On February 20, Alibaba Group released its financial report for the third quarter of fiscal year 2025, revealing a revenue of 280.15 billion yuan, marking an 8% increase compared to the previous yearThis growth rate is notable as it is the fastest pace seen in a yearMore impressively, the net profit reached 46.434 billion yuan, a staggering 333% increase year-on-yearSuch remarkable results prompted a pre-market surge of over 10% in the company's US stock.
Delving deeper into the individual business segments, the Taobao Group generated 136.091 billion yuan, reflecting a 5% year-on-year growthDuring an earnings call following the report, executives highlighted robust growth in e-commerce, particularly in new buyers and order volumesJiang Fan, newly appointed CEO of Alibaba's e-commerce business unit, emphasized the long-term goals of maintaining market share, enhancing user experiences, optimizing merchant efficiency, and improving the overall business environment within the domestic e-commerce landscape.
Jiang also pointed out that the B2B segment is expected to yield significant profits over the coming yearsHe discussed the optimizations that have been made in the company's cross-border B2C operations, yielding noticeable improvements in profitability, while actively seeking local partnerships in various countries to further enhance their footprint.
The international digital commerce division showed a promising trajectory, with a substantial revenue increase of 32% year-on-year, soaring to 37.756 billion yuan, largely fueled by strong performance in cross-border operationsJiang acknowledged that it is difficult to predict whether international operations would become more profitable than domestic ones in the future, but he believes the path to profitability for international business is clearer.
In the local lifestyle segment, revenue surged 12% to 16.988 billion yuan, driven by higher order volumes from services like Gaode and Ele.me, in addition to growth in marketing services
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The conversation surrounding Alibaba’s potential exit from certain physical retail sectors was addressed in the earnings call, where executives confirmed there are no plans to sell the Hema supermarkets at the moment but acknowledged considerations for bringing in strategic investors.
Alibaba’s focus remains on core operations while actively divesting from non-core investmentsThe executives characterized Hema as a growth story with stable expansion and decent profitability, a showcase of their successful integration of online and offline retail through digital strategies.
Attention also turned to Alibaba’s cloud services, which showed promising growthCEO Wu Yongming reported that Alibaba Cloud returned to double-digit growth at 13%, while revenues from AI-related products have seen triple-digit growth for six consecutive quarters.
During the earnings call, Wu discussed the implications of DeepSeek, noting that the differentiation in capabilities among large models is gradually lesseningThis trend particularly benefits cloud computing companies since most open-source models require a robust cloud computing infrastructure to operate effectivelyHe aptly stated, “If AI represents the largest commodity of the future, cloud computing networks are akin to today’s electrical grids.”
DeepSeek has catalyzed a surge in inference demand, significantly impacting Alibaba CloudWu highlighted a 60% increase in customer demand specifically for inference applications since the Lunar New YearAdditionally, he announced plans for Alibaba to launch a new deep inference model based on Qwen 2.5-MAX shortly, following the earlier release of the flagship AI model Qwen 2 at the end of January.
Another highlight from the earnings call was Alibaba’s future capital investment plansWu confirmed that significant investments will be directed toward AI infrastructure, with anticipated expenditures over the next three years expected to surpass the total of the past decade.
Wu further articulated that Alibaba will maintain its focus on three primary business types: domestic and international e-commerce operations, AI-driven cloud computing technologies, and internet platform products
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