Alibaba Group - Q2 2024
November 16, 2023
Transcript
Operator (participant)
Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's September quarter 2023 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 conference over to Rob Lin, Head of Investor Relations of Alibaba Group. Please go ahead.
Rob Lin (Head of Investor Relations)
Good day, everyone. Good day, everyone, and welcome to Alibaba Group's September quarter 2023 results conference call. With us are Joe Tsai, our Chairman; Eddie Wu, Chief Executive Officer; Toby Xu, our Chief Financial Officer; Trudy Dai, CEO of Taobao Tmall Group; and Jiang Fan, the CEO of Alibaba International Digital Commerce. This call is also being webcasted from the IR section of our corporate website. A replay of the call will be available on our website later today. Now, let me quickly cover the safe harbor. Today's discussion may contain forward-looking statements, including, without limitation, statements about our new organization and governance structure, strategies and business plans, as well as our belief and expectation about our business prospects, such as future growth of our business, revenue, and return on investments.
Forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussion of these risks and uncertainties, please refer to our latest annual report on Form 20-F and other documents filed with the U.S. SEC or announced on the website of the Hong Kong Stock Exchange. Any forward-looking statements that we make on this call are based on assumptions as of today, 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 in our earnings press release. Unless otherwise stated, growth rates of all stated metrics mentioned during this call refer to year-over-year growth versus the same quarter last year. With that, I will now turn to Joe.
Joe Tsai (Chairman)
Thank you, Rob. Hello, ladies and gentlemen. Thank you for joining our earnings call for the September quarter. Although this is the first communication in my new role as chairman of the company, I'm pleased to connect with some old friends in the investment community. This is not your normal earnings report for the quarter. This is the first time you will hear directly from our Group CEO, Eddie Wu, on his strategic thinking. He will lay out our plan for growing the business as well as our strategic priorities for execution and investment. We're pleased with this quarter's results, which show that our strategic focus on user-centric value proposition and technology innovation are driving improvement across our businesses. In addition, while global markets remain volatile, we are entering a phase of a more stable operating environment in China.
In terms of asset reorganization to highlight the value of our businesses, here are a few updates. First, we announced in our earnings release that Alibaba will not pursue a full spin-off of Cloud Intelligence Group in light of uncertainties created by recent U.S. export restrictions on advanced computing chips. Instead, we will focus on developing a sustainable growth model based on emerging AI-driven demand for networked and highly scaled cloud computing services. Second, in August, Cainiao Smart Logistics filed its prospectus and application for an IPO on the Hong Kong Stock Exchange. While the success of an IPO transaction is subject to market conditions and relevant approvals, we're confident of the business fundamentals of our logistics unit.
Other areas of reorganization and focus are going well across our businesses, as evidenced by strong revenue growth for AIDC and Cainiao and narrowing losses in local services and digital media entertainment. As I travel around to speak with investors, many have asked me about the relationship between the group company and our business units in a post-reorganized world. I want to make two points here. First, Alibaba Group will continue to support our operating businesses with the group's strong balance sheet. We ended the quarter with $63 billion in net cash, and we generated $27 billion in free cash flow in the last 12 months. Alibaba has never been in a better financial position to invest for the growth of our businesses.
Second, while each business is expected to operate independently and interact with each other based on arm's-length market principles, the group will use our resources to ensure long-term strategic synergies can be realized. We have businesses that are very symbiotic with each other, and their relationships are highly strategic. For example, Cainiao supports the logistics needs of our e-commerce businesses, and Alibaba Cloud provides superior technology capabilities to all of our own businesses. Eddie and my job is to balance the short-term goals of each business unit against the opportunities for long-term value creation. Now, let me say a few words about capital management. We're focused on unlocking value to improve shareholder returns.... We are looking at four areas in capital management. Number one, enhanced return on invested capital of our operating businesses. We have undertaken a review of our operating businesses and ways to enhance ROIC, return on invested capital.
In the fiscal year end of March 2023, our ROIC was in the single digits. Obviously, there's room for improvement, and we are targeting to lift our ROIC into the double digits. Number two, invest our cash flow for future growth. The clarity of focus emerging from our reorganization has highlighted many strategic growth opportunities for investment. Given the strength of our balance sheet, Alibaba is well positioned to capture these opportunities. Later on, Eddie will discuss our growth strategy and priorities for investment. Number three, monetize the value of non-core assets. Our balance sheet carries $67 billion in equity, securities, and other investments, as well as investment in equity method investees. In addition, we have operating businesses that tie up capital but generate low growth. Not all of these investments are core or strategic to our business.
We are evaluating creative ways to monetize the value of these assets in order to return value to shareholders. Number four, speaking of returning value to shareholders, this may take the form of our share repurchase program or cash distributions via dividends. We already have a share repurchase plan that still gives us $13 billion in dry powder as of today. In addition, as we have just announced, the company will pay an annual dividend. Our capital management activities are dynamic and remain a top priority for our management team and our board of directors. Now, I turn to Eddie for his remarks.
Eddie Wu (CEO)
Investors, friends, welcome to everybody. Thanks for joining this quarter's earnings call. It's exciting for me to speak with you on today's earnings call as CEO of Alibaba Group for the first time. In addition to updating you on the progress we've made in all of our businesses over the past quarter, I'd also like to share with you my thinking about Alibaba's future development strategy and business plans. Through 24 years of development, Alibaba has grown into a group that spans e-commerce, cloud computing, local services, logistics, digital media and entertainment, new retail, and many innovative new businesses. Today, the world is at the starting point of a new era. Rapid technological advances are profoundly reshaping all industries, all products, and all of our daily life scenarios. Virtually any prediction made today is bound to underestimate the future.
As the penetration rate of internet users reaches a ceiling, the driver of growth in this sector will be technology, especially AI. Therefore, I've defined the following three directions as the key priorities for Alibaba's next decade: our technology-driven internet platform businesses, AI-driven technology businesses, and global commerce network. In light of Alibaba's huge and complex set of businesses, as well as rapidly evolving market and technology trends, we intend to transform Alibaba and embrace the future through the following three key initiatives. First, establishing a highly nimble and fast decision-making governance structure and corresponding incentive system. Today, Alibaba must contend with fast-evolving new technologies, as well as new changes and expectations in the market. No matter how successful our business models have been in the past, we need to turn over a new page and start afresh. We need to reawaken our entrepreneurial mindset and improve our decision-making systems.
To that end, we initiated corporate governance reforms this year and continue to move quickly ahead with developing fast and nimble decision-making systems. Going forward, we want each of Alibaba's different businesses to face the market more independently and autonomously. On that basis, we're exploring corresponding incentive systems that strike the right balance between independence and cooperation across the business groups, so as to maximize synergy for development. Secondly, conducting a strategic review of existing businesses, focusing on the long term and maintaining high-intensity investments in core businesses. After years of development, we are keenly aware that outstanding business models are extremely rare. Going forward, we will give each of the existing businesses a different level of priority based on market size, business model, and product competitiveness, and we'll distinguish between core and non-core businesses.
Core businesses are where we will keep our long-term focus, intensively invest resources, pursue R&D, enhance user experience, and make sure that our products and services are constantly evolving to meet our users' needs, to keep them vital and competitive for the long term. As for the non-core businesses, we will realize the value of these assets by turning them profitable as soon as possible or through other means of capitalization. Thirdly, firmly committing to investing strategically for the future. The Alibaba Group will strengthen its strategic incubation initiatives. The highest priority for major investments will be placed on services and products that meet user demands and that are AI-driven. We will resolutely invest in revolutionary products for the future as well, taking a patient, long-term approach, adopting a three-year window for evaluation and proof of value.
In this way, we'll nurture new businesses and new growth drivers for Alibaba into the future. Next, I'll share our three-year development strategies and goals for each of the business groups and companies, and how they will capture market opportunities. We'll start with Taobao and Tmall Group. Taobao and Tmall Group is committed to three core strategies: to putting users first, building an ecosystem for brands and merchants to thrive, and realizing AI technology-driven innovation. Despite competition in the market this quarter, Taobao and Tmall Group maintain steady revenue growth and accelerated DAU growth. In the next three-year strategic cycle, putting users first is the top priority for Taobao and Tmall Group, and in particular, the focus will be on the following three areas. First, it's what we call universal Taobao.
Taobao is universal or omnipotent in that it has a vast assortment of goods and services it can supply. We must resolutely be an integrated platform that meets the needs of all tiers of consumption demand, serving the largest consumer base in order to increase consumer purchase frequency. This represents an important choice for Taobao and Tmall to maintain growth in today's competitive landscape. The second is consumer tiers and price competitiveness. China has a consumer market with multi-tiered value propositions. We have the most diverse consumer base and also have China's manufacturing advantage. That means in any category, there's a sufficiently rich assortment of supply with different value propositions to meet the needs of different consumers. Accordingly, we have to execute a multi-tier market strategy within one app.
Taobao is a super app that integrates all three mainstream sales formats: live streaming, content-driven sales, brand marketing-driven sales, and everyday low-price product sales, making it the most comprehensive platform. The Taobao app can accommodate different product tiers, from branded goods to white label goods, and the whole range of value propositions they represent. We intend to make Taobao a universal consumer app that connects to an all-inclusive and highly diversified marketplace, leveraging AI and next-generation operating models. At the same time, we must execute a price competitiveness strategy. Price competitiveness is the strongest force at work for both branded goods and non-branded goods. We will continue to leverage our platform model to optimize product efficiency, enhance supply chain efficiency, and adopt price competitiveness as a core strategy across all product tiers. In terms of user value, Taobao will remain committed to its positioning as an internet consumption platform.
It is not a retail company. In line with our identity as an internet consumption platform, we will prioritize our strategy of putting users first, with improving platform stickiness and customer retention as our core goals. From the operational perspective, we will adopt user purchase frequency as the highest priority KPI for platform operations above GMV, as purchase frequency is the most direct measure of users' recognition of an internet consumption platform. Taobao's diverse monetization products can support our strategic shift to putting users first. We're convinced that only with more users can we generate more market opportunities for merchants. These investments will create a virtuous win-win cycle for users, merchants, and the platform. Next, I will describe our strategy for the Cloud Intelligence Group. Given the uncertainties in the current environment, following evaluation, we have decided not to pursue a full spin-off of Cloud Intelligence Group.
Alibaba Group will continue to invest strategically in Cloud Intelligence Group in the long term. At the same time, Cloud Intelligence Group will continue to maintain its independent operation to be managed by its CEO and overseen by its board. In this quarter, we saw the AI boom bring about continued growth and demand for computing power and large model services. Cloud computing is the infrastructure of the digital economy. It's a business model that achieves network effects with computing resources and a service model that features both network effects and scale effects. With the advent of the AI era, typified by large models and the demand for AI transformation and innovation across all industries, IT investment will grow exponentially, and demand for cloud computing will expand exponentially as well, creating a huge incremental opportunity.
The Cloud Intelligence Group will resolutely implement a strategy of driving growth with AI and of prioritizing public cloud. It will scale up its technology investments in AI-related software and hardware. Regarding driving growth with AI, we see a fundamental paradigm shift underway in computing worldwide. We stand at the inflection point in this shift from traditional computing to AI computing. In the future, incremental demand for cloud computing will be driven by demand for AI, and most AI computing will run on the cloud. Going forward, we will do two things. First, we will build the most open cloud in the AI era, providing stable and efficient AI infrastructure for all industries and enabling all sectors to go intelligent. Second, we will build an open and prosperous AI ecosystem.
At the recently concluded Apsara Conference, we announced a comprehensive upgrade of our AI infrastructure, the artificial intelligence platform, PAI, and our large model, Tongyi Qianwen 2.0, which has hundreds of billions of parameters, as well as eight vertical models. Also, a one-stop model application development platform, Alibaba Cloud Bailian. In this AI era, we now have in place a full stack cloud computing system for AI development and are ready to better support demand for AI-driven computing power. This quarter, we began proactively managing the quality of our cloud revenue and achieved enhanced profitability. Alibaba Cloud has advantages in terms of pricing power, high renewal rates, and highly scalable cloud computing infrastructure and application service products. Going forward, we'll be selective about all of our products and business models.
We will reduce project-based revenue exposure, invest more in core products for public cloud, and continue to enhance the cloud business's revenue quality. By prioritizing public cloud, we will continue to reap scale effects and technological dividends. Going forward, we're extremely optimistic about the long-term development prospects of AI plus, cloud computing in combination. Next, let's turn to Alibaba International Digital Commerce. We're convinced that there's huge growth potential in international markets in the coming years. Our core strategies include, first, building a world-leading digitalized supply chain network. Alibaba already boasts the richest supply assortment in the world, plus an initially completed cross-border, plus local global logistics network. Over the next few years, we'll accelerate our efforts to build a world-leading digitalized supply chain network, leveraging multiple world-leading merchandise centers, plus our high-efficiency logistics network covering major international markets... Second is building world-leading AI plus overseas digital retail technologies.
Within Alibaba International Digital Commerce, we will build unified core technology capabilities for AI plus digital retail to drive efficiency enhancements and user experience innovations across platforms and regional markets. For example, by leveraging AI and other technologies to solve for translation across languages and transnational customer service, we can empower large numbers of merchants to truly make the leap from local to global. That represents a huge market opportunity and dividend. Thirdly, achieving breakthroughs in key emerging regional markets in the next few years. At present, Alibaba International Digital Commerce has relatively high penetration of users in just a few regional markets, such as Southeast Asia and Turkey. There's huge potential to grow user penetration in the majority of international markets. Leveraging our existing resources and footprint, we will scale up our investment in selected high-potential regional markets and capitalize on highly certain growth opportunities.
Next, let's turn to our Cainiao strategy. Cainiao continues to focus on building out its global smart logistics network and on reinforcing its end-to-end capabilities in cross-border logistics solutions. Revenue maintained relatively rapid growth this quarter. Over the next three years, Cainiao's core strategies will be, first, to accelerate construction of its global smart logistics network, scale up its investments in technology, grasp the historic opportunity of cross-border e-commerce growth, and achieve rapid growth in its international business by offering innovative products for cross-border e-commerce platforms and merchants. And secondly, to continue to differentiate itself in China and maintain healthy business growth. Cainiao will continue to empower the industry with technology capabilities, helping brands and manufacturers to achieve higher levels of logistics, digitalization, and intelligence, providing brands and consumers with high-quality, multi-platform, all-channel supply chain and logistics solutions.
Next, let me share with you our strategy for the Local Services Group. This quarter, the Local Services Group achieved 16% year-on-year revenue growth, further improvement in business scale and efficiency, and both quarter-on-quarter and year-on-year growth in AACs. Over the next three years, location-based technology services will continue to evolve and develop rapidly across a wide range of sectors, benefiting all different kinds of businesses, not just those in the sectors everyone's paying attention to today, like, to-home, food delivery, restaurant dining, and mobility, and not only in 2C businesses. We expect to see a relatively fast growth in demand for location-based technology services from 2B businesses. Accordingly, the group will continue to invest resolutely in location-based technology services in both of its core local service businesses.
Amap will primarily develop mobility and to-destination technology services, and Ele.me will primarily develop on-demand to-home technology services. At the same time, the local services businesses will take advantage of opportunities to innovate their applications and enhance their capabilities leveraging AI. The standard of success will be advancing together with the ecosystem. Next is Digital Media and Entertainment. DME achieves healthy growth in its revenues this quarter, with enhanced synergies across its different businesses on the back of a strong recovery in the offline cultural consumption market. Damai recorded strong GMV growth this quarter, with continued year-on-year improvement in profitability. On Youku, the total number of interactions during paid online broadcasting of live performances set a new record, and two films co-produced by Alibaba Pictures occupied the top two spots for box office releases during the summer season.
Over the next three years, DME's core strategies will include the following: One, leveraging AI and other technology innovations, DME will achieve standardized, process-based, digitalized film and drama show production capabilities within three years. We will cultivate next-generation content creators and promote the upgrading of the entertainment industry. We will launch innovative new consumer applications that will expand the boundaries of the business. Secondly, Youku will remain committed to its top-quality content strategy while increasing the ratio of self-produced content and build stronger mind share with its users with stable output of exclusive content. Alibaba Pictures will maintain its advantages in offline scenario coverage and market share and will continue to produce top-quality films, performances, and other self-produced content. As a leading media and entertainment company, Alibaba's DME Group strives to achieve overall stable profitability as soon as possible. Next is overall strategies for strategic-level innovation businesses.
As announced, the group will continue to invest in and incubate strategic-level innovative businesses for the future. We have clear-cut selection criteria, a sufficiently large addressable market, unique positioning in the market, and alignment with user demand trends, and the group's strategy of driving growth with AI. Today, let me introduce you to our first batch of these strategic-level innovation businesses. They are 1688, sixteen eighty-eight, Xianyu, DingTalk, and Quark. Sixteen eighty-eight is Alibaba's oldest business, serving mainstream manufacturers in China, has a solid foundation and huge potential to reinvent itself for this new era. It can leverage China-manufactured products, the most competitive anywhere, to expand from B2B into SME and consumer procurement. It also has the service capabilities to support cross-border transactions. Xianyu or Idle Fish, is the most popular secondhand goods trading platform among Chinese young consumers.
But we see Idle Fish as being much more than that in the future. It can become a lifestyle platform for consumers' hobbies and interests. As for DingTalk, with the advent of the AI era, there's now unprecedented scope for imagination about its future. It's the most effective enterprise productivity tool in China, and in the future, we believe that every individual and every company will have a personalized smart assistant powered by AI. DingTalk has the potential to become the best AI smart assistant platform for users. Quark is a search and knowledge product that's very popular with youth. In the large model era, we believe that Quark has tremendous opportunity to create a revolutionary search product for students and young people.
The strategic-level innovation businesses that I've listed out above will, in organizational terms, operate as independent subsidiaries and will not be constrained to their previous positioning within the group, enabling them to face the larger market with their own strategies. The group will make continued investments in them over a 3-5-year period. In this exciting AI era, Alibaba will resolutely devote itself to driving the technology revolution and product innovation, and will continue to incubate innovative businesses and technology products, and will meet new expectations and new demands of this growing market for products and services. Competition in the internet and technology sector is a never-ending game. No product ever enjoys a long-term moat. Any successful technology company must have the capacity to transition across technology cycles. For 24 years, Alibaba has firmly grasped development opportunities in the PC era and in the mobile era.
Along the way, we've had successes as well as failures. We gained experience and learned lessons. Today, Alibaba has grown into a diversified business group with annual revenues of $125 billion in free cash flow of $27 billion. We're privileged to serve and support transactions and fulfillment for tens of millions of SMEs. We own the third-largest cloud computing platform globally, and the deep convergence of AI plus cloud computing will be an important impetus for our future development. Today, we stand at the beginning of a new era of technology centered on AI. The next decade will bring dramatic change worldwide, creating immense uncertainties and opportunities in parallel. Alibaba is embarking on a new entrepreneurial journey and is fully prepared to devote its all to driving technological transformation.
We possess sufficiently advanced resources, strong cash flow, agile governance mechanisms, and a strong talent pipeline. We're confident that we can both unleash new momentum in our existing businesses and create fresh, new growth opportunities. Thank you. And next, I'll hand the mic to Trudy. Hi, everyone. This is Trudy, and I'm delighted to speak with you all again. Eddie has shared with you his thinking on Taobao and Tmall Group's three key strategies. He further reiterated that putting users first is the top priority and further set out three points of focus. Here, I will present to you on our operations in the September quarter and give an overview of the just completed Tmall Double Eleven Global Shopping Festival.
As a result of our ongoing efforts to attract new merchants, enhance price competitiveness, and enrich content offerings, in the September quarter, we continued to achieve rapid growth in DAUs. Even more importantly, we also saw that organic users grew at the same time. More users proactively coming to the Taobao app means that user mind share is strengthening as the Taobao app becomes more attractive. In this process, we specifically saw several very clear changes. First, Taobao and Tmall's rich assortment of supply constitutes a huge advantage. With the constant inflow of new merchants, new merchandise, and new content, Taobao has become more vital than ever as a universal app. We continue to invest in building our merchant ecosystem, adhering to the principles of driving with digital, digital technology, openness, and inclusivity.
The number of merchants increased by over 1 million in the September quarter compared to the June quarter. At the same time, Taobao's live streaming ecosystem maintained its growth momentum. On the one hand, top-tier live streamers and agencies from other platforms continue to join the Taobao platform, such as East Buy and the wine and spirits influencer, Li Xuanzhuo, and they're developing very well on Taobao Live. On the other hand, merchant-operated live stream also has strong growth momentum. With more and more Tmall brand merchants taking part, the live streaming participation rate and total live streaming time are growing, and the share of GMV from merchant-operated live streaming is also increasing. More and more merchants are realizing that self-operated live streaming is much, much more than just a sales tool.
It's an important and sustainable approach for brand building and user engagement on the Taobao app. Second, in line with our value positioning as an internet consumption platform, we've now put in place a complete matrix of sales models, brand marketing-driven sales, everyday low-price product sales, and live streaming content-driven sales. These three sales models are independent and complementary. In combination, they provide one-stop comprehensive value to Taobao app users. Leveraging our universal supply, this sales matrix provides the consumer finds goods option, allowing users with specific purchase intent to find exactly what they want through fast, accurate search. It also allows users with no specific purchase intent to have fun browsing, enabling goods to find consumers. Even users who don't want to buy anything right away can enjoy learning encyclopedic knowledge from relevant lifestyle and consumption content, i.e., sowing seeds.
As we said, there's no question that the Taobao app has everything you could want or need. The only question is, can you think of everything you need? Well, going forward, even if you can't think of what you need, no matter, the Taobao app will help you do the thinking. All you need to do is come to the Taobao app, and you will have a great experience. Different users can get exactly what they want and need and have a fun time. And besides live streaming, which I just discussed, the total time spent on short videos posted on Guangguang more than quadrupled in the September quarter. Overall, total time spent by users on the Taobao app is also growing.
And finally, in light of the clear trend of stratification in China's consumer market, we've engaged in a comprehensive exercise to build price competitiveness. We divide merchandise into three different tiers with different value propositions and manage price competitiveness by product category and by sale format. In this way, we're comprehensively strengthening the price competitiveness of merchandise. This clearly defined rigorous management matrix is generating business scale growth and operational certainty for merchants who have supply chain advantages and product competitiveness. This supply, together with branded merchandise, creates a good price advantage on the Taobao platform, resulting in more transacting buyers and orders in the September quarter. For example, the number of 88VIP members surpassed 30 million in the September quarter, with continued growth in their GMV.
At the same time, in respect of users with low purchasing power, the scale of active consumers and conversion rate have increased significantly. In order for us to build a funner, more price competitive, and universal Taobao app, a crucial underlying driver is technology. In the September quarter, we continued to roll out our comprehensive AI upgrade across the entire Taobao platform. Here, I'd like to highlight a major upgrade to Alimama's Wanxiangtai product. The Wanxiangtai Unbounded version we released in August. It enables merchants to allocate their advertising budgets across all available properties within the Alibaba ecosystem using a single interface, and leverages AI to provide data analytics and insights, to intelligently locate targeted users, and to create AI-generated advertising content.
So the upgrade enables merchants to optimize their advertising spending and to significantly enhance campaign efficiency, conversion rates, and ROI. So the Wanxiangtai upgrade has resulted in growth in the number of advertisers. Next, I'd like to spend a little time talking about this year's Double Eleven. During Double Eleven this year, we achieved comprehensive growth in the number of merchants, transacting buyers, orders, and GMV. Even more importantly, though, this year's Double Eleven was a test of our strategy this year. So let me share with you here the progress on several of our key initiatives as seen during this year's Double Eleven. So starting with price competitiveness. First, price competitiveness increased significantly with direct price reductions and everyday low prices beyond basket-based discounts for multiple purchases. Price competitiveness is what putting users first and creating value for users is really all about.
In the past, we organized merchants to provide good prices to consumers through basket-based discounts. That satisfied some consumers, but others found it too complicated. Building on all the efforts we've made over the last half year to build price competitiveness, during this year's Double Eleven, we successfully organized direct price reduction and everyday low price offerings, in addition to those basket-size-based discounts. This comprehensively strengthened price competitiveness on Taobao and Tmall. As a result, we achieved satisfactory results in terms of new user acquisition, existing user retention, overall purchase conversion rates, and repurchase rates. For example, the number of 88VIP members further grew and reached 32 million, and our enhanced price competitiveness gives us stronger confidence in everyday sales outside of large campaigns. Secondly, our product granularity-based matrix of sales models began to pay off.
Now, as I mentioned, one of our milestones in the September quarter was getting this matrix in place. Double Eleven was the first real-world test of our ability to deploy all of brand marketing, everyday low price, and live streaming in a coordinated way during a large-scale campaign, with granularity at the level of store and of product. By launching products with us here, large brands taking excellent advantage of Tmall's Hey Box to intensively launch new products can lead new consumption trends in China. In terms of everyday low price, we achieved explosive growth with both of the Taobao Good Price Festival and the Ten Billion Subsidy programs.
In terms of the live streaming content-driven sales model, merchant-operated live streaming made huge breakthroughs, with merchant-operated live streaming accounting for close to 70% of all the dozens of live streaming rooms that generated over CNY 1 billion in sales. As a result of this test, we are more confident that the Taobao app is the best one-stop platform for merchants to manage diversified users and merchandise across all phases of product life cycles, and to achieve long-term certainty for their business. We're all the more clear about how to best serve these merchants. Third, we've begun to explore new operating models for new supply. What makes Taobao universal is the rich and diverse merchant ecosystem on the Taobao platform. They are the foundation of rich supply on Taobao.
Over the past few months, we've made some adjustments to optimize the supply mix on the platform. Building on our base of Tmall-branded merchants, we've further grown the number of channel merchants and white label factory sellers. But not all merchants are good at online operations, and there's no reason for us to force them all to become good at everything. Some white label merchants, for example, excel at lean manufacturing and can produce large volumes of high-quality goods at low cost. So during Double Eleven, we tested semi-consignment and full consignment models targeting them. This allows the white label manufacturers to do what they do best. They're responsible for producing good merchandise, and we are responsible for helping them sell it. This pilot initiative is just getting started, and we will look forward to updating you further on future earnings calls.
For Taobao and Tmall, each year's Double Eleven is a large-scale test of the strategies and tactics we've been deploying since the beginning of the year. This year, the business results we achieved, the competencies we honed, and all of the feedback we've received from users and merchants, validated the correctness of our three key strategies of putting users first, building a prosperous ecosystem, and driving growth with technology. China's e-commerce market will be a highly competitive landscape for the long term. The road ahead will be long and difficult. I will remain firmly committed to, and will not change our strategies, our focus, and our investment plans. Guided by the principle of putting users first, as long as we resolutely stay the course of investing and upgrading, we can certainly create a universal Taobao app that is both more fun and more price competitive.
Over this three-year business cycle, our rich and diversified monetization products will enable us to create a virtuous cycle for users, merchants, and the platform.
...Thank you. Next, I'll be handing over to Jiang Fan.
Jiang Fan (CEO)
Well, hi, everyone. I'm delighted to speak with you all during this earnings call. AIDC continued to maintain rapid growth this quarter amidst an uncertain international market environment. This progress was a result of our sustained expansion in the different markets we serve, as well as our product and technology innovations, business model transformation, and efficiency improvement in our supply chain services, all of which realized greater value for our customers. Next, let me provide more details. Starting with business model transformation and supply chain services upgrade. So as you all know, over the past few months, AliExpress rolled out a brand new service model called AE Choice. So put simply, we've upgraded from a pure platform cross-border model to a business model that offers more supply chain services.
On the one hand, the platform has dramatically reduced the complexity of doing business for merchants, allowing more diverse merchandise to enter the platform. On the other hand, with the platform taking responsibility for end-to-end consumer services, delivery time has improved dramatically, greatly improving consumers' experience. AE Choice has already achieved rapid order growth over the past few months, as a result of this business model transformation and supply chain services upgrade. In collaboration with Cainiao, we began piloting our global five-day delivery service in Spain and other countries, and we believe that continually enhancing services to customers is the basis for long-term development of the platform. Second, product technology innovation. AIDC serves consumers in different countries and regions, so we need to continually optimize user experience to meet local consumer needs.
We're committed to driving ongoing improvement in platform commerce efficiency and to upgrading customer experience through product and technology innovation. Over the past quarter, we continued to see the value generated by these investments. For example, we are actively leveraging AI to enhance merchant operating efficiency. This quarter, Alibaba.com launched new AI-based digital products for foreign trade. These AI products are tightly integrated throughout the entire foreign trade value chain. Features include smart launch and management of merchandise, market analysis, customer interaction, real-time translation for video chats, covering many important links in the foreign trade business. Leveraging digital technology, merchants can export their goods to global markets more efficiently and achieve higher operating efficiency with certainty. Third, our progress in different regional markets around the world. Last quarter, we achieved quite good growth in different regional markets.
In Turkey, Trendyol maintained rapid growth and profitability at scale, while also expanding into neighboring markets. In Southeast Asia, Lazada's overall financial situation has also improved significantly. Going forward, we'll continue to focus on enhancing platform operation efficiency and on sharpening our differentiated competitive advantage so as to achieve long-term sustainable development. In Germany, we announced the acquisition of a leading local B2B platform, Visable. Post-acquisition, Alibaba.com will operate two brands in Europe and will do business on multiple B2B trade platforms, furthering Alibaba.com's international expansion. Looking ahead, we see some high-confidence market opportunities, including further expansion of AE Choice and opportunities in some emerging markets. Over the next few quarters, our short-term business focus will be on rapidly expanding our business scale and market share. We will actively invest in these areas to achieve growth.
The mission of AIDC is to help global SMEs engage in digital trade. During this year's Double Eleven, we supported merchants in multiple countries as they directly provided services to consumers in over 100 countries and helped them achieve rapid business growth. Taking AliExpress as an example, with the growth of AE Choice, the volume of merchandise placed by merchants in the Choice warehouses grew by severalfold compared to last year, and a large number of SME merchants achieved fast sales growth during Double Eleven. Going forward, we'll continue to create long-term value for global merchants and consumers through product and technology innovation and consumer service upgrades, and we'll continue to enable merchants to achieve sustained business growth on the platforms. Thank you.
Toby Xu (CFO)
Thank you, Jiang Fan. We achieved a healthy financial performance in the past quarter, driven by steady business momentum and improving operating efficiency in several major businesses. Total consolidated revenue was CNY 224.8 billion, an increase of 9%. Consolidated Adjusted EBITDA increased 18% to CNY 42.8 billion. Non-GAAP diluted earnings per share was CNY 1.95, an increase of 21%. Since July 1st to November 15th, we have repurchased approximately $3 billion worth of our shares, which accounted for 1.3% of total shares outstanding. This is supported by our continuous generation of strong free cash flow. During the quarter, free cash flow was CNY 45.2 billion, or $6.2 billion, an increase of 27%.
Over the last several months, the Capital Management Committee undertook a review on ways to improve our ROIC and potential use of cash. Our priority in cash deployment in the following order: firstly, invest in technology and innovation for growth. Secondly, reduce total shares outstanding to achieve accretive earnings per share through stock repurchases. And three, reward long-term investors via an annual dividend. Thus, cash will be returned to shareholders through a combination of share repurchase and dividends. Accordingly, in addition to our $40 billion share repurchase program, we are pleased to announce that our board of directors has approved an annual dividend for fiscal year 2023, in the amount of $0.125 per ordinary share or $1 per ADS. The aggregate amount of the dividend will be approximately $2.5 billion.
Now, let's look at cost trends as a percentage of revenue excluding SBC. Cost of revenue ratio decreased 1 percentage point to 62% during this quarter. Product development expenses ratio remained stable at 5% during the quarter. Sales and marketing expense ratio remained stable at 11% in this quarter. General and administrative expenses ratio decreased 1 percentage point to 3% in this quarter. Our net income was RMB 26.7 billion, an increase of RMB 49.2 billion, compared to a net loss of RMB 22.5 billion the same quarter last year. The increase was primarily due to a net gain from the increase in fair value of our equity investments, versus a net loss in the same quarter last year, and an increase in Adjusted EBITDA.
Our non-GAAP net income, which excluded net gains or losses from investment fair value changes and other items, was RMB 40.2 billion, an increase of RMB 6.4 billion. As of September 30, 2023, we continue to maintain a strong net cash position of RMB 457.8 billion or $62.7 billion. Free cash flow of this quarter was RMB 45.2 billion, an increase of 27%. The increase was primarily due to an increase in profitability and a decrease in capital expenditure, partly offset by net changes in working capital. Now, let's look at the segment results, starting with Taobao and Tmall Group. Revenue for Taobao and Tmall Group was RMB 97.7 billion, an increase of 4%.
Customer management revenue increased by 3% to CNY 68.7 billion, primarily due to the increase in merchants' willingness to invest in advertising, partly offset by the modest decline in Taobao and Tmall online paid GMV. Execution of our strategies, especially that of price competitiveness strategy, has resulted in increase in order volume and more consumers. Direct sales and others revenue increased 6% to CNY 23.9 billion, primarily due to strong sales driven by the consumer electronics and appliances. China Commerce wholesale business revenue increased 18% to CNY 5.1 billion, primarily due to an increase in revenue from value-added services provided to paying members. Taobao and Tmall Group Adjusted EBITDA increased by 3% to CNY 47.1 billion.
The increase was primarily due to narrowing losses in certain businesses and increase in profit from customer management services, partly offset by the increase in investment in user acquisition and retention, as well as the increase in investment in content. Alibaba International Digital Commerce Group revenue was CNY 24.5 billion, an increase of 53%. Revenue from international commerce retail business increased by 73% to CNY 19 billion. The increase in revenue was primarily due to strong combined order growth of AIDC's retail businesses, driven by the solid performance of all major retail platforms. The revenue contribution from AliExpress's Choice and the improvements in monetization. Revenue from our International Commerce Wholesale Group businesses increased by 9% to CNY 5.5 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 CNY 384 million. Losses significantly narrowed, primarily because of improved margins of Lazada and Trendyol, partly offset by the increase in investment in new business such as Miravia and AliExpress Choice. Total revenue from Cainiao grew 25% to CNY 22.8 billion, primarily contributed by the increase in revenue from cross-border fulfillment solutions. During this quarter, Cainiao rolled out its premium five-day delivery service for consumers in eight countries and regions. Importantly, the service enhanced AliExpress Choice's overall shopping experience, and order volume for Choice ramped up rapidly during the quarter. Cainiao Adjusted EBITDA was a profit of CNY 906 million, compared to CNY 125 million in the same quarter last year.
The increase was primarily because of improved operating results from cross-border fulfillment solutions, technology, and other services, as well as domestic logistics services. Local Services Group revenue in September quarter grew 16% to CNY 15.6 billion, primarily due to strong growth in both Eleme and Amap businesses. During the quarter, Eleme's order volume grew year-over-year and quarter-over-quarter, driven by increasing number of transacting users and higher purchase frequency per user. During this quarter, order growth of Amap increased rapidly due to its strengthening position as a comprehensive to destination service platform, as well as strong travel demand during this summer season.
During an 8-day holiday period from September 29 to October 6, that combined Mid-Autumn Festival and National Day holiday, Amap recorded an all-time high of over 280 million peak DAU, as the Chinese economy experienced a strong recovery in travel demand. Local Services Group Adjusted EBITDA was a loss of CNY 2.6 billion this quarter, compared to a loss of CNY 3.3 billion in the same quarter last year, primarily due to the continued narrowing of losses from our to-home business, driven by Eleme's improved unit economics per order and increasing scale. Revenue from Cloud Intelligence Group was CNY 27.6 billion in this quarter, an increase of 2%. Year-over-year revenue growth was mainly driven by Alibaba consolidated businesses.
Revenue excluding Alibaba consolidated businesses slightly decreased, primarily due to our continued effort to improve revenue quality by reducing the revenue from project-based contracts that are of low margins, which was mostly offset by the increase in revenue from our public cloud products and services. Going forward, we will continue to enhance the quality of our revenue by reducing certain low-margin project-based contracts. During this quarter, our public cloud revenue represented over 70% of our external cloud revenue and grew healthily year-over-year, reflecting the stickiness in demand from customers across major industries. Part of the public cloud revenue growth was driven by the strong demand for model training and related services on cloud infrastructure.
Looking forward, revenue from model training and related services may be constrained in the foreseeable future, given the expanded export control rules imposed by the U.S. to further restrict the export to China of advanced computing chips and semiconductor manufacturing equipment. We believe the long-term growth opportunities driven by AI services have just begun. AI will enable the rapid innovation of all industries, and the demand for AI-driven cloud computing services will continue to grow significantly in our view. We will continue to explore alternative solutions to fulfill the needs of our customers. Cloud's Adjusted EBITDA was increased by 44% to CNY 1.4 billion, primarily due to increasing revenue from public cloud products and services, as well as improving operating efficiency. Businesses within the DME segment continue to achieve synergies.
On September 19, Alibaba Pictures announced its acquisition of Damai, aiming to leverage Damai's leading position in the offline performance market to expand influence in the offline entertainment industry. During the quarter, Damai maintained its industry-leading position with triple-digit GMV growth and improving profitability. Revenue from our DME Group was RMB 5.8 billion, an increase of 11%, primarily driven by the strong revenue growth of offline entertainment business of Damai and Alibaba Pictures, as well as the increase in Youku's subscription revenue, partly offset by the decrease in Youku's advertising revenue. Adjusted EBITDA was a loss of RMB 201 million, compared to a loss of RMB 362 million. The improved Adjusted EBITDA was mainly due to the increase in profitability of Damai and Alibaba Pictures.
Lastly, I'd like to note that starting from this quarter, we reclassify the revenue of our DingTalk business, which was previously reported under Cloud Intelligence Group, to all others. The purpose of which was to provide DingTalk with greater autonomy and to promote innovation and enhance competitiveness. Within all other segments, DingTalk and Intelligent Information Platform are among our first batch of strategic level innovation businesses that we are incubating as future growth drivers. DingTalk's paying enterprise customers have reached over 100,000, and during the quarter ended September 30, 2023, number of paying enterprise customers grew around 40%. DingTalk continues to upgrade its products and services to serve more enterprises and organizations. It has recently launched seven product lines that have been fully integrated with our proprietary Tongyi large models, which will continue to drive growth, enterprise customers adoption.
Our Intelligent Information Platform includes Quark, UCWeb, and other businesses. Quark provides young users with a one-stop platform for information search, storage, and consumption. During the month ended September 30, 2023, Quark continued to grow strongly with DAU up over 35%. Revenue from all other segments remained stable at CNY 48.1 billion, primarily due to the revenue growth contributed by Freshippo, Fliggy, Alibaba Health, and Intelligent Information Platform, partly offset by decrease in revenue from Sun Art. Adjusted EBITDA from all other segments was a loss of CNY 1.4 billion, compared to a loss of CNY 2.9 billion in the same quarter last year, primarily due to improved operating results from Freshippo, DingTalk, and Fliggy. Thank you. That's the end of our prepared remarks. We can open up for Q&A.
Rob Lin (Head of Investor Relations)
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 note 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 the website within one week after the meeting. Dear operator, operator, please connect speaker and SI conference line now. Please start the Q&A session when ready. Thank you.
Operator (participant)
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. To give more people the opportunity to ask questions, please keep yourself to no more than one question at a time. Your first question comes from Ronald Keung with Goldman Sachs. Please go ahead.
Ronald Keung (Head of Asia Internet Research)
Thank you, management team, and congratulations to Joe and Eddie in the new leadership team, and also in laying out the key priorities that you told just now. I think I'll kick off with the cloud kind of distribution, which is now no longer proceeding. As some investors were initially hoping for some extra return from the cloud distribution. Just how should we think about, firstly, our ongoing reorganization and the planned spin-off? And how should we think about the shareholder return on a kind of next few year basis? How do we think besides the newly announced regular dividend, and do we consider any further upsizing of the buyback or even a special dividend, considering our $63 billion of net cash?
Given that it's two months into your roles, as you see this, would you like to share any key surprises and priorities that you would have from here, both for the next years ahead? Thank you.
Joe Tsai (Chairman)
Hey, Ronald, thanks very much for the question. It's a very good question. This is Joe Tsai. So if you know, there's multiple ways to provide value to shareholders and you know, we have previously announced a multitude of approaches-
...From full spin-off of the cloud business to share repurchase. We've already explained the strategic thinking and the rationale for not doing the spin-off. Well, there are alternative ways to provide or enhance returns to shareholders. And right now, our thinking is that we are very excited about our multiple businesses, from Taobao and Tmall Group to cloud, that we should get into a phase of investing for growth. And Eddie has laid out a very clear strategy and multiple priorities for our investments. So, I think, you know, that gives you a pretty good direction of the uses of our cash, as well as a thinking about how we can highlight the value of our businesses, rather than through, you know, full spin-offs, but investing and creating a sustainable growth model, you know, in these kind of businesses. So I think you should think about our core businesses as coming to a phase where there's a reset for sure. But I think going forward, we feel very optimistic, we feel very confident about the fundamentals and all the tools and ability that we have built up, capabilities that we have built up over the years, to continue to invest and show value to our investors that way. As far as the stock repurchase is concerned, we're still executing our overall $4 billion share repurchase plan that was approved by the board. And as I said, as of today, we have $13 billion of dry powder left, and we will continue to execute that buyback. We're not going to consider a one-time cash dividend. We think as we laid out, the priority for cash use is to invest for future growth, and then executing our current share repurchase plan. And number three, as Toby has said, we have announced a dividend. So those are the plans for the uses of our cash. Thanks.
Speaker 12
Thank you very much for your question. I am Joe Tsai. Actually, there are many different ways to return value to shareholders. As we announced before, we once considered splitting the cloud business as a complete split, as well as our share repurchase plan, etc. Then, we have already introduced our related reasons and our thinking on why we are not seeking a complete split now. But we believe there are still many other ways to enhance shareholder returns. Actually, looking at all the businesses, from Taotian to cloud, etc., we actually feel very excited, as there are very good opportunities now. We can utilize the current stage to make some investments for future investment and future growth. Then, Eddie has already introduced very clearly our investment priorities. So, after listening, you should be able to feel how we will mainly use our cash to highlight the value of these businesses. So, it may not be a complete split, but rather this investment in sustainable future growth. Then, in the core business aspect, of course, we are doing a restart, but we have extremely strong confidence in these businesses' base, this basic face, and for the tools and capabilities we have established and accumulated over many years, we have extreme confidence. We believe that through further investment, we can present further value to investors. Then, the share repurchase plan was also introduced just now. We are still carrying it out. We have very ample cash on our balance sheet, $13 billion. So, we do not consider doing a one-time cash dividend. But Toby has already introduced our dividend plan for this year.
Joe Tsai (Chairman)
Uh，next question。
Operator (participant)
Thank you. Your next question comes from Alicia Yap with Citigroup. Please go ahead.
Alicia Yap (Managing Director)
[Foreign Language]Hi, thank you, 谢谢管理层接受我的提问。我这边有一个问题是关于那个淘宝天猫，投资计划的最近进展。就是说因为我们最近加大了这个投资，所以想请管理层分享一下，就是说在哪些领域我们其实得到了，取得了这个超预期的 一些进展，那哪些领域你觉得其实还有进步的空间？然后这次加大的投资目的其实是，为了夺回市场的份额呢，还是说，实现这个 GMV 和 CMR 的持续的增长？最后也想管理层分享一下，因为我们在双十一期间，加深了跟微信这边的合作，不知道微信，渠道获取的这个用户的转化率和其他平台的用户转化率有什么不同吗？谢谢。
Speaker 12
Thank you, management, for taking my question. My questions firstly relate to investment plans for Taobao and Tmall Group, because recently you have been increasing your investments. And I'm wondering if management could share with us in what areas you think those investments have yielded results that have exceeded your expectations, and in what areas you think there's still room to do better? And is the purpose of these investments more to regain market share, or is it more about ensuring sustainable growth of GMV and of CMR? And then finally, we noted that in this year's Double Eleven, there was more collaboration with WeChat, and I'm wondering if you'd talk to us about that experience and how the conversion rate was of users coming from WeChat as compared to other channels.
Trudy Dai (Co-Founder)
Hello, ni hao!
[Foreign Language]就是从Eddie也提到，就是我们的三大战略，就是用户为先、生态繁荣和科技驱动。那我的所有的投资其实是为了战略来进行的。那在用户为先上面，我们也投入大量来进行价格力的建设，以及在用户的，购买和复购，以及新用户的获取上面，我们是有投入的。第二，刚才在我的表达里面也会看到，就是淘宝的用户时长、活跃用户、购买用户和用户时长都是增长的。
Eddie Wu (CEO)
Yes, thank you. This is Trudy. Well, as Eddie has explained, at Taobao Tmall Group, we have three key strategic priorities, namely putting users first, building an ecosystem for brands and merchants to thrive, and realizing AI and technology-driven innovation. So those are the strategies, and of course, all of the investments that we're making and will make will be intended to serve those strategies. So in terms of investing in users, we've made investments in building, of course, price competitiveness across the platform, on increasing repurchase rate, as well as on acquiring new users. And we've seen important payoffs on the Taobao app, on all the KPIs we've discussed, including time spent as well as number of active purchasers.
Trudy Dai (Co-Founder)
[Foreign Language]然后在内容投资上面，我们也看到在内容投资所带来的好处，就是我刚才提到的，用主动打开的用户是在增长的，然后我们的用户时长是在增长的，包括逛逛的用户及用户时长也都在增长的。啊，这更加，更加坚定了我们在内容侧会继续加大投入。
Eddie Wu (CEO)
In terms of our investments in enriching content on Taobao, again, we're, we're certainly seeing good payoffs from those investments. As we mentioned earlier, a very important one is we're seeing an increase in organic users, users who proactively open up their app and come to us. We've seen a increase in user time spent, and if you look at Guangguang as well, again, we've achieved good growth in terms of number of users and their time spent there. So all of that really gives us all the more confidence that we need to continue with these investments in enriching the content environment.
Trudy Dai (Co-Founder)
[Foreign Language]Eddie 也谈到，就是 AI 是未来驱动商业的最好的时代和机会，因此我们在 AI 的投入上也是继续加大投入的。一个呢，是在商家方面，我们依然会继续加大在商家工具的 AI 投入，帮助商家在我们平台上做生意会更简单和更高效。
Eddie Wu (CEO)
Also as Eddie said, AI is the defining technology of our time and a very, very important driver going forward of growth and commerce. So we will, of course, continue to invest in AI, leveraging AI capabilities to enable merchants to grow sustainably and help them develop their businesses in the long term on the platform.
Trudy Dai (Co-Founder)
[Foreign Language]另外一个呢，是要成为好的内容平台，所以我们也在利用AIGC的，技术，极大降低了创作门槛，也希望未来有更多的用户能在淘宝内创造内容。
Eddie Wu (CEO)
As another part of our effort to become a very strong content platform, we're also leveraging AI-generated content using AIGC to lower the barrier to entry and make it easier to produce compelling content.
Trudy Dai (Co-Founder)
[Foreign Language]我也坚信，通过AI能为消费者带来全新的消费体验和快乐。如正在对外邀测的用户百科产品，淘宝问问，就是面向消费者的一个产品，AI产品。
Eddie Wu (CEO)
I believe that AI will be able to unlock and create fresh new experiences and a lot of fun for consumers. It'll be compelling for consumers, and an example of that is the new consumer-facing product called Wenwen.
Trudy Dai (Co-Founder)
[Foreign Language]然后你提到的和微信的合作，现在只是非常初期，也影响也是有限的。
Eddie Wu (CEO)
Finally, you asked about collaboration with WeChat. This is a very initial stage, and its influence has been very limited.
Trudy Dai (Co-Founder)
[Foreign Language]这次双方的合作主要是聚焦于双方升级三大引擎，一个是在流量拓展方面，把握视频号的流量，提高转化效率和塑造品牌。
Eddie Wu (CEO)
Our collaboration with WeChat has been focused on a few limited areas, one of which is traffic.
Trudy Dai (Co-Founder)
[Foreign Language]在系统构建方面，我们一起来提升了推荐能力。然后在政策方面，我们一起提供了一元补，补贴和双边的政策扶持，双方合作来打造双十一的引爆计划。
Speaker 12
... In terms of co-construction of systems, we also worked on enhancing recommendation capacity. In terms of policies, we also provided CNY 100 million in subsidies as well as bilateral policy support. Of course, Taobao is an open platform, and we stand ready to work with all partners and potential partners to provide the best services to our merchants. Thank you.
Alicia Yap (Managing Director)
Next question?
Operator (participant)
Thank you. Your next question comes from Gary Yu with Morgan Stanley. Please go ahead.
Gary Yu (Equity Research Analyst)
Hi. Thank you, management, for the opportunity to ask questions. I have a question regarding the opening remark from Joe about the target to increase return on investor capital to double digit. Can management share more about what kind of target and how we will achieve this target in the next couple of years? Specifically regarding the non-core business turning profitable, any, you know, specific business unit that we think we can turn profitable within a certain period of time? Thank you.
Speaker 12
[Foreign Language]好，非常感谢管理层接受我的提问。我的问题呢，是关于Joe在开场白当中讲的，就是说我们有这样的目标，希望把ROIC，就是以投入资本的回报率可以提升到两位数的水平。那么有哪些具体的指标，怎么来实现？那么尤其是，就非核心的业务而言，有哪些你们认为可以在一定的时期内就可以让它变为盈利的？
Toby Xu (CFO)
Okay. Gary, thank you for your question. I will take this question. Yeah, as Joe mentioned, actually, we are looking very closely into our ROIC, you know, and you know, we do set a target that we want to increase the ROIC to double digit, you know, in the next few years. There's a few way, you know, we will take to achieve that, you know, target.
Speaker 12
[Foreign Language]Gary, 感谢您提的问题，我是Toby，我来回答。那么确实，正如刚才Joe所讲，我们是有这样的目标，就是要把ROIC在，未来几年内吧，要提高到两位数。那么为了达到这样的目标呢，我们会采取几种方式。
Toby Xu (CFO)
In all our businesses, if you like, actually, as Eddie mentioned, we do have core and non-core business. In addition, we will also have, you know, many of the investments sitting in our equity, sort of like investment or even investment associates. So for all those investments, you know, we are also a resource that we use to, you know, as part of the resource that we can utilize to enhance our ROIC.
Speaker 12
[Foreign Language]那么，正如Eddie刚才介绍，我们的所有业务呢，是分为核心业务和非核心业务。然后其实除此之外，我们还有很多的投资，包括就是，股本证券方面的投资，股票投资，还有我们一些关联企业方面的投资。那么其实所有这些投资也是一种资源，我们可以利用它来提升我们的，资本回报率。
Toby Xu (CFO)
With respect to the core businesses, as you know, Eddie explained, actually, we will need to invest in innovation and growth. So for all these, you know, core businesses, the growth and the future profitability will help certainly generate more earnings, which will contribute to increase of ROIC.
Speaker 12
[Foreign Language]那么，就像刚才Eddie介绍的那样，在核心的业务方面，我们需要加大投资，投资于创新，投资于增长。那么这样的话呢，未来可以进一步的提升，它的，这个盈利，那么从而的话呢，可以提高我们的，资本回报率。
Toby Xu (CFO)
With respect to the non-core businesses and also the investments in our balance sheet, they're no longer strategic or core to us. I think, you know, on one hand, as Eddie mentioned, we would need those businesses to become profitable, you know, as early as possible. And also for some of the investments, you know, we will also in looking to the opportunity to monetize, which will give us cash, and eventually we can utilize the cash to give the return to the shareholders. So that will also help to increase our ROIC.
Speaker 12
[Foreign Language]那么，就非核心业务来讲的话呢，其实我们的资产负债表上还有呢，不少的投资，既没有，战略意义，又不是我们的核心业务。那么如Eddie刚才讲，这些我们需要尽快，让它能够转为盈利。所以，某些这样的投资，我们还是有机会可以去加以，变现，那么通过货币化的方式，未来呢，也可以，就是，返还价值给到我们的股东，那么同样也是可以提升我们的回报率。
Toby Xu (CFO)
Thank you. Yeah.
Speaker 12
[Foreign Language]好，谢谢。
Alicia Yap (Managing Director)
Next question.
Operator (participant)
Thank you. Your next question comes from Alex Yao with JP Morgan. Please go ahead.
Alex Yao (Co-Head of Asia TMT Research)
Good evening, and thank you for taking the question. I have a question regarding the cloud business group. So as you guys discussed in the remarks, you want...
Joe Tsai (Chairman)
...You decided not to proceed with a full spin-off of the cloud business. Is the withdrawal of the spin-off and the IPO a temporary decision or a permanent decision? If market conditions change or the financial public change, would you reconsider this decision? Then related to the operation, I think you guys discussed to develop a sustainable growth model for the cloud business. Given AI chip restriction from the U.S., can you talk about your thoughts on how this sustainable growth model will be? Thank you very much.
Speaker 12
[Foreign Language]各位晚上好，感谢接受我的提问。我的问题呢，是有关云智能业务的。那么刚才呢，管理层已经就是宣布啊，决定啊，不再寻求云业务的完全的这个拆分。那么想要知道的就是说这个拆分和这个上市这个计划现在是暂停呢，还是永远的取消？比如说如果往后呢，市场形势有所变化，你们会不会重新考虑？，这是一个。另外一个的话呢，刚才也讲到，就是在云业务方面，正在寻求呢，更加可持续的这样的增长模式。那么考虑到美国实施的AI芯片的这些限制，想要知道你们未来的一个可持续的增长模式会是怎样的？
Joe Tsai (Chairman)
this is a two-part question, so I'll answer the first part and Eddie answer the second part. About the you know our announcement to not proceed with the full spin-off. For us, this is...
You know when we announce the full spin off, we were looking at a, a way to sort of a financial engineering way to show the value of the business, and that was when a business was operating in circumstances that we thought were, you know, predictable, with, with our ability to project the business and communicate to investors and provide a level of transparency to investors who will independently hold the shares of Cloud Intelligence Group. But the circumstances have changed, and right now, rather than focus on financial engineering, we rather focus on figuring out how to grow the cloud business. A big part of that is for us to for the group to provide cash to make investments, because the in the AI driven world to develop a full blown business based on a, a very networked and highly scaled infrastructure, it requires investment. So we would rather show investors through our operations of the cloud business rather than spinning it off, and hopefully we can enhance value to shareholders as, as we deliver future growth, revenues and profits in the future. As far as the sustainable business model, I'll let Eddie to answer that question.
Speaker 12
[Foreign Language]好，你好，感谢你的问题。这个问题分两个部分，我是周，我先回答第一个部分，那么第二个部分呢，待会儿交给Eddie来回答。那么关于第一个问题呢，就是我们决定，就是不去进行云业务的完全的拆分。当时呢，我们是想到要做这样的一个完全的拆分，主要的想法呢，就是希望通过这种所谓金融工程的这个方式，可以显现出这个业务它的一个真正的价值。那么在那个时候，这个业务所处的大环境，它的整个运营是可预测的，也就是说我们可以很透明地来给投资者显示未来这个业务的这个增长态势会怎样，毕竟他们以后会作为，作为独立的股东来持有它的股份。那么，至此呢，这个大环境这些情况都发生了变化，所以现在的话呢，我们就不通过金融工程，而是通过进一步的投资来显现这个业务的價值。因为在AI驱动的的高度网络化的高度规模化的这样一个世界当中，要显现这种云业务的價值是离不开投资的。所以的话呢，我们就不是通过拆分的方式来向投资者显示这个业务的價值，而是通过增强提升它的價值，未来呢，寻求提高它的增长，包括它的收入，包括它的利润，来显现它的真正的價值。下面交给Eddie。好，谢谢您的提问啊，就是您提的问题很关键，就是我们现在其实是一个有一些新的行业的一个变化。那我说两点吧，就是我觉得从我们云计算的商业模式上来说，我觉得可以分为两个阶段，那第一个阶段我们认为是以外CPU为核心的传统云，云计算，在这个，在这个领域，我们在14年的积累，我们在这个市场有非常强的一个产品组合，在这个产品组合当中...
Eddie Wu (CEO)
[Foreign Language]我们会以更加强调以公共云的这个产品组合为主，因为公共云的云计算模式，我们能够具备更强的网络效应，以及更强的规模效应，能够帮助客户提供更好、更具性价比的服务。所以这个是我们 在所谓的传统的云计算市场的一个增长策略。第二个其实是面向未来，其实以GPU为核心的AI计算，其实正在发生中国市场发生一些很大的变化。我们知道前段时间整体的一个国际上芯片的这些政策和这些策略，会对中国市场的AI计算市场产生一个很重要的变化。那我们觉得在可见的未来，在中国的AI算力的芯片市场会非常的分散化，也就是用户的选择，以及整个背后的供应链，会有多家供应商来提供整个的AI的算力市场。而 在这种情况下，我们觉得长期对于国内的云计算的AI市场，云计算的重要性会增加。因为在这种形势下，我们的客户其实更需要云计算平台来提供更加高效而且一次性的方案，来简化他们的开发和应用，以屏蔽底层更多更复杂的一种AI算力的芯片这些细节。而阿里云多年在云平台上实施的一云多芯的策略，重要性会得到提升。阿里云可以帮助客户通过我们的PaaS这样的平台产品，以及通过我们的Model-as-a-Service这样的产品，包括通过我们底层的云计算的IaaS这样的产品，提供一套完整的方案，在异构算力上，满足客户从训练到推理的AI计算需求。所以我们觉得长期来看，阿里云的AI解决方案对于客户未来可以提供更多的价值。这是我们的总体关于现在的云计算未来的增长策略。
Thank you. Well, the question you asked really is a critical one. There have been many changes in the situation in the market. But I'll come at this in two parts in terms of business model. The CPU centered traditional cloud computing business is one where we've built up a strong portfolio over the last 14 years. In this part of the business going forward, as we said, we're going to place our focus on public cloud, because we think public cloud is where we can achieve very strong network effects and scale effects, and thereby provide very good value for money to our customers. The second part of the business, going forward into the future, is GPU based AI computing, and obviously there have been some major changes in the external environment, policy wise and otherwise, that will bring about important changes in the China market.
I think going forward, what we can certainly expect to see in the China market is that there'll be multiple different chips being used, multiple different providers meeting demand for AI computing power in the China market. I think cloud in China is going to play an ever more important role in supporting the development of AI in this market, because cloud can allow developers to achieve much higher efficiency and not have to worry about complex issues around AI chip design.
I think that we have a complete set of offerings in place that's really well designed to support development, because we've always been supporting one cloud with multiple chips, and we have these different layers platform as a service, model as a service, infrastructure as a service. We're able to support heterogeneous architecture at all of these different levels. I think that with that in place, we're well prepared to provide great value to the Chinese market. Let's invite the last question.
Operator (participant)
Thank you. Your next question comes from Jiong Shao with Barclays. Please go ahead.
Jiong Shao (Senior Equity Research Analyst)
Thank you very much for taking my question. You highlighted choice as one of the growth driver has been one of the fastest growing segment. I was wondering, could you expand a bit on which countries and regions choice has entered? And you talked about revenue contribution earlier, I was wondering is there any magnitude that you can share, sort of a timeline to get to unit economics breakeven? And related to that, for your AIDC business, you have a mix of sort of local e-commerce in Turkey and Southeast Asia, and you have a cross-border express choice. Longer term, what's the focus? Or do you always expect sort of a 50/50 or a healthy balance between the two? Thank you very much.
Eddie Wu (CEO)
[Foreign Language]好，谢谢，这是我的提问。我这个问题是关于AIDC方面的，那么刚才，你们介绍Choice现在是一个，推动业务增长的重要的这个动能。那么，想要知道你们已经在哪些国家地区，推出，这个Choice的服务。另外，想要知道就是Choice业务对收入的贡献现在，有多高？然后，有没有这样一个时间表，就是何时，这个业务能够，UE就是，持平转正。
Speaker 12
[Foreign Language]...这样。然后另外的话呢，我们知道AIDC，它在土耳其，在东南亚是有这个本地电商，那么另外的话呢，有跨境电商，就是速卖通。那么这两个业务的一个比例，未来会怎么样？会不会以其中的一个为主呢，还是会一直保持这样一个五五开或相对比较平衡的这样一个格局。
Jiang Fan (CEO)
[Foreign Language]谢谢你的提问。我先回答一下第一个问题，就是因为那个AliExpress Choice本身是基于AliExpress的这样的一个已经存在的一个业务上面发展出来，它并不是一个从零开始的。对，因为整个AliExpress已经在全球超过100个，100个国家有这样的业务，那我们本质上是，通过把我们的这个纯平台的一个商业模式升级成为一个平台，加一个，Choice全托管这样的一个混合型的业务模式。那，那就是说可以看到，刚才我也讲到，因为Choice的这个用户体验会比这个，平台模式要好，所以它其实是现在驱动我们增长的一个主要的动力。
Eddie Wu (CEO)
Thanks for the question. Well, first of all, I should point out that Choice is actually based on AE. So it's not something new that's come out of nowhere. It's layered on top of a pre-existing business, AE, and AE is in over 100 different countries. So what we've really done with Choice is we've gone from a pure platform model to a platform plus a Choice model, a fully entrusted model. And what we found is that the user experience with Choice is significantly better than with the pure platform model. So, at this point, Choice is a major driver of growth in our business.
Speaker 12
[Foreign Language]对，那我们，因为这个Choice推出一年时间是发展非常快的，现在在我们的订单的占比在快速的一个提升。对，那我们预计可能在未来的几个季度内，我认为Choice的比例会，贡献整个AliExpress很超过50%的量。对，所以它还是整个驱动了我们整个平台的一个增长。AliExpress的50%的订单比例。
Eddie Wu (CEO)
So Choice has been launched for about a year now, and it's certainly growing very fast and accounts for an increasingly higher proportion of, of orders. So I would say that, in a few more quarters from now, Choice will account for more than 50% of revenue from AliExpress.
Speaker 12
[Foreign Language]对，那 是 -
Eddie Wu (CEO)
I mean, number of orders, not revenue.
Speaker 12
[Foreign Language]就是说那个，现在因为，整个 Choice 的模式还是在一个投入期，所以它还是一个利润为负的这么一个业务。但我们看到随着规模的一个增长，我觉得它整个的这个优异在快速地收敛。对，然后我们预计，在未来的 一段时间内，我们还是会以这个业务增长为第一优先级，对，但我们会同时优化我们整个的这样的一个，利润。
Eddie Wu (CEO)
So Choice is still in the a business that's in the investment stage. Its profit is negative for the time being. But with further growth, its unit economics will certainly be improving. For now, we're placing the number one priority for Choice is achieving growth, but unit economics and profitability will certainly optimize going forward.
Speaker 12
[Foreign Language]关于这个本地跟跨境的比率，首先就是说，我们其实在很多国家的业务，可能未来是这个本地跟跨境可能是一个这样混合的业务，对。那么有些市场我们会以跨境为主，有些市场会以本地为主，对。然后我觉得这是一个动态的比率，对。那么长期我们也希望，我们并没有去设计一个本地跨境的比率，而是以这个不同国家的用户的体验，跟需求角度看，达到一个这样比较平衡的比率，对。
Eddie Wu (CEO)
So as regards the local e-commerce model versus the cross-border model, you know, in some countries the local model works better, in other countries, the cross-border model works better. I don't, I wouldn't say that we have any fixed percentage in mind in terms of how to allocate the business. It really comes down to how do you provide the best user experience and best meet user demand in those different countries and markets.
Rob Lin (Head of Investor Relations)
Thank you. That concludes our earnings call for today. We will see you next quarter. Thank you.
Operator (participant)
That does conclude our conference call today. Thank you for participating. You may now disconnect.
