Alibaba Group Holding Ltd Earnings - Q4 2025 Analysis
Positives
- Consolidated adjusted EBITA increased by 36% to RMB 32.6 billion, primarily due to revenue growth and improved operating efficiency.
- The number of 88VIP members continued to increase by double digits YoY, surpassing 50 million.
- AI-related product revenue sustained triple-digit growth for the seventh consecutive quarter.
- The company delivered strong performance in Q4 with total revenue, excluding Sun Art and Intime, growing 10% YoY, and adjusted EBITA increasing by 36% YoY.
- The company's commitment to sustainable growth and improving efficiency delivered solid results, with all segments achieving YoY EBITA improvement in Q4, leading to a 36% increase in overall group EBITA.
Q&A Highlights - Q4 2025
Analyst asked about the company's plans to gain market share and monetize AI applications in the e-commerce space.
The company plans to continue to enhance monetization by stabilizing market share in the mid to long term, rolling out new products, and improving the user experience. They have already made improvements in monetization with the launch of QZT and by charging commission on payments. They plan to continue to innovate and pilot different monetization models, including AI-driven solutions, to enhance their business model and create more possibilities for higher levels of monetization.
Analyst asked about the growth rate of Alibaba Cloud's revenue in the various months of Q1, particularly after the Spring Festival.
Eddie Yongming Wu, CFO of Alibaba Cloud, explained that the company saw a surge in demand for inference workloads during the quarter, with a lot of new customers and demand arising after the Spring Festival. He noted that the growth rate of cloud revenue was not representative of the regular pace of growth due to disruptions in supply chains and the seasonal impact of the Spring Festival. However, the company expects a steady growth in demand driven by inference workloads in the coming months.
Analyst asked about the impact of different AI models on the cloud business.
Lydia Liu, CFO of Alibaba Cloud, explained that the company's open-source models have a lot of edge model applications, but they are not as impactful as the larger models, which require cloud-based compute resources. She noted that the edge models complement the cloud-based large parameter models and contribute to higher reliance by customers on the relevant products of Alibaba Cloud.
Analyst asked about the company's plans for investing in instant commerce, specifically in light of the intensified competition in the food delivery business.
Fan Jiang, CFO of Alibaba Cloud, explained that the company has been building up its capabilities in the instant commerce market for many years and has invested in Ele.me and Freshippo. He noted that the company has strong advantages in the market, including a mature merchant base and a robust logistics system. He also mentioned that the company's recent trial of the Taobao instant commerce offering exceeded expectations and that the company aims to drive higher levels of user engagement with the Taobao app by investing aggressively in the business.
Analyst asked about the strong performance in Q4 and how much of it was driven by GMV versus the 0.6% fee and Quanzhantui improvement.
Toby Hong Xu explained that the strong performance was driven by two major factors: the software service fee and the growing penetration of Quanzhantui. The software service fee will continue to contribute to monetization growth, and the company will gradually roll back some of the merchant-friendly measures that were in place when the fee was first implemented. Quanzhantui's penetration rate is also expected to continue growing, which will have a positive impact on monetization rates.
Analyst asked about EBITA and how it will be impacted by investments in user experience, price competitive products, and quick commerce.
Jiang Fan explained that the company is focused on stabilizing its overall market share, which requires investments in user experience, price competitive products, and quick commerce. These investments will result in new user growth, increased frequency, and stickiness, but will also have an impact on EBITA. The company expects EBITA to experience some fluctuation in the next few quarters due to competitive dynamics.
