This interim report details Alibaba Group’s financial performance and strategic initiatives for the six months ended September 30, 2025 (Fiscal Year 2026). Below is a comprehensive summary of the key findings:
1. Financial Performance Overview
- Revenue: Totaled RMB479,739 million, a 5% increase year-over-year (YoY), driven by steady growth in the Cloud and International Commerce segments.
- Operating Income: RMB691.72 million, up 2% YoY.
- Net Income: Net income attributable to ordinary shareholders was RMB68,143 million, a significant 35% increase YoY. This was primarily due to mark-to-market gains from equity investments, compared to losses in the same period last year.
- Non-GAAP Net Income: RMB77,209 million, a 9% decrease YoY, reflecting increased investments in e-commerce user experience and AI infrastructure.
- Cash Position: As of September 30, 2025, the company held cash and short-term investments totaling RMB525,071 million.
2. Segment Analysis
- Taobao and Tmall Group: Revenue reached RMB212,518 million (+1% YoY). The focus remained on “User First” strategies, resulting in growth in purchase frequency and the number of active buyers.
- Cloud Intelligence Group: Revenue was RMB56,146 million (+6% YoY). Notably, AI-related product revenue achieved triple-digit growth for several consecutive quarters.
- Alibaba International Digital Commerce (AIDC): Revenue surged to RMB60,911 million (+30% YoY), fueled by the strong performance of the “Choice” premium service on AliExpress.
- Cainiao Smart Logistics Network: Revenue grew 12% YoY to RMB54,952 million, supported by the expansion of cross-border fulfillment services.
- Local Services Group: Revenue grew 14% YoY to RMB34,484 million, with significantly narrowed losses due to improved scale and operational efficiency.
3. Strategic Pillars
- AI-Driven Growth: Alibaba is integrating AI across all business lines. The Cloud division is positioning itself as a foundation for AI development in China, while e-commerce units use AI to improve search, recommendation, and advertising efficiency.
- Synergy & Openness: A milestone during this period was the integration of Tencent’s WeChat Pay on Taobao/Tmall and the collaboration with JD Logistics, aiming to broaden the user base and improve delivery efficiency.
- Loss Reduction: Non-core business segments (Local Services, Big Entertainment) showed improved financial health, moving closer to profitability.
4. Shareholder Returns
- Share Repurchase: During these six months, Alibaba spent US$10 billion to repurchase 905 million ordinary shares (equivalent to 113 million ADSs).
- Share Count Reduction: This resulted in a 4.4% net reduction in outstanding shares, demonstrating a strong commitment to enhancing shareholder value.
- Remaining Authorization: As of September 30, 2024, US$15.1 billion remains available under the current buyback program.
5. Future Outlook
The management emphasizes a balance between maintaining market leadership in e-commerce and investing heavily in the future of AI. The focus is on high-quality growth and improving the monetization rate (CMR) while ensuring long-term competitiveness in the global digital landscape.
Based on the Interim Report for the six months ended September 30, 2025, here is the Condensed Consolidated Income Statement:
Consolidated Statement of Profit or Loss
(Amounts in RMB millions, except percentages)
| Item | Six months ended Sept 30, 2025 | % of Total Rev | Six months ended Sept 30, 2024 | YoY |
| Revenue | 479,739 | 100.0% | 458,946 | +4.5% |
| Cost of revenue | (300,053) | 62.5% | (280,424) | +7.0% |
| Product development expenses | (27,643) | 5.8% | (24,673) | +12.0% |
| Sales and marketing expenses | (58,410) | 12.2% | (52,425) | +11.4% |
| General and administrative expenses | (16,041) | 3.3% | (16,885) | -5.0% |
| Amortization/Impairment of intangible assets | (8,420) | 1.8% | (10,255) | -17.9% |
| Operations Profit | 69,172 | 14.4% | 67,684 | +2.2% |
| Interest and investment income, net | 29,864 | 6.2% | (1,724) | N/A |
| Other income, net | 5,667 | 1.2% | 5,556 | +2.0% |
| Income before income tax | 94,660 | 19.7% | 61,353 | +54.3% |
| Net Income | 67,575 | 14.1% | 49,321 | +37.0% |
| Net Income Attributable to Alibaba | 68,143 | 14.2% | 50,462 | +35.0% |
Segment Revenue Breakdown
| Segment | Revenue (RMB mn) | % of Total Rev | YoY |
| Taobao and Tmall Group | 212,518 | 44.3% | +1.4% |
| Cloud Intelligence Group | 56,146 | 11.7% | +6.5% |
| International Digital Commerce (AIDC) | 60,911 | 12.7% | +30.5% |
| Cainiao Smart Logistics Network | 54,952 | 11.5% | +12.5% |
| Local Services Group | 34,484 | 7.2% | +13.9% |
| Digital Media and Entertainment | 11,552 | 2.4% | +1.3% |
| All Others | 41,400 | 8.6% | -4.1% |
| Inter-segment elimination | (12,224) | -2.5% | N/A |
Key Financial Insights
- Net Income Surge: The 35% increase in net income was primarily driven by a net gain of RMB29,864 million from investment valuation changes, compared to a net loss in the prior year.
- Operating Margin Compression: Operating profit only grew 2.2% despite a 4.5% revenue increase. This reflects heavier spending in Cost of Revenue (+7.0%) and Sales & Marketing (+11.4%) as the company invests in user acquisition and AI infrastructure.
- Growth Engines: While Taobao/Tmall remains the largest contributor, growth is heavily supported by International Commerce (+30.5%) and Local Services (+13.9%).
- Cloud & AI: Cloud revenue growth is accelerating at 6.5%, with AI-related products consistently delivering triple-digit growth.
Based on the Interim Report for the six months ended September 30, 2025, here is the Condensed Consolidated Balance Sheet:
Consolidated Balance Sheet
(Amounts in RMB millions, except percentages)
| Item | Sept 30, 2025 | % of Total Assets | March 31, 2025 | Change % |
| Cash and cash equivalents | 225,791 | 13.1% | 248,125 | -9.0% |
| Short-term investments | 299,280 | 17.4% | 311,494 | -3.9% |
| Accounts receivable, net | 66,927 | 3.9% | 64,082 | +4.4% |
| Inventories | 53,995 | 3.1% | 53,775 | +0.4% |
| Other current assets | 81,206 | 4.7% | 81,881 | -0.8% |
| Total current assets | 727,199 | 42.3% | 759,357 | -4.2% |
| Equity method investments | 475,752 | 27.7% | 440,361 | +8.0% |
| Property, plant and equipment, net | 173,436 | 10.1% | 173,577 | -0.1% |
| Intangible assets, net | 36,718 | 2.1% | 42,691 | -14.0% |
| Goodwill | 266,495 | 15.5% | 266,205 | +0.1% |
| Other non-current assets | 39,783 | 2.3% | 38,316 | +3.8% |
| Total assets | 1,719,383 | 100.0% | 1,720,507 | -0.1% |
| — | — | — | — | — |
| Short-term borrowings | 40,307 | 2.3% | 35,359 | +14.0% |
| Accounts payable and notes payable | 125,952 | 7.3% | 126,284 | -0.3% |
| Accrued expenses and other liabilities | 134,625 | 7.8% | 144,573 | -6.9% |
| Deferred revenue | 70,364 | 4.1% | 73,266 | -4.0% |
| Total current liabilities | 371,248 | 21.6% | 379,482 | -2.2% |
| Long-term borrowings | 150,821 | 8.8% | 150,113 | +0.5% |
| Other non-current liabilities | 71,822 | 4.2% | 71,727 | +0.1% |
| Total liabilities | 593,891 | 34.5% | 601,322 | -1.2% |
| — | — | — | — | — |
| Total equity | 1,125,492 | 65.5% | 1,119,185 | +0.6% |
| Total liabilities and equity | 1,719,383 | 100.0% | 1,720,507 | -0.1% |
Key Financial Insights
- Liquidity Management: Total cash, cash equivalents, and short-term investments amounted to RMB525,071 million. The decrease from March is primarily attributed to the aggressive US$10 billion share repurchase program executed during the half-year.
- Asset Composition: Long-term investments and equity method investments increased by 8%, reflecting the rebound in market valuations of Alibaba’s investment portfolio.
- Leverage & Solvency: The debt-to-asset ratio remains conservative at 34.5%, with total equity slightly increasing despite the massive buybacks, thanks to strong net income during the period.
- Intangible Assets: The 14% decrease in intangible assets is mainly due to routine amortization and impairment assessments.
Based on the Interim Report for the six months ended September 30, 2025, here is the Condensed Consolidated Statement of Cash Flows:
Consolidated Statement of Cash Flows
(Amounts in RMB millions, except percentages)
| Item | Six months ended Sept 30, 2025 | Six months ended Sept 30, 2024 | YoY |
| Net cash from operating activities | 71,400 | 94,537 | -24.5% |
| Net cash used in investing activities | (35,934) | (16,045) | +123.9% |
| Net cash used in financing activities | (58,495) | (39,401) | +48.5% |
| Effect of exchange rate changes | 695 | (1,643) | N/A |
| Net increase/(decrease) in cash | (22,334) | 37,448 | N/A |
| Cash at beginning of period | 248,125 | 242,101 | +2.5% |
| Cash at end of period | 225,791 | 279,549 | -19.2% |
Free Cash Flow (Non-GAAP) Analysis
| Item | Six months ended Sept 30, 2025 | Six months ended Sept 30, 2024 | YoY |
| Net cash from operating activities | 71,400 | 94,537 | -24.5% |
| Less: Capital expenditures | (32,239) | (15,417) | +109.1% |
| Less: Other (IP rights, etc.) | (11,774) | (3,911) | +201.1% |
| Free Cash Flow | 27,387 | 75,209 | -63.6% |
Key Financial Insights
- Operating Cash Flow Pressure: The 24.5% decline in operating cash flow was primarily due to increased investments in user experience for Taobao/Tmall, higher tax-related payments, and front-loaded costs for AI development.
- Aggressive AI Investment: Capital expenditures more than doubled (+109.1%) compared to the previous year. This reflects Alibaba’s strategic pivot to expand its AI computing infrastructure, which aligns with the triple-digit growth in AI-related revenue within the Cloud segment.
- Shareholder Returns: Financing activities showed a massive outflow, largely driven by the US$10 billion (approx. RMB71.2 billion) spent on share repurchases during this six-month period.
- Cash Reserves: Despite the significant drop in Free Cash Flow, the company maintains a robust liquidity position with total cash and short-term investments of RMB525,071 million.
The following summary details the strategic focus and future outlook for Alibaba Group’s six major business segments as outlined in the FY2026 Interim Report:
1. Taobao and Tmall Group (TTG)
- Strategic Focus: Maintaining its position as the leading e-commerce platform in China by prioritizing “User First” initiatives.
- Key Developments:
- Enhanced user retention through simplified promotions and improved return/refund policies.
- Expanded accessibility by integrating WeChat Pay and collaborating with JD Logistics to capture users in lower-tier markets.
- Future Outlook: Focus on increasing the Monetization Rate (CMR) through AI-powered advertising tools (like “Quanzhantui”) while balancing price competitiveness with sustainable profit growth.
2. Cloud Intelligence Group
- Strategic Focus: Serving as the foundation for AI innovation and digital transformation for enterprises.
- Key Developments:
- AI-related revenue has achieved triple-digit YoY growth for several consecutive quarters.
- Shifted focus toward high-margin Public Cloud services and reduced low-margin resale projects to improve profitability.
- Future Outlook: Continued heavy investment in AI infrastructure to become the preferred cloud provider for AI developers in China. The segment aims to integrate proprietary LLMs (Qwen) across all Alibaba ecosystems.
3. Alibaba International Digital Commerce (AIDC)
- Strategic Focus: Scaling global e-commerce via platforms like AliExpress, Lazada, and Trendyol.
- Key Developments:
- Revenue surged by 30% YoY, primarily driven by the Choice model on AliExpress, which offers superior logistics and value.
- Strong growth in international markets, particularly in Europe, the Gulf region, and Southeast Asia.
- Future Outlook: Investing in global supply chain efficiency and AI-driven localized services (translation, customer service) to narrow losses and achieve regional profitability.
4. Cainiao Smart Logistics Network
- Strategic Focus: Building a global end-to-end logistics network to support domestic and international e-commerce.
- Key Developments:
- Revenue grew 12% YoY, supported by the expansion of cross-border fulfillment services.
- Successfully scaled the “Global 5-Day Delivery” service.
- Future Outlook: Deepening synergy with AIDC to provide faster shipping at lower costs. Cainiao plans to further automate its sorting centers and expand its local delivery networks in key overseas markets.
5. Local Services Group
- Strategic Focus: Optimizing the “to-home” (Ele.me) and “to-destination” (Amap) service models.
- Key Developments:
- Revenue increased by 14% YoY, with losses narrowing significantly due to operational efficiency and marketing optimization.
- Amap (Gaode) saw strong growth in ride-hailing and travel-related bookings.
- Future Outlook: Achieving break-even status in the near future by strictly managing acquisition costs and leveraging AI for better dispatching and logistics routing.
6. Digital Media and Entertainment
- Strategic Focus: Creating high-quality original content and managing digital distribution via Youku and Alibaba Pictures.
- Key Developments:
- Maintained steady revenue (+1% YoY) with a focus on narrowing losses through disciplined content spending.
- Future Outlook: Using Generative AI to reduce content production costs and enhancing the integration between online streaming and offline events (concerts, movies, and ticketing).
Group-Wide Strategic Summary
Alibaba’s overarching strategy is defined by two pillars: “User First” and “AI-Driven.”
- Capital Management: The US$10 billion spent on buybacks this half-year signals management’s confidence in long-term value.
- Ecosystem Openness: Breaking “walled gardens” by accepting rival payment methods (WeChat Pay) highlights a shift toward growth through industry collaboration.
- Efficiency: The group is successfully transitioning non-core business units from “loss-making” to “profit-contributing” entities.