Alibaba revenue up 7% as free cash flow dives 76%

Alibaba Group announced a 7% year-on-year revenue growth for the quarter ending March 31, 2025, totaling 236.45 billion yuan (US$32.58 billion).

The company reported a 93% increase in operating income, reaching 28.47 billion yuan (US$3.92 billion). This growth is attributed to adjusted EBITA growth and lower share-based compensation expenses.

Net income attributable to ordinary shareholders rose to 12.38 billion yuan (US$1.71 billion), a 1,203% increase compared to the same quarter last year.

However, free cash flow decreased by 76% year-on-year to 3.74 billion yuan (US$516 million), largely due to higher expenditures in cloud infrastructure.

For the fiscal year 2025, Alibaba reported a revenue growth of 6%, reaching 996.35 billion yuan (US$137.3 billion). Net income attributable to ordinary shareholders increased by 77% to 129.47 billion yuan (US$17.84 billion).

Free cash flow for the year declined by 53% to 73.87 billion yuan (US$10.18 billion), attributed to increased investments in cloud infrastructure.

The company reported a 12% growth in customer management revenue for Taobao and Tmall Group in the March quarter.

Additionally, there was an 18% increase in revenue for its Cloud Intelligence Group.

Alibaba also repurchased US$11.9 billion in shares during the fiscal year, reducing outstanding shares by 5.1%. The company announced dividends totaling US$4.6 billion.

🔗 Source: Alibaba Group

🧠 Food for thought

1️⃣ Alibaba’s AI pivot mirrors broader tech industry capital allocation patterns

Alibaba’s $53 billion investment in AI and cloud infrastructure over three years represents one of the largest AI commitments from a Chinese tech giant, reflecting a strategic transformation similar to Microsoft’s $13 billion investment in OpenAI and Google’s AI-focused capital expenditures1.

This massive investment coincides with a fundamental shift in revenue composition, as cloud revenue growth accelerated to 18% with AI-related products achieving seven consecutive quarters of triple-digit growth2.

The company’s release of over 200 generative AI models demonstrates a comprehensive approach to AI development spanning multiple modalities, such as text, image, audio, and video, similar to strategies employed by Western tech leaders1.

However, this strategic pivot is creating significant short-term financial pressure, with free cash flow decreasing 76% year-over-year to RMB3,743 million ($516 million), primarily due to increased cloud infrastructure expenditure3.