On the evening of August 15, Alibaba Group announced its financial results for the first quarter of the fiscal year 2025.

The financial report indicates that for this quarter, the group's revenue was 243.24 billion yuan, a year-on-year increase of 4%. The operating profit was 35.989 billion yuan, a year-on-year decrease of 15%. The adjusted EBITA also saw a 1% year-on-year decline, amounting to 45.035 billion yuan. The net profit attributable to ordinary shareholders was 24.269 billion yuan, and the net profit was 24.022 billion yuan, a year-on-year decrease of 27%, primarily due to the decline in operating income and the increase in impairment losses from investments.

Strategic focus and continuous investment have yielded results, with the two core businesses of e-commerce and cloud computing continuing to make positive progress: Taobao Group's online GMV maintained steady growth, and Alibaba Cloud focused on "public cloud + AI", with double-digit growth in public cloud business revenue and triple-digit growth in AI-related product revenue.

Alibaba Group CEO Wu Yongming stated during the earnings analyst conference call that, in addition to the two core businesses of e-commerce and cloud services, the group's other important internet technology businesses have readjusted their business strategies after an assessment and analysis of product capabilities and market competition.

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Wu Yongming mentioned that while maintaining product competitiveness, these businesses will prioritize enhancing their commercialization capabilities, and it is expected that most of the businesses will achieve break-even within 1 to 2 years.

The investment in Taobao is paying off, and the growth rate of Alibaba Cloud is accelerating.

The financial report shows that Taobao Group's revenue was 113.373 billion yuan, a 1% year-on-year decline. The adjusted EBITA decreased by 1% to 48.81 billion yuan, mainly due to increased investment in user experience and technical infrastructure.

Taobao has increased its investment around enhancing user experience and optimizing the business ecosystem for merchants, successively launching a series of innovative reform measures, such as canceling the official pre-sale for the 618 event, introducing full-event price protection, and upgrading the benefits of the 88VIP membership during the quarter.

These "user-first" investments have been effective, with online GMV achieving steady growth this quarter, double-digit year-on-year growth in order volume, continuous growth in the number of buyers and purchase frequency, and the number of 88VIP members exceeding 42 million.

The management specifically mentioned the technology service fee during the financial report meeting. Not long ago, Taobao Group announced that it would start charging merchants a 0.6% "basic software service fee" from September 1, and its second-hand e-commerce platform Xianyu will also charge sellers a service fee ranging from 0.6% to 1% during the same period, which will also strengthen the monetization capabilities of Taobao's e-commerce ecosystem.Cloud Intelligence Group's revenue was 26.549 billion yuan, a year-on-year increase of 6%. This growth was primarily driven by double-digit increases in public cloud and the adoption of artificial intelligence-related products. "We are transitioning from low-profit project-based revenue to a focus on high-quality revenue," Alibaba stated in its financial report.

Adjusted EBITA for the Cloud Intelligence Group increased by 155% in the second quarter of 2024, reaching 2.337 billion yuan, compared to 916 million yuan in the same period of 2023. This improvement was mainly due to a focus on public cloud adoption and enhanced operational efficiency, which led to an improved product mix.

Alibaba's management indicated during the earnings call that they observed a strong demand for cloud services from users and noted that customers' budgets for AI continue to increase, especially in industries and enterprises that rely heavily on digitalization. They forecasted double-digit growth in external revenue for the second half of the year.

Most businesses are expected to break even within 1-2 years.

In this quarter, the synergistic effects of cross-border business and cross-border fulfillment services continued to manifest, driving high-speed growth for Alibaba's International Digital Business Group and Cainiao Group. The International Digital Business Group's revenue was 29.293 billion yuan, a year-on-year increase of 32%, remaining the fastest-growing business segment, with international retail commerce growing at a high speed of 38%. Cainiao Group's revenue was 26.811 billion yuan, a year-on-year increase of 16%, second only to the International Digital Business Group in terms of growth rate.

The financial report showed that the strong performance was driven by the growth of cross-border business, especially the AliExpress Choice service. Orders on AliExpress continued to grow rapidly, and in collaboration with Cainiao, they continued to focus on logistics experience, further reducing the average delivery time.

"We continue to drive synergies between Cainiao and our cross-border e-commerce business, enhancing end-to-end service capabilities by building a highly digitalized global logistics network," Alibaba stated.

In the Latin American market, this quarter, AliExpress also reached a strategic cooperation with Magalu, the largest offline retail platform in Brazil. In the Southeast Asian market, Lazada achieved profitability in July of this year, and Lazada CEO Dong Zheng stated that they would continue to increase investment.

Alibaba's management expressed during the earnings call their hope to integrate the supply from Alibaba's domestic platforms for export, such as Taobao and 1688, as soon as possible.

However, the adjusted EBITA loss for the International Digital Business Group was 3.706 billion yuan, compared to a loss of 420 million yuan in the same period of 2023, indicating an increase in the loss. This was mainly due to increased investments in cross-border businesses like AliExpress and Trendyol, partially offset by a significant reduction in operating losses due to improved monetization rates and operational efficiency at Lazada.Cai Niao Smart Logistics Network Co., Ltd.'s adjusted EBITA for the second quarter of 2024 decreased by 30% to 618 million yuan, compared to 877 million yuan in the same period of 2023, primarily due to increased investment in cross-border fulfillment solutions.

Multiple businesses beyond e-commerce and cloud continued to enhance operational efficiency, leading to significant improvement in losses. This quarter, due to operational efficiency improvements and business scale expansion, the local life group achieved a substantial reduction in losses. The quarterly operating performance of RT-Mart, Hema, Ali Health, and Lingxi Interactive also saw improvements.

Financial reports indicate that revenue from the local life group was 16.229 billion yuan, a year-on-year increase of 12%. The revenue of the entertainment group was 5.581 billion yuan, a year-on-year increase of 4%.

In addition to the two core businesses of e-commerce and cloud, Alibaba has also readjusted its business strategy—most businesses are given priority to enhance commercialization capabilities while maintaining product competitiveness, and it is expected that the improvement in business profitability will continue. "We assess that most businesses will achieve break-even within 1 to 2 years and gradually begin to contribute to scaled profitability," said Wu Yongming.

Market analysts believe that the fiscal year 2025 is a year for Alibaba to adhere to its strategic direction and consolidate the effectiveness of its transformation. Over the past few quarters, investments focused on enhancing consumer experience, AI infrastructure, and technical capabilities have brought positive changes to the business, confirming the effectiveness of the investments and the expectation of achieving more solid results within the fiscal year.