阿里巴巴六月季度财报：云增长加速，AI投资推动盈利承压

BuyAsia China Al becoming commercial Peter Milliken, CFA Research Analyst+852-22036190Leo Chiang, CFA Alibaba delivered a solid June-quarter result, with revenue growing 9% YoY to RMB269bn, in line with expectations and reflecting continued strength in Cloud-andAl-related services,and stable e-commerce.The companycontinuestoposition itself as an Al-first platform, with management opening the release byhighlightingacceleratingCloudgrowth,expandingAlmonetizationandthelaunchofnewfoundationmodels and enterpriseAlagents.Revenuegrowthaccelerateddespiteaweakermacrobackdropandslowertransactionactivityindomesticcommerce. Research Analyst+852-220-36240 Keytakeawaysfromthequarterwere:(1)cloudgrowthcontinuestoacceleratewithAl revenues becoming increasingly material; (2) cloud margins are improvingrapidly despite ongoing investment; and(3)quick commerce unit economicscontinue to improve while maintaining market share. RevenuegrowthfromthenewlycreatedAlCloudandComputeServicessegmentacceleratedto45%YoY(as did externalcustomerrevenue),and isguidedto speedup in coming quarters,leaving management sounding confidentaboutachievingtheir target of USD100bn external revenue by 2030, and 20% adjusted EBITAmargin inlessthanfiveyears.Al-relatedproductrevenuereached RMB12.4bnanddelivered its twelfth consecutive quarter of triple-digit growth. Managementhighlighted increasing adoption of Al agents, foundation models, cloudinfrastructureandorchestrationsoftware,withAlibaba claiminga38.1%shareofChina's Al cloud market accordingtoOmdia. Software&ServicesAlibaba Thecost of theseinvestments has heldback profitability.Adjusted EBITAdeclined30%YoYtoRMB27.3bn(DBeRMB26bn)whileoperatingprofitfell57%toRMB15.2bn.Non-GAAPnet incomedeclined38%toRMB20.7bnasAlibabacontinued to invest aggressively inAl capabilities,cloud infrastructure andmodeldevelopment.Thecompanyrecorded RMB67.7bn of capex duringthequarter,up75%YoY,resultinginfreecashflowoutflowofRMB44.7bn.Managementhoweverremains at RMB38Obn,so this was a lumpyquarterduetotheneedtoprepareforhighAldemand;2)modeltraining costsshouldbefairlystablegoingforward,whilerevenueswill increase;3)the companyis seeing a 3-yearpayback onAl compute,which should fall to 2.5 years now that it is producing chips at scale; and 4) QuickCommercelossesareforecasttohalvethisyearandaretargetedtobeprofitableinFY29. AlibabaE-commerceGroup Alibaba has reorganized its reporting structure,combining domestic andinternationalcommercebusinesses withFreshippo into a single unit,the AlibabaE-commerceGroup.Revenueforthebusinessincreased4%YoYtoRMB205.9bn.Within this,China E-commerce revenue declined8%YoYtoRMB110.9bnasweakertransactionactivityweighedoncustomermanagementrevenue.ReportedCMR declined 7%,though management noted that, on a like-for-like basis,excluding the impact of its new business development program,CMRwouldhaveincreased by1%.(Thedifferenceisduetosubsidiespreviouslygetting recordedassalesandmarketing costs,butnownettedoutofrevenue.)Asnationalonlineretailsales onlyrose 2.3%inthequarter,theweakest since Covid,that is a reasonableperformance. QuickCommerceremainsthemajorgrowthengine.RevenuefromChinaQuickCommercerose45%YoYtoRMB53.3bn,drivenbyTaobaoInstantCommerceandFreshippo,whilelosseswerereduced.Improvinguniteconomicscamefromhigheraverage order values, better fulfillment efficiency and improved order mix,whilemaintaining market share. Freshippo also delivered robust revenue growth Software&ServicesAlibaba Instant Commerce. companyhighlightedstrongearlyadoptionofitsQwenShoppingAssistant,whichprovidesend-to-endassistancefromsearchthroughafter-sales support.Merchanttools havealsobeenupgradedwithagent-basedautomationcapabilities spanningproduct listing,store management,advertising and customerservicefunctions. Revenuegrew45%YoYtoRMB48.4bn,acceleratingfromthe40%growthreported in the March quarter. Al-related revenue reached RMB12.4bn during the quartercompared with RMB9bn in theprior quarter,and adjusted EBITA increased 133%YoYtoRMB5.6bn,implyingamarginofapproximately11.6%,upsubstantiallyfrom7.2% a year ago. The operating leverage kicking in is very encouraging and doessupport management's view that its full-stack approach is a competitiveinfrastructure, orchestration software and internally developed chips.T-Head'sZhenwuprocessors now serve over650 external customers.Model-as-a-Servicerevenues reached an RMB16bnARR. AlLabsandApplicationsAlibabahas separatedAl LabsandApplicationsasa standalonereporting segment, providing investors with greatervisibility into Alinvestmentand monetization.Thesegmentgenerated revenueofRMB3.3bn,up16%YoY,butrecorded anadjustedEBITAlossofRMB13.9bncomparedwitha RMB3.2bnloss ayearago.Whilethatis a substantial jump, as mentioned earlier, management suggests that costsshouldbe fairlystable ahead, and revenueis picking up. The widening losses reflect aggressive investment in model development,inferencecapacityandconsumer-facingAlapplications.Managementspecificallyhighlighted higher