Alibaba Group Holding Ltd. (09988) announced its financial results for the third quarter ended December 31, 2025. Revenue for the quarter reached RMB 284.843 billion, representing a 2% increase compared to the same period last year. Operating profit was RMB 10.645 billion, a decrease of 74% year-on-year. Net profit attributable to ordinary shareholders was RMB 16.322 billion, declining by 67% compared to the prior year period. Diluted earnings per American depositary share were RMB 5.93.

Chief Executive Officer Wu Yongming stated, "During the quarter, Alibaba continued its investments in two core strategic areas: AI and consumption. AI is one of our primary growth engines. Revenue from Alibaba Cloud demonstrated robust growth of 36%, with income from AI-related products achieving triple-digit growth for the tenth consecutive quarter. Concurrently, our Model-as-a-Service platform business is experiencing rapid expansion, building a new growth engine for our cloud segment. Furthermore, the accelerated integration of the Tongyi Qianwen app with various application scenarios across Alibaba's consumer ecosystem has significantly driven new user growth and transaction activity. The monthly active users for Tongyi Qianwen across all platforms have surpassed 300 million, marking the era of scalable AI agent services. Moving forward, leveraging our full-stack AI capabilities encompassing 'large models + cloud + chips,' and comprehensive integration with Alibaba's business ecosystem, we will continue to advance simultaneously in both AI for business and consumer applications."

Chief Financial Officer Xu Hong commented, "The rapid growth of our AI and cloud business over recent quarters gives us greater confidence to increase investments and solidify our full-stack AI technology advantage. In our consumer business, while expanding the scale of instant retail, we have continued to improve unit economics. The Group's strong capital reserves and robust cash flow generation provide a solid foundation for our ongoing strategic investments."

In the consumer business segment, the company advanced its strategic layout by further expanding its instant retail operations, enhancing user experience, optimizing operational efficiency, and increasing efforts in high-average-order-value categories, including both food and non-food items. This quarter, improvements in fulfillment logistics efficiency, better order mix, and high customer retention rates contributed to continuous quarter-on-quarter enhancements in the unit economics and average order value of the instant retail business. The company rebranded "Ele.me" to "Taobao Quick Purchase" during the quarter, creating tighter integration with the Taobao app and strengthening its brand identity. Additionally, Taobao Quick Purchase services were integrated into the Tongyi Qianwen app on January 15, 2026, to further expand its consumer base and better meet diverse user needs.

Customer management revenue for the quarter increased by 1% year-on-year to RMB 102.664 billion ($14.681 billion). The moderation in growth rate was primarily due to a slowdown in gross merchandise volume and the diminishing impact of previously collected basic software service fees. User engagement with the instant retail business continued to strengthen during the quarter, with sustained scale growth contributing to a double-digit year-on-year increase in monthly active consumers on the Taobao app. The 88VIP membership program, representing the company's highest-spending consumer cohort, maintained double-digit year-on-year growth, exceeding 59 million members. The company remains focused on enhancing retention for these key customers by improving the value proposition.

For the quarter ended December 31, 2025, Alibaba International Digital Commerce Group significantly narrowed its losses year-on-year, driven by combined improvements in logistics optimization and investment efficiency. The unit economics for the AliExpress Choice business showed continued quarter-on-quarter improvement.

In the AI and cloud business segment, revenue from the Cloud Intelligence Group for the quarter ended December 31, 2025, was RMB 43.284 billion ($6.190 billion). Total revenue, as well as revenue excluding inter-segment transactions with other Alibaba businesses, accelerated to year-on-year growth rates of 36% and 35%, respectively. This growth momentum was primarily driven by increased revenue from public cloud services, including rising adoption of AI-related products. Revenue from AI-related products remained strong, achieving triple-digit year-on-year growth for the tenth consecutive quarter.

Alibaba Cloud continues to lead the market, attracting a growing number of customers to its comprehensive AI and cloud products and services, which include high-performance networking, distributed storage, cloud operating systems, and model training and inference services. In the Gartner® Magic Quadrant™ for Cloud Database Management Systems, 2025, Alibaba Cloud was named a Leader for the sixth consecutive year. In the Gartner® Emerging Technologies and Trends Impact Radar: Generative AI report, Alibaba Cloud was recognized as an Emerging Leader across all four evaluated domains, making it the only cloud service provider in the Asia Pacific region to receive this distinction.

The company's enterprise-grade large model portfolio, the Tongyi Qianwen model family, continues to drive rapid AI adoption across key verticals such as smart manufacturing, financial services, consumer retail, and cloud-native development, delivering quantifiable productivity gains through its full-stack, multimodal capabilities. With top-tier foundational AI models, large-scale real-world deployment, and clear technological leadership, the Tongyi Qianwen models are rapidly expanding in both technological innovation and application proliferation.

Leveraging the advanced Qwen3.5 foundational model, the company's flagship consumer AI application, the Tongyi Qianwen app, represents a significant milestone in its AI strategy: translating the leading capabilities of its self-developed models into scalable, real-world applications. On January 15, 2026, a major upgrade to the Tongyi Qianwen app was announced, enabling deep integration with Alibaba ecosystem businesses including Taobao and Tmall, Taobao Quick Purchase, Amap, Fliggy, and Alipay. The app can intelligently coordinate services across platforms, positioning it as China's first AI assistant capable of executing complex real-world tasks at scale. This marks the industry's transition from conversational interaction to task execution. This ecosystem-level integration further expands user reach, enhances engagement across Alibaba's platforms, and solidifies the company's leadership in applied AI.

Since the launch of promotional activities for the Chinese New Year period on February 6, user activity on the Tongyi Qianwen app has increased significantly. By the end of February, nearly 140 million users had experienced AI-powered shopping for the first time through the app's AI agent features, covering areas such as dining, daily necessities, ticketing services, and travel bookings. In February, monthly active users for the consumer-facing Tongyi Qianwen application exceeded 300 million.