Alibaba Group Holding Limited

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's June quarter 2025 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 Lydia Liu, Head of Investor Relations of Alibaba Group. Please go ahead.

Good day, everyone. Welcome to Alibaba Group's June quarter 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 eCommerce Business Group. This call is also being webcast from the IR section of our corporate website. A replay of the call will be available on our website later today. Now, I will quickly cover the safe harbor. Today's discussions may contain forward-looking statements, particularly statements about our business and the 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. 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. And now I will turn the call over to Eddie.

Hello, everybody, and welcome to this quarter's earnings call. This quarter, we delivered solid growth. Excluding revenue from Sunart and InTime, our total revenue on a like-for-like basis grew 10% year-over-year. Revenue growth of our core businesses remained strong. Customer management revenue from our China e-commerce business rose 10% year-over-year. Cloud intelligence group revenue growth accelerated to 26% year-over-year with AI-related product revenue maintaining triple-digit growth for the eighth consecutive quarter. Revenue from AIDC grew by 19% year-over-year. In AI plus cloud, the accelerated development of AI applications and increasing AI product adoption by customers drove a 26% year-over-year revenue increase from external customers. During the quarter, AI-related revenue accounted for over 20% of revenue from external customers, as AI demand continued to grow rapidly. We're also seeing AI applications driving great growth momentum of traditional products, including compute and storage. SAP and Alibaba entered a strategic partnership focused on cloud and AI. As SAP's global cloud computing partner, Alibaba Cloud will support SAP customers to run and manage their core software systems on Alibaba's platform. Leveraging our Q1 models, SAP will also provide AI transformation services for its enterprise customers. This partnership signifies the recognition of our cloud infrastructure and AI capabilities by the global leading enterprises in the SAP ecosystem. We've continued to advance the capabilities of our AI foundation model since July Alibaba has released upgraded QN3, including a non-thinking model, reasoning model and AI coding model, which are recognized as global top performers in their respective categories. Notably, our QN3 coder model has rapidly increased QN's user adoption in overseas markets. We also open-sourced several models, such as the video generation model WAN 2.2 and the text-to-image model QnImage. By continuously upgrading our open-source models, we're empowering our customers to develop their own AI applications. Meanwhile, Alibaba's own AI-native applications continue to advance. AMAP has undertaken a comprehensive AI transformation with the launch of AMAP 2025, the world's first AI-native location-based application. The upgrade brings spatial intelligence into dynamic real-world scenarios, and AMAP is well-positioned to become a new gateway for future lifestyle services. ThinkTalk has also completed its latest AI upgrade, creating the world's first agent-driven work feeds to explore next-generation workplace application paradigms. On our Taobao platform, we see immense AI-powered opportunities emerging, such as AI Search and AI Advertising Platform. In consumption, We undertook a strategic combination of Taobao and Tmall Group, Ulema and Fliggy into Alibaba China e-commerce group. This organizational change creates a comprehensive consumption platform and upgrades our consumer experience. We have consolidated supply chains, user bases and membership benefits across our businesses and launched a tiered loyalty program that connects Ulema, Fliggy and AMAP. The newly integrated benefits enhance our members' experience across a full spectrum of consumption scenarios. Since May, our investments in QuickCommerce have rapidly surpassed key milestones and created synergies. In August, monthly active consumers on our QuickCommerce business are approaching 300 million, contributing to a 25% increase in monthly active consumers on the Taobao app. Daily order volume of our China e-commerce group continued to achieve new records. Looking ahead, Alibaba Group has two historic opportunities to build a technology platform centered on AI plus cloud and to create a comprehensive shopping and daily life services consumption platform. We will invest at scale to capture the opportunities. This also marks a new entrepreneurial chapter for the company after 26 years. In line with this, in February, we announced an investment of 380 billion RMB over the next three years to build our cloud and AI infrastructure. In July, we announced plans to invest 50 billion RMB in consumption. The transformative impact of AI on all industries combined with a deep integration of AI and cloud will present the most significant opportunity in the technology sector over the next decade. For Alibaba, we have the world's fourth largest and Asia's leading cloud infrastructure, along with full-stack technology capabilities spanning AI computing power, AI cloud platforms, AI models, an open-source ecosystem, and AI applications. This quarter, our CapEx investment in AI and cloud infrastructure reached 38.6 billion RMB. Over the past four quarters, we have cumulatively invested over 100 billion RMB in AI infrastructure and AI product R&D. Our investments in AI have begun to yield tangible results. This is evidenced by Alibaba's Alibaba Cloud's return to rapid growth driven by AI demand and our AI enhanced experiences across consumer and enterprise facing scenarios. So we're seeing an increasingly clear path for AI to drive Alibaba's robust growth. We're also well positioned in China, the world's largest e-commerce market and the most promising service consumption market. China has a well-developed e-commerce infrastructure, high population density and strong demand for service consumption, providing a solid foundation for the integration of our quick commerce business and the Taobao app. We believe this convergence will fulfill consumer needs for a one-stop consumption experience and meet merchants' desire to serve consumers across multiple scenarios. It will enhance commerce efficiency and pave the way for an all-in-one AI assistant for consumption. Alibaba's strategic positioning in QuickCommerce has ambitions beyond competing in a single category. We aim to meet the one-stop consumption needs of our 1 billion consumers and shape business models of a comprehensive consumption platform in the AI era. In consumption, our long-term goal is to create a comprehensive consumption platform catering to our 1 billion consumers' full spectrum of shopping and daily life needs. We aim to offer the best experience to the largest consumer base with the highest purchase frequency, ultimately leading in an RMB 30 trillion addressable market. Over the next three years, Alibaba will embark on a new journey with an entrepreneurial mindset to drive robust business growth through sustained investments centered on the strategic areas of consumption and AI plus cloud. We're confident that these investments in the core business will sharpen our competitive edge and fuel long-term growth. Thank you.