Alibaba (NYSE: BABA) ramps AI spend as margins fall to 6%

Rhea-AI Filing Summary

Alibaba Group Holding Ltd (BABA) reported June quarter 2026 revenue of RMB268,953 million (US$39,639 million), up 9% year-over-year, while profitability declined sharply as it accelerated AI investments and absorbed regulatory and impairment charges.

Net income fell to RMB10,444 million, down 75%, and operating margin contracted from 14% to 6%, driven by higher cost of revenue, increased product development and general and administrative expenses, including a provision related to a EUR550 million European Commission Digital Services Act fine, plus RMB4,458 million goodwill impairment. Non-GAAP net income declined 38% to RMB20,715 million.

Segment trends diverged. The new AI Cloud and Compute Services segment grew revenue 45% to RMB48,437 million with adjusted EBITA up 133% to RMB5,628 million, supported by AI product revenue of RMB12,376 million. China Quick Commerce grew 45%, while China E-commerce revenue fell 8%. AI Labs and Applications revenue rose 16% but its adjusted EBITA loss widened to RMB13,861 million as Alibaba invested heavily in Qwen models and applications. Free cash flow was an outflow of RMB44,670 million amid a 75% increase in capital expenditures to RMB67,678 million, largely for AI infrastructure; Alibaba also repurchased US$162 million of shares.

Positive

• AI Cloud and Compute Services revenue grew 45% year-over-year to RMB48,437 million, with adjusted EBITA up 133% to RMB5,628 million, showing strong scaling of the cloud and AI infrastructure business.
• China Quick Commerce revenue increased 45% to RMB53,295 million, driven by Freshippo and Taobao Instant Commerce, indicating rapid growth in on-demand retail.
• Net cash provided by operating activities rose 11% to RMB22,945 million, showing higher cash generation from core operations despite weaker accounting earnings.

Negative

• Net income dropped 75% year-over-year to RMB10,444 million, with operating margin falling from 14% to 6%, reflecting higher costs, a large regulatory provision and goodwill impairment.
• Non-GAAP net income declined 38% to RMB20,715 million, indicating weaker underlying profitability even after excluding investment gains and major non-cash items.
• Free cash flow was a large outflow of RMB44,670 million, more than doubling the prior-year outflow, mainly due to a 75% increase in capital expenditures to RMB67,678 million for AI infrastructure.
• AI Labs and Applications adjusted EBITA loss widened over fourfold to RMB13,861 million, highlighting substantial near-term drag from AI model and application investments.
• General and administrative expenses increased 72% to RMB12,708 million, including a provision related to a EUR550 million European Commission Digital Services Act fine, pressuring earnings.

Filing Explained

At June 30, 2026, Alibaba ended the quarter with RMB474,505 million of unrestricted liquid investments after a RMB44,670 million free-cash-flow outflow.

As a Form 6-K, this is an interim report furnishing material home-market information; Alibaba reports its quarter ended June 30, 2026 as completed and recasts segment reporting around three reorganized groups plus All Others.

The disclosed combinations join China E-commerce, International Digital Commerce and Freshippo into Alibaba E-commerce Group; Cloud Intelligence and T-Head into AI Cloud and Compute Services; and AI model labs, Qwen Consumer Business Group and QwenWork into AI Labs and Applications.

At June 30, 2026, unrestricted cash, short-term investments and other treasury investments were RMB474,505 million, down from RMB520,824 million at March 31, 2026.

Key Figures

Revenue: RMB268,953 million Net income: RMB10,444 million Operating margin: 6% +5 more

8 metrics

Revenue RMB268,953 million Three months ended June 30, 2026; up 9% year-over-year from RMB247,652 million

Net income RMB10,444 million Three months ended June 30, 2026; down 75% year-over-year from RMB42,382 million

Operating margin 6% June quarter 2026, down from 14% in the prior-year quarter

AI Cloud and Compute Services revenue RMB48,437 million Three months ended June 30, 2026; 45% year-over-year growth

AI Labs and Applications adjusted EBITA RMB(13,861) million Loss for the three months ended June 30, 2026, versus RMB(3,224) million a year earlier

Capital expenditures RMB67,678 million June quarter 2026; up 75% from RMB38,676 million in the June quarter 2025

Free cash flow RMB(44,670) million Outflow for the three months ended June 30, 2026, versus outflow of RMB18,815 million a year earlier

Cash and other liquid investments RMB474,505 million Unrestricted cash, cash equivalents, short-term and other treasury investments as of June 30, 2026

Key Terms

Adjusted EBITA, free cash flow, Digital Services Act, share-based compensation expense, +2 more

6 terms

Adjusted EBITA financial

"Adjusted EBITA decreased 30% year-over-year to RMB27,329 million"

Adjusted EBITA is a measure of a company’s operating profit before interest, taxes and amortization, further modified to remove one-time or unusual items so it reflects ongoing business earnings. It matters to investors because it aims to show the company’s core cash-making ability — like listening to an engine without road noise — making comparisons across periods or peers easier, though companies may differ in what they exclude.

free cash flow financial

"Free cash flow, a non-GAAP measurement of liquidity, was an outflow of RMB44,670 million"

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

Digital Services Act regulatory

"a provision in relation to the fine imposed by the European Commission under the Digital Services Act of EUR550 million"

A law that sets rules for how online platforms and digital services must behave, like new traffic rules for the internet to keep users safe and information clear. It matters to investors because it can change a company’s costs, what features it can offer, and how much legal risk it faces — all of which can affect revenue, growth prospects and valuation. Compliance decisions by platforms can reshape competitive advantages and market access.

share-based compensation expense financial

"Total share-based compensation expense included in the cost and expense items above in the quarter ended June 30, 2026 was RMB3,304 million"

Share-based compensation expense is the accounting cost a company records when it pays employees or executives with stock, stock options, or other equity instead of cash. It matters to investors because it reduces reported profits and can dilute existing owners’ stake over time — like a bakery paying workers with slices of cake instead of money, leaving fewer slices for original owners and changing each slice’s value.

AI agents technical

"increasing adoption of AI-related products and anticipated growing customer adoption of AI agents"

AI agents are computer programs designed to perform tasks or make decisions automatically, often by learning from data and adapting to new information. They act like virtual assistants or robots that can handle complex activities without human intervention, which can help businesses and individuals save time and improve efficiency. For investors, AI agents matter because they can enhance decision-making and automate processes that influence markets and financial outcomes.

goodwill impairment financial

"Impairment of goodwill of RMB4,458 million was recorded in the quarter ended June 30, 2026"

Goodwill impairment occurs when a company’s valued reputation or brand strength, known as goodwill, is found to be worth less than previously recorded on its financial statements. This usually happens when the company's performance declines or market conditions change, signaling that the expected benefits from acquisitions or brand value are no longer as strong. It matters to investors because it can indicate that a company's assets are less valuable than initially thought, potentially affecting its overall financial health.

Earnings Snapshot

Revenue: RMB268,953 million

Quarter ended June 30, 2026

Revenue RMB268,953 million Up 9% year-over-year from RMB247,652 million

Net income RMB10,444 million Down 75% year-over-year from RMB42,382 million

Non-GAAP net income RMB20,715 million Down 38% year-over-year from RMB33,510 million

Adjusted EBITDA RMB39,143 million Down 14% year-over-year from RMB45,735 million

Adjusted EBITA RMB27,329 million Down 30% year-over-year from RMB38,844 million

FAQ

How did Alibaba (BABA) perform financially in the June quarter 2026?

Alibaba reported revenue of RMB268,953 million, up 9% year-over-year, but net income fell 75% to RMB10,444 million. Operating margin declined from 14% to 6% as costs rose, goodwill was impaired, and a large European Commission fine provision was recorded.

How fast is Alibaba (BABA) growing its AI Cloud and Compute Services business?

AI Cloud and Compute Services revenue grew 45% year-over-year to RMB48,437 million, while adjusted EBITA rose 133% to RMB5,628 million. AI-related product revenue reached RMB12,376 million, continuing a pattern of triple-digit year-over-year growth.

What happened to Alibaba’s (BABA) e-commerce revenues in China and quick commerce?

In China E-commerce, revenue fell 8% to RMB110,900 million, with customer management revenue down 7%. In contrast, China Quick Commerce revenue rose 45% to RMB53,295 million, mainly from Freshippo and Taobao Instant Commerce.

Why did Alibaba’s (BABA) profitability decline despite revenue growth?

Profitability declined due to higher cost of revenue, increased product development and G&A expenses, a RMB4,458 million goodwill impairment, and a provision related to a EUR550 million Digital Services Act fine, which together reduced operating margin to 6%.

What was Alibaba’s (BABA) cash flow and capital expenditure in the June quarter 2026?

Net cash provided by operating activities was RMB22,945 million, up 11% year-over-year, while free cash flow was an outflow of RMB44,670 million. Capital expenditures increased 75% to RMB67,678 million, mainly for AI infrastructure and compute capacity.

Did Alibaba (BABA) repurchase shares in the June quarter 2026?

Yes. Alibaba repurchased 13.4 million ordinary shares (about 1.7 million ADSs) for a total of US$162 million in the U.S. market under its share repurchase program during the quarter.

How strong is Alibaba’s (BABA) liquidity as of June 30, 2026?

As of June 30, 2026, Alibaba held RMB474,505 million (US$69,933 million) in cash, cash equivalents, short-term investments and other unrestricted treasury investments, compared with RMB520,824 million as of March 31, 2026.

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Form 6-K: How Foreign Companies Report to the SEC →

Available on EDGAR 08/20/2026 - 04:06 PM Accepted by SEC EDGAR 08/20/2026 - 04:05 PM Learn about SEC filing dates

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 Under

the Securities Exchange Act of 1934

For the month of August, 2026

Commission File Number: 001-36614

Alibaba Group Holding Limited

(Registrant’s name)

26/F Tower One, Times Square

1 Matheson Street

Causeway Bay

Hong Kong S.A.R.

People’s Republic of China

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F x Form 40-F o

EXHIBITS

Exhibit 99.1 – Press Release – Alibaba Group Announces June Quarter 2026 Results

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ALIBABA GROUP HOLDING LIMITED
Date: August 20, 2026	By:	/s/ Toby Hong XU
	Name:	Toby Hong XU
	Title:	Chief Financial Officer

Exhibit 99.1

 

Alibaba Group Announces June Quarter 2026 Results

Hong Kong, China, August 20, 2026 - Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988 (HKD Counter) and 89988 (RMB Counter), “Alibaba” or “Alibaba Group”) today announced its financial results for the quarter ended June 30, 2026.

“We delivered a strong quarter, driven by the improving commercialization of our full-stack AI capabilities,” said Eddie Wu, Chief Executive Officer of Alibaba Group. “Alibaba Cloud’s external revenue growth accelerated to 45%, with AI-related product revenue delivering triple-digit growth for the twelfth consecutive quarter. We recently launched frontier language, coding, video, audio, image and music models, all delivering top-tier performance. We introduced QwenWork, an AI workforce agent that unleashes enterprise productivity and capabilities. With our full-stack AI strategy, we have put Alibaba in a superior position to capture the substantial growth of demand for artificial intelligence and AI compute.”

“This quarter, we delivered robust revenue growth and margin improvement across our core businesses. Cloud segment revenue growth continued to accelerate, with quality earnings and operating leverage increasing EBITA margin to 12%. Our quick commerce business continued to improve unit economics while maintaining market share, and our overall e-commerce business delivered resilient profits,” said Toby Xu, Chief Financial Officer of Alibaba Group. “As synergies across our core businesses deepen and AI monetization ramps up, we have greater strategic and financial flexibility to make disciplined and sustained investments in full-stack AI capabilities.”

BUSINESS HIGHLIGHTS

In the quarter ended June 30, 2026:

· Revenue was RMB268,953 million (US$39,639 million), an increase of 9% year-over-year.

· Customer management revenue decreased by 7% year-over-year. Excluding the contra revenue impact from the new business development program, customer management revenue on a like-for-like basis would have grown by 1% year-over-year.

· Income from operations was RMB15,161 million (US$2,234 million), a decrease of 57% year-over-year, primarily due to the decrease in adjusted EBITA, impairment of goodwill and a provision⁽¹⁾ recorded this year. Adjusted EBITA, a non-GAAP measurement, decreased 30% year-over-year to RMB27,329 million (US$4,028 million), primarily attributable to the investment in technology, partly offset by the improved operating results in our Cloud business, as well as enhanced operating efficiencies across various businesses.

· Net income attributable to ordinary shareholders was RMB10,537 million (US$1,553 million). Net income was RMB10,444 million (US$1,539 million), a decrease of 75% year-over-year, primarily attributable to the decrease in income from operations, decrease in net gains from disposal of investments, and the decrease in net gain from mark-to-market changes of our equity investments. Non-GAAP net income in the quarter ended June 30, 2026 was RMB20,715 million (US$3,053 million), a decrease of 38% compared to RMB33,510 million in the same quarter of 2025.

1

· Diluted earnings per ADS was RMB3.71 (US$0.55). Diluted earnings per share was RMB0.46 (US$0.07 or HK$0.53). Non-GAAP diluted earnings per ADS was RMB8.52 (US$1.26), a decrease of 42% year-over-year. Non-GAAP diluted earnings per share was RMB1.07 (US$0.16 or HK$1.23), a decrease of 42% year-over-year.

· Net cash provided by operating activities was RMB22,945 million (US$3,382 million), an increase of 11% compared to RMB20,672 million in the same quarter of 2025. Free cash flow, a non-GAAP measurement of liquidity, was an outflow of RMB44,670 million (US$6,584 million), compared to an outflow of RMB18,815 million in the same quarter of 2025. The decrease in free cash flow was mainly attributed to the increase in our cloud infrastructure expenditure. As of June 30, 2026, our cash and other liquid investments⁽²⁾ were RMB474,505 million (US$69,933 million).

Reconciliations of GAAP measures to non-GAAP measures presented above are included at the end of this results announcement.

	(1)	See the section entitled “June Quarter Other Financial Results”.
	(2)	Cash and other liquid investments represent cash and cash equivalents, short-term investments and other treasury investments included in equity securities and other investments on the consolidated balance sheets, of which that are unrestricted for withdrawal and use.

BUSINESS AND STRATEGIC UPDATES

During the quarter ended June 30, 2026, we undertook strategic combinations of certain businesses to realize synergies across our commerce platforms and strengthen our full-stack AI capabilities. Alibaba China E-commerce Group, Alibaba International Digital Commerce Group, together with Freshippo, were integrated to form Alibaba E-commerce Group. Cloud Intelligence Group and T-Head were combined to form AI Cloud and Compute Services. In addition, AI model labs, Qwen Consumer Business Group, QwenWork, all previously included in “All Others”, were consolidated to form AI Labs and Applications. Based on this strategic re-alignment, starting from this quarter, our segment reporting will present the following: (1) Alibaba E-commerce Group, (2) AI Cloud and Compute Services, (3) AI Labs and Applications, and (4) All Others.

Alibaba E-commerce Group

The new Alibaba E-commerce Group reflects our strategic focus on unlocking significant synergies across our domestic and cross-border e-commerce businesses. Starting from this quarter, we will present Alibaba E-commerce Group’s revenue as the following: (1) China E-commerce, (2) China Quick Commerce, (3) International E-commerce, and (4) Global Wholesale.

We are deepening the integration of AI capabilities into our e-commerce platforms to enhance experiences for both consumers and merchants. On the consumer side, Qwen Shopping Assistant, a one-stop AI agent which delivers end-to-end assistance across the entire shopping journey from consumer idea inspiration to after-sales services on the Taobao app, demonstrated rapid growth in user adoption since its launch in May. For merchants, we have enhanced our merchant operations management platform with skill-based agentic capabilities that seamlessly automate end-to-end workflows, from product listing and store management to advertising and customer services.

2

In our China E-commerce business, CMR decreased 7% year-over-year during the quarter. Excluding the contra revenue impact from the new business development program, on a like-for-like basis, CMR would have grown 1% year-over-year. The slow-down in revenue growth was primarily due to weaker transaction activities. We saw incremental customer management revenue driven by the increase in monthly active consumers on the Taobao app because of our growth of quick commerce business.

The China Quick Commerce business includes Taobao Instant Commerce, Freshippo, and other on-demand delivery business. Taobao Instant Commerce continued to improve its unit economics quarter-over-quarter, driven by higher average order value and enhanced fulfillment logistics efficiency, while maintaining market share. We improved the order mix through an increasing focus on high-value food orders and non-food categories. Meanwhile, Freshippo maintained robust year-over-year growth momentum in orders and revenue, driven by its expanding footprint into emerging cities and counties, as well as deeper collaboration with Taobao Instant Commerce to offer differentiated grocery and fresh produce products.

The number of 88VIP members, our highest spending consumer group, continued to increase by double digits year-over-year to approximately 64 million as of June 30, 2026. We remain focused on the growth and retention of 88VIP members through enhanced value proposition to our most valued customers.

In our International E-commerce business, AliExpress achieved operating profit this quarter, driven by logistics optimization and cost efficiency enhancement. We continued to diversify and enrich our product offerings by leveraging the supply chain advantages of the Alibaba ecosystem. The proportion of AliExpress’ sales that are contributed by local product supplies has continued to increase significantly year-over-year.

AI Cloud and Compute Services

For the quarter ended June 30, 2026, revenue from AI Cloud and Compute Services was RMB48,437 million (US$7,139 million). The year-over-year growth of total revenue and revenue from external customers both accelerated to 45%. This momentum was primarily driven by the increasing adoption of AI-related products. AI-related product revenue continued to show strong momentum, achieving RMB12,376 million (US$1,824 million) and delivering the twelfth consecutive quarter of triple-digit year-over-year growth.

Cloud

Alibaba Cloud continues to lead the market, driven by growing customer adoption of our full-stack AI capabilities across AI agents, AI models, AI cloud infrastructure, and orchestration software that manages heterogeneous chip clusters, including our own proprietary chips. Omdia’s “AI Cloud Market: China - 2025” reported that Alibaba Cloud ranked first in China’s AI cloud market with the largest share of 38.1%, highlighting our ability to outperform industry and lead China's fast-growing AI cloud market with our comprehensive full-stack AI capabilities.

Chip Design – T-Head Semiconductor (“T-Head”)

T-Head has established a portfolio of proprietary silicon, spanning GPU, CPU, storage and networking chips. This comprehensive chip portfolio enables integrated hardware optimization across compute, storage and networking, strengthening our ability to deliver high performance and efficiency in AI infrastructure.

The Zhenwu chips, including Zhenwu M890, the latest AI processor, have achieved broad commercial adoption via Alibaba Cloud services from more than 650 external customers across over 20 industries, including autonomous driving, Internet, and financial services. This broad adoption demonstrates its ability to support AI workloads from training and fine-tuning to inference.

3

AI Labs and Applications

Model

Our model development has demonstrated a combination of capability and fast iteration, with our frontier language, coding, video, audio, image and music models all delivering top-tier performance. In August, we launched our flagship foundation model Qwen3.8-Max within three months of its prior version, and we opened its model weights with 2.4 trillion parameters. Qwen3.8-Max delivers comprehensive improvements across coding, real-world work, research, long-horizon tasks and multimodal agents, enabling it to complete complex tasks with greater reliability.

QwenWork

QwenWork is our flagship unified AI-native workforce agent. Through advanced AI models and agentic capabilities, QwenWork is designed to unlock productivity at the organizational level and drive operating efficiency. It also supports individual users with everyday workplace tasks. On distribution, QwenWork is deeply integrated with Alibaba Cloud and DingTalk’s ecosystem, providing a natural gateway to Alibaba's extensive enterprise user base and established workplace workflows. Its reach is further extended through broad integration with third-party business workflows and productivity platforms.

Qwen App

Qwen app, our flagship consumer-facing AI application, is adding diverse value-added offerings to meet user demands. Qwen app deepens its integration with core services across our ecosystem, including Taobao and Tmall, and Taobao Instant Commerce, to further expand the customer reach of our e-commerce business and enable a wider range of agentic use cases. 250 million users have had their first AI-driven shopping experience through Qwen app’s agentic features across an expanding range of e-commerce and other services since the launch of Qwen app. The integration also creates a flywheel across our AI and e-commerce businesses: broader AI adoption unlocks new growth opportunities, while feedback from real-world use cases enables us to enhance our models and user experiences.

Share Repurchases

During the quarter ended June 30, 2026, we repurchased a total of 13.4 million ordinary shares (equivalent to approximately 1.7 million ADSs) for a total of US$162 million. These purchases were made in the U.S. market under our share repurchase program.

Capital Expenditures

During the quarter ended June 30, 2026, capital expenditures were RMB67,678 million (US$9,975 million), an increase of 75% compared to RMB38,676 million in the same quarter of 2025, reflecting our continued investments in AI infrastructure to meet strong and growing customer demand. The significant year-over-year increase was due to several reasons, including fluctuations in procurement cycles, increase in CPU-compute capacity driven by anticipated growing customer adoption of AI agents, and higher pricing of a broad range of chip components.

4

JUNE QUARTER SUMMARY FINANCIAL RESULTS

		Three months ended June 30,
		2025				2026
		RMB				RMB				US$				YoY % Change
		(in millions, except percentages and per share amounts)
Revenue			247,652				268,953				39,639				9	%
Income from operations			34,988				15,161				2,234				(57	)%(2)
Operating margin			14	%			6	%
Adjusted EBITDA(1)			45,735				39,143				5,769				(14	)%(3)
Adjusted EBITDA margin(1)			18	%			15	%
Adjusted EBITA(1)			38,844				27,329				4,028				(30	)%(3)
Adjusted EBITA margin(1)			16	%			10	%
Net income			42,382				10,444				1,539				(75	)%(4)
Net income attributable to ordinary shareholders			43,116				10,537				1,553				(76	)%(4)
Non-GAAP net income(1)			33,510				20,715				3,053				(38	)%(3)
Diluted earnings per share(5)			2.25				0.46				0.07				(79	)%(4)(6)
Diluted earnings per ADS(5)			17.98				3.71				0.55				(79	)%(4)(6)
Non-GAAP diluted earnings per share(1)(5)			1.84				1.07				0.16				(42	)%(3)(6)
Non-GAAP diluted earnings per ADS(1)(5)			14.75				8.52				1.26				(42	)%(3)(6)

(1) See the sections entitled “Non-GAAP Financial Measures” and “Reconciliations of Non-GAAP Measures to the Nearest Comparable U.S. GAAP Measures” for more information about the non-GAAP measures referred to within this results announcement.

(2) The year-over-year decrease was primarily due to the decrease in adjusted EBITA, impairment of goodwill and a provision recorded this year (see the section entitled “June Quarter Other Financial Results”).

(3) The year-over-year decreases were primarily attributable to the investment in technology, partly offset by improved operating results in our Cloud business, as well as enhanced operating efficiencies across various businesses.

(4) The year-over-year decreases were primarily attributable to the decrease in income from operations, decrease in net gains from disposal of investments, and the decrease in net gain from mark-to-market changes of our equity investments, while net income attributable to ordinary shareholders and earnings per share/ADS would further take into account the net loss attributable to noncontrolling interests. We excluded non-cash share-based compensation expense, gains/losses of investments, impairment of goodwill and intangible assets, and certain other items from our non-GAAP measurements.

(5) Each ADS represents eight ordinary shares.

(6) The year-over-year percentages as stated are calculated based on the exact amount and there may be minor differences from the year-over-year percentages calculated based on the RMB amounts after rounding.

5

JUNE QUARTER SEGMENT RESULTS

Revenue for the quarter ended June 30, 2026 was RMB268,953 million (US$39,639 million), an increase of 9% year-over-year compared to RMB247,652 million in the same quarter of 2025.

The following table sets forth a breakdown of our revenue by segment for the periods indicated:

		Three months ended June 30,
		2025				2026
		RMB				RMB				US$				YoY % Change
		(in millions, except percentages)
Alibaba E-commerce Group:
China E-commerce
- Customer management			89,199				82,547				12,166				(7	)%
- Direct sales, logistics and others(2)			31,675				28,353				4,179				(10	)%
			120,874				110,900				16,345				(8	)%
China Quick Commerce(3)			36,725				53,295				7,855				45	%
International E-commerce			28,177				27,761				4,091				(1	)%
Global Wholesale			13,036				13,906				2,049				7	%
Total Alibaba E-commerce Group			198,812				205,862				30,340				4	%
AI Cloud and Compute Services			33,418				48,437				7,139				45	%
AI Labs and Applications			2,882				3,338				492				16	%
All others			28,629				28,803				4,245				1	%
Unallocated			519				783				116
Inter-segment elimination			(16,608	)			(18,270	)			(2,693	)
Consolidated revenue			247,652				268,953				39,639				9	%

(1) During the quarter ended June 30, 2026, we have implemented a new segment structure, to reflect the strategic re-alignment to realize synergies across our commerce platforms, strengthen our integrated AI infrastructure offering, and accelerate the development of our AI products and services, as follows:

i) Alibaba E-commerce Group, a unified group formed by combining Alibaba China E-Commerce Group, Alibaba International Digital Commerce Group, together with Freshippo and certain commerce businesses within Cainiao.

ii) AI Cloud and Compute Services, combining Cloud Intelligence Group with T-Head to strengthen the infrastructure and computing layer of our full-stack AI capabilities.

iii) AI Labs and Applications, where AI model labs, Qwen Consumer Business Group and QwenWork, formerly classified under All others, were brought together to integrate the full value chain from AI model innovation through to consumer applications and enterprise productivity solutions.

iv) All others include mainly Alibaba Health, Hujing Digital Media and Entertainment Group, Amap, Lingxi Games and other technology businesses.

Accordingly, the above presentation has been recast to conform with the new reporting structure to reflect how our chief operating decision maker (“CODM”) reviews information under this new structure.

(2) Direct sales, logistics and others revenue under China E-commerce business of Alibaba E-commerce Group primarily represents direct sales businesses of Tmall Supermarket (excluding on-demand delivery business), Tmall Global and other businesses, where revenue and cost of inventory are recorded on a gross basis within the business group, as well as revenue from logistics services and other value-added services.

(3) China Quick Commerce revenue includes revenue generated by Taobao Instant Commerce, Freshippo, and on-demand delivery business of Tmall Supermarket.

6

The following table sets forth a breakdown of our adjusted EBITA by segment for the periods indicated:

		Three months ended June 30,
		2025				2026
		RMB				RMB				US$				YoY % Change(3)
		(in millions, except percentages)
Alibaba E-commerce Group			39,988				39,749				5,858				(1	)%
AI Cloud and Compute Services			2,419				5,628				830				133	%
AI Labs and Applications			(3,224	)			(13,861	)			(2,043	)			(330	)%
All others			687				(3,343	)			(493	)			N/A
Unallocated(2)			(419	)			(163	)			(24	)
Inter-segment elimination			(607	)			(681	)			(100	)
Consolidated adjusted EBITA			38,844				27,329				4,028				(30	)%
Less: Non-cash share-based compensation expense			(3,194	)			(2,962	)			(437	)
Less: Amortization of intangible assets			(807	)			(665	)			(98	)
Less: Impairment of goodwill, and others			145				(8,541	)			(1,259	)
Income from operations			34,988				15,161				2,234				(57	)%

(1) During the quarter ended June 30, 2026, we have implemented a new segment structure, to reflect the strategic re-alignment to realize synergies across our commerce platforms, strengthen our integrated AI infrastructure offering, and accelerate the development of our AI products and services, as follows:

i) Alibaba E-commerce Group, a unified group formed by combining Alibaba China E-Commerce Group, Alibaba International Digital Commerce Group, together with Freshippo and certain commerce businesses within Cainiao.

ii) AI Cloud and Compute Services, combining Cloud Intelligence Group with T-Head to strengthen the infrastructure and computing layer of our full-stack AI capabilities.

iii) AI Labs and Applications, where AI model labs, Qwen Consumer Business Group and QwenWork, formerly classified under All others, were brought together to integrate the full value chain from AI model innovation through to consumer applications and enterprise productivity solutions.

iv) All others include mainly Alibaba Health, Hujing Digital Media and Entertainment Group, Amap, Lingxi Games and other technology businesses.

Accordingly, the above presentation has been recast to conform with the new reporting structure to reflect how our chief operating decision maker (“CODM”) reviews information under this new structure.

(2) Unallocated primarily relates to certain costs incurred by corporate functions and other miscellaneous items that are not allocated to individual segments.

(3) For a more intuitive presentation, widening of loss in YoY% is shown in terms of negative growth rate, and narrowing of loss in YoY% is shown in terms of positive growth rate.

Alibaba E-commerce Group

(i) Segment revenue

· China E-commerce Business

Revenue from our China E-commerce business in the quarter ended June 30, 2026 was RMB110,900 million (US$16,345 million), a decrease of 8% compared to RMB120,874 million in the same quarter of 2025.

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Customer management revenue decreased by 7% year-over-year. Excluding the contra revenue impact from the new business development program, customer management revenue on a like-for-like basis would have grown by 1% year-over-year.

Direct sales, logistics and others revenue under China E-commerce business in the quarter ended June 30, 2026 was RMB28,353 million (US$4,179 million), a decrease of 10% compared to RMB31,675 million in the same quarter of 2025, reflecting our planned reduction of certain direct sales businesses.

· China Quick Commerce Business

Revenue from our China Quick Commerce business in the quarter ended June 30, 2026 was RMB53,295 million (US$7,855 million), an increase of 45% compared to RMB36,725 million in the same quarter of 2025, primarily driven by Freshippo and Taobao Instant Commerce.

· International E-commerce Business

Revenue from our International E-commerce business in the quarter ended June 30, 2026 was RMB27,761 million (US$4,091 million), a decrease of 1% compared to RMB28,177 million in the same quarter of 2025.

· Global Wholesale Business

Revenue from our Global Wholesale business in the quarter ended June 30, 2026 was RMB13,906 million (US$2,049 million), an increase of 7% compared to RMB13,036 million in the same quarter of 2025, primarily due to the increase in revenue generated by cross-border related value-added services.

(ii) Segment adjusted EBITA

Alibaba E-commerce Group adjusted EBITA decreased by 1% to RMB39,749 million (US$5,858 million) in the quarter ended June 30, 2026, compared to RMB39,988 million in the same quarter of 2025, primarily due to our increased investment in user experiences and technology, partly offset by improved operating performance across various businesses.

AI Cloud and Compute Services

(i) Segment revenue

Revenue from our AI Cloud and Compute Services in the quarter ended June 30, 2026 was RMB48,437 million (US$7,139 million), an increase of 45% compared to RMB33,418 million in the same quarter of 2025, primarily driven by public cloud revenue growth, including the increasing adoption of AI-related products.

(ii) Segment adjusted EBITA

AI Cloud and Compute Services adjusted EBITA increased by 133% to RMB5,628 million (US$830 million) in the quarter ended June 30, 2026, compared to RMB2,419 million in the same quarter of 2025, primarily due to revenue growth and improving operating efficiency, partly offset by the increasing investments in customer growth and technology innovation.

8

AI Labs and Applications

(i) Segment revenue

Revenue from AI Labs and Applications in the quarter ended June 30, 2026 was RMB3,338 million (US$492 million), an increase of 16% compared to RMB2,882 million in the same quarter of 2025.

(ii) Segment adjusted EBITA

AI Labs and Applications adjusted EBITA was a loss of RMB13,861 million (US$2,043 million) in the quarter ended June 30, 2026, compared to a loss of RMB3,224 million in the same quarter of 2025, primarily due to our increased investment in AI capabilities, and higher inference cost related to Qwen app.

All Others

(i) Segment revenue

Revenue from All others segment was RMB28,803 million (US$4,245 million) in the quarter ended June 30, 2026, an increase of 1% compared to RMB28,629 million in the same quarter of 2025.

(ii) Segment adjusted EBITA

Adjusted EBITA from All others segment in the quarter ended June 30, 2026 was a loss of RMB3,343 million (US$493 million), compared to a profit of RMB687 million in the same quarter of 2025, primarily due to our increased investment in technology businesses.

9

JUNE QUARTER OTHER FINANCIAL RESULTS

Costs and Expenses

The following tables set forth a breakdown of our costs and expenses, share-based compensation expense, and costs and expenses excluding share-based compensation expense by function for the periods indicated:

		Three months ended June 30,																				% of
		2025								2026												Revenue
		RMB				% of Revenue				RMB				US$				% of Revenue				YoY change
		(in millions, except percentages)
Costs and expenses:
Cost of revenue			136,429				55.1	%			166,096				24,480				61.8	%			6.7	%
Product development expenses			15,001				6.1	%			22,529				3,320				8.4	%			2.3	%
Sales and marketing expenses			53,178				21.5	%			47,625				7,019				17.7	%			(3.8	)%
General and administrative expenses			7,398				3.0	%			12,708				1,873				4.7	%			1.7	%
Amortization of intangible assets			807				0.3	%			665				98				0.2	%			(0.1	)%
Impairment of goodwill			–				0.0	%			4,458				657				1.7	%			1.7	%
Total costs and expenses			212,813								254,081				37,447
Share-based compensation expense:
Cost of revenue			463				0.2	%			424				62				0.2	%			0.0	%
Product development expenses			1,466				0.6	%			1,477				218				0.5	%			(0.1	)%
Sales and marketing expenses			458				0.2	%			337				50				0.1	%			(0.1	)%
General and administrative expenses			1,158				0.5	%			1,066				157				0.4	%			(0.1	)%
Total share-based compensation expense(1)			3,545								3,304				487
Costs and expenses excluding share-based compensation expense:
Cost of revenue			135,966				54.9	%			165,672				24,418				61.6	%			6.7	%
Product development expenses			13,535				5.5	%			21,052				3,102				7.8	%			2.3	%
Sales and marketing expenses			52,720				21.3	%			47,288				6,969				17.6	%			(3.7	)%
General and administrative expenses			6,240				2.5	%			11,642				1,716				4.3	%			1.8	%
Amortization of intangible assets			807				0.3	%			665				98				0.2	%			(0.1	)%
Impairment of goodwill			–				0.0	%			4,458				657				1.7	%			1.7	%
Total costs and expenses excluding share-based compensation expense			209,268								250,777				36,960

(1) This includes both cash and non-cash share-based compensation expenses.

Cost of revenue – Cost of revenue in the quarter ended June 30, 2026 was RMB166,096 million (US$24,480 million), or 61.8% of revenue, compared to RMB136,429 million, or 55.1% of revenue, in the same quarter of 2025. Without the effect of share-based compensation expense, cost of revenue as a percentage of revenue would have increased from 54.9% in the quarter ended June 30, 2025 to 61.6% in the quarter ended June 30, 2026, primarily driven by the increase in proportion of cloud and technology businesses in our revenue mix, as well as the contra revenue impact from the new business development program.

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Product development expenses – Product development expenses in the quarter ended June 30, 2026 were RMB22,529 million (US$3,320 million), or 8.4% of revenue, compared to RMB15,001 million, or 6.1% of revenue, in the same quarter of 2025. Without the effect of share-based compensation expense, product development expenses as a percentage of revenue would have increased from 5.5% in the quarter ended June 30, 2025 to 7.8% in the quarter ended June 30, 2026, primarily due to investments in our technology infrastructure costs, as well as research and development personnel.

Sales and marketing expenses – Sales and marketing expenses in the quarter ended June 30, 2026 were RMB47,625 million (US$7,019 million), or 17.7% of revenue, compared to RMB53,178 million, or 21.5% of revenue, in the same quarter of 2025. Without the effect of share-based compensation expense, sales and marketing expenses as a percentage of revenue would have decreased from 21.3% in the quarter ended June 30, 2025 to 17.6% in the quarter ended June 30, 2026, primarily due to the impact of our new business development program, where relevant subsidies previously recorded as sales and marketing expenses are now recorded as contra revenue item, as well as more efficient investment in Taobao Instant Commerce.

General and administrative expenses – General and administrative expenses in the quarter ended June 30, 2026 were RMB12,708 million (US$1,873 million), or 4.7% of revenue, compared to RMB7,398 million, or 3.0% of revenue, in the same quarter of 2025. Without the effect of share-based compensation expense, general and administrative expenses as a percentage of revenue would have increased from 2.5% in the quarter ended June 30, 2025 to 4.3% in the quarter ended June 30, 2026, primarily due to a provision in relation to the fine imposed by the European Commission under the Digital Services Act of EUR550 million recorded this year.

Share-based compensation expense – Total share-based compensation expense included in the cost and expense items above in the quarter ended June 30, 2026 was RMB3,304 million (US$487 million), compared to RMB3,545 million in the same quarter of 2025.

The following table sets forth our analysis of share-based compensation expense for the quarters indicated by type of share-based awards:

		Three months ended June 30,
		2025				2026
		RMB				RMB				US$				YoY % Change
		(in millions, except percentages)
By type of awards:
Alibaba Group share-based awards(1)			2,321				2,461				363				6	%
Others(2)			1,224				843				124				(31	)%
Total share-based compensation expense(3)			3,545				3,304				487				(7	)%

(1) This represents Alibaba Group share-based awards granted to our employees.

(2) This represents share-based awards of our subsidiaries and Ant Group granted to our employees.

(3) This includes both cash and non-cash share-based compensation expenses.

Share-based compensation expense decreased in the quarter ended June 30, 2026 compared to the same quarter of 2025.

We expect that our share-based compensation expense will continue to be affected by changes in the fair value of the underlying awards and the quantity of awards we grant in the future.

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Amortization of intangible assets – Amortization of intangible assets in the quarter ended June 30, 2026 was RMB665 million (US$98 million), a decrease of 18% from RMB807 million in the same quarter of 2025.

Impairment of goodwill – Impairment of goodwill of RMB4,458 million (US$657 million) was recorded in the quarter ended June 30, 2026. Impairment recorded represents the impairment of goodwill in relation to businesses in All others.

Income from operations and operating margin

Income from operations in the quarter ended June 30, 2026 was RMB15,161 million (US$2,234 million), or 6% of revenue, a decrease of 57% compared to RMB34,988 million, or 14% of revenue, in the same quarter of 2025, primarily due to the decrease in adjusted EBITA, impairment of goodwill and a provision in relation to the fine imposed by the European Commission under the Digital Services Act of EUR550 million recorded this year.

Adjusted EBITDA and Adjusted EBITA

Adjusted EBITDA decreased 14% year-over-year to RMB39,143 million (US$5,769 million) in the quarter ended June 30, 2026, compared to RMB45,735 million in the same quarter of 2025. Adjusted EBITA decreased 30% year-over-year to RMB27,329 million (US$4,028 million) in the quarter ended June 30, 2026, compared to RMB38,844 million in the same quarter of 2025, primarily attributable to the investment in technology, partly offset by the improved operating results in our Cloud business, as well as enhanced operating efficiencies across various businesses. A reconciliation of net income to adjusted EBITDA and adjusted EBITA is included at the end of this results announcement.

Adjusted EBITA by segment

Adjusted EBITA by segment as well as a reconciliation of income from operations to adjusted EBITA are set forth in the section entitled “June Quarter Segment Results” above.

Interest and investment income, net

Interest and investment income, net in the quarter ended June 30, 2026 was RMB9,004 million (US$1,327 million), a decrease of 48% compared to RMB17,376 million in the same quarter of 2025, primarily due to the decrease in net gains from disposal of investments and the decrease in net gain from mark-to-market changes of our equity investments.

The above-mentioned investment gains and losses were excluded from our non-GAAP net income.

Other income, net

Other income, net in the quarter ended June 30, 2026 was RMB495 million (US$73 million), an increase of 42% compared to RMB348 million in the same quarter of 2025.

Income tax expenses

Income tax expenses in the quarter ended June 30, 2026 were RMB12,798 million (US$1,886 million), compared to RMB8,865 million in the same quarter of 2025.

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Share of results of equity method investees

Share of results of equity method investees in the quarter ended June 30, 2026 was RMB934 million (US$137 million), a decrease of 8% compared to RMB1,013 million in the same quarter of 2025. The following table sets forth a breakdown of share of results of equity method investees for the periods indicated:

		Three months ended June 30,
		2025				2026
		RMB				RMB				US$
		(in millions)
Share of profit of equity method investees
- Ant Group			1,547				1,563				230
- Others			455				605				89
Others(1)			(989	)			(1,234	)			(182	)
Total			1,013				934				137

(1) “Others” mainly include basis differences arising from equity method investees, share-based compensation expense related to share-based awards granted to employees of our equity method investees, as well as gain or loss arising from the deemed disposal of the equity method investees.

We record our share of results of all equity method investees one quarter in arrears. The year-over-year share of profit of Ant Group remained stable, as the net increase in fair value gains was offset by the increased investments in new growth initiatives and technologies.

Net income and Non-GAAP net income

Our net income in the quarter ended June 30, 2026 was RMB10,444 million (US$1,539 million), compared to RMB42,382 million in the same quarter of 2025, primarily attributable to the decrease in income from operations, decrease in net gains from disposal of investments and the decrease in net gain from mark-to-market changes of our equity investments.

Excluding non-cash share-based compensation expense, gains/losses of investments, impairment of goodwill and intangible assets, and certain other items, non-GAAP net income in the quarter ended June 30, 2026 was RMB20,715 million (US$3,053 million), a decrease of 38% compared to RMB33,510 million in the same quarter of 2025, primarily attributable to the investment in technology, partly offset by the improved operating results in our Cloud business, as well as enhanced operating efficiencies across various businesses. A reconciliation of net income to non-GAAP net income is included at the end of this results announcement.

Net income attributable to ordinary shareholders

Net income attributable to ordinary shareholders in the quarter ended June 30, 2026 was RMB10,537 million (US$1,553 million), compared to RMB43,116 million in the same quarter of 2025, primarily attributable to the decrease in income from operations, decrease in net gains from disposal of investments and the decrease in net gain from mark-to-market changes of our equity investments.

Diluted earnings per ADS/share and non-GAAP diluted earnings per ADS/share

Diluted earnings per ADS in the quarter ended June 30, 2026 was RMB3.71 (US$0.55), compared to RMB17.98 in the same quarter of 2025. Excluding non-cash share-based compensation expense, gains/losses of investments, impairment of goodwill and intangible assets, and certain other items, non-GAAP diluted earnings per ADS in the quarter ended June 30, 2026 was RMB8.52 (US$1.26), a decrease of 42% compared to RMB14.75 in the same quarter of 2025.

Diluted earnings per share in the quarter ended June 30, 2026 was RMB0.46 (US$0.07 or HK$0.53), compared to RMB2.25 in the same quarter of 2025. Excluding non-cash share-based compensation expense, gains/losses of investments, impairment of goodwill and intangible assets, and certain other items, non-GAAP diluted earnings per share in the quarter ended June 30, 2026 was RMB1.07 (US$0.16 or HK$1.23), a decrease of 42% compared to RMB1.84 in the same quarter of 2025.

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A reconciliation of diluted earnings per ADS/share to non-GAAP diluted earnings per ADS/share is included at the end of this results announcement. Each ADS represents eight ordinary shares.

Cash and cash equivalents, short-term investments and other treasury investments

As of June 30, 2026, cash and cash equivalents, short-term investments and other treasury investments included in equity securities and other investments on the consolidated balance sheets, of which that are unrestricted for withdrawal and use, were RMB474,505 million (US$69,933 million), compared to RMB520,824 million as of March 31, 2026. Other treasury investments consist of fixed deposits, certificates of deposit and marketable debt securities with original maturities over one year for treasury purposes. The decrease of RMB46,319 million during the quarter ended June 30, 2026, was primarily due to (i) free cash flow outflow of RMB44,670 million (US$6,584 million), (ii) effect of exchange rate changes of RMB5,853 million (US$863 million) mainly due to the depreciation of the U.S. dollar against Renminbi, partly offset by (iii) net proceeds from bank borrowings of RMB11,005 million (US$1,622 million).

Net cash provided by operating activities and free cash flow

During the quarter ended June 30, 2026, net cash provided by operating activities was RMB22,945 million (US$3,382 million), an increase of 11% compared to RMB20,672 million in the same quarter of 2025. Free cash flow, a non-GAAP measurement of liquidity, was an outflow of RMB44,670 million (US$6,584 million), compared to an outflow of RMB18,815 million in the same quarter of 2025. The decrease in free cash flow was mainly attributed to the increase in our cloud infrastructure expenditure. A reconciliation of net cash provided by operating activities to free cash flow is included at the end of this results announcement.

Net cash used in investing activities

During the quarter ended June 30, 2026, net cash used in investing activities of RMB18,964 million (US$2,795 million) primarily reflected capital expenditures of RMB67,678 million (US$9,975 million), partly offset by net decrease in short-term investments and other treasury investments by RMB50,452 million (US$7,436 million). The significant year-over-year increase in capital expenditures was due to several reasons, including fluctuations in procurement cycles, increase in CPU-compute capacity driven by anticipated growing customer adoption of AI agents, and higher pricing of a broad range of chip components.

Net cash provided by financing activities

During the quarter ended June 30, 2026, net cash provided by financing activities of RMB9,469 million (US$1,395 million) primarily reflected cash provided by net proceeds from bank borrowings of RMB11,005 million (US$1,622 million).

Employees

As of June 30, 2026, we had a total of 132,165 employees, compared to 131,462 as of March 31, 2026.

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WEBCAST AND CONFERENCE CALL INFORMATION

Alibaba Group’s management will hold a conference call to discuss the financial results at 7:30 a.m. U.S. Eastern Time (7:30 p.m. Hong Kong Time) on Thursday, August 20, 2026.

All participants must pre-register to join this conference call using the Participant Registration link below:

English: https://s1.c-conf.com/diamondpass/10055637-sjr4i0.html

Chinese: https://s1.c-conf.com/diamondpass/10055638-wgmt8s.html

Upon registration, each participant will receive details for the conference call, including dial-in numbers, conference call passcode and a unique access PIN. To join the conference, please dial the number provided, enter the passcode followed by your PIN, and you will join the conference.

A live webcast of the earnings conference call can be accessed at https://www.alibabagroup.com/en/ir/earnings. An archived webcast will be available through the same link following the call. A replay of the conference call will be available for one week from the date of the conference (Dial-in number: +1 855 883 1031; English conference PIN 10055637; Chinese conference PIN 10055638).

Please visit Alibaba Group’s Investor Relations website at https://www.alibabagroup.com/en/ir/home on August 20, 2026 to view the earnings release and accompanying slides prior to the conference call.

ABOUT ALIBABA GROUP

Alibaba Group is a global technology company focused on AI + Cloud and consumption. We provide the technology infrastructure and marketing reach to help merchants, brands, retailers and other businesses to engage with their users and customers and operate efficiently. We empower consumers and enterprises with our full-stack AI capabilities and services. Our AI technology based on Qwen (Chinese: Qianwen), a family of large language and multimodal models, powers the intelligence behind our services across enterprise solutions, e-commerce and other Internet platforms.

Investor Relations Contact

Lydia Liu

Head of Investor Relations

Alibaba Group Holding Limited

investor@alibaba-inc.com

Media Contacts

Cathy Yan

cathy.yan@alibaba-inc.com

Ivy Ke

ivy.ke@alibaba-inc.com

EXCHANGE RATE INFORMATION

This results announcement contains translations of certain Renminbi (“RMB”) amounts into U.S. dollars (“US$”) and Hong Kong dollars (“HK$”) for the convenience of the reader. Unless otherwise stated, all translations of RMB into US$ were made at RMB6.7851 to US$1.00, the exchange rate on June 30, 2026 as set forth in the H.10 statistical release of the Federal Reserve Board, and all translations of RMB into HK$ were made at RMB0.86855 to HK$1.00, the middle rate on June 30, 2026 as published by the People’s Bank of China. The percentages stated in this announcement are calculated based on the RMB amounts and there may be minor differences due to rounding.

15

SAFE HARBOR STATEMENTS

This results announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “may,” “will,” “expect,” “anticipate,” “future,” “aim,” “estimate,” “intend,” “seek,” “plan,” “believe,” “potential,” “continue,” “ongoing,” “target,” “guidance,” “is/are likely to” and similar statements. In addition, statements that are not historical facts, including statements about Alibaba’s strategies and business and operational plans, Alibaba’s beliefs, expectations and guidance regarding the growth of its business, its operating and financial results, return on investments, strategic investments and dispositions and share repurchases, and the business and industry outlook and quotations from management in this results announcement, are or contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to: Alibaba’s ability to compete, innovate and maintain or grow its business; risks associated with sustained investments in Alibaba’s businesses; risks related to strategic transactions; fluctuations in general economic and business conditions in China and globally; uncertainties arising from competition among countries and geopolitical tensions, including national trade, investment, protectionist or other policies and export control, economic or trade sanctions; changes to our shareholder return initiatives; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Alibaba’s filings with the U.S. Securities and Exchange Commission and announcements on the website of The Stock Exchange of Hong Kong Limited. All information provided in this results announcement is as of the date of this results announcement and is based on assumptions that we believe to be reasonable as of this date, and Alibaba does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

NON-GAAP FINANCIAL MEASURES

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: for our consolidated results, adjusted EBITDA (including adjusted EBITDA margin), adjusted EBITA (including adjusted EBITA margin), non-GAAP net income, non-GAAP diluted earnings per share/ADS and free cash flow. For more information on these non-GAAP financial measures, please refer to the table captioned “Reconciliations of Non-GAAP Measures to the Nearest Comparable U.S. GAAP Measures” in this results announcement.

We believe that adjusted EBITDA, adjusted EBITA, non-GAAP net income and non-GAAP diluted earnings per share/ADS help identify underlying trends in our business that could otherwise be distorted by the effect of certain income or expenses that we include in income from operations, net income and diluted earnings per share/ADS. We believe that these non-GAAP measures provide useful information about our core operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. We present three different income measures, namely adjusted EBITDA, adjusted EBITA and non-GAAP net income in order to provide more information and greater transparency to investors about our operating results.

We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic corporate transactions, including investing in our new business initiatives, making strategic investments and acquisitions and strengthening our balance sheet.

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Adjusted EBITDA, adjusted EBITA, non-GAAP net income, non-GAAP diluted earnings per share/ADS and free cash flow should not be considered in isolation or construed as an alternative to income from operations, net income, diluted earnings per share/ADS, cash flows or any other measure of performance or as an indicator of our operating performance. These non-GAAP financial measures presented here do not have standardized meanings prescribed by U.S. GAAP and may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.

Adjusted EBITDA represents net income before interest and investment income, net, interest expense, other income (expense), net, income tax expenses, share of results of equity method investees, certain non-cash expenses, consisting of share-based compensation expense, amortization and impairment of intangible assets, impairment of goodwill, depreciation and impairment of property and equipment, and operating lease cost relating to land use rights, and others (including provision in relation to matters outside the ordinary course of business), which we do not believe are reflective of our core operating performance during the periods presented.

Adjusted EBITA represents net income before interest and investment income, net, interest expense, other income (expense), net, income tax expenses, share of results of equity method investees, certain non-cash expenses, consisting of share-based compensation expense, amortization and impairment of intangible assets, impairment of goodwill, and others (including provision in relation to matters outside the ordinary course of business), which we do not believe are reflective of our core operating performance during the periods presented.

Non-GAAP net income represents net income before non-cash share-based compensation expense, amortization and impairment of intangible assets, gain or loss on deemed disposals/disposals/revaluation of investments, impairment of goodwill and investments, and others (including provision in relation to matters outside the ordinary course of business), and adjustments for the tax effects.

Non-GAAP diluted earnings per share represents non-GAAP net income attributable to ordinary shareholders divided by the weighted average number of outstanding ordinary shares, in each case for computing non-GAAP diluted earnings per share on a diluted basis. Non-GAAP diluted earnings per ADS represents non-GAAP diluted earnings per share after adjusting for the ordinary share-to-ADS ratio.

Free cash flow represents net cash provided by operating activities as presented in our consolidated cash flow statement less purchases of property and equipment (excluding acquisition of land use rights and construction in progress relating to office campuses) and intangible assets (excluding those acquired through acquisitions), as well as adjustments to exclude from net cash provided by operating activities the buyer protection fund deposits from merchants on our marketplaces. We deduct certain items of cash flows from investing activities in order to provide greater transparency into cash flow from our revenue-generating business operations. We exclude “acquisition of land use rights and construction in progress relating to office campuses” because the office campuses are used by us for corporate and administrative purposes and are not directly related to our revenue-generating business operations. We also exclude buyer protection fund deposits from merchants on our marketplaces because these deposits are restricted for the purpose of compensating buyers for claims against merchants.

The table captioned “Reconciliations of Non-GAAP Measures to the Nearest Comparable U.S. GAAP Measures” in this results announcement has more details on the non-GAAP financial measures that are most directly comparable to GAAP financial measures and the related reconciliations between these financial measures.

17

ALIBABA GROUP HOLDING LIMITED

UNAUDITED CONSOLIDATED INCOME STATEMENTS

		Three months ended June 30,
		2025				2026
		RMB				RMB				US$
		(in millions, except per share data)
Revenue			247,652				268,953				39,639
Cost of revenue			(136,429	)			(166,096	)			(24,480	)
Product development expenses			(15,001	)			(22,529	)			(3,320	)
Sales and marketing expenses			(53,178	)			(47,625	)			(7,019	)
General and administrative expenses			(7,398	)			(12,708	)			(1,873	)
Amortization of intangible assets			(807	)			(665	)			(98	)
Impairment of goodwill			–				(4,458	)			(657	)
Other gains, net			149				289				42
Income from operations			34,988				15,161				2,234
Interest and investment income, net			17,376				9,004				1,327
Interest expense			(2,478	)			(2,352	)			(346	)
Other income, net			348				495				73
Income before income tax and share of results of equity method investees			50,234				22,308				3,288
Income tax expenses			(8,865	)			(12,798	)			(1,886	)
Share of results of equity method investees			1,013				934				137
Net income			42,382				10,444				1,539
Net (income) loss attributable to noncontrolling interests			(1,733	)			170				25
Net income attributable to Alibaba Group Holding Limited			40,649				10,614				1,564
Reversal of accretion (Accretion) of mezzanine equity			2,467				(77	)			(11	)
Net income attributable to ordinary shareholders			43,116				10,537				1,553
Earnings per share attributable to ordinary shareholders(1)
Basic			2.32				0.56				0.08
Diluted			2.25				0.46				0.07
Earnings per ADS attributable to ordinary shareholders(1)
Basic			18.57				4.51				0.67
Diluted			17.98				3.71				0.55
Weighted average number of shares used in calculating earnings per ordinary share (million shares)(1)
Basic			18,570				18,671
Diluted			19,142				19,324

(1) Each ADS represents eight ordinary shares.

18

ALIBABA GROUP HOLDING LIMITED

UNAUDITED CONSOLIDATED BALANCE SHEETS

		As of March 31,				As of June 30,
		2026				2026
		RMB				RMB				US$
		(in millions)
Assets
Current assets:
Cash and cash equivalents			131,530				142,914				21,063
Short-term investments			155,310				154,653				22,793
Restricted cash and escrow receivables			42,038				42,585				6,276
Equity securities and other investments			30,054				88,130				12,989
Prepayments, receivables and other assets			251,837				296,572				43,709
Total current assets			610,769				724,854				106,830
Equity securities and other investments			449,942				343,018				50,555
Prepayments, receivables and other assets			94,996				119,377				17,594
Investment in equity method investees			206,803				203,207				29,949
Property and equipment, net			282,699				312,497				46,056
Intangible assets, net			16,983				16,700				2,461
Goodwill			247,378				242,456				35,734
Total assets			1,909,570				1,962,109				289,179
Liabilities, Mezzanine Equity and Shareholders’ Equity
Current liabilities:
Current bank borrowings			28,224				30,614				4,512
Income tax payable			10,630				9,204				1,357
Accrued expenses, accounts payable and other liabilities			359,893				412,767				60,834
Merchant deposits			236				233				34
Deferred revenue and customer advances			77,415				79,439				11,708
Total current liabilities			476,398				532,257				78,445

19

ALIBABA GROUP HOLDING LIMITED

UNAUDITED CONSOLIDATED BALANCE SHEETS (CONTINUED)

		As of March 31,				As of June 30,
		2026				2026
		RMB				RMB				US$
		(in millions)
Deferred revenue			4,885				4,682				690
Deferred tax liabilities			46,060				48,725				7,181
Non-current bank borrowings			47,450				56,007				8,254
Non-current unsecured senior notes			117,485				115,716				17,054
Non-current convertible unsecured senior notes			55,861				54,905				8,092
Non-current exchangeable bonds			10,976				9,288				1,369
Other liabilities			24,185				26,635				3,926
Total liabilities			783,300				848,215				125,011
Commitments and contingencies
Mezzanine equity			7,845				7,584				1,118
Shareholders’ equity:
Ordinary shares			1				1				–
Additional paid-in capital			385,086				387,610				57,127
Treasury shares at cost			(36,141	)			(37,236	)			(5,488	)
Statutory reserves			16,628				16,814				2,478
Accumulated other comprehensive loss			(13,070	)			(20,066	)			(2,957	)
Retained earnings			708,382				701,915				103,449
Total shareholders’ equity			1,060,886				1,049,038				154,609
Noncontrolling interests			57,539				57,272				8,441
Total equity			1,118,425				1,106,310				163,050
Total liabilities, mezzanine equity and equity			1,909,570				1,962,109				289,179

20

ALIBABA GROUP HOLDING LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three months ended June 30,
		2025				2026
		RMB				RMB				US$
		(in millions)
Net cash provided by operating activities			20,672				22,945				3,382
Net cash provided by (used in) investing activities			18,328				(18,964	)			(2,795	)
Net cash (used in) provided by financing activities			(2,731	)			9,469				1,395
Effect of exchange rate changes on cash and cash equivalents, restricted cash and escrow receivables			(958	)			(1,519	)			(224	)
Increase in cash and cash equivalents, restricted cash and escrow receivables			35,311				11,931				1,758
Cash and cash equivalents, restricted cash and escrow receivables at beginning of period			189,268				173,568				25,581
Cash and cash equivalents, restricted cash and escrow receivables at end of period			224,579				185,499				27,339

21

ALIBABA GROUP HOLDING LIMITED

RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE U.S. GAAP MEASURES

The table below sets forth a reconciliation of our net income to adjusted EBITA and adjusted EBITDA for the periods indicated:

		Three months ended June 30,
		2025				2026
		RMB				RMB				US$
		(in millions)
Net income			42,382				10,444				1,539
Adjustments to reconcile net income to adjusted EBITA and adjusted EBITDA:
Interest and investment income, net			(17,376	)			(9,004	)			(1,327	)
Interest expense			2,478				2,352				346
Other income, net			(348	)			(495	)			(73	)
Income tax expenses			8,865				12,798				1,886
Share of results of equity method investees			(1,013	)			(934	)			(137	)
Income from operations			34,988				15,161				2,234
Non-cash share-based compensation expense			3,194				2,962				437
Amortization of intangible assets			807				665				98
Impairment of goodwill, and others			(145	)			8,541				1,259
Adjusted EBITA			38,844				27,329				4,028
Depreciation and impairment of property and equipment, and operating lease cost relating to land use rights			6,891				11,814				1,741
Adjusted EBITDA			45,735				39,143				5,769

22

ALIBABA GROUP HOLDING LIMITED

RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE U.S. GAAP MEASURES (CONTINUED)

The table below sets forth a reconciliation of our net income to non-GAAP net income for the periods indicated:

		Three months ended June 30,
		2025				2026
		RMB				RMB				US$
		(in millions)
Net income			42,382				10,444				1,539
Adjustments to reconcile net income to non-GAAP net income:
Non-cash share-based compensation expense			3,194				2,962				437
Amortization of intangible assets			807				665				98
Gain on deemed disposals/disposals/revaluation of investments			(13,128	)			(5,364	)			(791	)
Impairment of goodwill and investments, and others			1,013				9,202				1,356
Tax effects(1)			(758	)			2,806				414
Non-GAAP net income			33,510				20,715				3,053

(1) Tax effects primarily comprise tax effects relating to non-cash share-based compensation expense, amortization and impairment of intangible assets and certain gains and losses from investments, and others.

23

ALIBABA GROUP HOLDING LIMITED

RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE U.S. GAAP MEASURES (CONTINUED)

The table below sets forth a reconciliation of our diluted earnings per share/ADS to non-GAAP diluted earnings per share/ADS for the periods indicated:

		Three months ended June 30,
		2025				2026
		RMB				RMB				US$
		(in millions, except per share data)
Net income attributable to ordinary shareholders – basic			43,116				10,537				1,553
Dilution effect on earnings arising from non-cash share-based awards operated by equity method investees and subsidiaries			(162	)			(109	)			(16	)
Adjustments for interest expense attributable to convertible unsecured senior notes			71				80				12
Dilution effect on earnings arising from assumed exchange of exchangeable bonds			–				(1,556	)			(229	)
Net income attributable to ordinary shareholders – diluted			43,025				8,952				1,320
Non-GAAP adjustments to net income attributable to ordinary shareholders(1)			(7,734	)			11,631				1,714
Non-GAAP net income attributable to ordinary shareholders for computing non-GAAP diluted earnings per share/ADS			35,291				20,583				3,034
Weighted average number of shares on a diluted basis for computing non-GAAP diluted earnings per share/ADS (million shares)(2)			19,142				19,324
Diluted earnings per share(2)(3)			2.25				0.46				0.07
Non-GAAP diluted earnings per share(2)(4)			1.84				1.07				0.16
Diluted earnings per ADS(2)(3)			17.98				3.71				0.55
Non-GAAP diluted earnings per ADS(2)(4)			14.75				8.52				1.26

(1) Non-GAAP adjustments exclude the attributions to the noncontrolling interests for computing non-GAAP diluted earnings per share/ADS. See the table above for items regarding the reconciliation of net income to non-GAAP net income (before taking into account the dilutive impact and excluding the attributions to the noncontrolling interests).

(2) Each ADS represents eight ordinary shares.

(3) Diluted earnings per share is derived from dividing net income attributable to ordinary shareholders by the weighted average number of outstanding ordinary shares, on a diluted basis. Diluted earnings per ADS is derived from the diluted earnings per share after adjusting for the ordinary share-to-ADS ratio.

(4) Non-GAAP diluted earnings per share is derived from dividing non-GAAP net income attributable to ordinary shareholders by the weighted average number of outstanding ordinary shares, in each case for computing non-GAAP diluted earnings per share. Non-GAAP diluted earnings per ADS is derived from the non-GAAP diluted earnings per share after adjusting for the ordinary share-to-ADS ratio.

24

ALIBABA GROUP HOLDING LIMITED

RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE U.S. GAAP MEASURES (CONTINUED)

The table below sets forth a reconciliation of net cash provided by operating activities to free cash flow for the periods indicated:

		Three months ended June 30,
		2025				2026
		RMB				RMB				US$
		(in millions)
Net cash provided by operating activities			20,672				22,945				3,382
Less: Purchase of property and equipment (excluding land use rights and construction in progress relating to office campuses)			(38,629	)			(67,660	)			(9,972	)
Less: Changes in the buyer protection fund deposits			(858	)			45				6
Free cash flow			(18,815	)			(44,670	)			(6,584	)

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