Alibaba's Q4 revenue grew by 2% year-on-year, while non-GAAP net profit fell by 67%. AI-related revenue has seen triple-digit growth for 10 consecutive quarters | Earnings Report Insights

Alibaba's fourth-quarter financial report released on Thursday shows that the high growth rate of AI + cloud business continues to confirm itself as a new main line, but the group's profits and cash flow are significantly pressured due to investments in instant retail.

In this performance report, the most impressive growth comes from cloud and AI. Alibaba Cloud's revenue for this quarter increased by 36% year-on-year to 43.284 billion yuan, and revenue from AI-related products has maintained triple-digit year-on-year growth for the tenth consecutive quarter; management stated that the growth of the MaaS platform is strong and is becoming a new engine driving cloud business. On the consumer side, the Qianwen app has deeply integrated with Taotian, instant retail, Gaode, Feizhu, Alipay, and other ecological services, promoting the implementation of AI Agents "from dialogue to task execution," with monthly active users across the platform exceeding 300 million in February.

Another main line of the consumer business is the accelerated expansion of instant retail: this quarter, instant retail revenue increased by 56% year-on-year to 20.842 billion yuan, and improvements in fulfillment efficiency, order structure, and retention have led to a quarter-on-quarter improvement in unit economic models and a continuous increase in average transaction value; Ele.me was renamed "Taobao Instant Commerce" during the quarter and further integrated with the Qianwen app in January to expand its reach.

The cost is reflected in the profit and loss statement and cash flow:

Group revenue increased by only 2% year-on-year to 284.843 billion yuan (on a comparable basis, excluding disposed businesses like RT-Mart and Intime, it was +9%), falling short of the market expectation of 290.7 billion yuan. Operating profit plummeted by 74% year-on-year to 10.645 billion yuan, and non-GAAP net profit declined by 67% year-on-year to 16.710 billion yuan, while the market expected 31.6 billion yuan.

Operating cash flow decreased by 49% year-on-year, and free cash flow decreased by 71% year-on-year, with the company stating that this was mainly due to investments in instant retail.

After the financial report was released, Alibaba's pre-market stock price in the US fell by 4%.

The pressure from the financial report has intensified Alibaba's urgency to "turn AI into a business." This week, the company launched the enterprise-level agentic AI service Wukong, established a token division, and simultaneously raised prices for cloud computing and storage services by up to 34%, aiming to more directly convert computing power and model capabilities into revenue.

Revenue increased by 2% year-on-year, cloud revenue accelerated growth

• Quarterly revenue: 284.843 billion yuan, year-on-year +2%
• Comparable basis (excluding disposed RT-Mart and Intime): year-on-year +9%

By segment, growth was mainly driven by cloud business and domestic e-commerce (including instant retail), while "other businesses" were significantly dragged down by asset disposals and adjustments in certain businesses:

• Taotian Group: 159.347 billion yuan, year-on-year +6%
• International Digital Commerce: 39.201 billion yuan, year-on-year +4%
• Cloud Intelligence Group: 43.284 billion yuan, year-on-year +36%
• Other businesses: CNY 67.34 billion, down 25% year-on-year (affected by the disposal of RT-Mart, Intime, and a decline in Cainiao's revenue)

Instant retail drag, non-GAAP net profit down 67% year-on-year

• Operating profit: CNY 10.645 billion, down 74% year-on-year (operating profit margin 4%, compared to 15% in the same period last year)
• Adjusted EBITA: CNY 23.397 billion, down 57% year-on-year (adjusted EBITA profit margin 8%, compared to 20% in the same period last year)
• Net profit: CNY 15.631 billion, down 66% year-on-year
• Non-GAAP net profit: CNY 16.710 billion, down 67% year-on-year

The core reason for the profit decline is "strategic increase in expenditures": expansion of instant retail, enhancement of user experience, and increased technology investment, partially offset by growth in cloud business and improvement in operational efficiency. The segment-adjusted EBITA clearly reflects that "the money earned from the cloud is spent on new battlegrounds":

• Taotian Group adjusted EBITA: CNY 34.613 billion, down 43% year-on-year
• International digital commerce adjusted EBITA: -CNY 2.016 billion (compared to -CNY 4.952 billion in the same period last year, significant loss narrowing)
• Cloud Intelligence Group adjusted EBITA: CNY 3.911 billion, up 25% year-on-year
• Other businesses adjusted EBITA: -CNY 9.792 billion (compared to -CNY 3.176 billion in the same period last year, loss widening)

Domestic e-commerce: Customer management revenue only +1%, 88VIP surpasses 59 million

In this quarter, Taotian Group's traditional e-commerce growth was weak, with instant retail becoming the driving force:

• E-commerce business revenue: CNY 131.583 billion, up 1% year-on-year
  • Customer management revenue: CNY 102.664 billion, up 1% year-on-year
    • Reason for slowed growth: Weak trading activity, gradual exit of software service fee impact; however, the company mentioned that "improvement in take rate" offset some pressure.
• Monthly active consumers on Taobao APP: Achieved double-digit year-on-year growth (company-calculated), related to the mental uplift brought by the expansion of instant retail scale.
• 88VIP membership: Double-digit year-on-year growth, exceeding 59 million.
• Instant retail revenue: CNY 20.842 billion, up 56% year-on-year, mainly driven by the large-scale promotion of "Taobao Instant Commerce" by the end of April 2025, leading to order growth.

Management emphasized that the unit economic model of instant retail continued to improve this quarter, with an increase in average order value month-on-month, coming from three types of actions: improved fulfillment efficiency, optimized order structure (increased focus on high-value dining and non-food categories), and strong customer retention. However, from a group perspective, instant retail is still in the "investment for scale" phase, with direct and significant pressure on profits and cash flow.

Costs related to business adjustments are also beginning to reflect on the expense side: equity incentive expenses increased by 26% year-on-year, which the company explained is related to the rebranding of Ele.me and talent retention incentives (replacement awards).

International e-commerce: Moderate revenue growth, loss narrowing relies on logistics and efficiency

• International digital commerce revenue: CNY 39.201 billion, up 4% year-on-year
• International Retail: RMB 32.351 billion, +3% year-on-year (growth from AliExpress and others offsets decline in Lazada)
• International Wholesale: RMB 6.850 billion, +10% year-on-year
• Adjusted EBITA loss: RMB -2.016 billion (compared to RMB -4.952 billion in the same period last year)

The company attributes improvements to logistics optimization and enhanced investment efficiency, mentioning that the unit economic model of AliExpress's Choice business has improved quarter-on-quarter; at the same time, it is accelerating brand entry through collaboration with Shinsegae in South Korea and AliExpress's "Brand+" overseas solution to enhance supply and monetization capabilities.

Cloud and AI: Revenue +36% acceleration, AI products achieve triple-digit growth for ten consecutive quarters

• Alibaba Cloud revenue: RMB 43.284 billion, +36% year-on-year
• Cloud revenue excluding Alibaba's consolidated subsidiaries: +35% year-on-year
• Adjusted EBITA: RMB 3.911 billion, +25% year-on-year

The acceleration in growth is primarily driven by increased penetration of public cloud and AI-related products. The company disclosed that revenue from AI-related products has achieved triple-digit year-on-year growth for the tenth consecutive quarter; the MaaS platform is experiencing strong growth and is positioned as a new growth engine for cloud business. In terms of overseas expansion, as of December 31, 2025, Alibaba Cloud operates in 29 regions and 92 availability zones worldwide.

Qianwen moves from "model" to "application": Monthly active users exceed 300 million, beginning to drive ecological transactions

This quarter's progress on the AI consumer side is concentrated in the Qianwen app's "ecological integration":

• After the upgrade on January 15, the Qianwen app can coordinate services such as Taotian, Taobao Instant Commerce, Amap, Fliggy, and Alipay, evolving into an "AI assistant capable of executing complex tasks."
• User engagement increased after the Spring Festival activities: by the end of February, approximately 140 million users completed their first AI-driven shopping/lifestyle service experience through Qianwen's Agent capability; monthly active users across the platform exceeded 300 million in February.
• On the model side: Qianwen 3.5 was released in February; as of January 21, Qianwen's open-source model has been downloaded over 1 billion times on Hugging Face.

The key to this line is not just attracting new users but also: if the AI entry point can stably distribute to e-commerce, local life, travel, and payment, it will directly impact Alibaba's conversion efficiency and customer acquisition cost structure in "transaction + service" scenarios.

Self-developed chip T-Head: GPU mass production, supplementing "long-term supply" of computing power

Alibaba disclosed that its self-developed GPU under T-Head has achieved large-scale mass production, capable of supporting end-to-end AI workloads from training and fine-tuning to inference, and is compatible with mainstream AI frameworks.

The company stated that this business has made a "meaningful contribution" to cloud infrastructure supply and can be combined with Qianwen models and cloud services to provide external customers with more cost-effective AI services—during a phase where computing power is tightly constrained and cost-sensitive, the strategic value of this layout leans more towards the medium to long term.

"Other Businesses": Asset disposal drags down revenue, technical investments increase losses and impairments

Revenue from "Other Businesses" this quarter was 67.34 billion yuan, down 25% year-on-year. The company explained that this was mainly due to:

• Revenue gap from the disposal of RT-Mart and Intime;
• Decline in Cainiao's revenue;
• Some offset by growth in Hema and Alibaba Health.

In terms of profitability, the adjusted EBITA loss for "Other Businesses" widened to -9.792 billion yuan (compared to -3.176 billion yuan in the same period last year), which the company attributed to "increased investment in technology businesses"; at the same time, this quarter saw a goodwill impairment provision of 9.515 billion yuan (all related to Other Businesses), further depressing GAAP profit performance