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Operator
Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's March quarter 2024 and full fiscal year 2024 results conference call. At this time, all participants are on listen-only mode. After management's prepared remarks, there will be a Q&A session. I would now like to turn the call over to Rob Lynn, Head of Investor Relations of Alibaba Group. Please go ahead.
Rob Lynn
Thank you. And good day, everyone. Welcome to Alibaba Group's March quarter and fall fiscal year 2024 results conference call. With us are Joe Tsai, Chairman, Eddie Wu, Chief Executive Officer, Topi Xu, Chief Financial Officer. We have also invited Jiang Fan, Co-Chairman and CEO of Alibaba International Digital Commerce Group, to join the call. This call is also being webcasted from the IR section of our corporate website. A replay of this call will be available on our website later today. Now, let me quickly cover the safe harbor. Today's discussion may contain forward-looking statements, including, without limitation, statements about our new organization and governance structure, Alibaba's plan to convert to primary listing in Hong Kong, Alibaba's strategies and business plans, as well as our belief, expectations, and guidance about our business prospects, such as the future growth of our business, revenue, and return on investment and share purchases. Forward-looking statements involve inherent risks and uncertainty that may cause actual results to differ materially from our current expectations. For detailed discussion of these risks and uncertainties, please refer to the latest annual report on the Form 20-F and other documents filed with the USSEC, or announce on the website of Hong Kong Stock Exchange. Any forward-looking statements that we make on this call are based on assumptions as of and we do not undertake any obligation to update these statements, except as required under applicable law. Please note that certain financial measures that we use on this call, such as adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, non-GAAP diluted earnings per share, or ADS, and free cash flow, are expressed on a non-GAAP basis. Our GAAP results and reconciliation of GAAP to non-GAAP measures can be found on the earnings press release. Unless otherwise stated, growth rates of all metrics stated during the call refer to year-over-year growth versus same quarter last year.
Alibaba
With that, I will turn it over to Eddie.
Tmall
Hello, everyone. Following several quarters of adjustments and continued user experience enhancement, our core business has gradually returned to healthy growth. The Taobao Tmall Group achieved double-digit year-over-year growth in GMV this quarter. Alibaba International Digital Commerce revenue increased by 45%. Our core public cloud offerings recorded double-digit year-over-year growth in revenue. AI-related revenue increased triple-digit year-over-year. This quarter's results demonstrate that our strategies are working and we are returning to growth. TTG continued to execute its user-first strategy by creating a system for brands, merchants, and industrial belts to operate efficiently and to meet the diverse needs of China's domestic consumers through a shopping experience that offers quality products at attractive prices supported by exemplary service. Our investments in driving price competitiveness and elevating the user experience have received positive consumer feedback. We've seen tangible results in progress, strong growth in quarterly buyers and purchase frequency that has driven robust double-digit growth in GMV, reflecting a continued improvement in consumption and user trust. At the same time, we continue to enhance member benefits and service experience with 88 VIP membership numbers growing by double digits year over year to surpass 35 million. Last quarter, I shared TTG's three key investment areas aimed at enhancing overall capabilities. First, product supply. Second, competitive pricing. And third, quality service. We are committed to boosting consumption and purchase frequency through these measures, driving further growth. For fiscal year 2025, we expect TTG's GMV will gradually return to healthy growth as our platform's overall shopping experience continues to improve. At the same time, our schedule of launching monetization products will also proceed as planned. In the second half of the fiscal year, we will gradually introduce new monetization mechanisms aligned with new platform algorithms and product features that will further enhance CMR-centered revenue growth. As we continue to improve platform products and investment tactics under our user-first strategy, we're very confident we will win more consumer trust and maintain our market share leadership. This quarter, we completed adjustments to Alibaba Cloud's product strategy for the AI era, and the quality of our revenue continued to improve. We focused on creating competitive advantages in Alibaba Cloud's technology and scale and reduced pricing for public cloud products globally. Driven by strong demand from various sectors, including foundational model companies, internet companies, as well as customers from industries such as financial services and automotive, AI-related revenue accelerated, and continue to record triple-digit growth year over year. We believe that this wave of generative AI-driven technological innovation is in the early stages of the industry cycle. Starting in 2024, we've seen a rapid increase in customer demand for AI. It has also stimulated growth in demand for traditional cloud computing needs, including general computing storage and big data. Therefore, we are actively investing in our cloud computing product matrix. especially in AI infrastructure, to capture the monumental opportunities. Currently, Alibaba Cloud has established strategic partnerships with the vast majority of leading foundational model companies in China. At the same time, Alibaba's proprietary foundational model, TongYi, released a 110 billion parameter model in late April, which is on par with the top open source models globally. Looking ahead, We will deeply integrate our Tony large model with Alibaba Cloud's advanced AI infrastructure to realize synergies and optimization across software and hardware. We aim to create the premier AI development platform that combines outstanding AI capabilities and high-cost efficiency, redefining the industry benchmark for cost performance. Based on our leading product portfolio, substantial infrastructure investments, and proactive industry partner strategy, we are confident that Alibaba Cloud's revenue will excluding internal customers, will return to double-digit growth in the second half of the 2025 fiscal year. For our overseas e-commerce, AIDC revenue grew 45% and order volume grew 20% year-over-year this quarter due to continued focus on expanding cross-border retail operations and enhancing the consumer experience. And Jiang Fan will share more details with you later. In March this year, we withdrew Tainiao's IPO application. Tainiao provides essential infrastructure to Alibaba's core e-commerce business, and we hope Tainiao will strengthen its synergies with our Chinese domestic and international e-commerce operations. Alibaba Group will continue to support the expansion of Tainiao's global logistics network. The past year has been a year of self-transformation for Alibaba. We're pleased that adjustments in our business and organization have yielded results. A journey of transformation will undoubtedly have challenges, but we are well-prepared. In the new fiscal year, Alibaba Group will continue to focus on investing and executing our user-first AI-driven strategy, and we are confident in the long-term healthy development of our company. Thank you. Greetings. This is Jiang Fan, and it's a pleasure to be back to give you an update on AIDC's business. AIDC continued to achieve rapid growth this quarter, despite widespread and intense market competition in different countries. Across AIDC, total orders were up by 20% year-on-year, with especially significant growth in our cross-border business. Next, let me share with you on the progress we've made around the three major drivers that are our consistent focus. First, business model and supply chain service upgrade. Driven by AE Choice, AliExpress continued to realize robust order growth AE continued to advance in its transition from the original platform business model to a supply chain efficiency-driven platform POP semi-consignment plus full consignment hybrid business model. While maintaining rich merchandise assortment, we significantly enhanced user experience. By April 2024, AE choice orders accounted for around 70% of total orders on AliExpress. At the same time, synergies between AliExpress and and the cross-border logistics capabilities of Tainiao have further strengthened AE's competitiveness with the 5-day and 10-day delivery completion rates both doubling year over year, and will continue to make effective investments while paying attention to improving the efficiency of the choice model. Second is product and technology innovation. We continue to bring more localized high-quality user experiences to different consumers around the world. AI and intelligent technologies continue to enhance efficiency and user experience In cross-platform smart product assortment optimized presentation of product details, multi-language search, targeted recommendations, and so on. Additionally, more and more small and medium enterprises are starting to leverage AI to enhance their operating efficiency. 17,000 SMEs have subscribed to the AI Business Helper launched on Alibaba.com. and millions of products have now been launched with AI, and searches for AI-optimized products have increased by 37%. Third is sustained growth in key markets. Our continued investment in key markets for AliExpress has brought about growth in our user base, as well as enhanced user experience, supporting our sustained rapid growth and continued leading position locally. Trendyall is actively investing in cross-border business, achieving very rapid growth in the Gulf region. Trendyall's brand recognition has improved rapidly, driven by significant expansion in its merchandise supply. and it has become one of the most downloaded e-commerce apps in the region. There remains huge potential for AIDC to grow user penetration in the majority of its markets. We will achieve quality growth by providing better and more differentiated merchandise and services. At the same time, we'll focus on enhancing operating efficiency, both by narrowing losses in certain businesses and by making higher efficiency investments to continue to grow actively in markets around the world. Thank you.
Jiang Fan
Thank you, Changfan. First, I will provide a recap of the key financial highlights for fiscal year 2024. Following the overview, I will provide a detailed review of the financials for the March quarter. During this fiscal year 2024, our total consolidated revenue was RMB $941.2 billion, an increase of 8%. Consolidated adjusted beta increased by 12% to RMB $165 billion. Non-GAAP net income increased 11% to RMB $157.5 billion, while non-GAAP diluted earnings per ADS saw a fast increase of 14%, strengthened by our ongoing share repurchase program. Excluding Sunnard, FreshApple, and in-time businesses, that have physical retail operations, group revenue would have grown at approximately 11%, and our group consolidated adjusted guitar margin would have been approximately 3.6 percentage points higher at approximately 21%. During the fiscal year 24, under the leadership of the Capital Management Committee and our Board of Directors, we have increased cash return to the shareholders. we repurchased a total of about 1.25 billion ordinary shares, or equivalent to 156 million ADS, for a total consideration of US dollar 12.5 billion. After accounting for ESOP issuance, our outstanding shares decreased by 5.1% in fiscal year 2024. Regarding cash dividends, we declared an annual cash dividend of U.S. dollar one per ADS totaling about U.S. dollar 2.5 billion for fiscal year 2023, which was paid out in January 2024. Furthermore, our board of directors has approved an annual cash dividend for fiscal year 2024 of U.S. dollar one per ADS and a one-time extraordinary cash dividend is a distribution of proceeds from disposition of certain financial investments in the amount of U.S. dollar 66 cents per ADS with total cash dividend amounting to approximately U.S. dollar 4 billion. Through a combination of share repurchase and the cash dividends, we have returned and plan to return about U.S. dollar 16.5 billion to shareholders for fiscal year 2024 up from U.S. dollar $13.4 billion for fiscal year 2023. We are committed to returning value to our shareholders and will continue to execute our capital return programs. Now, let me provide a review of our financial performance for the March 2024 quarter. Overall, we observed improving fundamentals across our major businesses supported by enhanced investments aimed at fueling growth. During the quarter, our total consolidated revenue was RMB 221.9 billion, an increase of 7%. Consolidated adjusted beta decreased by 5% to RMB 24 billion. Our non-GAAP net income was RMB 24.4 billion, a decrease of 11%. However, the decline in our non-GAAP diluted earnings per ADS was more moderate at 5% given our ongoing share repurchase program. Our net income was RMB 0.9 billion, a decrease of RMB 21.1 billion. This decline was primarily due to market-to-market changes of RMB 19.9 billion from our equity investments in publicly traded companies which shifted from a gain in previous year to a loss this year. As of March 31, 2024, we continue to maintain a strong net cash position of RMB $446.5 billion or USD $61.8 billion. Free cash flow this quarter was RMB $15.4 billion, a decrease of RMB $16.9 billion compared to the same quarter last year. The decrease mainly reflected the increase of RMB 7.7 billion in capital expenditure, the majority of which reflected our investments in Alibaba Cloud infrastructure, as well as a special dividend of RMB 10.5 billion from Ngroup in the same quarter last year. Now let's look at cost trends as percentage of revenue excluding SBC during this quarter. Cost of revenue ratio increased by 1 percentage point to 67%. Product development expenses ratio remained stable at 5%. Sales and marketing expenses ratio increased by 1 percentage point to 13%. G&A expenses ratio decreased by 1 percentage point to 4%. Now let's look at the second result starting with Taobao and Tmall Group. Revenue from Taobao and Tmall Group was RMB 93.2 billion, an increase of 4%. During the quarter, our online GMV achieved a double-digit growth, which is driven by rapid order growth supported by strong increase in number of purchases and the purchase frequency. Strong GMV growth supported a 5% increase in customer management revenue, though overall take rate declined slightly. The overall take rate was impacted by a combination of two factors. Firstly, Taobao and Tmall GMV both increased strongly. The decrease in take rate was due to Taobao's GMV growth outperforming that of Tmall. This trend continues to reflect increasing demand of price-competitive products off of our platform. Second, take rate was also impacted by the introduction of new models that currently have low monetization rates. We believe our overall take rate has room to improve as the percentage of paying merchants among our SME merchants remains relatively low and we have yet to roll out the new advertising tools. As we gradually roll out the new advertising tools that would further enhancing merchants ROI, we see upside from potential increase in merchant adoption as well as higher incremental spending from paying merchants. Direct sales and others revenue decreased 2% to RMB 24.7 billion. China commerce wholesale business revenue increased 20% to RMB 5 billion, primarily due to an increase in revenue from value-added services provided to paying members. Taobao and Tmall Group adjusted EBITDA was RMB 38.5 billion compared to RMB 39 billion in the same quarter last year. primarily due to the increase in investment in user experience, which resulted in improved customer retention and higher purchase frequency and technology infrastructure, partly offset by the increase in revenue from customer management service. Revenue from cloud intelligence group was RMB 25.6 billion during the quarter, an increase of 3%. We are committed to our strategy of focusing on high-quality revenues from increasing public cloud adoption while reducing low-margin project-based contracts. During the quarter, our core public cloud offerings, which include products such as Elastic Compute Database and AI products, recorded double-digit growth in revenue. During this quarter, AI-related revenue experienced accelerated growth and continue to record triple-digit growth. We expect the strong revenue growth in public cloud and AI-related products will offset the impact of the roll-off of project-based revenues. Cloud's adjusted EBITDA increased by 45% to RMB 1.4 billion. The increase was primarily due to improving product mix through our focus on public cloud and operating efficiency. Alibaba International Digital Commerce Group revenue was RMB 27.4 billion, an increase of 45%. Revenue from international commerce retail business increased by 56% to RMB 22.3 billion. The increase in revenue was primarily due to the solid combined order growth of AIDC's retail businesses. Revenue contribution from AliExpress' choice as well as improvements in monetization. Revenue from our international commerce wholesale business increased by 11% to RMB 5.2 billion. The increase was primarily due to an increase in revenue generated by cross-border related value-added services. AIDC's adjusted EBITDA was a loss of RMB 4.1 billion compared to a loss of RMB 2.2 billion in the same quarter last year. Loss increased primarily because of increased investment of businesses including AliExpress Choice and TrendView's cross-border business, partly offset by improvements in monetization. Total revenue for Tanya grew 30% to RMB 24.6 billion, primarily contributed by the increase in revenue from cross-border fulfillment services. Tainiu adjusted EBITDA with a loss of RMB 1.3 billion compared to a loss of RMB 319 million in the same quarter last year, primarily due to additional retention incentives granted to Tainiu employees recognized during the quarter in connection with the withdrawal of its IPO. Local service group revenue in March quarter grew 19% to RMB 14.6 billion, primarily due to the order growth of ULMA AMAP. Local service group adjusted EBITDA was a loss of RMB 3.2 billion this quarter, compared to a loss of RMB 4.1 billion in the same quarter last year, primarily due to the continued narrowing of loss from our to-home business driven by ULMA's improved unit economics and increasing business scale. Revenue from our DME group was RMB 4.9 billion, a decrease of 1%. Adjusted EBITDA was a loss of RMB 884 million compared to a loss of RMB 1.1 billion in the same quarter last year, loss reduced primarily due to the reduced loss of Youku. Revenue from all other segments decreased 3% to RMB 51.5 billion mainly due to the decrease in revenue from Sunnut and Alibaba Health, partly offset by the increase in revenue from Freshable. The decrease in revenue from Sunnut was mainly driven by the scale down of supply chain business and decreasing market size. Adjusted beta from all other segments was a loss of $2.8 billion compared to a loss of RMB $1.9 billion in the same quarter last year, primarily due to the increased losses from fresh apple and the decrease in profitability of Lingxi Games. Lastly, we have been preparing for our primary listing in Hong Kong and currently expect to complete this by the end of August 2024. We will make a further announcement on the primary conversion date in due course. In closing, Our robust balance sheet positions us well to strategically reinvest our cash flows to foster growth and strengthen leadership in core businesses, thereby improving future returns on invested capital. As Eddie and Jiangfan mentioned, we anticipated that near-term investment will yield firstly improved User experience in our domestic e-commerce platform that supports strong GMV growth in FY25 and enhanced monetization in the second half of FY25. Secondly, a return to double-digit revenue growth in the second half of fiscal year 25 for Alibaba cloud business. And thirdly, continuous rapid growth momentum while improving unit economics from AIDC. We are seeing positive initial results, making us even more confident in achieving strong and sustainable growth in our core businesses. Thank you, and that's the end of our prepared remarks. We can open up for Q&A.
Rob Lynn
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. Please know that the translation is for convenience purpose only. In the case of any discrepancy, our management statement in the original language will prevail. If you are unable to hear the Chinese translation, bilingual transcript of this call will be available on our website within one week after the meeting. Operator, please connect the speakers and SI conference lines now and start the Q&A session when ready. Thank you. Thank you.
Operator
If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. 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 Kenneth Fong with UBS. Please go ahead.
Kenneth Fong
Hi, good evening, management. Thanks for taking my question. I have a question regarding the CMR versus the GMV growth. Our strategy for focusing on user experience and price competitiveness have solid results, deliver a double-digit GMV growth despite the intense competition. As Toby earlier highlighted, because of the makeshift and early in monetization, we see CMR underperforming GMV at only 5% growth. With our new app product, site-wide marketing, 全家推广, to be launched, How should we think about the pace for this gap to narrow over time? And then down to EBITDA, for the incremental growth in the CML, should we expect this to reinvest back to the business, or we should actually expect a margin gradual expansion as the CML growth gradually reaccelerates?
spk08
Thank you. 管理層,晚上好。感謝接受我的提問。
Tmall
My question is about the growth relationship between CMR and GMV. This is the company's focus on perfecting user experience and price performance, bringing solid efficiency. Although facing intense competition, it has also achieved two-digit GMV growth. Just now, Toby also talked about it in his speech. So because of what Toby said, we see that the performance of CMR is still lower than the growth of GMB by only 5%. But next, we are going to launch the mechanism of full-time charging. So after launching, how should we understand the difference between these two? Is it that after CMR is improved, the part of the growth will invest in the development of this business again? Or is it that the company's EBITDA will increase?
Jiang Fan
Kenny, thanks for the question. I think I would just start, you know, provide my explanation, and then, you know, Eddie can add. I think, you know, as you can see, in this quarter, the GNV had a double-digit growth. And as I said, actually, this growth is both quite strongly in Taobao and Tmall merchants. So the first thing is I think the execution of our strategy, we have seen the result. Basically, we are backing growth. That's a very important message. And secondly, as we were saying, we are introducing, enhancing our monetization product, and we'll be introducing the new, gradually roll out the monetization product. which will help to enhancing the ROI and eventually enhancing the penetration into the merchants, particularly the SME merchants. as well as increase their spending in the monetization. However, it would take some time since we are rolling out gradually. So we will be able to see the growth throughout the year, particularly in the second half of the year, that you will see the result coming out during the second quarter of the year.
Tmall
Thank you, I am Toby. I will explain later, maybe Eddie will want to add something. As you can see, this season, GMB has achieved a growth of two digits. The growth in the middle of Taobao and Tianmao is obvious. Therefore, we can see that our company's real-time strategy is working. So this is the first part. The second part is that we will gradually launch these commercialized products, so that we can increase the return on investment and we can also increase the penetration rate in our business, especially in China. um um
Jiang Fan
Okay, before Eddie gives you more color on this rollout of the monetization product, I would just also explain on the investment we are making. For Taobao Tmall, as we're saying, we see the early success of executing our strategy by investing in the customer experience, various things focusing on consumer first. So we see the result and we are willing to invest So that's the first thing, firstly. Secondly is, in terms of investment we are making, on the other hand, we are doing it in a very disciplined way. We do closely monitor the ROI. For the investment we can make, definitely we will see the good ROI from it. So it's in a very disciplined way. So we will continue to make the investment. In terms of how much we are going to invest, really depending on space we're ramping up you know the consumer experience as well as you know the supplies so you know we have the resource and we are committed to make the investments.
Tmall
We invested in Taotian Group to improve the consumer experience. This investment has already achieved initial results. Because we saw the results, we are further willing to invest in it. Secondly, any investment we make will have high probability. Any investment we make, we must see investment returns. So we will continue to do this kind of investment in this way. So how much investment? It depends on us to improve the customer experience and the speed of the product's richness to further deploy. Thank you.
Eddie
I would like to add something about the progress and our plan of the full-time push that everyone is concerned about. In general, for more small and medium-sized advertisers, it is easier to invest and gain business growth. Full-time push is a more important product for us now. In general, we are now in a test stage for a small-scale customer. Our purpose in this test stage is more because we know that the core of full-time push The core requirement is to ensure the growth of the business under the requirement of the ROI of the client. So we are adjusting our algorithm and training our model for a longer period of time, and on the basis of more customer data, to improve the overall efficiency of the ROI of the client. So we think this time will still take some time, but this is a process that can be realized with certainty. Then we are officially After the launch of the full-time push, we may also feel that it takes a certain amount of time to increase customers and increase customers in different industries, different industries, and in different users, the flow of the crowd. So I think after we officially launched it, we will gradually see a growth in the full-time push. But at that stage, we estimate that it will be in about 12 months. In other words, the overall full-time push of customers, From the testing period to the verification period, after the verification period, if we start to do the full amount, we need a lot of long-term algorithm adjustment, as well as the matching of customers and traffic, as well as the improvement of customer penetration rate. Yes, but I would like to emphasize that in this process, it is actually a process of certainty. It's just that operating this business model and this product's algorithm model, we really need to do this. Thank you, yes.
Tmall
So moving ahead with Omni platform marketing and whole platform charging is an important direction that we're moving in as we're making it easier for SMEs to advertise. Of course, it's important to ensure that money that merchants are spending on advertising achieves solid ROI. So to that extent, we're currently adjusting and tweaking the algorithms, training the models, doing testing and using the data from the testing to further improve the service and enhance ROI. So all of this will, of course, take some time, but it is certain that we are moving in that direction and will continue. eventually get there and further optimize it for different customers and for different sectors as a means of enhancing our revenues. So I expect that this process will take something like 12 months because it does take time to tweak the algorithms, get those data in place, and ensure everything is optimal. But what I can tell you is that's certainly the direction that we're moving in and we continue to fine-tune.
spk08
Okay, next question.
Operator
Thank you. Your next question comes from Gary Yu with Morgan Stanley. Please go ahead.
Gary Yu
Hi. Thank you, management, for the opportunity. My question is regarding the iCloud business. It's encouraged to hear from management that we're expected to resume double-digit growth in the second half of the year. Could management please share some of the composition of the revenue growth driver behind How much of the improvement in growth is coming from AI-related products? How much is it coming from public cloud? And how much is it coming from low-margin private cloud projects becoming a smaller part of the business? And then also related to that is once we are back up to the double-digit growth level, how should we look at the kind of medium-term margin for cloud business going forward? Thank you.
Tmall
Thank you, Director. My question is about cloud business. I just heard that in the next half of the year, the growth of the two-digit number can be restored. We feel that this is a very encouraging news. So I want to know how much proportion of the income structure of cloud business will be in the future. How much of the AI-related products will come from the public cloud? How much will come from the private cloud business? Of course, this business is gradually decreasing. Then, after the growth of the two-digit number, what will be the long-term profit rate of the cloud business? Okay.
Eddie
Thank you. Let me answer this question. From our current income growth, the overall income growth of cloud businesses is mainly due to the drive of AI new products. So at this stage, we will actually see a lot of new increases coming from our AI-related products. But because of the investment of AI-related products, it will also bring This customer in the public cloud, in the ARI cloud, other traditional cloud computing products. So we think these two parts will promote each other. At the same time, the other part, how to look at the special cloud, a part of the project's income reduction. We think this part should be said in the public cloud. This kind of business double-digit growth. In fact, this quarter has already occurred. It's just that we have this quarter. The growth of this quarter is still offsetting some of the impact of our current reduction in the income of some project-based projects. We expect that in the next few quarters, we will see a greater growth in the income of public cloud and AI related projects, and we will be able to offset the income of these projects that we have been reducing. At the same time, we feel that these low-income project income Thank you. This is Eddie, and I'll take that.
Tmall
If you look at the overall revenue growth of the cloud business today, most of that is already being driven, I would say, by AI and AI-related new products. So going forward, a lot of the incremental growth we can expect to see in the cloud business will be related to investment that customers are making in AI, but also there's a complementary effect because the more that customers invest in and make use of AI, the more demand they will also have for other of our various cloud offerings. So the two things go hand in hand. At the same time, we continue to decrease the share of project-based revenue in cloud's overall revenues. In fact, the other parts of the cloud business already achieved double-digit growth in this quarter, but that continues to be offset by the ongoing, although diminishing, but still ongoing impact of that low-margin project-based revenue. business. But as we continue to phase out that low-margin project-based business, we expect revenues to grow faster, primarily driven, again, by public cloud and by AI-enabled offerings. And we expect that we should see that complete disappearance of that drag within, say, one or two quarters into the new year.
Eddie
I would like to add to what you said about our future. If we return to We think that this is a very early stage of a 10-year IT cycle. On the second part of your question, which had to do with the kinds of profit margins we expect to achieve in the medium to long term,
Tmall
once we get to that place where public cloud primarily is driving our growth and we're back to double-digit growth. I would say that, for the most part, our public cloud offerings have very healthy profit margins. When it comes to AI, of course, we're looking at a 10-year period IT new technology cycle. We're in the very early stage of that cycle. So we're talking about healthy margins, but with ongoing longer-term investment. But overall, the profit margins from the AI products will be healthy.
spk08
Next question, please.
Operator
Thank you. Your next question comes from Alex Yao with J.P. Morgan. Please go ahead.
Alex Yao
Good evening, management team, and thank you for taking my question. So for the domestic e-commerce business, it's great to see the GMV growth rate has recovered back to double digit in this quarter. Can you show us to understand what is driving the GMV growth rates to narrow the pace versus the e-commerce market? Or put it in another way, what did you do in the past quarter that leads to a slowdown of market share loss? And a broader question is, what does it take to be competitive in the current China e-commerce market given the rise of alternative e-commerce competitors in the market? Thank you.
Tmall
Thank you for accepting my question. My question is about domestic e-commerce. We are very happy to see that this quarter, the GMV increase in domestic e-commerce has returned to a two-digit level. I would like to know what kind of driving factors are behind the increase in the GMV increase, or the gap between it and other e-commerce platform increases. Or another way to ask, what have we done in the past quarter? to slow down the loss of market share. And in the new e-commerce environment, what do we need to do to compete better with other new platforms? Okay, let me answer this question.
Eddie
In general, I think our core goal is to enhance the e-commerce shopping experience of the overall user. The e-commerce shopping experience basically means that good products, good prices, and good services. But more specifically, we think that there are different models in the supply chain of Chinese products. We need to use different products to match different modes to improve the price of the product and the efficiency of the entire product. As I mentioned earlier, if we divide into brands, channels, and industrial factory, or the white market, basically, these three supply chains we have to use different product models or different business models to improve the price and conversion efficiency of these three different companies. At the same time, we invest in customer experience, including our logistics, including our customer service. In the end, we think that through this, for different companies, using different product combinations to improve product efficiency, to improve service experience, in the end, we should be able to bring the overall customer experience Thank you.
Tmall
Well overall I think it's really about enhancing the user's shopping experience and as I said that really consists of getting three things right. First is having good merchandise, secondly having that at a good price and thirdly supporting that with excellent service. Now if we break that down further when it comes to goods, the assortment of goods, there are actually different models that we can apply. with different products to better support them. So basically we can think about goods from brands, goods from channel merchants and goods from industry belts or manufacturers of white label goods and we can provide different products and take differentiated approaches to ensure that those three different kinds of players are getting their goods to consumers in a way that is cost competitive, they're offering a good price and achieve high conversion efficiency for the merchandise. All of that can be further supported with strong logistics and good customer service. So we can take a different approach with respect to those three different kinds of supply, always with the aim of increasing customer purchase frequency and attracting new customers as well to achieve that advantage.
Eddie
Okay, let me add one more thing. For now, the competition in the Chinese e-commerce market is very intense, as you can see. But for Taobao, we have some unique products This is a very important support. For us, Taobao is a very unique value among our competitors in the Chinese e-commerce market. So we have to maintain the rich foundation of the entire Taobao market, and provide some products with higher sales rates. We provide higher product efficiency. Through the continuous improvement of these two dimensions, we can establish a unique competitive advantage in the Chinese e-commerce market.
Tmall
Secondly, I can add to that, that as we know, there's been very intense competition in China's domestic e-commerce market. And we've made some very clear strategic choices on Taobao as to how to address this competition and when going forward. A big part of this is ensuring high product efficiency, referring to conversion efficiency. and also to providing optimized services as well. Of course, another very important part of the equation for Taobao is what I've referred to as omnipotent Taobao or universal Taobao. Taobao has everything that anybody could want, the richest possible assortment. So while maintaining that rich and diversified assortment, Also focusing on achieving better efficiency with respect to high volume selling goods to maintain that unique competitive advantage.
Rob Lynn
Next question.
Operator
Thank you. Your next question comes from Ellie Jang with Macquarie. Please go ahead.
Ellie Jang
Thank you for accepting my question. I have a follow-up question. It's about the full-fledged push and some new marketing tools that we just mentioned. I would like to ask, now that we can see some friends on the market who have launched similar products, how do we evaluate the differences between ourselves and our friends? And in the process of designing this product and the subsequent promotion, what do you think are some of the decision factors for the conversion efficiency of this product? There may be some traffic in the back, including the product richness mentioned by the manager. Please share the logic behind this. Thank you.
Tmall
Thank you. I have a follow-up question about the whole platform charges and the new marketing tools that you've mentioned that will be launched. We understand that there are some similar products that have been launched or are being launched on the market by competitors. I'm wondering how we would evaluate our products versus the competitors, how differentiated our products and what are some of the factors that determine conversion rates for these kinds of products, if you could share some of the underlying logic. Thank you. Just to clarify the question, are you asking about our marketing products and how they are differentiated versus other platforms? Is that the question? 对,主要可能聚焦在全站推这一个产品上。 So basically focusing on the Omni platform marketing solutions,全站推? 我觉得每个平台的变现或者商业化产品都有它的特殊性,因为都是要针对这个平台特殊的流量机制以及这个平台的经营机制和这个平台的人群构成去做。
Eddie
to do the design. So I don't think it's that comparable. But in the end, what the business is fighting for is an ROI investment on this platform. So I think in the process of user design, or the algorithm, it may not be comparable. But the business will basically use an ROI investment to decide to put the money on that side. But for now, our Taobao's overall right understood you know i think uh
Tmall
Different platforms are going to be very different if you look at the way they achieve monetization and their monetization products because the platforms are fundamentally different in terms of their traffic, the business model, and the different groups of users on the platform. So I don't think there's any direct comparability. I think certainly what merchants are looking at at the end of the day is the ROI that they achieve on their investments in marketing. So I don't think we can directly compare... user design and algorithms and things of that nature. But you can certainly look at the ROI on marketing investment. And I can tell you that on Taobao today, merchants are achieving probably the highest ROI they can get on any platform for their marketing investments.
Rob Lynn
Next question.
Operator
Thank you. The next question comes from Alicia Yap with Citigroup. Please go ahead.
Alicia Yap
Hi. Good evening, management. Thanks for taking my questions. Congrats on the solid quarter. I have a follow-up on the overall CMR growth. Obviously, the 5% growth is very good, and the double-digit GMV growth is good. Any obstacle that we foresee that could prevent GMV and CMR to further improve from here? I'm just wondering how is the overall consumer consumption trend It seems that we are gaining momentum that allows us to enjoy faster growth despite potentially more muted macro outlook. Any comment you can share with us with the latest trend that you are seeing for April and May on the GMV growth would be helpful. Thank you. 感谢管理总教授我的提问。
Tmall
I also congratulate the company for achieving a very solid quarter performance. I would like to ask questions about CMR in the future. When we see a 5% increase, this is very good. Seeing the increase of GMV by two numbers is also very good. Alicia, thanks for the question. I'll take on this question.
Jiang Fan
I think, you know, as we explained, you know, we see the results from our investments, you know, the GMB growth. And then, you know, I think that the growth trend is sustainable, what we can observe. So, you know, we're still observing a good, healthy growth in April, May time. And in terms of CMR, as we were explaining, because the GMV growth, because of the mixed shift in the GMV towards, you know, Taobao merchants and also some of their new sort of models, you know, business products, you know, which has relatively low monetization at this stage, so there's a big hatch room for it to increase the monetization rate. And with the introduction of our monetization model, you know, we will be seeing the growth of CMR catch up with GMB sort of gradually. So it will lag behind a few quarters, but it will eventually catch up. So that's sort of our belief in terms of the effect of the investment, effectiveness of the investments, and also, you know, both on the GMB side as well as on the revenue side. Yeah.
Tmall
Thank you for your question. My name is Toby. Let me explain it this way. We see that the investment we are doing is working. Specifically, we see that GMB is growing. We believe that the current trend of growth is sustainable. And if you ask about April and May, we also see a very good and healthy trend of growth continuing. So we think that in the next few weeks, we will gradually launch these commercialized products. Then at that time, the growth of CMR will gradually catch up with GMB to hold the level. After that, this situation may continue for a few more weeks, but in the end it will catch up with the level. The two are equivalent. So at that time, we think that not only GMB, but also the company's other income will increase. Next question.
spk02
Sorry, Rob. Alicia, this is Joe Tai. I'd also like to sort of supplement what Eddie and Toby said. I think implicit in your question is you're looking at our March quarter GMV growth in double digits. And compared to last year, it was an easy comp because last year was partially coming out of the lockout lockup of from the COVID lockdown. And so the implicit question is, are we going to see, you know, from a macro standpoint, what do we see from our platform that could reflect sort of broader consumption trends? What I would like to say is, as we look at the Chinese consumers, the number one, you know, right now household cash is at its highest point. We're looking at something like $19 trillion of household cash savings that's in the system. So the Chinese consumer has the ability to spend, right? I think all we're looking at is what's their confidence level of spending on a going forward basis. First of all, I think we've all seen some of the growth in the services sector during the May 1st holidays. And within our platform, we've seen some green shoots. Some discretionary items like apparels and electronics are actually growing, looking pretty, the growth is pretty good. So what that tells us is consumers are starting to reflect that willingness to spend. We have no doubt that they have the ability, but the willingness reflects the confidence in what they have about the future. So we're seeing some positive signals. It is probably still too early to tell because the macro environment is still broadly affected by the property sector downturn. On that front, we've been very encouraged that the local governments now have been relaxing the property purchase restrictions. So we're going to wait and see. But so far, confidence level, we've seen some early signs of growth.
Tmall
Okay, I'm Zhou Cai. Let me add to what Eddie and Toby just said. I think the question you mentioned has a question behind it. Because you saw that in the March quarter, our GMB growth reached two-digit. Of course, if you compare it to a situation in the same period last year, it's easier to achieve. You might think so, because last year was just the end of these lockdown measures during the epidemic. So you may want to ask a question. What is the situation like in Hong Kong? What kind of big trend do we see in Hong Kong? I can say that the current level of Chinese consumers' family cash reserves is very high. In the whole system, the family's cash reserves may reach $19 trillion. Ah, ah, ah, ah, ah. They are slowing down some of the policies that are being bought. So we should say that we see that the initial signs show that the consumer's confidence is increasing, but it still needs time to observe further. Okay, I'll add to that.
Eddie
Because I think the previous few questions are similar. I was just joking with Jiu Youhan that you investors seem to make more money than we do. Yes. So I think on this, I want to make it more clear. And we think that in Taobao, we invest in the competitiveness of the products, the efficiency of the products, and the customer service experience, and the improvement of the user's consumer experience, and the growth of GMV, and the frequent growth of users' consumption on our side, is our primary task this year. Only this primary task can achieve a better Taiwan Taiwan From zero income to one billion to ten billion to one hundred billion income, this whole Alimama advertising platform transformation process. So how to go step by step through our advertising products to improve, to improve our CMR, I think this is a decisive process. It's just that we are now controlling this process to make the business experience better, to make the consumer experience better. For us this year, the main task is still in our So I would like to add to this my opinion.
Tmall
Yeah, this is Eddie. I'd just like to chip in to be even clearer on this point because I detect a common pattern across the past several questions. And I was just actually joking with Joe about this because it seems like investors are even more anxious than we are to make money. So, you know, I'd like to be really clear about what our primary objective is this year and that is on Taobao certainly to invest in merchandise assortment and competitiveness and enhanced user experience to drive GMV growth as well as purchase frequency right that's our number one objective this year and only after being able to achieve that objective successfully can we really increase CMR and in fact increasing CNR will just be a natural result of those efforts. And, you know, talking about advertising and commercialization, you know, I was personally part of the whole growth story of TAVA from zero in revenues and the development of Alimama from zero through 100 million to 1 billion and 10 billion, you know, and beyond. So I can tell you that we have the capabilities to put in place those kinds of advertising products that will drive CMR growth. We're certain that we can do that, but we're controlling the pace at which we move forward to ensure a really good experience for our merchants and for our consumers. So this year, we're really focused on enhancing consumer experience and growing GMV, and we'll move forward on that basis. Thank you. Next question.
Operator
Thank you. Your next question comes from Wong Kyung with Goldman Sachs. Please go ahead.
Wong Kyung
Thank you. Thank you, Joe, Eddie, Toby, and Thong Van. So I guess no one asked about the ARDC so far. I haven't really deeply discussed. So I want to ask about the – because this quarter, it was mostly the increase in ARDC losses to the group earnings. Otherwise – the Taobao Tmall has been relatively stable. So I want to hear how do we see the investment scale evolve for international e-commerce? We've also seen some of our peers shifting from fully entrusted to semi-entrusted, which is they kind of leave merchants to do their local warehousing. How do we see our loss or investment evolve with these trends? Thank you.
Tmall
Okay, let me ask a question about ARDC. I haven't asked about ARDC before. In this quarter, we can see that the loss of ARDC is still expanding. Taobao Tianmao should be more stable. I would like to know how ARDC's investment scale is now. In addition, we also understand that the full-staff management is now turning to semi-staff management. This is a service that the business is responsible for its own storage. Can you introduce this?
Tianmao
Okay, let me first answer the question about the loss of the last quarter. Because I think there are two main reasons for the loss of the last quarter. The first reason is that last quarter, we still have a relatively close investment in the new market, especially in the Middle East. Because last quarter, in March, it was also a big sales node of a Muslim Ramadan in the Middle East. Yes, then our one like Trendle, new business expansion in the Taiwan region. There will be a large-scale investment. This is one aspect. The second is what we just talked about, which is the business model of AE Choice. The current ratio has been rising. In this business model, in the process of switching, its own profitability and ability still need a sense of time. It is the same as our past platform model. There is such a gap in it. We are now also quickly optimizing our efficiency. And we can also see in the next few seasons, we will also see a quick optimization of our entire AE Choice, our entire UE. So I think with the gradual improvement of our new model, We will also pay more attention to the efficiency of this business model. Of course, we will pay attention to this efficiency while pursuing growth.
Tmall
Thank you. Well, I think there are really two principal reasons for the losses in this quarter or for the heightened spending in this quarter. First was that in certain emerging markets, and especially in the Middle East, this was a time of year that represents peak sales with Ramadan in Middle Eastern countries. So Trendyol was taking advantage of that with advertising spending promotions reaching out to consumers. And then the second reason has to do with AE Choice, as AE Choice occupies an increasing proportion of the overall business. And as we're switching over to this new business model, it's going to take a little time for the profit margins in AE Choice to catch up. So there is a margin gap there to be filled. We are working rapidly to optimize efficiency of the AE Choice model. And I think you'll see within several quarters very clear enhancement in the unit economics of the AE Choice model. model. So as the new model stabilizes, we'll continue to pay attention, of course, to achieving growth, balancing that also with more efficiency.
Tianmao
Regarding your second question, regarding the whole-tool tube, I think your question should be more about a cross-border model and a future, that is, the local, that is, the local model where the goods are brought back to the local model. Businesses in the past have also brought a lot of such products overseas. In fact, different platforms are trying to get some local business. We are also doing it. For example, in the Middle East, including some markets such as South Korea and Europe, we are also actively expanding local sellers. We believe that there are some types of services that local business provides are more competitive On your second question, which had to do with semi-consignment versus full consignment model,
Tmall
So that's not really about cross-border per se. It's about where merchants pre-place their merchandise in a local warehouse for local shipping. Our take on that is that some categories are just better suited to a cross-border business model because of characteristics of the merchandise and other reasons. For other categories, that kind of local shipment model can work better. So we've done a lot of this in the past as well, you know, pre-placing merchandise into overseas warehouses to be shipped locally. And we're working on developing more local sellers in places like the Middle East, South Korea, and Europe. But, you know, we think at the end of the day, For some categories, local merchants can be more competitive, but in other categories, the cross-border model will work better. It really comes down to competitiveness and consumer preference, so we continue to track how consumers receive these different approaches and plan accordingly.
Rob Lynn
Thank you. Next question.
Operator
Thank you. Your next question comes from Yang Bai with CICC. Please go ahead.
Yang Bai
The second is that it seems to be a plan that needs to be announced every year and can be adjusted at any time in the future. But at the same time, we see that some overseas technology giants, after fulfilling the normal strategic development of the company, it seems that no matter what level the company's stock is at, they can use a relatively large amount of this strength to repay shareholders. So my question is,
Tmall
Thank you. My question has to do with the company's plans to deliver returns to shareholders, and we see those plans now resulting in something like the equivalent of an 8%. dividend yield, but I have some concerns about the share repurchase plan going forward because it seems to be related to the currently rather low stock price. But in the longer term, how will this play out and how can you guarantee your ability to continue to make those kinds of returns to shareholders?
Jiang Fan
Okay, thank you Yang Bai. Let me answer this question. I think first of all, our shareholder return plan, if you look at our return in the past few years, we have not started in the recent one or two years. We have been working for many years. And our current plan is also under the approval of the board of directors until March of 2027. If you look at the numbers in the past two years, In 2013, we made more than $1.3 billion in shares. In 2014, we made more than $1.65 billion in shares. In the current account, we still have nearly $2.9 billion in shares that we can use in the future. From the perspective of the shareholder return plan, this is not just a very short-term plan. This is already a long-term plan, and it has been implemented and will continue to be implemented.
Tmall
Well, thank you for that question. You know, our shareholder return plan isn't something that we just started to implement over the past one to two years. It's a long-term plan. It started several years back, and the current plan we have in place has been approved by the board to run all the way through to March of 2027. If you look at the amount of share repurchases that we did in the last year, it was around $13 billion U.S., The more recent year, 16.5 billion U.S. dollars approximately, and that leaves us with around 30 billion U.S. dollars to continue to deploy. So this is a long-term plan that we're committed to.
Jiang Fan
That's right. Thank you.
Tmall
For us, as management of the company, thinking about how we'll continue to deliver those returns to shareholders in the future, we have to look on the one hand at the company's cash flows and on the other hand at the investment needs of the company related to our core business, but also in new emerging areas that are important like AI, for example, and also AIDC. right now. But going forward, we will be committed to continue to make those kinds of returns to shareholders on that basis, and we take an integrated view. In other words, the share buyback program and dividend distributions together comprise our shareholder return program. We look at the two together.
Alibaba
Thank you. Next question.
Operator
Thank you. Your next question comes from Joyce Zhu with Bank of America. Please go ahead.
Joyce Zhu
Good evening, everyone. Thank you for accepting my question. My question is about AIDC. Because we just mentioned that overall, we see that the growth of AE Choice is very fast. It has already taken 70% of the orders from AliExpress. 就是想问一下就是说从我们目前看到的增长 跟未来这个进步或者甚至是一两年的话 我们这个这一块业务的长期的发展 从地区角度然后从品类角度 能不能多给我们一点colors 然后有没有可能跟我们多分享一些类型数据 比如说我们在哪些市场看到哪些品类 哪一类的用户 我们看到最有希望是我们未来的长期的 这个稳定的return users Or is it that we see where there are more things that can be done? Including the group, there are also small vegetables. We will make further investment in the cross-examination field. Can you give a little specific sharing of which types of investment in which countries? Maybe we will focus on the development and consideration of this.
Tmall
Thank you. My question is also about AIDC in particular. We understand that the AE choice model now represents around 70% of total orders on AliExpress. Perhaps you could give us a little more color on how that model is growing, how you see it growing in the next couple of quarters or even in the next few years on a longer term basis in terms of which regions, which categories, what kind of users represent the most stable sources of growth or where there's the most potential for further growth. And I'm also wanting to understand more about your collaboration with Tainiao in terms of making further investments together on cross-border.
Tianmao
Yes, I would like to talk about it. Because the main categories of our current AeChoice model are still some small and medium-sized components. This kind of category is more suitable for cross-border operation. Then you can see that this kind of cross-border operation can have some obvious advantages in these categories. It is more suitable for this kind of cross-border logistics in aviation. I think this is what we have done in the past. AE has always had some advantages in this category. We are also expanding some models based on different technologies. We are also expanding new categories. For example, in the market like South Korea, we are also trying to sell some heavy-duty weapons Yeah. Trending, and some similar platforms. Our entire AE Choice will also work with these platforms. Their products can be sold directly to these markets through such a platform. In such a market, we don't have to make a big investment to establish our non-standard brand. It can be combined with our existing non-standard brands. Through this method, uh, Thank you. Well...
Tmall
AE Choice is a business model that is best suited, of course, for light and small packages, light and small goods. It has a strong advantage in that space, goods that can be air-shipped cost-effectively. In the past, that is really where Alibaba Express has had an advantage in those kinds of categories. We are also working on growing different kinds of supply chain models for different markets. For example, for South Korea, working on developing additionally ocean freight for larger and heavier kinds of goods and piloting also the deployment of local warehouses as well. So, you know, our general strategy in any market is to start with those categories where we have that advantage, the light and small packages, and then to build up supply chain to support other kinds of demands that make sense for that particular market. Another important thing is that we have these local platforms in different regions. For example, Lazada in Southeast Asia, Trendyol. in the Middle East. And AE Choice is currently integrating with those different platforms to allow for direct sales into those markets, meaning that AE Choice doesn't need to make any big investments in branding and marketing to consumer offering in those markets. So that's allowing us to move ahead very rapidly into those different markets. Of course, different categories make better sense in different markets, In the case of Turkey, for example, they have an advantage when it comes to apparel, but we can achieve an advantage there in other categories where they don't have that kind of local supply. So in each market, of course, we look at our own resources, what we can bring, we look at the situation in that market, and then decide which categories we're going to bring to that market and how.
Rob Lynn
Thank you. Let's invite the last question.
Operator
Thank you. Your next question comes from James Lee with me, Suho. Please go ahead.
James Lee
Great, thanks for taking my question. And I have a big picture question about AI and cloud. And can you maybe talk about your development, your own large language model, and help us understand where your focus is. Is the scale, is it easy to scale to be the largest one, you know, based on the number of parameters, or are you focused on different modalities of data? voice, text, image, or video. And should we think about the end goal for your large language model to create maybe applications such as AI agents, shopping agents for your consumers, and business agents for your merchants? Thanks so much.
Tmall
I think it's okay. Yeah. 我这个问题还是关于这个人工智能和语音这一块,就是想要知道你们主要追求的是规模,比如说参数的多少,还是说追求多模态的覆盖,就是语音,文字,视频等。 然后你们这个发展这个大模型最终的一个目标是不是要创造一些这个AI的这个agents, This is a assistant. For example, it can help your consumer to make a purchase or help the merchant to make a salesperson. I want to clarify again.
Eddie
The first question you want to ask is about the direction of our large model development or a general question.
Tmall
Could I just ask you, please, to clarify the thrust of your first question? Are you asking about the main objectives for our ongoing development of large models?
James Lee
Yes. The development of a large language model is to scale to have one of the largest ones in China based on the parameters. Is that the focus or the modality of the data? you know, voice, text, image as the focus, because different companies that throughout internationally, they have different focus in terms of growing that large language model. 对的,我问的是你们大模型开发就是未来的重点,或者是终极目标,你主要追求的是要有最多的参数,还是追求的是有最多模态的一个覆盖,包括语音,文字,视频等?
Eddie
I think it's like this. Right now, all of our, what we now call, comprehensive large-scale companies, the direction that most companies pursue is basically the same, which is the so-called AGI, universal artificial intelligence. But when it comes to the path of this goal, in fact, each of our companies will have its own So I think the ultimate goal may be the same for everyone. In the end, it should be in sound, text, image, and video. In the end, it will be through the same set of devices, a ultimate model. But our, including Chinese companies, including American companies, on this road, there are fast and slow, there are choices, there are some breakthroughs through some vertical directions. So this is, we are fast and slow on the road. Right. Well, I think all of the companies in the large model space, anybody who's developing foundational models,
Tmall
shares the same goal, and that is working towards AGI, Artificial General Intelligence. But different companies will take different routes to get there, and along the way can make different choices and may choose to develop certain kinds of vertical applications, leveraging their model along the way. But at the end of the day, I think for all players, the ultimate goal is to achieve AGI, covering everything from... voice and audio through to image, video, and text, and encompassing all of that. So different pathways to getting there, perhaps different kinds of vertical models along the way, but the objective, I think, is a common objective.
Eddie
So back to Alibaba, we have to invest so much resources to study the AGI, or the direction of developing large models. For us, there are actually three three important goals. The first goal itself is to explore the development direction of the AI big model and AGI. The second goal, I think, for Alibaba, actually has a very important realistic meaning. That is, our unified big model is naturally compatible with our Alibaba's business model. In other words, we will China. China. China. Basically, it's like Alibaba. We are both doing the main business of Alibaba and the main business of Alibaba. We think there is a very big opportunity here. The third point is that we can provide basic model support for the development of Alibaba's other AI business through our large model. For Alibaba,
Tmall
I think there are really three major objectives underlying our ongoing large investments in research and development around AI and large models. The first is the pursuit of AGI, as I just explained, per se, developing our own foundational models for AI moving towards AGI. The second objective is, internally within Alibaba, integrating cloud our cloud offering with Tony our large language model integrating them tightly so that we can provide to our customers extremely well integrated software and hardware offerings bringing together our cloud capabilities and our AI capabilities and enabling them to benefit from very high highly effective and cost-efficient AI functionality And I think if you look around the world, I don't think there's really any other company anywhere like Alibaba that has cloud as one of its major businesses and AI as one of its major businesses simultaneously. So we see that as a huge opportunity. And then the third objective, really, is leveraging the development of TongYi to enable other businesses within the Alibaba group to better develop their own applications and their own business. So thinking of applications like DingDing but also Quark and even Taobao, they can benefit from leveraging our large model TongYi to further improve their own applications.
Eddie
Yes, I would like to add another example. Regarding the second point, that is, the combination of our integrated large model and Aliun. Our integrated open source model should be the top open source model in the Chinese world. It is also the most widely used open source model in the Chinese world by developers. When developers use our open source model in their development process, when their application needs to be deployed online, they will very naturally choose Aliyun's service. Because the open source model provided by Aliyun is the best and most familiar to them. So this is a relatively simple example. You can see the relationship between our entire open source model and Aliyun's ecosystem and Aliyun's business model.
Tmall
Just to further expand on that second point I just made about the tight integration between our TongYi model and our cloud offerings, our open source model that we've made available is undoubtedly the number one top open source model anywhere in the Chinese-speaking world, and it's also certainly the most widely adopted. So when you have developers using our open source model in their own development environment, to develop something, when it comes time to deploy that, it's a very natural choice for them to choose Alibaba Cloud because of the very high level of cost efficiency, but also because that's the most familiar environment to them. So that's just a very simple example. showing how we can leverage that tight integration between Tongi, our model, and cloud, and indeed other aspects of Alibaba's business and business models.
Rob Lynn
Okay, that concludes our earnings call today, and thank you, everyone, for your participation.
Alibaba
We will see you next quarter.
Operator
that does conclude our conference for today thank you for participating you may now disconnect
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