Alibaba Group Holding Ltd Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Alibaba Group Holding Ltd's Q2 2026 earnings call, held on November 25, 2025, focused on the company's 15% year-over-year revenue growth, driven by investments in AI + Cloud and consumption. Key topics included the growth and market share gains in the cloud business, particularly with AI-related products, the performance of China E-commerce, and strategies for quick commerce and platform synergy. The call also addressed capital expenditures related to AI infrastructure and provided insights into the competitive landscape and growth opportunities.
Key Financial Results
Total revenue increased 15% year-over-year, excluding Sun Art and Intime.
GAAP net income was RMB 20.6 billion, a decrease of 53%.
Operating cash flow was RMB 10.1 billion, a decrease of RMB 21.3 billion compared to the same quarter last year.
Free cash flow was an outflow of RMB 21.8 billion, reflecting investments in quick commerce and AI + Cloud infrastructure.
The company has a strong balance sheet, backed by $41 billion in net cash.
Business Segment Results
China E-commerce CMR grew 10%.
Cloud Intelligence revenue rose 34%.
Revenue from Alibaba China E-commerce Group was RMB 132.6 billion, an increase of 16%.
Customer management revenue increased by 10%, due to the improvement of take rate.
Revenue from the quick commerce business increased 60%.
AIDC grew 10%, with an adjusted EBITA profit of RMB 162 million.
Cloud business revenue and revenue from external customers accelerated to 34% and 29%, respectively.
All others segment revenue decreased by 25%, mainly due to the disposal of Sun Art and Intime businesses.
All others adjusted EBITA was a loss of RMB 3.4 billion, primarily due to increased investment in technology businesses.
Capital Allocation
Reinvesting free cash flow to create a winning quick commerce business and to be a leader in AI.
Significant investments in quick commerce business and AI + Cloud infrastructure.
Continued investment in customer growth and technology innovation to increase adoption of AI infrastructure cloud.
Aggressively investing in AI infrastructure to meet customer demand.
Industry Trends and Dynamics
Strong demand for AI and rising usage of public cloud drove Alibaba Cloud's 34% revenue growth.
Two major trends in the cloud computing market: demand for vendors with full-stack AI technology portfolios and increased demand for compute, storage, and traditional cloud services due to AI usage.
AI-related product revenue continued to grow at a triple-digit pace.
The quick commerce model holds immense potential for synergy with the broader Alibaba ecosystem.
Competitive Landscape
Alibaba Cloud is gaining market share across multiple segments.
In China's AI cloud market, Alibaba is the clear leader, with a market share larger than the combined total of the second to fourth largest providers.
Qwen3-Max ranks among the global leaders in benchmarks for real-world coding tasks and agent tool use capabilities.
Intense competition may cause fluctuations in adjusted EBITA quarter-over-quarter.
Growth Opportunities and Strategies
Deepen collaboration across businesses and leverage the large integrated platform.
Enhance synergy between quick commerce and the broader Alibaba ecosystem.
Further accelerate integration and synergy between key retail categories and the quick commerce model.
Continue to refine the user experience through operational upgrading, with a focus on serving high-value users and expanding retail categories.
Advance both enterprise and consumer-focused AI, unlock deeper synergies across Alibaba's businesses, and use these engines to drive long-term growth.
Build native AI-first applications by leveraging best-in-class models and Alibaba's extensive ecosystem.
Integrate Qwen with E-commerce, map navigation, and local services to become an AI-powered entry point for everyday life.
Financial Guidance and Outlook
Adjusted EBITA may fluctuate quarter-over-quarter due to intense competition and significant investment in user experience.
AIDC adjusted EBITA may fluctuate quarter-over-quarter due to tactical investments in select markets.
The September quarter will likely be the quarter during which the scale of investments in quick commerce are the highest.
The company will dynamically adjust the pace and size of investments in line with market competition.
The RMB 380 billion CapEx figure previously mentioned might be on the small side, given current customer demand.
