On November 15th, Alibaba (BABA. NYSE/09988. HK) released its second quarter financial report for the fiscal year 2025 (three months ended September 30th). According to the financial report, Alibaba's revenue for the quarter was 236.503 billion yuan, a year-on-year increase of 5%, operating profit was 35.246 billion yuan, a year-on-year increase of 5%, and adjusted EBITA was 40.561 billion yuan, a year-on-year decrease of 5%.
Alibaba Group's Chief Financial Officer, Xu Hong, stated that Alibaba's revenue growth this quarter was driven by the rhythmic increase in monetization rate by Taobao Group, including GMV based service fees and merchants using Alibaba's marketing tool "full site promotion". Alibaba will continue to invest in its core business and improve operational efficiency.
This quarter, Alibaba repurchased $4.1 billion worth of shares, resulting in a net decrease of 2.1% in outstanding shares compared to the end of June.
Taobao's customer management revenue increased by 2%, while adjusted EBITA decreased by 5%
Overall, Alibaba's revenue for this quarter was slightly lower than market expectations, while Taobao Group's retail business revenue in China increased by 0% year-on-year. Alibaba is still in a critical period of revitalizing Taobao, as Taobao's investment in customer experience continues to increase. Adjusted EBITA has decreased, but GMV and customer management revenue have increased. As one of Alibaba's core businesses, Alibaba Cloud has achieved an increase in revenue growth for the fourth consecutive quarter. In addition, the revenue scale of Alibaba's overseas e-commerce continues to expand, but it is still in a period of loss.
In terms of business, Alibaba's main business, Taotian Group, had a revenue of 98.994 billion yuan this quarter, a year-on-year increase of 1%. The customer management revenue of Taobao China's retail business was 70.364 billion yuan, a year-on-year increase of 2%, while the revenue from direct and other (including Tmall Supermarket, Tmall Global, and other direct businesses) was 22.644 billion yuan, a year-on-year decrease of 5%. During the reporting period, Taotian Group's adjusted EBITA decreased by 5% year-on-year to 44.59 billion yuan.
According to the financial report, the growth rate of Taobao's customer management revenue has expanded this quarter. Last quarter, Taobao's customer management revenue increased by 1% year-on-year. Alibaba stated in its financial report that this was mainly due to the growth of online GMV, while the Take rate remained stable year-on-year. Alibaba's direct sales and other revenue continued the downward trend of the previous quarter. Alibaba stated that the decline in revenue in this quarter was mainly due to a decrease in sales of electrical appliances.
In terms of cloud intelligence group, Alibaba Cloud's revenue for this quarter was 29.61 billion yuan, a year-on-year increase of 7%, compared to 26.549 billion yuan in the previous quarter, a month on month increase of 11.5%. Adjusted EBITA profit was 2.661 billion yuan, a year-on-year increase of 89%. According to the financial report, Alibaba Cloud's overall revenue (excluding revenue from Alibaba's consolidated business) increased by over 7% year-on-year, driven by double-digit growth in public cloud services and an increase in the adoption of AI related products. AI related product revenue has achieved double-digit year-on-year growth for five consecutive quarters.
In terms of Alibaba International Digital Business Group (AIDC), AIDC's revenue for this quarter was 31.672 billion yuan, a year-on-year increase of 29%; Alibaba International's retail revenue was 25.618 billion yuan, a year-on-year increase of 35%, mainly driven by the revenue growth of AliExpress Choice and Trendyol. However, AIDC still incurred a loss of 2.905 billion yuan this quarter. Alibaba stated in its financial report that this was mainly due to increased investment in cross-border businesses such as AliExpress and Trendyol, partially offset by a significant reduction in operating losses caused by Lazada's improved monetization rate and operational efficiency.
In addition, the financial report shows that the revenue growth of cross-border logistics fulfillment solutions has driven Cainiao Group's revenue growth of 8% this quarter. However, at the same time, Cainiao's increased investment in cross-border logistics fulfillment solutions has also led to a 94% year-on-year decrease in its adjusted EBITA. This quarter, the adjusted EBITA losses of Alibaba Entertainment Group and Local Life Group have converged.
Taotian is still in the investment period
At the same time as the release of the financial report, Wu Yongming, CEO of Alibaba Group, Taobao Group, and Alibaba Cloud, mentioned that during this year's Double 11 period, Taobao and Tmall GMV achieved strong growth, and the number of buyers reached a historical high. He stated that after the end of Singles' Day, Taobao learned that a large number of merchants had exceeded expectations in terms of performance.
This Double 11, Taobao's investment in membership coupons continues to increase. Wu Yongming mentioned that the 88VIP membership coupon is a planned investment by Taobao during the big promotion period, which will help brand merchants grow on Taobao in the long run. According to the financial report, the number of 88VIP members on Taobao continued to grow in double digits this quarter, reaching 46 million. By investing in platform members, Alibaba hopes to drive brand merchants to increase their advertising budget expenditures on Taobao and Tmall.
For the specific strategy of "revitalizing Taobao", the management mentioned that while improving profitability, Alibaba will increase investment in the entire user experience and merchant aspects. Taobao will expand its advantages in product supply, including investment in price power, new product supply, and brand supply with competitive advantages. At the same time, investment in user service, front-end user interface, logistics, after-sales and other aspects will continue to increase. At the same time, in terms of investing in AI computing power in e-commerce, Alibaba also has a lot of AI related products under development.
On the eve of Double 11, Taobao achieved full integration with WeChat Pay. Wu Yongming stated that Taotian has high expectations for the potential user growth that WeChat Pay may bring. For this group of users, Taobao will invest in medium to long-term user growth, which will also be a relatively large investment direction for Taobao in the future. Overall, Taotian is still in an investment phase.
It is worth noting that after the Double 11 shopping festival, the management of Taobao seems to be paying more attention to "brand". During the earnings conference call, Wu Yongming mentioned that during this year's Singles' Day, the overall industry saw a slowdown in the growth rate of live streaming e-commerce, but the growth rate of live streaming e-commerce on Taobao and Tmall increased significantly. The trend he sees is that live streaming e-commerce is increasingly combining with high-quality supply, and Taotian's supply, mainly through brand flagship stores, has formed a good chemical reaction with live streaming, bringing about overall growth.
We believe this year is a turning point. The growth rates of various e-commerce platforms are gradually converging. For brand owners, they will choose platforms that can truly bring them greater sales, rather than simply investing in growth. In this situation, I think Taobao Tmall's advantage in obtaining brand owners' budgets will expand, "said Wu Yongming. Backed by "brand" supply, Taotian seems to see the "inflection point" in the competition with Tiktok, Kwai and other live broadcast e-commerce.
Regarding the competition faced by Taobao in the white label and agricultural product fields, Wu Yongming stated that Taobao's strategy is very clear. Each platform has its own characteristics, strong categories, and core audience. Among Taobao's core audience of 88VIP, the majority of consumers in most categories tend to prefer branded products. In certain categories, the core audience of Taobao may also have a demand for white cards, and Taobao will provide white card supply in these categories. At the same time, in response to the new users brought by channels such as WeChat Pay, Taobao needs to pay attention to their category consumption preferences and the differences between existing users, in order to meet the needs of this group of users.
In the past few months, amidst the intensifying market competition in the e-commerce industry, Taobao has made breakthroughs in retaining core users and increasing new user growth, "said Wu Yongming." We will continue to invest in our core business and improve the quality of our operations, and we are confident in our future development