Alibaba Group Holding Limited

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's March quarter and full fiscal year 2026 results conference call. At this time, all participants are in 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. Please go ahead.

Good day, everyone. Thank you for joining Alibaba Group's March quarter and full fiscal year 2026 earnings call. On the call with me are Zhou Cai, Chairman, Eddie Wu, Chief Executive Officer, Toby Xu, Chief Financial Officer, Jiang Fan, Chief Executive Officer of Alibaba eCommerce Business Group. As a reminder, this call is being webcast live. A replay of the call will be available on our website later today. On this call, we may make forward-looking statements and discuss certain non-GAAP financial measures. The forward-looking statements reflect management's current expectations that are subject to risks and uncertainties. Our GAAP results and reconciliations of GAAP to non-GAAP measures is included in today's earnings press release and investor presentation. Our comments will be on year-over-year comparisons unless we state otherwise. And with that, let me turn the call over to Eddie.

Welcome to Alibaba Group's fiscal year 2026 fourth quarter earnings call. Over the past quarter, Alibaba's high-intensity investment in our two strategic priorities of AI plus cloud and consumption is rapidly translating into tangible business results. with group revenue growing 11% year-over-year. This quarter, cloud intelligence groups' external revenue growth accelerated to 40%, and AI-related product revenue achieved triple-digit growth for the 11th consecutive quarter. China e-commerce CMR grew 8% year-over-year on a like-for-like basis, and the quick commerce market achieved significant unit economics improvement while maintaining market share. We are at a pivotal inflection point in the evolution from conversational chatbots to autonomous AI agents, which is directly driving explosive growth across three core workload categories, training, inference, and agent orchestration. Against this backdrop, Alibaba's AI has moved beyond the initial investment phase and progressed commercialization at scale. Next, let me walk you through four areas in detail, AI commercialization, cloud infrastructure, the AI application ecosystem and our consumption business. First, the AI and cloud commercialization inflection point has arrived. This quarter, Cloud Intelligence Group's annualized AI-related product revenue has surpassed 35.8 billion RMB, continuing to maintain triple-digit growth. AI-related product revenue now accounts for 30% of Cloud Intelligence Group's external revenue. We expect that in about one year, AI-related product revenue will cross the 50% threshold, becoming the primary engine driving the cloud business's revenue growth. As a result, cloud intelligence groups' external revenue growth is expected to continue accelerating beyond its current 40% rate over the coming quarters. Given the certainty of long-term AI demand and our full-stack technology advantages, we expect this trajectory to sustain strong growth over the medium to long term. This reflects AI's role in driving a comprehensive upgrade of Alibaba Cloud's entire business as its growth engine fully pivots from traditional compute and storage to models, AI compute and agent services. We're also seeing exponential growth in AI model and application services revenue. A new revenue engine driven jointly by foundation model services and AI native software. Over the past three months, Token consumption volumes on our model services platform grew substantially quarter over quarter as enterprise customers accelerated their shift from simple tasks to production scale and complex workloads, driving continued growth in demand for model and application services on the Model Studio platform. We expect model and application services annualized recurring revenue, ARR, inclusive of the Model Studio platform to surpass 10 billion RMB in the June quarter and 30 billion RMB by year end. The harm margin profile of this revenue stream is becoming increasingly apparent, making it a source of healthy, high quality growth. Second, our AI infrastructure underpins our full technology stack and constitutes a durable moat. T-Head's proprietary GPU chips have achieved scaled mass production with over 60% of compute capacity already serving external customers across internet, financial services, and autonomous driving verticals. As the only AI cloud provider in China capable of delivering self-developed AI chips at scale, we've secured autonomy over our compute supply chain while providing customers with highly competitive AI inference and training services. In an environment of compute scarcity, this structural advantage is favorable to our revenue growth and gross margin improvement. At the same time, our cloud products are accelerating their AI-oriented upgrade The surge in agent workloads has significantly elevated demand for traditional cloud products built around CPU storage and containers, and we're upgrading these into infrastructure solutions optimized for the agent era. Third, at the application layer, we've built a complete closed loop spanning AI-native software to a full agent ecosystem. Alibaba Token Hub ATH continues to launch new products, connecting consumer and enterprise environments with breakthrough progress in AI native software and coding agents. The Q1 model continues to iterate across reasoning, coding, and agentic capabilities. On the enterprise side, we've launched a range of products spanning intelligent workplace tools, AI coding, and business operations management, helping enterprises unlock greater productivity. On the consumer side, The QNAP fully integrated Taobao and Tmall's commerce service capabilities on May the 7th. With this QNAP is now deeply embedded across the ecosystem, spanning Taobao, Alipay, AMAP and Fliggy, making it China's first all-in-one personal assistant to seamlessly bridge everyday life productivity and learning. Fourth, across our consumption business and at the group level, we're prioritizing long-term value. Beyond AI, our consumption strategy continues to progress steadily with CMR growth rebounding significantly. This quarter, CMR grew 8% year-over-year on a like-for-like basis as we continue to improve user experience and merchant operating efficiency. The quick commerce business achieved significant unit economics improvement while maintaining stable market scale. In summary, the return on our investments in AI plus cloud and consumption are increasingly clear. AI plus cloud revenue growth is accelerating with improving margins. Model and application services, ARR, continues to grow at pace and operating efficiency across our consumption business continues to improve. Facing the historical opportunity that AI represents, Alibaba is at a pivotal juncture where our technology investments are beginning to pay off commercially. We'll maintain our strategic resolve and leverage our full-stack AI capabilities to support long-term growth. That concludes my prepared remarks. Next, I'll hand over to Toby to walk you through our financial results. Thank you. Thank you, Eddie.