Alibaba Group Q4 2025 Earnings Report

Alibaba Group EPS Results

• Actual EPS: $1.73
• Consensus EPS: $1.48
• Beat/Miss: Beat by +$0.25
• One Year Ago EPS: $1.40

Alibaba Group Revenue Results

• Actual Revenue: $32.57 billion
• Expected Revenue: $32.89 billion
• Beat/Miss: Missed by -$320.21 million
• YoY Revenue Growth: +6.60%

Alibaba Group Announcement Details

• Quarter: Q4 2025
• Date: 5/15/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 15, 2025
• Conference Call Time: 7:30AM ET

Alibaba Group (NYSE:BABA) is a global technology and commerce company founded in 1999 by Jack Ma and a group of co-founders. Headquartered in Hangzhou, China, the company operates a broad ecosystem of businesses serving consumers, merchants, brands and enterprises.

Its core businesses include online and mobile commerce platforms such as Taobao and Tmall in China, as well as international marketplaces including AliExpress and Lazada. Alibaba also provides wholesale commerce, cross-border retail, logistics through Cainiao, local consumer services, digital media and entertainment, and other consumer-focused technology services.

Alibaba Cloud provides cloud computing, data storage, artificial intelligence and related technology solutions to businesses and organizations. Through its various platforms and services, the company serves customers and merchants in China and international markets across Asia, Europe, the Americas and other regions.

Alibaba is led by Chairman Joe Tsai and Chief Executive Officer Eddie Wu. Its American depositary shares trade on the New York Stock Exchange under the symbol BABA.

Alibaba Group Q4 2025 Earnings Call Transcript

Key Takeaways

• Alibaba reported total revenue (ex-SunArt & InTime) up 10% YoY and adjusted EBITA surged 36% YoY, highlighting strong operational leverage.
• Alibaba Cloud revenue accelerated to 18% YoY growth, with AI-related product revenue maintaining triple-digit growth for the seventh consecutive quarter.
• Taobao and Tmall customer management revenue rose 12% YoY, adjusted EBITDA increased 8%, and 88 VIP membership surpassed 50 million, indicating healthy e-commerce monetization.
• International commerce segment (AIDC) drove 22% YoY revenue growth and narrowed losses, and is on track to reach quarterly profitability in the coming fiscal year.
• Free cash flow plunged 76% YoY due to elevated cloud infrastructure spending, despite an 18% increase in operating cash flow and a strong net cash position of RMB 366.4 billion.

Presentation

[Lydia Liu, Head of Investor Relations at Alibaba Group]

Good day, everyone. Welcome to Alibaba Group's March Quarter and Full Fiscal Year 2025 Earnings conference call. With us today are Joe Tsai, Chairman; Eddie Wu, Chief Executive Officer; Toby Xu, Chief Financial Officer; Jiang Fan, Chief Executive Officer of Alibaba E-commerce Business Group. This call is also being webcast from the Investor Relations section of our corporate website. A replay of the call will be available on our website later today. Now, let me quickly cover the safe harbor. Today's discussions may contain forward-looking statements, particularly statements about our business and financial results that are subject to risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor statements that appear in our press release and investor presentation provided today.

[Lydia Liu, Head of Investor Relations at Alibaba Group]

Please note that certain financial measures that we use on this call are expressed on a non-GAAP basis. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. Unless otherwise stated, growth rate of all stated metrics refer to year-over-year growth versus the same quarter last year. I will turn the call over to Eddie.

[Eddie Wu, CEO at Alibaba Group]

Thank you.

[Eddie Wu, CEO at Alibaba Group]

Welcome to join our quarterly earnings call. We delivered strong performance this quarter with total revenue, excluding Sun Art and Intime, growing 10% year-over-year, and Adjusted EBITDA increasing 36% year-over-year. For fiscal year 2025, our user-first, AI-driven strategy continued to deliver meaningful results, with accelerated growth across our core businesses. We've established a well-defined growth portfolio centered on AI plus cloud, e-commerce, and other internet platform businesses. We're seizing the historic opportunity presented by AI and stepping up our investments in AI infrastructure and advanced technologies to further strengthen Alibaba's global leadership in technology. These capabilities will also be translated into sustained drivers of business growth. Driven by robust and growing AI demand, Alibaba Cloud's revenue growth accelerated to 18% this quarter, with revenue excluding Alibaba consolidated subsidiaries increasing 17% year-over-year. Public Cloud revenue growth continued to accelerate.

[Eddie Wu, CEO at Alibaba Group]

Revenue from AI-related products has maintained triple-digit year-over-year growth for the seventh consecutive quarter. For the full fiscal year, Alibaba Cloud's revenue grew by double digits. Looking ahead, we expect AI to remain a key driver of accelerated revenue growth for Alibaba Cloud. While uncertainties persist in the global AI supply chain, customer demand remains strong and unwavering. We continue to see growing demand for cloud and AI, an opportunity that will define the next 10 to 20 years and will not be derailed by short-term supply chain fluctuations. Our confidence and commitment to investing in cloud and AI infrastructure remains unchanged, and we are actively exploring diversified solutions to meet rising customer demand. We continue to advance foundational research and innovation in large models, pushing the boundaries of model capabilities while remaining firmly committed to open source.

[Eddie Wu, CEO at Alibaba Group]

In April, we released our next-generation Qwen3 model as open source, ranking amongst the top performers globally on multiple authoritative benchmarks. By the end of April, we had open sourced over 200 models under the Qwen family, with more than 300 million downloads worldwide and over 100,000 derivative models, making it the world's largest open source model family. As we accelerate the adoption of AI plus cloud across a wide range of industries, two clear trends have emerged. Among large and mid-sized enterprises, AI applications are expanding from internal systems to more customer-facing use cases. At the same time, adoption of AI products is rapidly extending from large enterprises to a growing number of small and medium-sized businesses. This quarter, the industry penetration of our AI products expanded rapidly.

[Eddie Wu, CEO at Alibaba Group]

In addition to faster adoption across sectors like internet services, autonomous driving, financial services, and online education, we're also seeing strong momentum in more traditional industries such as animal farming and manufacturing, which are actively exploring AI applications and have shown significant growth in demand. In the financial sector, we continue to deepen our industry leadership. Recently, the Industrial and Commercial Bank of China, ICBC, officially selected Alibaba Cloud's PolarDB as its enterprise-wide transactional distributed database. This represents a strong endorsement of our technological capabilities by one of the most demanding financial institutions in terms of business performance and technology requirements. In e-commerce, we remain focused on putting users first. We continue to invest in user growth and improving user experience. Taobao and Tmall Group saw stronger momentum in new user growth, and 88 VIP members surpassed 50 million.

[Eddie Wu, CEO at Alibaba Group]

This quarter, TTG customer management revenue rose 12% year-over-year, while Adjusted EBITDA increased by 8%. We continue to invest in improving the operating environment for merchants, increasing our support for those offering high-quality products and services. Fueled by strong momentum in its cross-border businesses, AIDC achieved year-over-year revenue growth of 22% this quarter. Operational and investment efficiency also continued to improve. Despite potential uncertainties in global trade regulations, we remain confident that AIDC's diversified footprint across global markets positions us well to manage changes effectively, and we remain on track to achieve overall quarterly profitability in our international e-commerce business in the coming fiscal year. Other businesses within the group continued to maintain healthy operations. The Digital Media and Entertainment Group achieved profitability on an Adjusted EBITDA basis this quarter.

[Eddie Wu, CEO at Alibaba Group]

In fiscal year 2026, we will continue to focus on driving growth in our core businesses of e-commerce and AI plus cloud while shaping a second growth curve powered by technology over the medium to long term. Thank you.

[Toby XU, CFO at Alibaba Group]

Thank you, Eddie. The strong financial results of the past quarter highlight the good progress we are making in driving growth in our core businesses. On our Taobao and Tmall businesses, we saw a substantial increase in CMR growth, which grew 12% year-over-year, primarily driven by the improvement of take rate. Our take rate benefited from the impact of the software service fee and the increasing penetration of Quanzhantui. Merchants benefit through Quanzhantui's convenience of use and the improvement of marketing efficiency. Our cloud business continues to exhibit robust momentum, with revenue growth accelerating to 18%, and overall revenue, excluding Alibaba consolidated subsidiaries, accelerated to 17%, driven by an even faster public cloud revenue growth. Notably, our AI momentum remains robust, with AI-related product revenue sustaining triple-digit growth for the seventh consecutive quarter.

[Toby XU, CFO at Alibaba Group]

We are seeing our AI products being adopted across increasingly diverse industries, including a set of digital native industries as well as traditional verticals such as manufacturing, reflecting the broader application of AI technologies in real-world business environments. These demonstrate our commitment to innovation and reinforce our leadership in the cloud and AI sectors. This quarter, AIDC maintained its rapid growth momentum, primarily driven by strong performance in cross-border businesses. We continue to enrich its product offerings and diversify its business models to meet the needs of local consumers through local supply. We will continue to focus on enhancing operating efficiency and navigating in dynamic macro and geopolitical environments. Our commitment to sustainable growth and improving efficiency delivered solid results, with all segments achieving year-over-year EBITDA improvement this quarter, leading to a 36% increase in overall group EBITDA.

[Toby XU, CFO at Alibaba Group]

A number of loss-making businesses are on track of turning profitable, while we are investing in select strategic AI-driven initiatives that position us to capture long-term opportunities and create value to our users and customers. This quarter, we continue to optimize our business portfolio by exiting non-core assets. We expect to generate $2.6 billion in maximum of cash proceeds from the sale of Sun Art and Intime. These actions allow us to sharpen our focus on core businesses and invest in key growth areas, while also enabling solid cash returns to shareholders. Our board of directors has approved an annual dividend of $1.05 per ADS, representing a 5% increase year-over-year. This increase reflects the impact of our share repurchase program, which resulted in a 5.1% net reduction in share count after accounting for ESOP issuance for this fiscal year.

[Toby XU, CFO at Alibaba Group]

The board also approved a special dividend of $0.95 per ADS, which is higher than last year's $0.66 per ADS. This increase demonstrates that we are making solid progress in disposing of non-core businesses in financial investments. In total, we are distributing $2 per ADS in cash dividends this year, amounting to $4.6 billion. Combined with the $11.9 billion in share repurchases, we have returned a total of $16.5 billion to our shareholders for this fiscal year. On a consolidated basis, total consolidated revenue was RMB 236.5 billion, an increase of 7% year-over-year. Excluding the revenue from Sun Art and Intime, group revenue would have grown 10% year-over-year. Consolidated Adjusted EBITDA increased 36% to RMB 32.6 billion, primarily attributable to revenue growth and improved operating efficiency, partly offset by the increase in investments in our e-commerce businesses and technology.

[Toby XU, CFO at Alibaba Group]

Our non-GAAP net income was RMB 29.8 billion, an increase of 22%. Our GAAP net income was RMB 12 billion, an increase of RMB 11.1 billion, primarily due to market-to-market changes from our equity investments. The increase in income from operations and the decrease in impairment of equity method investments partly offset by the losses arising from the disposal of subsidiaries. Operating cash flow this quarter was RMB 27.5 billion, an increase of 18%. Free cash flow this quarter decreased 76% to RMB 3.7 billion, which was mainly attributed to the increase in our cloud infrastructure expenditure. As of March 31st, 2025, we continue to maintain a strong net cash position of RMB 366.4 billion or $50.5 billion.

[Toby XU, CFO at Alibaba Group]

The strong net cash position and healthy operating cash flow bring us confidence and sufficient resources to increase our investment in cloud and AI infrastructure to capitalize to sustain the strong demand and the substantial growth potential presented by latest AI innovations. Now, let's look at the segment results, starting with Taobao and Tmall Group. Revenue from Taobao and Tmall Group was RMB 101.4 billion, an increase of 9%. Customer management revenue increased by 12%, primarily driven by the improvement of take rate. Our take rate benefited from the impact of software service fee and increasing penetration of Quanzhantui. Merchants benefit through Quanzhantui's convenience of use and the improvement of marketing efficiency. We continue to invest in user growth and other strategic initiatives, such as price-competitive products, customer service, membership program benefits, and AI technology applications to enhance user experience.

[Toby XU, CFO at Alibaba Group]

These efforts led to stronger momentum in new consumer growth and a continuous increase in orders. On the merchant end, we remained focused on improving their operating environment and ensuring their sustainable development on our platform. In particular, we increased the support of merchants that provide high-quality products and customer services, including support for marketing, new product launches, and customer management. During this quarter, the number of 88 VIP members continued to increase by double digits year-over-year, surpassing 50 million. With solid profitability and increasing output on a cohort basis, we will continue to focus on its retention rate. Taobao and Tmall Group Adjusted EBITDA increased by 8% to RMB 41.7 billion, primarily due to the increase in revenue from customer management service, partly offset by the increase in investments in user experience and technology.

[Toby XU, CFO at Alibaba Group]

Revenue from AIDC grew 22% to RMB 33.6 billion this quarter, primarily driven by strong performance in cross-border businesses. AIDC's Adjusted EBITDA was a loss of RMB 3.6 billion compared to a loss of RMB 4.1 billion in the same quarter last year. AIDC continued to focus on enhancing operating and investment efficiency, leading to a narrow loss this quarter. In particular, the unit economics of the AliExpress Choice business improved on a sequential basis. AIDC has a diverse geographical presence. Moving forward, we will continue to diversify and enrich our product offerings by engaging local merchants and partners through different business models in different markets and navigate in the dynamic macro and geopolitical environment. Revenue from Cloud Intelligence Group grew 18%, and overall revenue, excluding Alibaba consolidated subsidiaries, increased by 17%, primarily driven by an even faster Public Cloud revenue growth.

[Toby XU, CFO at Alibaba Group]

Notably, AI-related product revenue maintained a triple-digit year-over-year growth for the seventh consecutive quarter. Our AI products are seeing broader adoption across a wide range of industry verticals, including internet, retail, manufacturing, and media, with a growth in focus on value-added applications. In April, we launched Qwen3 series, a new generation of hybrid reasoning models that combine the capabilities of fast, simple responses and deeper chain of thought reasoning into a single model. The Qwen3 series covers a full range of model sizes, including two MoE models and six dense models. All Qwen3 models have been fully open-sourced on ModelScope, Hugging Face, and other platforms. We believe the full open-sourcing of Qwen3 will drive innovation and new applications by developers, startups, and enterprises.

[Toby XU, CFO at Alibaba Group]

Cloud's Adjusted EBITDA increased by 69% year-over-year, primarily due to faster growth of public cloud products and improving operating efficiency, partly offset by increasing investments in customer growth and technology innovation. We will continue to invest in anticipation of customer growth and technology innovation, including AI products and services, to increase cloud adoption for AI and maintain our market leadership. The Adjusted EBITDA margin decreased quarter-over-quarter by 1.9 percentage points. We increased our investments in technology and product development to capture the surge in AI demand. Also, as we ramp up infrastructure investments to growing demand, higher depreciation and amortization expenses also weighed on margins. Revenue from Cainiao decreased by 12%, and its Adjusted EBITDA increased by 55%. This is the result of the increasing integration of logistic offerings into our e-commerce businesses.

[Toby XU, CFO at Alibaba Group]

Revenue from Local Service Group grew 10%, driven by the combined order growth of both Amap and Ele.me, as well as revenue growth from marketing services. While its Adjusted EBITDA loss continued to narrow year-over-year as scale increased and unit economics improved due to operating efficiency. Our Adjusted EBITDA loss increased quarter-over-quarter, mainly due to seasonal factors, including high investments during Chinese New Year holiday. Revenue from Digital Media and Entertainment Group grew 12% to RMB 5.6 billion, primarily driven by the strong performance of the movie and entertainment businesses and the increase in Youku's advertising revenue. Adjusted EBITDA of DME turned positive, primarily driven by Youku's profitability.

[Toby XU, CFO at Alibaba Group]

Revenue from all other segments increased by 5%, primarily due to the increase in revenue from Freshippo and Alibaba Health, partly offset by the decrease in revenue from Sun Art due to its sale and deconsolidation in February 2025, while Adjusted EBITDA loss was a loss of RMB 2.5 billion. The all other segment comprises a set of innovative businesses, including several strategic AI-driven technology infrastructure and businesses. While we continue to drive efficiency improvements across business lines, we are also investing in AI opportunities to maintain our competitive edge and to drive future growth. In closing, during this quarter, we are making significant strides in enhancing the competitiveness of our e-commerce and cloud businesses. Our Taobao and Tmall Group delivered solid growth, reflecting the improvement in monetization efficiency. In cloud, revenue growth continued to accelerate sequentially.

[Toby XU, CFO at Alibaba Group]

As we are seeing surging demand and ramping up of our capacity, we will onboard more customers and accelerate our business growth. We are also focusing on improving the efficiency of all segments to establish a clear path to profitability, with DME turned profitable this quarter. This quarter, we strengthened our balance sheet by monetizing non-core assets and financial investments. These actions enable us to focus more on our core businesses and provide greater flexibility to invest decisively for growth and to return value to shareholders. We are executing with speed and precision to capture the substantial opportunities ahead in the AI era. Thank you. That's the end of our prepared remarks. We can open up for Q&A.

[Lydia Liu, Head of Investor Relations at Alibaba Group]

Hi everyone. For today's call, you are welcome to ask questions in Chinese or English. A third-party translator will provide consecutive interpretation for the Q&A session.

[Lydia Liu, Head of Investor Relations at Alibaba Group]

Please note that the translation is for convenience purposes only. In the case of any discrepancy, our management statement in the original language will prevail. If you are not able to hear the Chinese translation, bilingual transcripts of this call will be available on our website within one week after the end of the meeting. [Foreign Language] Operator, please start Q&A session. Thank you.

[Operator]

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. To give more people the opportunity to ask questions, please keep yourself to no more than one question at a time. Your first question comes from Gary Yu with Morgan Stanley. Please go ahead.

[Gary Yu, Equity Research Analyst at Morgan Stanley]

[Foreign language] 好，谢谢管理层。我这边有两个关于 AI 的问题。第一个是关于云的。我们之前有看到在企业方面是比较难去用云去变现的。那在 AI 的时代，我记得上一个季度管理层说过有 90% 以上的 token 是预期在云上面服务。那在过去几个月 DeepSeek 之后，我们跟我们的企业客户去沟通的时候，有没有看到有一个比较大的一个改变？就是以前就比较不太愿意上云的企业开始，因为 AI 就有比较大的一个就把 workload 转移到云上面那个情况出现了。如果有的话，会是大概是那一些类型的公司，那一些行业的公司可以跟我们分享一下，以及于有没有一个 2026 年财年那个云服务收入的一个指引。我第二个问题是关于一些 AI 的应用的，特别是关于电商方面。如果是我们现在往前看两到三年之后，我们预期能靠，因为阿里算是一家就比较前、比较早期去投入 AI 的一家电商公司，可以把我们的现在的市场份额在往上提升。而且在那个货币化率的时候，有没有一个往上的一个空间呢？因为 AI 的一些工具。好，谢谢。

[Gary Yu, Equity Research Analyst at Morgan Stanley]

Thank you, and I have two questions regarding the cloud. The first is that we've seen that it's been difficult in the past for AI to be monetized in the AI era. I recall management having said that in a previous quarter's earnings call, and more than 90% of tokens were serving together in the cloud. First, over the past several months, I'm wondering in the course of talking with your customers if you've seen any big change on that front, and in the past, starting with the enterprises that weren't that willing to go on to the cloud, because AI is now providing a big push to get onto the cloud. I'm wondering if you're starting to see that kind of uptake.

[Gary Yu, Equity Research Analyst at Morgan Stanley]

If you have, I'm wondering what kinds of companies it is and in what industries, and if you could share with us some color on that, as well as provide some guidance for the FY 2026 fiscal year in terms of cloud service revenues. That was my first question. The second question has to do with AI applications, in particular in the e-commerce area. Looking ahead, say two to three years down the road, where do we expect to be at? Because we are one of the earlier companies in the e-commerce space that's beginning to apply AI in our e-commerce offering. If you could provide some kind of outlook as for how much market share you expect to be able to gain as a result of that new AI deployment.

[Gary Yu, Equity Research Analyst at Morgan Stanley]

At the same time, in terms of monetization, will these new AI tools provide further space for expansion? Thank you.

[Eddie Wu, CEO at Alibaba Group]

[Foreign Language] 好，第一个问题我来回答吧。我们现在就上个季度而言，云业务的营收增速提升到 18%。其实最主要的是还是受于 AI 相关的需求的这个带动。那 AI 相关的需求就是从数字上我们已经看到连续七个季度有三位数的增长。那这个增长其实大量的都是就是有很多新的企业都在使用 AI 这个服务。那我们前面已经讲到过，就是从我们最早接受 AI 的这些服务的企业，可能很多是像我们的互联网，或者说互联网金融、教育，或者智能汽车这些最早应用的行业。但是我们确实现在看到很多其他的一些其他的一些工作场景，包括一些其他的一些公司，就是原来他因为他原来在没有用到 AI 的情况下，他在线下的 IDC，甚至在公司内部的机房就能解决的这些服务。但是因为用了 AI，他有强大的动力搬迁到云上面来。所以我们刚才所提到的，像我们提到的这些例子，像甚至是养殖业，包括是一些制造业，包括我们说到的就是可能是像义乌小商品城这样的这些企业，其实他们有相当多的原来在一些线下的 workload 都在，因为他们要应用 AI，所以他们在把他们的这些服务搬迁到云上面来。那搬迁到云上面来的时候，他们可能会有些简单的一些应用，他可能会调用 API，但是他要与他的一些企业内部的数据或者企业内部的流程相结合的时候，很多情况下他们都会在开源模型之上做一些后训练来满足整个企业的这些需求。那我们看到这样的这些需求，通过百炼或者说通过在阿里云上租赁我们的整个的那个 GPU 服务和 AS 层的其他的服务，其实它能够很好的满足。所以这个是我对第一个问题的一个回答吧。

[Eddie Wu, CEO at Alibaba Group]

Thank you. This is Eddie, so I will take this question. The first question. In the quarter that just concluded, our cloud revenue grew by 18% year-over-year. I think that that is primarily benefited from and being driven by demand related to AI. In terms of putting a number on that, if we look at AI-driven demand in the cloud space, it has already grown by triple digits for seven consecutive quarters now. Behind that, that means that there is a lot of new companies that are starting to make use of AI services.

[Eddie Wu, CEO at Alibaba Group]

As we said before, a lot of the companies that started out initially adopting AI were ones in the internet space or internet finance, education, autonomous driving, those early adopter kinds of sectors. What we're seeing now is a lot of new scenarios and a lot of newer kinds of companies in other sectors that are taking up AI services. A lot of these companies might have, before they adopted AI, been able to access these services offline with IDC or internally with their own server rooms in their own company. Precisely because they're now adopting AI, they have powerful impetus to migrate onto the cloud.

[Eddie Wu, CEO at Alibaba Group]

As you've seen, we've given you some examples, for example, in the animal farming or animal husbandry sector, as well as in the manufacturing sector, as well as the Yiwu small commodity city and companies there. There are a lot of these kinds of companies that originally were handling these workloads offline. When it comes time for them to implement AI and adopt AI applications, they're migrating these services onto the cloud. When they migrate onto the cloud, they will probably have some simple applications where they can do API calls. When it comes to accessing their company internal proprietary data or proprietary internal processes within the enterprise and integrating with those, a lot of the time what they're going to be doing is post-training on the basis of an open source model in order to meet those enterprise-specific demands.

[Eddie Wu, CEO at Alibaba Group]

We certainly are seeing a lot of this kind of demand through Bai Lian or through leasing GPU compute on Alibaba Cloud and making use of IaaS layer services and other services that are satisfying all of those different demands. That is my response to your first question.

[Eddie Wu, CEO at Alibaba Group]

[Foreign language] 我再补充一点吧，就是经过我们现在看到的这个行业趋势，越来越多的公司因为 AI 它要使用云服务，然后越来越多的公司它在一些传统的基于传统的 CPU 的计算在转向 AI 的，在转向 AI 计算。所以就我们现在看到的情况而言，我们对未来几个季度阿里云的营收增速还在处于一个上升通道，还是抱有一个比较强的信心。

[Eddie Wu, CEO at Alibaba Group]

Just to add to that previous answer, in terms of the trends that we are seeing across these different sectors with more and more companies adopting cloud-based AI services, these are companies that had been using traditional CPU-based compute that are now turning to AI and AI compute. Given that, what we see for the next few quarters to come is growth track, significant growth track for revenues in Alibaba Cloud, and we have quite strong confidence and conviction in that.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

[Foreign Language]

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

Thank you. This is Jiang Fan, and I will take the second part of the question regarding the application of AI in the e-commerce space. As we've said several times, there's huge potential for applying AI in e-commerce. Certainly in the present phase, one thing that we're paying a lot of attention to is leveraging AI to further enhance the user experience. You know, we have an opportunity to reshape the consumer experience with AI, for example, in terms of search recommendations and advertising, where we are operating these systems based on traditional algorithms. I think that this is a high priority for us in the near term. We're already making many attempts on this front and are already starting to see results.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

It has the potential to enhance, of course, the search experience, as well as to provide more precise recommendations, as well as to enhance advertising efficiency. We are seeing AI already making a significant difference in those different ways. Secondly, we are also thinking about how we can leverage AI to enhance working efficiency internally for our employees and beyond our employees, also more generally for merchants. Because as you know, when it comes to e-commerce, apart from the platform, the other big player in the system is merchants. We also trust that with the deeper adoption of AI, we will be able to further elevate efficiency across our entire ecosystem. The third point is that we believe in the longer term that AI can create new forms of interaction and engagement. We are working on innovation-based forms of interaction and engagement for the future.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

We're piloting these things actively, and we believe that AI will play a critical role in terms of driving long-term enhancement in the user experience on Taobao and equally in terms of driving enhancement in the efficiency of commerce.

[Lydia Liu, Head of Investor Relations at Alibaba Group]

Next question, please.

[Operator]

Thank you. Your next question comes from Alex Zhou with J.P. Morgan. Please go ahead.

[Alex Zhou, Analyst at J.P. Morgan]

[Foreign language] 感谢管理层接受我的提问。我有两个关于咱们国内淘天的变现的问题。一个就是咱们是怎么考虑我们这个未来变现率的一个方向和这个目标。我们看到这个去年，对吧，4月份推出了全站推，9月份把这个淘宝的佣金从零提到了千六。那么这个在这个过去的两三个季度里面，陆陆续续的已经体现在财报上了。但中长期我们考虑这个变现率的话，是考虑哪些因素？因为背景我理解就是咱们因为过去两三年变现率是稳中有跌的，但是境对友商的变现率是大幅提升的。特别淘宝其实现在应该是行业最低的一个变现率的平台。那我们在考虑中长期的变现率的时候，是考虑跟境对的差距呢，还是考虑跟这个商家自己的 ROI 呢，还是我们自己的 ROI 呢，还是怎么样的一个考量？所以这个我的第二个跟进的问题就是我们去年做的这些提升变现率的事情，这个全站推，这个淘宝的佣金，它只是一个一年的一个事情，然后就结束了，还是说我们会在多年的一个周期里面慢慢的这个渐进的提升我们的变现率？谢谢。

[Alex Zhou, Analyst at J.P. Morgan]

Thank you. I have a couple of questions regarding monetization on Taobao and Tmall. The first is what is the overall direction that we're moving in and what is the objective, the goal in terms of monetization? We know that starting from last year in April, you launched Quanzhantui QZT, and then in September, you started implementing the 0.6% software service fee on Taobao, where previously it had been zero. You weren't charging anything.

[Alex Zhou, Analyst at J.P. Morgan]

Over the past two or three quarters, we've seen these different monetization initiatives progressively rolled out and making a difference that we can see in the financial statements. Looking more to the mid to long term, when you think about monetization, what are the factors that you are considering? We know that over the last two to three years, the monetization rate has been relatively stable, perhaps with a slight decline, whereas the monetization rates of the competitors have all risen by quite a large margin. In particular, Taobao, we know, has one of the lowest monetization rates among any of the platforms across the industry. When we're thinking about take rate and thinking about that gap with the competitors, are we thinking about merchants and their ROI? Are we thinking about our own ROI and how are you considering that and where's the balance?

[Alex Zhou, Analyst at J.P. Morgan]

Then the second follow-on question to that is that we started implementing these monetization initiatives last year, QZT, as well as the commission on Taobao. That has all been in the course of one year. Is that it? Is there going to be more to this as sort of a multi-year initiative, a multi-year cycle where we are going to continue progressively to roll out more monetization measures? Thank you.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

[Foreign language]我来回答一下这个问题，就是关于这个商业化率变现率的一个持续提升的问题。对，首先我想讲的就是说我们的首要的这个经营目标还是去稳定中长期的市场份额。对，然后我们的商业化率本质上是一个我们的市场的一个份额，包括我们的商业效率的一个体现。对，那么在过去的一年里面，我们其实是通过一些新的产品，像全站推这样一些产品，其实去变现了一些过去我们传统的广告产品没有非常好的去商业化的一些卖家。对，像一些什么白牌卖家，可能我们这些卖家的商业化率是得到了一个显著性的一个提升。那我认为就是说可能在未来的几个季度内，我们还是可以看到这样的一个趋势。当然去年我们也做了这个像那个支付手续费的一个收取，那这个对我们整个商业化率也会有一个阶段性的一个帮助。对，那么我觉得长期看的话，就一方面刚刚讲到就是说我们希望通过用户体验的提升，我们商业模式、商业效率的这样的一个优化能够使得我们的增长，就GMV的增长，还有市场份额能够稳定。那么在此基础之上，我们也会去做更多的商业化产品、商业化模式的一些尝试。刚才讲到一些AI相关的一些尝试，那么也有一些其他的空间。那我们也是希望在这样的一个基础之上，我们可以去不断通过创新，通过我们的商业效率的提升，然后来创造更多的变现的这样的一个可能性。

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

Thank you. I will take the question regarding the monetization rate and how we are working to continue to enhance monetization. The first thing I would say is that our foremost business objective is to stabilize market share in the mid to long term, and on that basis, our monetization rate essentially reflects the size of our market share. Over the past year, we have indeed rolled out various new products, including QZT, among others.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

What that did is it allowed us to take some of the traditional advertising products that we were not able very well to monetize with respect to certain merchants and make a big improvement on that score. For example, for white label merchants, these are merchants who in the past represented a much lower level of monetization, and that has been significantly improved. I think in the next few quarters to come, we will certainly continue to see this kind of a trend going forward. Of course, we have also begun charging commission on payments. That has made a difference in this present phase in terms of monetization. Looking more to the long term, on the one hand, we want to enhance the user experience and enhance our business model on that basis, and that will result in the optimization of monetization rate.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

We want to see growth in our GMV and stability in our market share, and on that basis, we will certainly go about implementing more different kinds of monetization products and make different attempts, pilot different monetization models. I already spoke earlier about some of the attempts we're making already around AI, and I think there's certainly potential there. On that basis, we will continue to innovate and to enhance our monetization rate and to create more possibilities for higher levels of monetization.

[Lydia Liu, Head of Investor Relations at Alibaba Group]

Operator, next question, please.

[Operator]

Thank you. Your next question comes from Ronald Keung with Goldman Sachs. Please go ahead.

[Ronald Keung, Stock Analyst at Goldman Sachs]

[Foreign language] 谢谢 Ally 周斌 蒋 凡 和 Lydia。那我想问关于阿里云增长的这个情况，因为上个季度我记得管理层说了这个1月以来这个春节就看到推理需求出现爆发性的增长。那如果我们这么看的话，是否这个二三月比1月是有明显加快？想想看我们看到这个是不是每个月我们的这个云增长都加快，那可能整个季度的18个点应该是123月的平均。那我们也看到千问的这个模型有一些小而美的一些小模型，也可以做一些断策的这些应用。那我想问就我们应该怎么评估这个AI模型，但也有大也有小，但因为我们是云端，所以想听一下我们对这个模型变小而美的这个对我们这个云未来一个增长推理增长的这个看法。谢谢。

[Ronald Keung, Stock Analyst at Goldman Sachs]

Thank you. I have a question regarding Alibaba Cloud's growth rate, because I recall that in the past quarter it had been said that starting from Spring Festival onward, we saw a surge in demand for inference workloads.

[Ronald Keung, Stock Analyst at Goldman Sachs]

So I'm wondering if we look at February/March compared to January, whether you saw that continuing rapid acceleration and what kind of growth we're talking about on a month-over-month basis. For the quarter as a whole, I think it might have been 18%, but that would be the average for January, February, and March as a whole. Also, when we look at these models within the Qwen family, there are some smaller models as well as some larger models. I'm wondering how we would evaluate these different AI models, the larger ones, the smaller ones, because we're running them on the cloud. I'd like to hear about what your view is in terms of growth in demand for inference compute power with respect to these models, given that some of them are very small models. Thank you.

[Eddie Wu, CEO at Alibaba Group]

[Foreign language] 另外一个我们的您听到的这个AI模型对于业务的影响，我们的开源千问的模型确实有很多的端侧模型的应用，也有很多在适合在云端上的。那我们现在看到的情况实际上在很多的，尤其是在3B或者说更小一点的规模的模型，可能大规模这类的业务，我们大概率我们看到其实主要是应用在客户的一些手机或者说玩具或者智能的设备上面。那这些上面的业务对云业务可能是影响有限，但是因为这些客户在使用千问的这些模型的时候，其实他也往往会需要云端的一些模型的一些配合。他不仅仅是一些端侧的模型才能够会做好这个服务。所以我们看到其实在32B以上的模型的话，虽然在消费级的显卡上可以跑，但是真正要跑大规模的一些应用的话，可能还是要放到云上来，这样他会有更好的一个更能够适应工作负载的这种弹性，以及更好的一个价格。所以我觉得我们的端侧模型某种程度上其实和我们的云端的云端的一些大参数的一些模型其实是相互的一个配合的一个相互配合的一个逻辑吧。所以我觉得都会拉动我们的客户对于阿里云的相关产品的依赖性。对。

[Eddie Wu, CEO at Alibaba Group]

Thanks. This is Eddie.

[Eddie Wu, CEO at Alibaba Group]

I will take that question. Your first question had to do with the pace of cloud revenue growth in the various months over the quarter. During that first quarter in the period January, February, March, there was the Spring Festival, the Chinese New Year. I do not think that period of time is really very representative of the overall pace of developments. I think if you look at the quarter after the Spring Festival, you certainly do see a lot of new customers, a lot of new demand arising, and a lot of that new demand is for inference workloads or for workloads that are driven by inference-based scenarios. A lot of the large-scale adoption, I think, is what you are going to see in the next few months to come.

[Eddie Wu, CEO at Alibaba Group]

Not just in February and March after the Spring Festival, but through April and May as well. I think the surge that you're seeing in demand growth is representative of and closer to what you can expect to see as the regular pace of growth going forward. There were some disruptions in supply chains in January, February, March, as well as the seasonal impact of the Spring Festival in that time. I think you need to look beyond that to see what the regular pattern is going forward. Looking at customer demand, as I said, a lot of demand is driven by inference that continues to grow steadily. Additionally, you had also asked a separate question about the effect of the different AI models, different sizes of models on the cloud business. You're absolutely right.

[Eddie Wu, CEO at Alibaba Group]

Our Qwen open-source models have a lot of edge model applications, and there are also applications that are more suitable to be run on the cloud. There is a lot of different applications. In particular, when we talk about the smaller models of around 3 billion parameters or even smaller, these kinds of models are running on local devices, for example, on mobile phones of customers, or it could be in toys, or it could be on different kinds of smart devices. They are not going to have much of an impact in terms of driving cloud business. Because those same customers are using the Qwen models, what that means is often they are also going to require additional usage of cloud-based compute resources as well. It is not just an edge model that can achieve that kind of service requirement.

[Eddie Wu, CEO at Alibaba Group]

You have the larger models, say 32 billion parameters or higher. Although, yes, you can run those on a consumer-grade video processing card, nonetheless, to really be able to run big models and run them well, run applications well, you need to put them in the cloud. That way you have the kind of elasticity that can scale to meet the requisite workloads, and of course, you get a better price as well for the compute. I think that the edge models, to a certain extent, are complementary with our cloud-based large parameter models. They work well together as a business model. I think that the use of those smaller models also contributes to higher reliance by those customers on the relevant products of Alibaba Cloud. Thank you.

[Lydia Liu, Head of Investor Relations at Alibaba Group]

Next question, please.

[Operator]

Thank you. Your next question comes from Kenneth Fong with UBS.

[Operator]

Please go ahead.

[Kenneth Fong, Head of China Internet Research at UBS]

Hi. Good evening, management, and thanks for taking my question. I have a question in our recent announcement in the infrastructure investment that we said we will invest RMB 10 billion with Ele.me to grow the pre-commerce business. Can management share some plans on, let's say, area of investment, why we do it now, and how would it impact the profitability for local service, especially in light of the intensified competition in the food delivery business recently? Thank you.

[Kenneth Fong, Head of China Internet Research at UBS]

[Foreign language] 好，管理层，谢谢。请问这是有个100亿的技术零售，要投资100亿。请问这个具体的投资计划这个内容如何，然后会如何影响到相关的这个盈利能力？谢谢。

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

对，那我回答一下这个问题。就是其实阿里并不是今天第一天进入技术零售这个赛道。其实我们在这个市场的布局已经有非常多年。其实从我们过去投资饿了么，包括我们也做像盒马这样的一些业务，其实都是在布局。对，那其实我们进入这个市场也是非常自然的一件事情。当然最近的市场也发生了一些很大的一些就是新的一些事情。对，当然我觉得讲一下我们进入这个市场的一些原因，就是说包括我们的一些优势。首先我觉得其实零售这个赛道是非常大的，那它是一个非常广泛的一个中国老百姓都有的一个需求。那它是一个可能是一个现在可能是个五六亿，未来可能是一个10亿用户的一个需求。对，那么它也是一个发展非常快的一个赛道。对，那么我们其实认为首先淘宝我们已经有一个非常非常广泛的一个用户的一个基础。对，那么我们其实也是非常自然的会去把技术零售作为一种新的服务，或者说作为一些新的品类，然后纳入到淘宝这个平台上。那第二就是说我们进入这个市场，我们有现成的这个商户，非常成熟的商户，因为我们的饿了么在这个市场已经做了非常多年。对，那我们有非常成熟的物流体系。对，那这样可以让我们在淘宝上去实现这样的技术零售的体验，我们是一个建立在这样的一个基础之上的。对，那我认为这是我们的一些优势。那基于这些优势，我认为我们可以在非常快的去实现这样一个非常好的体验，同时又在商业效率上面会是一个非常好的平衡.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

Thank you. This is Jiang Fan, so I will take this question. Instant commerce is not a new racetrack for Alibaba. This isn't day one for us, so to speak, in this sector. We've been building up our capabilities in this marketplace for many, many years now. We invested, of course, in Ele.me and developed Freshippo as well.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

These were all putting pieces in place in that instant commerce space. I think it's entirely natural for us to continue to develop and grow in this market. Of course, there have been many new large and new developments in this market recently as well. I think that these are some of the reasons that we're positioned to do very well in the market, and we have some strong advantages. One thing to note about this instant retail market is that it's a huge market because basically every person in China, every consumer in China will have demands for instant commerce. Today, it could be a market of some, say, 500-600 million consumers. Going forward, that could easily be 1 billion consumers. It's also a market that's growing and developing extremely rapidly.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

It is important to know that Taobao has an extremely broad user base already in place. It is entirely natural for us to develop in this direction and to boost up our instant commerce offerings as a new service or a new category and to integrate it into the Taobao platform. Secondly, in terms of merchants in the market, we have an extremely mature and experienced merchant base already in place because, as I said, Ele.me has been operating in this market for many years now. We also have an extremely robust and mature logistics system to support instant commerce as well. This all makes it possible for us to provide an excellent service experience for instant commerce on Taobao. We are building on a very strong base with very strong advantages.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

Leveraging those advantages, I expect that we can move forward very quickly in delivering an excellent service experience for instant commerce while at the same time ensuring an excellent balance in terms of business efficiency.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

[Foreign language]然后我想讲一下，就是我们其实在过去的两周就做这个淘宝闪购的这样的一个尝试，我们其实超过我们的预期的，因为无论从这个规模的增长还是这个效率的体现上面都是好于我们的预期的。那么我们认为这件事情长期会给我们带来多方面的好处。那首先就是说对淘宝这样的一个APP，就是一个电商的APP，那它是一个非常高频次的一个场景。那么我相信在这样的一个，如果我们能在淘宝上建立这样的一个服务，那会让淘宝的活跃度与用户的这样的一个规模都会有一个长期会有一个更好的一个体现。对，然后第二就是说我认为未来我们也看到原厂进厂电商会有一些结合的可能性。那么我们也是希望能够在一个未来的一段时间之内，我们的重心会是在快速的，我们会积极的投资，然后我们会把这样的更多的淘宝的用户会让他去转变成这样的一个技术零售的一个用户。对，那么长期我们相信我们可以基于这样的一个新的业务，然后来重新的升级我们的商业模式，然后以及去让我们的APP变得更加的活跃。对，那短期内我们的投资重点主要还是在于刚讲到的新用户上面，就是我们认为淘宝上有一个非常巨大的一个用户的空间，可以让他们去变成技术零售的这样的一个用户。所以我们短期内会非常积极的投入这个业务.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

I can expand on that further to say that over the past couple of weeks we've been making some attempts with the Taobao Instant Commerce or Quick Commerce offering. The results of that trial have vastly exceeded our original expectation. This is we're talking about the growth in scale as well as efficiency of operations in both of those dimensions. Results were better than we had expected. I think that in the longer term, continuing to develop this will result in many different benefits and advantages for Taobao.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

First of all, for Taobao as an app, we're an e-commerce app, and instant commerce is a high-frequency consumption scenario. By developing more instant commerce on the Taobao app, we can drive higher levels of user engagement with the Taobao app. That's definitely going to be a good thing for Taobao in the long term. Secondly, we see new possibilities for combining nationwide e-commerce with local or hyperlocal e-commerce. We hope that in the next period of time to come, we can develop those synergies rapidly by investing aggressively in that integration. We aim to convert more Taobao app users into users of the instant commerce offering on Taobao. In the long term, we believe that by driving the growth of this new business format on Taobao, we can upgrade our business model further, and we can drive more engagement with our app.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

In the short term, the focus of our investment will be on developing new users, as I said. We see huge potential for the Taobao app to grow its users and to convert existing users into instant commerce users. In the short term, we will be investing aggressively in this business.

[Lydia Liu, Head of Investor Relations at Alibaba Group]

Next question, please.

[Operator]

Thank you. Your next question comes from Joyce Chu with Bank of America. Please go ahead.

[Joyce Chu, Research Analyst at Bank of America]

管理层晚上好。那个感谢给我这个机会提问。我的问题是，因为我们也知道最近我们的618活动已经开始了。第一个是想问一下，就是我们今年的618活动跟往年可能在一些这个活动安排、预售节奏上有一些不同。不知道今年我们的策略会是怎么样的。然后目前我们看到商户端、用户端有什么样的反馈。然后我的第二个问题是，刚刚其实继续刚刚的那个问题，就是我们在即时零售这个领域的话，我们在短期内有没有看到它和我们618主战的这个协同有没有给我们带来一些惊喜的效果。那我们怎么看在这边过去的一两个月里面，sorry，在未来的一两个月里面，我们期待他们会不会有一些什么样的更多的投入跟合作。有没有一些比较具体的这个成就或者是目标想要达成的？谢谢。

[Joyce Chu, Research Analyst at Bank of America]

Thanks, Management, for taking my question. As we know, recently this year's 618, 618 campaign has begun. First of all, I'd like to know what different strategies we can expect to see this year around the 618 promotion in terms of events or in terms of the pace of the pre-sales period and so on. Secondly, I'm wondering how the feedback is on the merchant side and on the user side.

[Joyce Chu, Research Analyst at Bank of America]

Just to follow on from that previous question before mine, I'm wondering if there's any connection that we can expect to see between instant commerce or rapid commerce and this year's 618 campaign in terms of synergies and if there might be some nice, happy surprises waiting for us in the instant commerce space in connection with 618.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

[Foreign language] 对，那我再回答一下这个问题。就是刚才讲到即时零售的一个战略方向。那我觉得我们短期内的关注重点还是刚刚讲到就是说怎么样快速转化更多的用户变成即时零售的用户。那同时在淘宝内端内建立这样的一个心智。那么我们也看到在初步的试验这样的一个结果中，当用户使用了这个就是即时零售的淘宝闪购这样一个新的服务的时候，我们可以看到它的活跃度是有显著的一个提升的。对，但我们现在的主要的阶段性目标还是先把这个业务做好。对，那我认为长期跟原厂电商还是有非常多的结合的可能性的。对，所以回到这个618这个问题，可能618我们并没有非常刻意的去将两个，就是将这个新业务跟我们这个电商业务做一个非常强的一个这种打通。对，然后回答你一下第二个问题。第一个问题就是刚才关于618的问题。那618其实是刚开始应该说是明天才正式卖。对，然后618我们今天还是做了一些改变的。那这些改变包括营销玩法的调整，包括一些节奏上的这种就是新的一些这种新的节奏。那么我们也是希望能够更好地适应新的竞争环境。那么当然也出发点还是希望让消费者有好的体验、好的价格、好的服务。对，那么我觉得因为这个618刚还没有开始，那可能我们到下一次的时候给大家汇报618的结果会更合适一点。

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

Okay, thank you. This is Jiang Fan, and I will take the question about the strategic direction for instant commerce starting there first. I think in the short term, our priority, as I was just saying, is to achieve very rapid conversion, to convert more existing Taobao users into instant commerce users on Taobao and to position Taobao with that kind of mind share amongst consumers. We're already seeing good results, as I said, from our initial forays.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

When users first make use of instant commerce, they continue to come back with high engagement and high frequency. We are seeing higher levels of engagement from those consumers. A major goal for us in the present phase is to get the instant commerce business right. I think in the longer term, there are many possibilities to achieve synergy between instant commerce, hyperlocal, and nationwide commerce. Coming to the 618 campaign, the other part of your question, I think that this is just getting started. In fact, I think the campaign does not actually start officially until tomorrow. You can expect to see some changes, including around marketing and including around the pacing of the campaign.

[Jiang Fan, CEO at Alibaba E-commerce Business Group]

These changes are aimed at better orienting and gearing the campaign to the new competitive environment and, of course, also at offering consumers a good experience, good prices, and good services. Because the campaign hasn't actually started yet, I'm not in a position to share with you any of those details. I will look forward on giving you a fuller report on the campaign during our next quarterly earnings call.

[Lydia Liu, Head of Investor Relations at Alibaba Group]

Due to time limit, we'll now take the last question.

[Operator]

Thank you. Your next question comes from Alicia Yap with Citigroup. Please go ahead.

[Alicia Yap, Managing Director and Senior Equity Analyst at Citigroup]

Hi, good evening. Thanks for taking my questions. I wanted to follow up on the CMR this quarter. I wanted Management to elaborate a little bit the strong performance this quarter. How much of that is driven by the GMV versus the 0.6% fee and the trans-entry improvement? I also wanted to follow up how much more levers that this improvement on trans-entry could further drive the monetization improvement in this upcoming fiscal 2026. I also follow up, will the step-up investment in the food delivery business put some pressure on the TTG EBITDA in the coming quarters? Thank you.

[Alicia Yap, Managing Director and Senior Equity Analyst at Citigroup]

[Foreign language] 好，感谢管理层接受我的提问。我想问的是关于CMR，本季度CMR的提升能不能说一下多少是跟GMV有关，就是GMV驱动的多少是签六软件服务费有关的。然后我们还有什么样的杠杆可以在26财年进一步提升这个CMR，然后认为本财年CMR可以提升到什么样的一个水位。那么另外想知道就是在即时零售这方面做投资会不会使就是淘天的这个EBITDA增加一些压力。谢谢。

[Toby XU, CFO at Alibaba Group]

[Foreign language] rate 的上升有一个 positive 的一个 impact。

[Toby XU, CFO at Alibaba Group]

Thank you. This is Toby, and let me start by answering your question about CMR. As I said earlier, there were really two major drivers of CMR growth in this quarter. The first was the software service fee, the 0.6% charge that we began charging starting from September of last year. The second factor has been the growing penetration of Quanzhantui QZT and its penetration in terms of advertising revenues. In the new fiscal year, looking ahead, I think that both of those factors will continue to exist and to play a role. Starting first off with the software service fee, there will continue to be a period of time going forward because last year we started from a very low base. We will continue to be rolling out and charging that software service fee, first point.

[Toby XU, CFO at Alibaba Group]

Secondly, in the earliest period of implementing the software service fee, we had various merchant-friendly measures, rebates to certain merchants. In the coming fiscal year or in 2025, we will slowly start to roll back some of those rebates. In the new year, the software service fee will continue to be a positive factor for the further growth of monetization. The second point regarding QZT will continue to drive penetration of QZT. In fact, progress to date is entirely in line with our expectations. The penetration rate continues to grow, and that is also having a positive driving effect on monetization rates. Of course, in that process of driving penetration of QZT, and Jiang Fan also mentioned this earlier, the most important thing is growth in terms of new merchants, getting new merchants to adopt QZT.

[Toby XU, CFO at Alibaba Group]

That includes a lot of small and medium-sized merchants who have now started to make use of our advertising products, as well as white label merchants and so on. From a certain perspective, this is incremental budget and incremental new advertising revenue. This increase will be positive for driving growth in monetization in the new fiscal year. Thank you.

[Toby XU, CFO at Alibaba Group]

[Foreign language] continues to evolve.

[Toby XU, CFO at Alibaba Group]

Turning to your second question concerning EBITDA, as Jiang Fan already said, you know our primary goal that we're focused on for the medium term is stabilizing our overall market share. As part of that process, we are making a lot of investments. That includes investments in user experience as well as in price-competitive products. As we've said, we still very much remain in an investment stage. This is an investment period, and certainly that will have an impact on EBITDA in line with competitive developments. You could expect to see fluctuation in EBITDA on a quarterly basis. I think that's what you can expect to see and that's what you've already seen over the past several quarters. Starting from this quarter, obviously we're also making new investments in quick commerce or instant commerce, and that also will have an impact on EBITDA.

[Toby XU, CFO at Alibaba Group]

On the one hand, these investments will result in the acquisition of new users, new user growth, as well as increase in frequency and in stickiness. In a certain sense, you can see this as supplanting some of our original investments in market growth. Of course, we do take that into consideration. Overall, we would expect that EBITDA, TTG's EBITDA overall in the next few quarters to come will experience some fluctuation in line with competitive dynamics.

[Lydia Liu, Head of Investor Relations at Alibaba Group]

Thank you, everyone, for joining us today. We appreciate your time. We will see you next quarter.

[Operator]

That does conclude our conference for today. Thank you for participating. You may now disconnect.

Participants

Executives

• Eddie Wu, CEO
• Toby XU, CFO
• Lydia Liu, Head of Investor Relations

Analysts

• Ronald Keung, Stock Analyst at Goldman Sachs
• Gary Yu, Equity Research Analyst at Morgan Stanley
• Jiang Fan, CEO at Alibaba E-commerce Business Group
• Alicia Yap, Managing Director and Senior Equity Analyst at Citigroup
• Alex Zhou, Analyst at J.P. Morgan
• Kenneth Fong, Head of China Internet Research at UBS
• Translator
• Joyce Chu, Research Analyst at Bank of America