Alibaba Group - Earnings Call - Q3 2025

Transcript

Operator (participant)

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's December Quarter 2024 results conference call. At this time, all participants are on listen-only mode. After management's prepared remarks, there will be a Q&A session. I would now like to turn the call over to Lydia Liu, Head of Investor Relations of Alibaba Group. Please go ahead.

Lydia Liu (Head of Investor Relations)

Good day, everyone. Welcome to Alibaba Group's December Quarter 2024 earnings conference call. With us are Joe Tsai, Chairman; Eddie Wu, Chief Executive Officer; Toby Xu, Chief Financial Officer; Jiang Fan, Chief Executive Officer of Alibaba International Digital Commerce. This call is also being webcast from the IR section of our corporate website. A replay of the call will be available on our website later today. Now, let me quickly cover the safe harbor. As usual, we would like to remind everyone that today's discussions may contain forward-looking statements, particularly statements about our business prospects and expected financial results that are subject to risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor statements that appear in our press release and investor presentation provided today.

Please note that certain financial measures that we use on this call are expressed on a non-GAAP basis. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. Unless otherwise stated, growth rate of all stated metrics mentioned during this call refers to year-over-year growth versus the same quarter last year. With that, I will now turn the call over to Eddie.

Eddie Wu (CEO)

各位投资人朋友，晚安。

Hello, everyone.

Welcome to this quarter's earnings call. Over the past year, we have pursued our user-first, AI-driven strategy and focused on our two core businesses of e-commerce and AI+ Cloud. After a year of transformation, our core businesses have demonstrated accelerating growth momentum. We've also largely completed the divestments of our offline assets. Across Alibaba Group, our businesses now possess strong business fundamentals and profit-generating capabilities. This quarter, we continue to pursue our integrated AI+ Cloud strategy in our cloud business, leveraging our industry-leading AI product portfolio. Overall revenue, excluding Alibaba consolidated subsidiaries, grew 11% year-over-year this quarter, with AI-related product revenue maintaining triple-digit year-over-year growth for the sixth consecutive quarter. With the rapid adoption of AI technology across industries, customer demand for Alibaba Cloud products has surged. Looking ahead, revenue growth of Cloud Intelligence Group will continue to accelerate.

We recently launched Qwen 2.5-Max, our flagship AI foundation model, which has achieved industry-leading performance across multiple recognized benchmarks. As of the end of January, over 90,000 Qwen-based derivative models have been developed globally, making Qwen the most popular among developers across the major model families. Over 290,000 companies and developers have accessed Qwen APIs through Alibaba Cloud's Bailian platform, and we will soon release a deep reasoning model built on Qwen 2.5-Max. In e-commerce, Taobao and Tmall continued to invest in new user growth and comprehensive user experience enhancements. We saw strong growth in both new consumers and orders during the quarter. 88VIP members, our core consumer group, maintained double-digit growth, reaching 49 million by the end of the quarter. Taobao and Tmall also made solid progress in monetization as planned, with CMR growing 9% year-over-year.

At the same time, Taobao and Tmall continued to strengthen merchant-friendly measures that improve our platform's business operating environment, fostering higher quality and more sustainable development. Our international e-commerce business maintained strong growth this quarter, driven by cross-border businesses with continued improvement in operating efficiency. During the quarter, we increased investment in key markets while focusing on operating efficiency, with Choice's unit economics improving on a sequential basis. We expect AIDC to achieve its first quarter of profitability in the next fiscal year. Our other internet platform businesses continued to improve operating efficiency. Amap achieved profitability this quarter. Looking ahead, Alibaba's strategic direction and roadmap are clearer than ever. We'll continue to focus on three business categories: first, domestic and international e-commerce; second, AI+ Cloud computing; and third, internet platform businesses. We are confident that our focused strategy will drive sustained solid growth for Alibaba Group.

Today, AI technology advancements are driving profound industry transformation. In alignment with Alibaba Group's business landscape, we will scale up investments in the following three areas as part of our broader AI strategy over the next three years. First, infrastructure for AI and cloud computing. The AI era presents a clear and massive demand for infrastructure. We will aggressively invest in AI infrastructure. Our planned investment in cloud and AI infrastructure over the next three years is set to exceed what we have spent over the past decade. Second, AI foundation models and AI-native applications. AI foundation models are pivotal to transforming industry productivity. We will substantially increase R&D investment in AI foundation models to maintain our technological leadership and drive the development of AI-native applications. Third, transforming our existing businesses with AI. AI technology presents powerful opportunities to enhance user value across our e-commerce and other internet platform businesses.

We will increase investment in AI application R&D and computing power and deeply integrate AI across our businesses, capturing new growth opportunities in the AI era. Looking ahead, we're confident in our focused strategy on e-commerce and AI+ Cloud and excited by the business opportunities being unlocked by this new technology cycle. Thank you.

Toby Xu (CFO)

Thank you, Eddie. The strong financial results of the past quarter show that we are making very good progress to ignite growth in our core businesses. On our Taobao and Tmall businesses, we saw a significant upswing in CMR growth, which accelerated to 9% year-over-year, driven by growth in online GMV and improved monetization. This outcome reflected full quarter impact of the software service fee and the increasing adoption of Quanzhantui. Our cloud business continues to exhibit robust momentum, with revenue growth accelerating to 13%, and the overall revenue from businesses excluding Alibaba consolidated subsidiaries grew over 11%, fueled by an even faster public cloud revenue growth. Additionally, our AI momentum remains robust, with AI-related product revenue sustaining triple-digit growth for the sixth consecutive quarter. These achievements highlight our commitment to innovation and reinforce our leadership in the cloud and AI sectors.

This quarter, AIDC maintained its rapid growth momentum, primarily driven by strong cross-border business performance. AIDC increased investments during overseas shopping festivals quarter over quarter and continued to invest in select European markets and the Gulf region to acquire users. While we made good progress in growing our core businesses, we maintained financial discipline with enhanced operating efficiency, achieving positive EBITDA growth in Taobao and Tmall Group. Meanwhile, we improved operating efficiency of other businesses with the goal of sustainable business growth and achieving profitability. This quarter, Amap achieved profitability for the first time, while the majority of loss-making businesses will achieve break-even and gradually begin to contribute profitability at scale within the next one to two years. We have been actively managing our balance sheet through strategic divestment of non-core assets, share buybacks, and effectively extending our debt maturities at attractive rates.

During the quarter, we entered into agreements to dispose all of our interests in Sun for up to a maximum of USD 1.6 billion and in Intime for USD 1 billion. These moves reflect our strategic shift to streamline operations and focus on our core businesses. Recently, we have obtained the PRC antitrust approval with respect to Sun and Intime's merger control filing. We expect the major financial impacts will be reflected in March quarter. These transactions will improve our operating efficiency and enhance our agility. For December quarter, we repurchased shares of a total of USD 1.3 billion, or a 0.6% net reduction in share count. Combined with approximately USD 10 billion repurchased in the first half of this fiscal year, we had achieved a 5% net reduction in share count over the last nine months.

In November 2024, we also completed a dual currency bond issuance, raising approximately USD 5 billion through a combination of USD 2.65 billion USD-denominated notes and CNH 17 billion RMB-denominated notes, which was strategically structured to leverage the attractive pricing of RMB notes to significantly lower our overall financing cost. On the consolidated basis, total consolidated revenue was RMB 280.2 billion, an increase of 8%. Consolidated adjusted EBITDA increased 4% to RMB 54.9 billion, primarily attributable to revenue growth and improved operating efficiency, partly offset by the increase in investments in our e-commerce businesses. Excluding the effect of long-term cash incentive plan, our adjusted EBITDA growth would have been an increase of 5% on a like-for-like basis compared to the same quarter last year. Our non-GAAP net income was RMB 51.1 billion, an increase of 6%.

Our GAAP net income was RMB 46.4 billion, an increase of 333%, primarily due to the increase in income from operations, mark-to-market changes from our equity investments, and increase in share of results of equity-method investees. Operating cash flow this quarter was RMB 70.9 billion, an increase of 10%. Free cash flow this quarter decreased 31% to RMB 39 billion. The decrease in free cash flow was mainly attributed to the increase in expenditure related to our investments in cloud infrastructure. As of December 31, 2024, we continue to maintain a strong net cash position of RMB 378.5 billion, or USD 51.9 billion. The strong net cash position and healthy operating cash flow bring us the confidence and sufficient resources to increase our investments in cloud and AI infrastructure to capitalize the substantial growth potential presented by the latest AI innovations.

Now, let's look at segment results, starting with Taobao and Tmall Group. Revenue from Taobao and Tmall Group was RMB 136.1 billion, an increase of 5%. Customer management revenue increased by 9%, primarily driven by the growth in online GMV and improvement of take rate. This outcome reflected the full quarter impact of the software service fee and the increasing adoption of Quanzhantui. We increased the efforts to grow our user bases and continue to invest in strategic initiatives to enhance user experience. These efforts led to strong growth in new consumers and strong order growth. During this quarter, the number of 88VIP members continued to grow rapidly, reaching 49 million. With solid profitability and increasing upon a cohort basis, we will continue to balance the scale and the profitability of this program.

Taobao and Tmall Group adjusted EBITA increased by 2% to RMB 61.1 billion, primarily due to the increase in revenue from customer management service, partly offset by the increase in investment in user experience. Revenue from AIDC grew 32% to RMB 37.8 billion this quarter, primarily driven by strong performance of cross-border businesses. Revenue from international commerce retail business increased by 36% to RMB 31.6 billion, primarily driven by the increase in revenue contributed by AliExpress and Trendyol. Revenue from our international commerce wholesale business increased by 18% to RMB 6.2 billion, primarily due to an increase in revenue generated by cross-border related value-added services. AIDC's adjusted EBITA was a loss of RMB 5 billion, compared to a loss of RMB 3.1 billion in the same quarter of last year.

AIDC increased investment during the overseas shopping festivals quarter over quarter and continued investments in select European markets and the Gulf region to acquire users. However, the UE of the AE Choice business improved our sequential basis. Moving forward, we will continue to enhance operating efficiencies within each business and drive high-quality growth by strategic investments in select markets. Revenue from Cloud Intelligence Group grew 13%, and overall revenue, excluding Alibaba consolidated subsidiaries, increased by 11%, mainly driven by the double-digit revenue growth of public cloud products, including AI-related products. Cloud's adjusted EBITA increased by 33%, primarily due to a shift in product mix to a higher margin public cloud products and improving operating efficiency, partly offset by the increasing investments in customer growth and technology.

We will continue to invest in anticipation of customer growth and technology innovation, particularly in AI infrastructure, to capture growth opportunities in the AI era. Revenue from Cainiao decreased by 1%, and its adjusted EBITA decreased by 76%. There is an ongoing restriction with our e-commerce businesses taking on certain logistics platform role. Cainiao will continue to focus on building its global smart logistics network and make its end-to-end logistics capabilities available to our own e-commerce businesses as well as third parties. Revenue from Local Service Group grew by 12% to RMB 17 billion, driven by the order growth of both Amap and Ele.me, as well as revenue growth from marketing services. While its adjusted EBITA loss narrowed significantly as unit economics improved due to operating efficiency and as scale increased.

Revenue from Digital Media and Entertainment Group grew 8% to RMB 5.4 billion, while its adjusted EBITA loss continued to narrow. Revenue from all other segments increased by 13% to RMB 53.1 billion, mainly due to the increase in revenue from retail businesses, including Freshippo and Alibaba Health, while adjusted EBITA was a loss of RMB 3.2 billion. In closing, during this quarter, we are making significant strides in enhancing the competitiveness of our e-commerce and cloud businesses. Additionally, we are focusing on improving the efficiency of our loss-making segments to establish a clear path to profitability. In addition, this quarter, we continue to optimize our balance sheet and shareholder return with significant non-core asset sales, share buybacks, and effectively extending our debt maturities at attractive rates. As Eddie mentioned, we will continue to execute our strategy and make significant investments to seize opportunities presented by the AI era.

Looking ahead, our unique business positioning, coupled with our strong financial position, gives us full confidence to grow. Thank you. That's the end of our prepared remarks. We can open up for Q&A.

Lydia Liu (Head of Investor Relations)

Thanks, Toby. 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 purposes 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 transcripts of this call will be available on our website within one week after the end of the meeting. [Foreign language] Operator, please connect speaker and conference lines now. Please start Q&A session. 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 Alicia Yap with Citigroup. Please go ahead.

Alicia Yap (Equity Analyst)

Thank you. Good evening, management. Thanks for taking my questions. Congratulations on the solid results. My question is related to cloud AI and also the CapEx. So with Baba as leading cloud infrastructure service and strong foundation AI models, Baba is well positioned to capture the transformation era of these AI adoptions in the coming months in China and also possibly outside of China.

Maybe can management share some insight as how it will translate into the financial upside in terms of the cloud revenue growth and also the cloud margins trend in the next few quarters? We noted that CapEx spend this quarter almost doubled from last quarter to RMB 31 billion. And also management noted on the prepared remarks that you know the expected investment in CapEx in the next three years will be more than the past 10 years. Can management clarify the comment and help us crystallize the amount of the spend in the next few quarters? And also do you have a budget that you can share for us for the next three years? And how will the CapEx spend actually impact overall profitability trend? Thank you.

Eddie Wu (CEO)

[Foreign Language].

Alicia Yap (Equity Analyst)

Thank you.

Eddie Wu (CEO)

And there were quite a few questions in there.

Perhaps before I get into each of those questions, I could begin by sharing with you our overall views on AI and why we're investing in AI so aggressively and the larger opportunities that we see in the sector, as well as the ways that we have been and will continue to monetize developments around AI progressively as they come out. First of all, we think that Alibaba is extremely well positioned in the AI space, in particular in the Asia market, where we have several very important advantages. We are the number one cloud provider in the region and number four cloud provider globally. We have leading models, leading technology. We have proprietary AI models as well as a thriving open ecosystem. And we also have a multitude of application scenarios for AI across our ToC ecosystem.

But to explain the group's strategy around AI requires taking an even longer-term view, because this is the kind of opportunity for industry transformation that really only comes about once every several decades. So when it comes to Alibaba's AI strategy, our first and foremost goal is to pursue AGI. The pursuit of AGI is our primary objective. We aim to continue to develop models that extend the boundaries of intelligence. Why is that the primary aim? Well, it's because all of the visible AI application scenarios today that we see around content creation, search, and so on and so forth have arisen precisely as a result of the ongoing extension of those boundaries. And we want to keep pushing out those boundaries to create more and more opportunities.

Lydia Liu (Head of Investor Relations)

因此我们觉得智能能力的提升是这一轮AI技术生产力变革的核心主轴。第二，就我们要从实现AGI能够创造的商业价值上来看，为什么智能能力这么重要。所谓的AGI的标准定义是能够完成80%以上的人类的能力。那么我们从这个角度上来看，全球GDP的50%的支出其实是就业者的劳动工资支出，包括脑力劳动和体力劳动。从这个角度上来看，我们预判如果实现AGI，那人工智能相关的产业大概率将会是全球最大的产业，有可能影响或者替代现在50%左右的GDP的构成。第二，就我们从我们的角度上来看，通过云和AI的深度结合，将会成为最重要的AI基础设施。而且云和AI的结合将在未来的云计算网络上会成为输出AI智能最大的云计算网络之一。这是我们阿里云的目标。为什么我们觉得大部分的智能，大部分的所谓的智能就是现在模型背后的输出的Token，90%的Token我们判断未来将会在云计算网络上生成，并在云计算网络上输出。因为这么巨大的模型所计算的量只有在云计算网络上才会具备最高的效率。通过我们遍布全球的数据中心，才能够以更快速的方式去输送给全球的应用开发者。第三，在我们集团的战略目标上，我们会以更开放的心态在集团的各应用中深度应用AI。因为我们觉得AI技术的应用在我们现有业务的升级上面能够提升各业务的巨大价值。AI技术对于集团的各个我们的ToB和ToC业务都会带来效率的提升，以及用户时长和用户价值的巨大提升。这个是为什么我们要投入这么巨大，包括您刚才所说的投入在未来三年，我们要投入在基础设施上投入超过过去十年总和这样的一个AI战略的一个决心。

So we see the continued pushing out of the boundaries of intelligence and the pursuit of AGI as the key objective in our efforts. Secondly, the pursuit of AGI can contribute immense business value. There have been studies that indicate that when AGI is achieved, it could potentially, pardon me, the standard for AGI is artificial intelligence that can replace or achieve 80% of human capabilities. Well, around 50% of global GDP is manpower salaries, including both intellectual or mental work and physical labor. So if AGI can be achieved, then that could have a tremendous impact in terms of restructuring industry around the world and could have a significant influence on or even replace 50% of global GDP. Second, we will continue to deepen the integration of cloud and AI. We see this as the most important kind of infrastructure.

In the future, we will continue to build AI on an integrated fashion across our cloud and in our own business applications. When we talk about intelligence, we're really talking about the tokens that are output by models. We think that in the future, 95% of those output tokens will be generated on the cloud and distributed by the cloud, because only a cloud computing network can generate and distribute tokens with that highest level of efficiency. We can connect to developers on the most efficient and rapid basis worldwide through our globally deployed network of data centers. Thirdly, we maintain an open attitude with respect to the deep integration of AI into our own scenarios to create value across all of our businesses. We expect that with the further integration of AI across our ToB and ToC offerings, we will achieve higher efficiency.

We will increase user time spent and create more user value for our users. So that's precisely the thinking behind our determination, as you referenced, to invest more in cloud and AI over the next three years than we did in aggregate over the last 10 years.

Eddie Wu (CEO)

您说到第二个问题是关于我们的资本支出的季度的一个安排情况。那我们觉得在这个是对我们三年的未来三年的一个总的预期。从我们的现在的预判来说，在年度周期内，我们觉得可能是一个相对平均的一个支出安排。但是在每个季度而言，可能现在会有波动，因为你在每个季度而言的供应链的周期，包括整个的IDC的建设周期，这些东西可能会根据供应链的情况来做每个季度的一些特别安排。所以这是基本上是这样一个情况.

The second part of your question had to do with CapEx on a quarter-by-quarter basis going forward. What I've laid out for you is our overall expectation for the coming three years. I would say that on a year-by-year basis, the annual level of CapEx will be more or less equal across these three years, but there could be fluctuation within each year on a quarter-by-quarter basis given the time that it takes for supply chains to provide what's needed as well as for the IDCs to get set up.

But overall, we would expect it to be relatively even over the next three years.

您说到的这些资本支出将如何影响整体盈利？那总体来说，我们觉得未来三年是可能阿里集团历史上云的建设周期最大的、最集中的这个三年。所以我们相信这个集中的建设周期对于我们的资本，对于我们的硬件的每年的摊销，包括我们的这些方面，我们相信会产生一定的影响。但是从现在我们看到用户需求以及对行业未来的预判上来说，我们觉得这些投入下去的这些整体的基础设施，我们相信会很快会被内外部的客户需求所消化。

The other part of your question had to do with the potential impact of our CapEx plans on profitability. I would say that this next three-year period will likely be the single period in which we'll be making the most concentrated and highest level of investments in building out our cloud and AI-related infrastructure. And of course, the hardware infrastructure will have an impact in terms of depreciation. But behind that is our expectation of huge demand for take-up on the part of both internal and external customers. There's huge demand there, and we definitely see this being taken up very rapidly.

Lydia Liu (Head of Investor Relations)

Next question, please.

Operator (participant)

Thank you. Your next question comes from Alex Yao with J.P. Morgan. Please go ahead.

Alex Yao (Co-Head of Asia Technology, Media and Telecommunications)

Hey, thank you, Management, for taking my question and congrats on a very strong quarter. My question is also related to AI in the cloud. So based on my observation, the introduction of latest DeepSeek large language model families has brought high-quality models at affordable cost to the entire industry. And because DeepSeek's model itself is free of charge, monetization of large language model consumption has moved down one layer in the value chain to the compute power part. So first of all, do you agree or disagree with this statement? And secondly, to what extent is the compute power for large language model or GenAI not a commodity? And lastly, with the help from DeepSeek's high-quality and high-cost efficiency models, where do you see the most high potential area in terms of AI-native application within Alibaba ecosystem and outside of Alibaba ecosystem? Thank you.

Eddie Wu (CEO)

好，感谢管理层接受我的提问，也祝贺本季度取得良好的业绩。我的问题也是关于AI和云这一方面。那我们就是观察到，现在DeepSeek推出了新的一些大模型。那么它等于是给整个行业带来了很高质量，同时也是费用承担得起很廉价的这样的大模型的服务。而DeepSeek本身这个模型它是免费提供的。那么因此的话，在商业化这一方面代表的是，这个就是价值链上很难再攀升，而是这个下了一个台阶。那么不知道你会不会同意，然后就是算力这一方面是不是也是这个被商品化。然后就是说展望未来，AI原生应用这一块，你认为阿里内部和外部最大的一个有价值的应用场景有哪些？ 好，谢谢。你这个问题问得很好。我觉得现在在AI这个技术的进展当中还处于非常的早期。同时我们的AI的技术能力也在快速的发展。所以就现在来看，我们现在的在基座大模型上确实在基座大模型的本身的这个商业模式上可能确实是并不看得那么清楚。但是我们觉得在未来随着智能能力的提升，我们有非常多的机会。这些机会可能现在可能看不一定会看得到，但是我们想象当未来的AI大模型具备足够强的智能能力，它可能在方方面面产生的能够替代我们的相当多的工程师、科学家的时候，我们相信这个商业模式在那个阶段和我们现在看到的这个阶段可能会不一样。那第二点，我们也确实看到了，就是说现在的大模型，就是各家的公司之间的差异化其实是在逐渐的收窄，也就是说变得大家之间的差异化越来越不明显，包括开源模型和闭源模型之间的差异化也越来越不明显。但是这样一个现状其实我们觉得是反而是非常利好于云计算公司，因为无论是开源的模型还是闭源的模型，最终大部分的开源这些模型都要hosting在云计算网络上。所以就我们的对于阿里集团而言，现在可见的无论是未来的模型的能力更大的提升，还是说现在而言模型的能力还是各家相对来说差异化不明显，我们都有一个非常明确的商业模式，也就是我们的云计算网络。那无论是所谓的智能的商品化，其实对于我觉得最利好的可能就是云计算网络。因为我们想象如果人工智能是未来最大的商品，类比于现在的电的话，那么云计算网络就是类比于现在的电网。

Thank you.

Those were some really good questions. I think we're still in very early days when we're talking about the advancement of artificial intelligence technology. Although it's developing rapidly, we're still in the initial stages of development. So I think the future business models and the future ways in which these models will be monetized are not necessarily clear to anybody today. As the boundaries of intelligence get pushed out, as the models get smarter and smarter, there'll be more and more opportunities to monetize them, but in ways that may not be apparent to us today. I'm talking about a future where the models become sufficiently intelligent to be able to supplant engineers and scientists, that kind of expertise, and that will really be a different stage of development.

The second point is that if you look at current models today, the level of differentiation across models from different vendors is narrowing. The differences are becoming less obvious. In fact, it's also becoming less apparent what the differentiation is between open-source models and closed models. But the development of all of these different models, be they open-source or closed, are beneficial for our cloud computing network offerings because all of these models, open or closed, will need to be hosted on a cloud computing network. So if you ask me what the clearest monetization pathway is today, it's definitely our cloud computing offerings that exist to host and to support the operation of these clouds. So if I could offer an analogy, if AI, artificial intelligence, is like electricity in this new era, then our cloud computing network is like the power grid that carries that electricity.

好，您问的后面的问题关于在阿里生态系统内，我们觉得最具潜力的AI应用在什么地方。我觉得现在我们看到AI模型的能力在越来越强，而且我们看到它的进化的速度也在越来越快。那你说我们现在最具潜力的应用是哪一个，我觉得我很难说。我可能说是我们的每一个应用都是非常具备很高的潜力。那具体来说，其实我们内部来说，我们会看到几个方面的一些明显的机会。那第一个是我们觉得是生活消费的入口，AI的这个通过AI技术的改造。那我们会看到我们的淘宝，其实淘宝现在我们内部有相当多的内部研发项目，后面会逐渐推出。我们看到用AI技术在加强与我们的消费者的互动和促进交易效率方面，其实都有相当大的提升。同时因为AI技术的这个更多的应用，我们在购物或者购物相关的购物决策相关的很多消费领域的应用，我们觉得对于淘宝的用户时长以及淘宝的用户的价值提升还是有非常大的空间，可能会带来淘宝除了购物之外的更大的用户价值。那其实我们还有一些方向，像集团内部的我们所谓的定义的AI2C领域。那这个领域我们主要是我们的夸克和我们的通义这两个App。那夸克其实现在是我们的AI搜索。那我们现在其实夸克是应该在AI搜索领域中国用户量最高的应用。我们觉得这里面AI的这些大模型应用对于用户的搜索也好，用户的生产力创作也好，用户在工作当中怎么去提升它的效率也好，有非常大的提升空间。那另外一块我们觉得集团内一个非常重要的ToBe的一个资产，丁丁，我们觉得未来的在企业端有非常多的用AI来重塑企业内协作协同的这些场景和机会。而这里面丁丁是我们一个最重要的面向ToB领域的一个AI应用。同时我们现在我们也在内部在积极的推动我们的高德将在生活领域积极的用AI来创造更多的用户价值，包括提升用户的市场。因为高德现在更多的是一个导航工具，它是有1.7亿以上DAU的一个产品。在这个产品上我们有机会通过AI技术的应用，让高德有机会成为生活服务的入口。

Your other question had to do with the AI applications that we think have the greatest potential within the Alibaba ecosystem. Models are becoming more and more powerful and are evolving faster and faster, which means that it's actually quite difficult for me to tell you definitively what are the areas with the highest potential. I think that all applications potentially could have huge potential. But we are certainly internally looking at some very interesting opportunities. First, in terms of the Taobao App as a portal for lifestyle and for consumption, we're doing a lot of internal development, and many of these projects will be launched soon. You'll see them when they are deployed. But these AI enhancements within Taobao will serve to increase consumer engagement and also drive higher transaction efficiency.

Other kinds of AI-empowered applications will contribute to purchase-related decision-making and increase user time spend and create value for users. So beyond shopping, we can expect the further introduction of AI features on Taobao to create more kinds of value. We also have our 2C AI offerings, as you know, Quark and Tongyi Qianwen. So Quark is an AI search product which has the largest number of users in China, and AI is being deployed and will continue to be deployed there to improve search productivity, creation, and overall efficiency. As you know, one of our very important, the most important asset we have on the ToB side is the DingTalk App as well. We're also deploying AI there to redefine the enterprise collaboration experience. And the same is also true for Amap, where we're deploying AI to extend it. It's now currently mostly used as a navigation app.

It has DAU 170 million in China. But as we more deeply integrate AI, it can become a portal into lifestyle and local services, and that will increase user time spent as well.

Lydia Liu (Head of Investor Relations)

Next question, please.

Operator (participant)

Thank you. Your next question comes from Kenneth Fong with UBS. Please go ahead.

Kenneth Fong (Managing Director)

Hi, good evening, management. Thanks for taking my questions and congrats on the strong results. I have a question about the e-commerce side. So we see that revenue has been very strong and accelerating for both AIDC as well as CML for TTG. So can management share with us what has changed and the key initiative ahead for TTG as well as AIDC? And financially, we see the margin for TTG has also stabilized. So how should we think about the trend ahead? And for AIDC, we target for profitability next year. So shorter term, what are the key drivers for driving profitability? And longer term, should we expect the international business being more profitable than a domestic one given it is less competitive? Thank you.

Eddie Wu (CEO)

好，感谢接受我的提问。也祝贺管理层本季度取得了良好的业绩。我的问题是关于电商这一块。那我们看到本季度这个电商的收入是取得快速的增长，增长加速。在AIDC这一方面，包括TTG的CMR也是有很大的一个提高。那我想请问，就是接下来AIDC和TTG有哪些关键的战略？然后TTG的这个利润率现在是趋于稳定，那么未来的趋势将会怎样？另外刚才管理层也介绍，预计AIDC明年可以实现盈利。那么AIDC实现盈利关键的驱动因素有哪些？然后最后就是长期而言，我们的国际电商业务利润率会不会高于国内的这个电商，因为竞争没那么激烈？

好的，那个就是很多个问题。那我们可能先从这个国内的那个电商来说。对，国内电商我们其实一直坚持我们的方向，就是我们希望一方面的用户体验上我们可以持续的创新和优化，然后使得我们的用户粘性可以提升。然后我们也看到在这个新的这个财年，就是新的这一年，我们也看到了一个用户的空间。因为我们也接通了更多的用户支付，所以我们也会在用户侧做持续的投资。对，然后我们在过去的这一年里面，我们其实在商业化上也做了很多的动作，包括我们的支付手续费，还有就是我们的像新的一些广告的模式。那么你可以看到这些动作也带来了Take Rate的一个明显的一个提升。对，所以这是我们也会持续的去改善用户体验，然后我们同时也会持续优化我们的商家的经营的效率，然后包括营商的环境。对，然后用户侧刚讲到我们也会加大投资。对，所以这是我觉得国内我们的长期中长的目标还是我们首先能够使得稳定我们的市场份额，然后同时我们持续的优化我们的这样的一个体验，还有就是我们的营商的效率。

Thank you. Again, there are quite a few questions there. Why don't I start with domestic e-commerce? So in the domestic e-commerce business, the strategy that we've been pursuing has been to enhance the user experience, to make innovation and optimization around the user experience to achieve higher levels of stickiness. And looking ahead to the coming year, we see potential to further achieve user growth by investing in users. At the same time, as you've said, we've done a lot to drive increased monetization recently, including, among other things, charging payment processing fees. But we will continue to invest in enhancing the user experience as well as enhancing the operating environment for merchants. And those things will continue to require investment. So overall, we're looking at stabilizing market share while enhancing the user experience and optimizing merchant operations efficiency.

然后我再回答一下关于这个国际业务，因为我们的国际业务其实是很多个业务的一个，就是我们有B2B的业务，我们有跨境业务，然后我们还有本地的这样的一些平台。对，那我分开来说的话，就是首先我觉得我们的B2B业务还是在未来几年我们看到会有一个比较稳定的一个这样的一个趋势。对，然后也能够我们带来比较可观的一个利润。对，然后我们的B2C业务，我们在过去的跨境业务里面我们做了非常多的优化，然后也可以显著的看到这样的一个优异的一个提升。对，那我们也有信心在未来的几个这样的一个quarter内可以看到我们整个跨境业务的这样的一个损益的一个明显的一个改善。对，然后我们的一些我们的一个政策就是我们也在一些国家我们积极的寻求跟一些本地的平台合作。对，那这样的话我觉得也是有利于我们长期改善我们的盈利。对，那么关于这个长期国内国际业务能不能比国内业务盈利更多，那现在我们可能还不能去做这样的一个预判。对，但是我们可以看到就是说国际业务未来的一个盈利的路径还是比较清晰的。

Secondly, in terms of our international e-commerce business, this is really an amalgamation of lots of different business models, including B2B, cross-border, as well as local platforms that we operate. But overall, as we've said, we expect to see a stable trend in our international business in the next few years, working towards achieving significant profitability at scale. In our B2C business, as you know, we've done a lot to optimize the business model, and unit economics have increased very significantly. And as we've said, over the next few quarters, you can expect to see a significant increase in profitability. In some countries, we are working on collaborating with local platforms where it makes sense to do so, and that is also beneficial to increasing our profitability. You asked in the long term if the international e-commerce business could be more profitable than our domestic e-commerce business.

I don't think that's something I can judge at this point. What I can say is that at this particular point in time, the pathway to profitability in the international business is clearer.

Toby Xu (CFO)

好的，我来回答Kenny，我来回答一下您关于这个就TTG的利润率的问题。那在TTG，我想这个蒋凡刚刚讲了，我觉得我们还是一个很明确的坚持我们中长期的目标，是要健康的稳定我们的市场份额。所以这点我觉得还是很关键。所以在过去的几个季度，包括这个季度，我们还是在一个投入的阶段。这些投入会聚焦在用户的体验，也聚焦在这里，包括我觉得新的用户，也包括像我们这个88VIP member这样的一些用户。所以这方面的投入会继续。同时我们也要抓住现在因为接入其他支付的这样一个窗口，更好的发展我们新的用户。所以这些也是我们投入的一些重点。所以现在还是我们的一个投入期。那么在这个投入的同时，我们也希望可以在更多的explore我们的一个开源的方式。那在这里的话，包括我们的软件服务费的收取，也包括我们用一个更高效的、更智能化的这样一个商业化的产品全站推来提升我们的商业化率。这是我们在开源方面所做的一点。所以回来我想我们会继续做这样一个动作，同时继续我们的投资。那么当然在做这个更多的一个商业化提升商业化的同时，我们也在更多的关注我们商家的在我们平台做生意的这样一个整体的一个环境。所以在这个方面我们也会有进一步的投入。所以回来我想回答您的问题，从利润率的角度，这是一个收支的一个平衡。那在现在这个阶段我们还是很坚定，我们需要继续投入在用户的体验，在新的用户，在商家的营商环境等各个方面。所以我们还是在一个投入期。

Thank you. This is Toby. I'll take the question regarding margin on TTG. As I think Jiang Fan has stated very clearly, the strategy for TTG has been to invest in achieving healthy, stable market share. That's been the priority of investment for the past several quarters, and indeed in this quarter, investing in enhancing user experience, in acquiring new users, as well as in our 88VIP core user group, and those investments will continue. Also, we've integrated new payment methods as well, which is an important means also of engaging with new users, and of course, while making these investments, we're also actively exploring ways to increase revenues. We've done so with the software service fee, as you've seen, as well as with a more intelligent marketing product, Quanzhantui or QZT, which is driving higher levels of monetization.

We'll continue to invest in those areas while also seeking to increase monetization in those same ways while paying a lot of attention to optimizing the business environment for merchants on the platform. Margin is always a balance between revenue and expenditure, and we do remain in an investment stage as we have been and will continue to invest in enhancing user experience and acquiring new users.

Lydia Liu (Head of Investor Relations)

Next question, please.

Operator (participant)

Thank you. Your next question comes from Ronald Keung with Goldman Sachs. Please go ahead.

Ronald Keung (Managing Director)

Thank you, Joe, Eddie, Toby, and Lydia. So further on the AI questions, we've seen the AI revenue triple-digit growth, as we mentioned, for six quarters now. So how should we quantify the size of that? Are we reaching kind of more substantial kind of double-digit mark here for AI? The reason is we want to know what are the implications for cloud margins, given that historically cloud business is at a very significant margin gap versus some of the global cloud players. So as the cloud makes shifts from public cloud to training and then now increasingly to inference, how should we think about the growth and then, more importantly, the cloud margin outlook for us versus our global peers in the longer term? Thank you.

Eddie Wu (CEO)

好，感谢接受我的提问。我的问题是关于AI这一方面。那么刚才已经介绍AI相关产品连续第六个季度实现了三位数的增长。那么这个很好，但我想了解它的利润率怎样，是不是比较不错的两位数的这样一个利润率。因为我们的利润率一直相比国际的这些公司都是相对较低的。那么随着现在需求的重点从公共云转向训练，再转向推理，那么这个对我们的利润率会有什么样的影响？利润率的未来展望怎么看？

好，谢谢你提这个问题。我们现在确实AI相关的收入已经实现了六个季度的持续百分百以上的增长，三位数以上的增长。那我们现在看到客户的需求其实还是在持续的增长当中，而且这个增速还是超越我们原来的判断。尤其是在今年春节之后，我们看到一个非常大的一个变化，就是推理的需求确实是在爆发。我们现在新增的客户需求，百分之六七十以上都是客户会用来拿我们的资源用在推理上面。所以这个是我们会看到客户用在推理上面的话，会让我们的客户基数以及使用的场景或者客户使用在应用的行业会迅速扩大。这方面某种程度上会提升我们整体来说在AI基础设施上的利润率。但是另外一方面，我们刚才已经讲过了，未来三年我们会是一个集团历史上最大的一个CAPEX的一个建设周期。我们相信这些大的投入的折旧摊销或多或少会影响一些利润率。同时我觉得由于中国市场的激烈竞争，以及中国的云市场其实相对全球来说还是相对不太一样，我们觉得总体的在中国市场云计算的利润率可能和全球的其他公司而言可能还是会相对有所差别。对。

Thanks for those questions. Indeed, you're absolutely correct. Our AI-related revenues achieved over 100% growth, three-digit growth for the sixth consecutive quarter. And customer demand for AI and related products continues to grow. In fact, that growth is turning out to be much higher than our original expectation. And what we've seen in particular from the Spring Festival, Chinese New Year onward, is an explosion in demand for inference. In fact, around 60%-70% of the new demand that we're seeing now is for inference. So we expect that with this rapid expansion in demand, we will grow our customer base and expand industry coverage across a wider range of sectors, and all of that will certainly contribute to higher levels of margin in our AI services. However, as I said earlier, we're committed to making the highest ever historical investments in CapEx in the coming three-year period.

If you take those investments and amortize them over the coming years, that will certainly have an impact on margin. A final point, I would expect that given the fierce competition in China and the different market dynamics here, the kind of margin that you'll see in China will be somewhat different from what you'll see internationally.

好，我再补充一下，其实因为云计算是一个规模效应和网络效应同时具备的一个生意模式，尤其在现阶段来说，规模效应是非常重要的。我们相信我们这个巨大的一个整体的CAPEX投入，未来会对我们的整体硬件的采购也好，或者说大规模的建设的这种成本也好，我们相信应该会有一些比较大的改善。所以这个也是我们觉得持续的做大规模，可能一方面会带来我们更多的客户，另外一方面其实也会改善我们的整体的投入成本。

The other thing I would say is that cloud is a business that's characterized by both strong scale effects and strong network effects. The scale effects are particularly important at this stage as we're engaging in large capital investments, building out our hardware with CapEx. The point is that as we achieve greater scale and acquire more customers, we'll be able to better optimize the costs of this build-up.

Lydia Liu (Head of Investor Relations)

Next question, please.

Operator (participant)

Thank you. Your next question comes from William Yuen Lau with CITIC Securities. Please go ahead.

William Yuen Lau (Director)

嗨，你好，晚上好。我祝贺这个季度取得强劲的业绩以及AI的一些进展。那我的问题其实是关于股东回报。我们看到截止到27年3月，我们还有207亿美元的一个回购额度。那在这个投入AI的一个过程当中，管理层如何去考虑我们未来的一个股东回报？谢谢。

Thank you, management. Congratulations on the strong results and all the progress you're making around AI. My question has to do with shareholder returns. I think we see this at USD 20.07 billion. Pardon me, $20.7 billion of dry powder for share buybacks. I'm wondering if you can tell us how that will be deployed, given all of the progress that you intend to make around AI and the investment there.

Eddie Wu (CEO)

的回购，把最终的整个 outstanding share reduced by 0.6%。那在前面的两个季度里面，我们总共 deploy 了 $10 billion，整个 reduce 了整体的 outstanding shares 大概是差不多 4.4%-4.5%。所以回来大家可以看得到，我们在过去的九个月当中已经花了 over $11 billion，已经 reduce 了 5.1%。所以这个整个的过程还是十分大的一个 progress.

In the December quarter, as you know, we conducted USD 1.3 billion of buybacks, achieving a 0.6% net reduction in share count. During the first half of the fiscal year, we repurchased approximately USD 10 billion, achieving a 5% net reduction in share count over the last nine months. As you can see, we've already made very considerable progress with these share repurchases.

buyback，肯定会考虑到这个股价。所以这是为什么在前面的六个月，这个财年前面的六个月里面，我们买的是用一个加速的状态在买。这里包括了，举个例子，在六月份那个季度，我们做了大概 $5 billion 的融资。那在那个季度里面，我们就花掉了所有的这个 $5 billion 在整体的股票回购上。所以那个阶段，因为我们觉得我们的股票当时只有 $80 左右，是十分的 undervalued。

As is common market practice for companies engaging in share repurchase programs, of course, we will consider the current share price as we execute our share buyback program, and that's why in the first six months, you saw an accelerated pace of share repurchase. As an example, in the June quarter, we raised USD 5 billion in debt financing and used the entirety of the proceeds for share buybacks, and that was because at the time our share price was only USD 80, which in our view is extremely undervalued. Right.

所以对于整体的股东回报来讲，我们大家知道我们董事会有一个 Capital Management Committee，我们有一个这样一个委员会。这个委员会的整体设立就是为了要更好的在公司的层面通过更好的资本分配来提升整体的股东回报。那过去的这个阶段，其实我们都是在很好的管理这样的一个资本分配，提升股东回报。往未来看，我觉得从股东回报的角度，我们会继续用好股息，然后同时是回购以及投入在高增长的业务这样一些方面来提升股东回报。

As you know, we have set up at the board level a Capital Management Committee precisely for the purpose of optimizing capital allocation so as to enhance shareholder return. The committee has been providing strong management to shareholder return initiatives and will continue to do so. And we will aim to continue to elevate shareholder return through a combination of dividends, of share buybacks, as well, of course, as investment in high growth, high potential areas.

往未来看，我们会继续使用好我们的现金给到股东回报。那这个当中，对于回购，我们也会观察整个股价的走势。那对于董事会批准的这样一个额度，给了我们更好的一个灵活度去使用。

Going forward, we will continue to deploy our cash effectively and optimally to enhance shareholder return. And we'll continue to execute share repurchases in accordance with the allocation and guidance given to us by the board of directors and with an eye on the share price.

Lydia Liu (Head of Investor Relations)

Next question, please.

Operator (participant)

Thank you. Your next question comes from Gary Yu with Morgan Stanley. Please go ahead.

Gary Yu (Analyst)

Hi, thank you for the opportunity and congratulations on a strong set of results. I have two questions, both related to AI and cloud. The first one is, I appreciate management's comment about AI potentially representing 50% of the global GDP, and cloud is an important infrastructure, but when we think about how we monetize this potential sizable opportunity, besides the infrastructure which is represented by cloud, how should we think about Alibaba's strategy to tap into the application or software layer? And could management comment more about the enterprise adoption side? Because we kind of understand the previous comment about the consumer-facing part, including consumption and local services. And my second question is related to CapEx, so management's comment about the next three years being the heaviest investment cycle in the past decade. How should we think about how Alibaba plans to allocate the investment?

How much will be spent on chips? And specifically, how should we think about the mix between spending on import chips from the U.S. as well as domestic chips? And in the event of further export restrictions from the U.S., how should we think about any contingent plan in order to continue with the investment? Thank you.

Eddie Wu (CEO)

好，感谢管理层接受我的提问，也祝贺取得良好的成绩。我的问题还是关于 AI 和云这一方面的。那么我刚才特别注意到管理层介绍说 AI 有可能会代表全球 GDP 的 50%，而云是重要的承载的基础设施。那么我想问一下在商业化的方面，就是除了基础设施，我们云的这个基础设施的提供之外，我们怎么样在应用，就是 APP 或者说软件这一方面能够捕捉一些变现的机会？另外是不是可以展开介绍一下企业采用我们 AI 服务的一个情况？因为刚才已经是介绍过 to C 端消费和生活的场景，请你介绍一下企业方面的采用情况。第二个问题是关于资本投资 CapEx 这一方面，刚才管理层也说了接下来三年会是十多年以来投资力度最大的一个周期。那么请问这些投资会做什么样的分配？比如说多少会是投资于芯片的，然后芯片里面多少会是从美国进口的，多少会是国产的？然后如果美国方面对美国生产的芯片实施进一步的限制，我们有什么样的预案来继续推行我们这样的一个投资的计划？好，谢谢你的问题。我们刚才已经讲到了集团在 to C 方面有几个我们看到的一些明显的一些用 AI 升级的一些机会。那您刚才说的 to B 方面，其实我们分两个层面。其实一方面我们觉得从在阿里云的服务层面，我们有相当多的机会在企业端的。其实未来的 SaaS 软件或者在企业内部的这些软件，未来我们相信会更多的会变成 AI Agent 的驱动。也就是说很多企业内部的这些系统未来都会逐渐变成，未来都会逐渐变成是一个有相当多的 AI Agent 互相连接、互相调用，然后来帮助企业内提升效率，甚至能够帮助企业完成一些非常重要的决策工作。我觉得在这个里面有相当多的一些软件和 SaaS 软件，以及 SaaS 软件背后的 SaaS 各方面软件升级的这些机会。那另外一方面我们刚才提到了钉钉，那我觉得未来的企业，尤其是在钉钉上面的这些企业，我们觉得在企业协同上面的相当多的一些操作，会更多的借助自然语言，像类似钉钉这样聊天那种界面去完成。而更多的背后的这些 CRM 软件或者 ERP 软件，其实会更像是在背后的实现这些数据库的功能。而就像我们在开会当中，在企业内部开会做的一些决策，很多情况下其实都可以通过一种自然语言的方式在钉钉上去处理掉。那这个就是一些典型的 AI Agent 和钉钉一些非常好的一个结合。而同时我们在钉钉上有相当多的企业，有非常多它内部私有化的资料，以及内部私有化的这些流程，它都需要一些私有化的模型部署，或者说私有化的一些 Agent 去帮它实现更高的这些效率。所以我们觉得 AI 的这些技术的积极应用，对于整个企业软件市场以及企业协同市场都是一个巨大的变革。

Well, thank you for those questions. As we said, we definitely see some very clear opportunities for the application of AI on the to C side, which I've already mentioned. When it comes to the to B side, there are a host of different opportunities for Alibaba Cloud Intelligence to capture. I think as a general remark, SaaS software going forward will become more and more AI Agent driven.

In other words, a lot of the internal systems employed by enterprises in the future will become more like a network of multiple AI Agents that collaborate and call on one another to provide services, including to assist the enterprise even in important decision making. Along with that, there'll be a lot of opportunities to upgrade not just the software, the SaaS layer, but also the underlying supporting PaaS layer. Another really good example I think is DingTalk, which is our flagship enterprise collaboration product. I think going forward with AI, a lot of functionality on DingTalk will be achieved through natural language interaction. And today's CRM and ERP type systems will become more like databases that feed in. So enterprise meetings and decision making can all be handled through natural language on DingTalk.

Again, there are many opportunities for the integration of all kinds of agents into DingTalk. Another important thing to note is that a lot of companies internally have huge amounts of proprietary data and their own proprietary in-house processes, and they'll need to leverage AI Agents in order to enhance the efficiency of those kinds of processes. I think overall, AI will be able to empower and reshape all kinds of corporate software, corporate applications, and this is a huge opportunity.

好，至于您说的第二个问题，我们其实整体的 CAPEX 投入基本上和我们的 IDC 里面的整个设备的不同模块的构成有关系。所以我觉得这边可能也不太方便分享里面的一些更多细节的部分。那另外一个总体芯片上面，其实我们在云计算的基础设施上已经做好了阿里云能够去适配多种多样的芯片。在这个基础上，我们相信是能够无论这个政策怎么变化，我们都能够再去能够实现我们整体的 AI 的一个整体的战略。

On to the other part of your question regarding CapEx, in order to give you a breakdown as to what percentage of CapEx will go into what area, that would really require giving you a detailed breakdown of the cost of all the different equipment in our IDCs. So I don't think I'm really at liberty to get into that kind of detail with you. What I can tell you is that the way we've designed our cloud very deliberately is to be compatible with a whole range of all kinds of different chips. So no matter what kind of policy changes may be forthcoming in the future, that will not affect us, and we will certainly be able to implement our investment plan.

Lydia Liu (Head of Investor Relations)

Due to time limit, we will now take the last question.

Operator (participant)

Thank you. Your next question comes from Jialong Shi with Nomura. Please go ahead.

Jialong Shi (Internet Research Analyst)

[Foreign language]

Thanks, management, for taking my questions. I have two questions. My first is following your successful divestment of physical retail assets in Intime and Sun Art, I'm wondering if you have any plans for potential future divestment of other assets, including Freshippo, Youku, and Ele.me. My second question coming back to cloud, it seems that a lot of the revenue growth that's being driven in cloud is as a result of demand for compute associated with uptake in AI. But I'm wondering if there's, in addition to that, any future monetization pathway, monetization model for Tongyi, the use of the model itself, is there any way to generate revenue and profits from the model, not just from the compute? And as Eddie said, the Chinese AI market seems to be rather homogeneous in the sense that there's a lack of differentiation across the different models.

Do you think that'll continue to be the case, or in the future will there come a day when there might just be one or two big models in the market that take up a large market share?

Toby Xu (CFO)

谢谢您的问题。我来回答您的第一部分问题，然后 Eddie 会回答您第二部分问题。关于您的问题，关于我们的一些非核心资产的退出的问题，我想首先大家可以看得到，我们还是在很严格的执行聚焦核心业务，然后积极退出非核心的一些资产跟投资。那过去几个季度里面，我觉得第一个是这个 12 月份季度里面，我们在大润发跟银泰做了一个整体的退出。最近我们也已经收到反垄断的审批，所以我们预计在 3 月季度，或者在 6 月季度，就看整个过程，我觉得还是会完成这样两个出售。这是首先。第二，我们在一些我们的非战略性的少数股权的投资上，我们也在积极进行一定的退出，所以大家可能从市场里也可以经常看到一些我们退出一些投资的这样一个消息。那往未来看，我觉得我们还是会继续去看我们的整个的第一个聚焦我们的主业，同时我们也会进一步去观察在我们仍然拥有的这些资产跟投资上，聚焦在退出一些非核心的投资的同时，也会更多的去关注一些我们的业务的价值如何能更好的反映在我们的估值里面。那这里我觉得举个例子，比如说河马，大家可能也已经完全了解到，第一，首先我觉得河马有很好的增长跟稳健的扩张，同时也已经是实现了很不错的整体盈利。那对我们来讲，这是一个充分展现了线上线下融合的这样一个数字化零售的这样一个战略的成功。所以目前我们并没有一个出售河马的计划，但是同时我们也会用一个开放的心态，比如说在一些战略投资的引进等等，我们会用一个更开放的心态去思考怎么让河马这样一个十分有价值的这样一个业务，它的价值能最终反映在集团整体的估值当中。这是未来我相信我们需要去探索和思考的问题。

Thank you. This is Toby. I'll take the first part of the question and then hand over to Eddie. So, as you know, we have been strictly implementing our strategy of focusing on our core businesses and exiting our non-core businesses. And as has been announced in the December quarter, we completed the sale in full of Sun Art and Intime, and we have already passed anti-monopoly reviews. So we expect to complete those transactions either in the March quarter or in the June quarter. We will continue to look for opportunities to exit our non-strategic minority-owned assets, and you'll continue to see announcements coming forth as we go forward. And in the future, we will be focusing, as we have been on our core businesses, we'll be looking at the assets in which we're invested and exiting, as I say, the non-core ones.

But in respect of other assets, we'll be looking for ways to tap into their business value and to see that value better reflected in the valuation of Alibaba Group. And I think Freshippo, which you mentioned, is a really good example of that. Freshippo was a business that's achieved very good growth, very good expansion. It's achieved very good profitability, and it's an excellent example of an innovative business model that integrates online and offline retail. So given its success, no, we don't have any plan to sell Freshippo, but we would certainly have and take an open attitude, for example, to introducing a strategic investor or other similar approaches that could enhance the value of Freshippo and in particular result in that value being better reflected in the valuation of the Alibaba Group. So this is something that needs further exploration going forward.

Eddie Wu (CEO)

好，后面的问题我来回答一下。我们现在阿里云的收入增长是其实依赖于客户非常强劲的一个对 AI 相关产品的强劲需求。那我们的通义模型其实是我们是一个开源的模型，但是并不见得是一个免费的模型，因为我们也在我们的百炼平台上提供那个收费的 API。当然就现在来说，收费的 API 创造的营收还比较小，但是我们相信随着模型能力的持续提升，以及未来客户的需求在各方面的这个提升，我们相信作为一个模型最基础的一个变现方式，API 收费可能这个方式还是会存在的。这个是我们的第一点。那第二点，我觉得由于通义是一个开源模型，我们相信有相当多的开发者会基于我们的开源模型去开发它的垂直模型或者去开发它的应用。这部分开发者现在会天然的会去使用阿里云，因为使用阿里云整个的通义以及通义的衍生模型在上面效率是最好的。那另外一个第三点就是我们发现使用我们的通义的 API 的客户其实会带动相当多的其他云上的产品销售。这是我们看到一个非常明显的一个客户关联销售的一个效果。所以某种程度上我觉得通义虽然并不见得是直接带来非常大的收入，但实际上是对于云的商业模式来说是一个非常重要的一个组成部分。

Thanks. This is Eddie. Let me take the other part of that question. So yes, the growth, the robust growth that we're seeing in cloud revenue is largely being driven by huge customer demand for AI products. Our Qianwen model is an open source product, but that does not necessarily mean that it is provided free of charge. In fact, we do charge for access to the model via the API on the Bailian platform. Of course, the revenues that we create that way are relatively low, but as the models improve, become more powerful, as their capabilities become more sophisticated, it's certainly possible that we could charge more for the use of the models.

But I should also say that Qwen is an open source model, which means that a lot of developers are using it as a foundation model on which to develop their own vertical models and their own applications. And it's therefore only natural that they will deploy those models, those applications on Alibaba Cloud because that's the most efficient way to do it. Thirdly, I would also say that when customers are accessing our Qwen model through the API, there are a lot of opportunities for us to cross-sell to them other of our cloud offerings. It's a really excellent example of a cross-selling opportunity. So although Qwen in and of itself is not driving and may not drive huge revenues, it's a very, very important part of our overall cloud offering that will help to drive overall cloud revenue.

好，您的那个最后一个问题是关于 AI 大模型的市场格局。因为整个的 AI 大模型的技术还在快速的迭代当中，而且也是整个市场的早期，所以我觉得去判断一个整体未来的终局可能还不太清晰。但是从我们现在看到的一些行业趋势来看，我觉得在最基础的基座大模型上面，我们会看到其实大家的差距差异在慢慢的变小。而且但是我们看到，尤其是基于 OpenAI o1 或者说 DeepSeek 这样的推理模型，以及我们千问云未来会推出的推理模型，这方面的技术越来越进步。我们看到在后训练这个阶段，对于模型定制化以及能够去适应各个不同的行业，甚至是适应不同的私有化的数据，我们看到这方面会有非常大的市场的可以做的空间。而这方面我们也会看到应该有非常多的不同大大小小的公司都可能在这个上面产生非常多的一些创造价值的空间。而这些创造的价值的空间，我相信未来会有非常多的专业模型或者垂直模型能够去 hosting 在云上。这也是我们看到未来我们乐见整个开源生态比较繁荣的一个原因。

Finally, on your last question, which had to do with the future market landscape for AI in China, this is a period of time right now where things are iterating and developing rapidly. At the same time, it's very early days in the development of AI. So I just don't think it's possible to judge what the end game will look like. What I can tell you is the trends that we're seeing today. As I've said, the gap between different foundation models today is narrowing. I think that going forward, you can expect to see a lot of demand around post-training.

So thinking of models like OpenAI o1, DeepSeek, the reasoning models, as well as the reasoning model of Qwen that we will be releasing shortly, a lot of the demand will be around post-training to customize those models, adapt them to different sectors, different use cases, to adapt them to private data sets. And I think that there's huge market potential for that kind of post-training. I think there's also lots of opportunity to create value for a whole range of different companies, large and small. And all of these models, the specialized models, the vertical models I've referenced, will all need to be hosted on cloud. So that's why we are very excited and confident in the prosperous development of an open cloud ecosystem.

Lydia Liu (Head of Investor Relations)

Thanks, Eddie. That wraps up the Q&A session of today's earnings call. Thank you very much for joining us today. We look forward to speaking with you soon. Thank you.

Operator (participant)

That does conclude our conference for today. Thank you for participating. You may now disconnect.