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Operator
Good day ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group’s September 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 and A session. I would now like to turn the call over to Lydia Liu, Head of Investor Relations of Alibaba Group. Please go ahead.
Lydia Liu (Head of Investor Relations)
Thank you. Good day everyone. Welcome to Our September quarter 2025 earnings conference call. With me today from Alibaba are Zhu Cai, Chairman Eddie Wu, Chief Executive Officer Toby Xu, Chief Financial Officer Jiang Fan, Chief Executive Officer of Alibaba E Commerce Business Group. I would like to remind you that this call is also being webcast on our corporate website. A replay of the call will be available on our website later today. Just a few forward-looking statements before we begin today, 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. Please note that certain financial measures that we use on this call are expressed on a non Generally Accepted Accounting Principles (GAAP) basis. Our Generally Accepted Accounting Principles (GAAP) results and reconciliations of Generally Accepted Accounting Principles (GAAP) to non Generally Accepted Accounting Principles (GAAP) measures can be found in our earnings press release. With that, I’m going to turn the call over to Eddie.
Eddie Wu (Chief Executive Officer)
Welcome to Alibaba Group’s quarterly earnings call. Over the past quarter, Alibaba delivered steady and healthy growth. Our total revenue increased 15% year over year excluding Sun, Art and Intime. Our continued investment in core businesses is yielding results with China E Commerce CMR growing 10% and Cloud Intelligence revenue rising 34%. Let me walk you through the latest developments across our AI, cloud and consumption businesses sustained strong demand for AI and rising usage of public cloud drove Alibaba’s cloud’s 34% revenue growth this quarter while revenue from external customers accelerated by 29%, AI related products continued to post triple digit year over year growth for the ninth consecutive quarter. In the cloud computing market, two major trends are becoming increasingly apparent. First, as AI applications scale, more developers and enterprise customers are choosing vendors with full stack AI technology portfolios. Second, customers are deepening and broadening their use of AI which is significantly increasing demand for compute storage and other traditional cloud services. Together, these forces are accelerating revenue growth driven by external customer demand. This quarter we continued to strengthen our full stack AI capabilities spanning high performance AI infrastructure, foundation models and AI development frameworks. Our flagship model, QN-3 Max ranks among the global leaders in benchmarks for real world coding tasks, agent tool use capabilities and other specialized valuations. Our full stack AI capabilities are now a defining competitive advantage. Alibaba Cloud is gaining market share across multiple segments in the hybrid cloud market, Alibaba Cloud has become a key player, growing more than 20% year over year, outpacing the industry and steadily expanding market share. Our financial cloud business is also growing faster than the market, with market share continuing to rise. In China’s AI cloud market, we are also the clear leader with a market share larger than the combined total of the second to fourth largest providers. Recently, businesses such as the NBA, Marriott China, UnionPay and Bosch have partnered with Alibaba Cloud on AI initiatives. Last week we officially launched the Q1 app. App which aims to be the most advanced personal AI assistant powered by our latest models. In the first week of its public beta, the Q1 app has already surpassed 10 million in new downloads. The launch of the Q1 app marks Alibaba’s commitment to both AI for enterprise and AI for consumer. In enterprise focused AI, our goal is to build a world leading full stack AI provider serving businesses across all industries. For consumers, we aim to build native AI first applications by leveraging our best in class models and Alibaba’s extensive ecosystem. On the one hand, QN-3 Max’s intelligence and world class tool use capabilities combined with Alibaba’s rich consumer and lifestyle use cases contributed to exceptional user retention in the QN Apps beta release. We believe this is the right moment to scale our consumer AI efforts. On the other hand, the synergy between AI and the broader Alibaba ecosystem is a powerful multiplier. Alibaba is the only company in China with both a leading large model and extensive lifestyle and commerce use cases. QN will gradually integrate E commerce, map, navigation, local services and more, becoming an AI powered entry point for everyday life. With AI innovation and ecosystem collaboration reinforcing each other, we’re confident in our ability to deliver substantial user value in consumption. We continue to deepen collaboration across businesses and the benefits of our large integrated platform are becoming increasingly evident. This quarter China E Commerce CMR grew 10%. Our quick commerce business saw significant improvement in unit economics with greater fulfillment efficiency, stronger user retention, higher average order value and expanding scale. The growth of quick commerce business contributed to rapid growth in Taobao app’s monthly active consumers and supported CMR expansion. Brands on TMALL are also accelerating their adoption of on demand retail. As of October 31, approximately 3,500 brands on Tmall have onboarded their offline stores. To our Quick Commerce business. Going forward, we will further enhance synergy between Quick Commerce and the broader Alibaba ecosystem, continue improving unit economics and meet consumers fast growing demand for immediate access to diverse products and services. On October 1, AMAP daily active users reached a historical high of 360 million. In September we launched the AMAP’s Street Stars feature which has significantly boosted user engagement. In October, AMAP’s Street Stars averaged more than 70 million daily active users with average daily user reviews more than triple the amount of the same period last year indicating strong future growth potential. AMAP’s Street Stars has built a trust based rating system for local offline services using user consented metrics such as the user’s credit rating. We believe that enhancing consumer trust is essential to strengthening consumer confidence and enabling merchants to focus on operations while giving consumers greater peace of mind supporting the healthy and sustainable growth of the local offline services sector. Looking ahead, we’ll continue investing decisively in our two core strategic pillars, AI plus Cloud and Consumption. We will advance both enterprise and consumer focused AI, unlock deeper synergies across Alibaba’s businesses and use these engines to drive Alibaba’s long term growth and carry the company to the next level. Thank you. I will now hand over to Toby.
Toby Xu (Chief Financial Officer)
Thank you Eddie. We are continuing our focus and discipline on AI, Cloud and consumption and we see strong momentum from these strategies with gains in technology, market share, consumers and user engagements. Now let’s look at the financial results on a consolidated basis. Total revenue was RMB 247.8 billion excluding revenue from Sun Art and in time revenue on a like for like basis would have grown by 15% year over year. Total adjusted EBITDA decreased 78% primarily due to our strategic investments in Quick Commerce Business to grow its user base and transaction volume, partly offset by double digit revenue growth in China E Commerce Group and Cloud Intelligence Group and improved operating efficiencies across various businesses including AIDC and Hugin DME. Our GAAP net income was RMB 20.6 billion, a decrease of 53% primarily attributable to the decrease in income from operations. Operating cash flow was RMB 10, a decrease of RMB 21.3 billion compared to the same quarter last year. The year over year decrease was mainly attributed to our increased strategic investments in Quick Commerce business. Free cash flow was an outflow of RMB 21.8 billion which reflected our significant investments in Quick Commerce business and AI Cloud infrastructure. We are reinvesting our free cash flow to create a winning quick Commerce business and to be a leader in AI. Our strong balance sheet, backed by US$41billion in net cash gives us confidence for this reinvestment strategy. Revenue from Alibaba China E Commerce Group was RMB 1 32.6 billion, an increase of 16%. Customer management revenue increased by 10% primarily due to the improvement of take rate which benefited from the increasing penetration of Quan Jiantui and the addition of software service fees. Revenue from our quick Commerce business increased 60% during the quarter we executed our plan to grow the scale of our quick Commerce business, improve user experience and narrow UE loss. The adjusted EBITDA from Alibaba China E Commerce Group was RMB 10.5 billion. Excluding loss from our quick Commerce business, our Alibaba China E Commerce Group EBITDA would have grown at mid single digit year over year. For the quarter going forward, this adjusted EBITDA may fluctuate quarter over quarter due to intense competition and a significant investment in user experience. Revenue from AIDC grew 10%. AliExpress in particular has developed its AliExpress’ Direct model that leverages local inventories in over 30 countries. AliExpress has also enhanced the range of our product offerings by launching the Brand+ program providing go to market solutions to Chinese brands going overseas. A combination of logistics optimization and investment efficiency enhancement resulted in AIDC’s adjusted EBITDA profit of RMB162 million this quarter. Looking ahead While we continue to enhance operating efficiency, AIDC adjusted EBITDA may fluctuate quarter over quarter due to tactical investments in select markets. Our cloud business delivered another quarter of accelerated growth as both growth of cloud segment revenue and revenue from external customers accelerated to 34% and 29% respectively. This momentum was primarily driven by public cloud revenue growth including the increasing adoption of AI related products. AI related product revenue continued to grow at triple digit pace. AI related product revenue this quarter accounted for over 20% of revenue from external customers. With its contribution continue ...
