produced | Huxiu Commercial Consumer Group
author | Miao Zhengqing
title picture | Visual China
At the Alibaba quarterly earnings conference call on the evening of August 15, analysts had more than one-third of the questions surrounding AI starts asking questions. This scene is highly similar to Microsoft’s quarterly earnings conference call 15 days ago: In the past quarter, these two Internet giants have “bet heavily” on AI and are trying to reshape the underlying logic of the entire business through AI.
Faced with analysts’ high attention to AI, the difference between Alibaba Group CEO Wu Yongming and Microsoft Chairman and CEO Satya Nadella (satya nadella) is: When asked when investments around AI will be When it comes to returns, Wu Yongming said that "Alibaba's AI return on investment is very impressive, and most of the computing power generates revenue after the product is put on the shelves." Satya Nadella and his executive team said that "In 15 years, even longer".
On August 15, Alibaba released its financial report for the first quarter of fiscal year 2025 ( is the quarterly financial report as of June 30, 2024, the natural year). During the quarter, Alibaba’s operating income increased by 4% year-on-year to 243.23 billion yuan, adjusted ebita A year-on-year decrease of 1% to 45.03 billion yuan. As Alibaba increased its investment in cloud infrastructure during the quarter, Alibaba's net free cash flow fell 56% year-on-year to 39.089 billion yuan.
"One of the factors affecting free cash flow is the increase in investment in AI, and the other is the reduction in the scale of some businesses. For example, we have made active adjustments to Taotian's direct business." Alibaba's senior management team said on the phone This was stated at the meeting.
’s investment in AI is expected to maintain its current intensity in the next few quarters. Wu Yongming said: "Investment in AI will continue at the current pace, because customer demand is still strong and has not been fully met."
Judging from the results, Alibaba's investment in AI has begun to bear fruit. During the quarter, Alibaba Cloud's AI product revenue growth rate maintained triple-digit growth, while public cloud revenue achieved double-digit growth. During the quarter, Alibaba Cloud's adjusted EBita increased by 155% year-on-year. The number of AI-related paying users also increased significantly during the quarter. The number of paying users of Alibaba Cloud's AI platform Bailian increased by more than 200% quarter-on-quarter.
"Take the cloud business as an example. More than half of the current revenue growth comes from AI products, and a large number of new customer demands are concentrated on GPU-centered AI projects." Wu Yongming said.
ai’s impact on Alibaba’s e-commerce, overseas and other business lines was also magnified during the quarter. Huxiu learned that as of June 30, Alibaba International’s AI tool users exceeded 500,000 merchants, and the average daily calls to Alibaba International’s AI capabilities by merchant users had exceeded 50 million. During the quarter, Taotian invested in a number of new AI tools, such as the free merchant AI tool Quick Butler launched on Taobao Qianniu platform; and continued to promote Alibaba's full-site promotion based on LMA large model technology, which was used on 618 Among the merchants promoted throughout the site, 130 have a turnover exceeding 10 million, and have contributed to the average month-on-month growth of GMV of 1.5 million products in the 7 days after investment by more than 65%.
It is worth noting that during the quarter covered by the financial report, Alibaba’s core executives have repeatedly expressed their attitude towards “Alibaba’s bet on AI” in public. “Alibaba is all in artificial intelligence. If you think about the e-commerce scenario in e-commerce, in terms of purchase recommendations, you can walk into a virtual fitting room and see how some clothes look on you, what you need Personal assistants and customer service, these things can be greatly enhanced by AI technology.” On May 31, at the 20th JPMorgan Global China Summit, Alibaba Group Chairman Tsai Chongxin (joe tsai), Chairman of JPMorgan North Asia and Greater China. said Kam Shing Kwang, Vice Chairman of District Investment Bank.
ai is a bright spot, and it will take time for the basic market to fully revive.
The weakness of the overall consumer market and the multiple impacts of consumption grading have put several major traditional shelf e-commerce companies under pressure in the second quarter of 2024.
The challenges faced by Taotian are similar to those faced by platforms such as JD.com: overall market factors have weakened consumer confidence, which further affects merchants’ confidence in streaming and advertising. However, against this background, Taoxi still showed certain signs of vitality and recovery throughout the second quarter of 2024.
From the data point of view, the quarterly financial report shows that after excluding the chargeback factors, Taotian's overall GMV and order volume have maintained a year-on-year growth rate of mid-to-high single digits and double digits respectively. The number of 88vip showed double-digit growth during the quarter, which means that the core high-net-worth users of Taobao are basically stable and growing.
On the other side of these positive news, some analysts are paying attention to the slowdown in the growth rate of cmr ( domestic retail customer management revenue ). Previously, the market expectation for Taoxi's cmr this quarter was about 3%. But the figure shown in the financial report was 0.6%. Several analysts asked relevant questions on the conference call. Wu Yongming's reply was: "It is expected that in the next few quarters, the growth rate of cmr will gradually match the growth rate of gmv."
A potential influencing factor of
is that Taobao has paid more attention to the data of market share in the past few quarters. , in order to win back share, it launched some new tools on the merchant side and made some previously paid products free. According to the information disclosed by Wu Yongming in the conference call, Taobao's overall e-commerce market share is stable and increasing. According to his expectation, as Taobao's market share stabilizes in the next few quarters, the commercial part will Get a speed boost.
Another noteworthy change during the quarter is that Taobao is adjusting its direct business. According to relevant sources, Taoxi took the initiative to shrink some of its self-operated businesses, and the largest shrinkage was in the 3C field. After this adjustment, Taoxi's self-operated business will focus more on daily necessities and other directions. In the first half of 2024, the tactical adjustments of several major 3c e-commerce platforms will be relatively concentrated. For Pinduoduo, this is a key direction in which it is developing its efforts; for JD.com, in order to win back its mental advantage in the 3C field, JD.com is significantly expanding subsidies in the 3C field as a whole. In this context, it is actually a better choice for Taoxi to transfer resources to more imaginative daily necessities.
However, this series of adjustments have affected Taoxi’s income. During the quarter, Taotian's overall quarterly revenue fell by 1.4% year-on-year, and adjusted ebita fell by approximately 1% year-on-year. However, 1688 under Taotian Group showed special vitality during the quarter. During the quarter, 1688 further integrated with Taobao and expanded its reach in 2c business and overseas business. These attempts were effective. During the quarter, 1688 overall Revenue increased by more than 16% year-on-year.
’s overseas business is another major sector that attracted the attention of the outside world during the quarter. The overall revenue of Alibaba International (aidc) increased by more than 30% year-on-year during the quarter. Although the growth rate has declined compared with the previous quarter, the overall growth rate is still the leader among various sectors of Alibaba e-commerce. One of the key directions that the overseas sector focuses on during the quarter is optimizing the balance of payments. The overall loss narrowed by about 9% month-on-month.
Rookie further deepened its collaboration with other businesses during the quarter. Huxiu learned that the employees in the Cainiao team who collaborated with Taoxi and Alibaba International have gone to the office areas of Taoxi and Alibaba International to work together. Overall, Cainiao's revenue growth rate during the quarter was 15.7% year-on-year, which was slower than the previous quarter. However, its profit status changed from a loss of 1.3 billion yuan in the previous quarter to a profit of 620 million yuan in this quarter.
’s local service segment revenue increased by 12.3% year-on-year during the quarter, and the loss narrowed to 390 million yuan. As expected, the local services segment is expected to break even.
Alibaba Cloud is the most noteworthy among Alibaba's major sectors this quarter. On the one hand, Alibaba Cloud has become the second largest revenue pillar within the entire Alibaba business. On the other hand, Alibaba Cloud's AI part has become the vanguard of the entire Alibaba's "AI-ization".
During the quarter, Alibaba Cloud's overall revenue increased by 5.7% year-on-year to 26.5 billion yuan, and adjusted ebita profit increased by more than 60% quarter-on-quarter to 2.3 billion yuan.According to Wu Yongming, the core engine of Alibaba Cloud's growth is already AI, and this revenue engine is expected to continue to accelerate in the next few quarters.
At the moment, there are two key questions facing Alibaba: First, in the basic e-commerce market, how to translate the adjustments and upgrades in the past few quarters into results on the revenue side, which has become the focus of the outside world; second, how to convert the adjustments and upgrades in the past few quarters into results on the revenue side; second, , Alibaba's series of investments in AI, whether it can achieve geometric growth in potential energy in the next few quarters.
