EARNINGS REVIEW
Alibaba, FY2026 Q3 Earnings Results
Historical quarterly report · Results and outlook reflect information available at the time of that release. Actual results from later quarters have not been incorporated into the outlook.
Cloud growth and quarterly FCF improved, but profitability pressures remained in China e-commerce. Distinguish total revenue growth from growth excluding disposed businesses.
Assessment · Sequential improvement is evident, but it is too early to call this a recovery to prior-year profitability. The key is whether cloud demand and improved quick-commerce efficiency lead to a sustained recovery in consolidated operating income and FCF.
Key management and company statements
Earnings release · Excerpt from the original“our quick commerce business continues to scale while unit economics improved steadily”Meaning · Unit economics improved steadily as quick commerce scaled up.
Context · This is the CFO’s description of operating conditions, not confirmation that consolidated earnings have recovered.
Original statement ↗01 Revenue, operating income and results versus expectations
Year over year · revenue 38.967 → 40.181 B$ (+3.1% · +1.215 B$), operating income 5.731 → 1.502 B$ (−73.8% · −4.230 B$).
Quarter over quarter · revenue 34.623 → 40.181 B$ (+16.1% · +5.559 B$), operating income 0.750 → 1.502 B$ (+100.3% · +0.752 B$), operating margin 2.2% → 3.7% (+1.6%p).
Revenue in RMB grew 2%, and like-for-like growth excluding disposed businesses was 9%. Cloud grew 36%, while customer management revenue increased only 1%.
The YoY and QoQ figures at the top are in B$, translated at each quarter’s average exchange rate. Company-reported growth rates in the narrative are in RMB and may differ because of currency effects.
02 Earnings sustainability · From operating income to net income
GAAP operating income declined 74% year over year, and adjusted EBITA declined 57%. The company attributed this mainly to investment in quick commerce, user experience and technology.
Cloud adjusted EBITA was 0.552 B$, up 25% in RMB. This is neither Cloud GAAP operating income nor consolidated operating income.
- Operating income
- 1.502 B$
- Net non-operating income
- 1.866 B$
- Income tax expense
- −1.193 B$
- After-tax equity-method income/loss
- 0.030 B$
- Consolidated net income
- 2.205 B$
Net income of 2.311 B$ in the existing quarterly dataset is attributable to the parent/shareholders. Its scope differs from consolidated net income used in the cash flow bridge.
03 Cash flow quality · Net income → OCF → FCF
Company FCF turned positive at 1.601 B$, but declined 71% year over year in RMB. Sequential recovery and year-over-year weakness are both presented.
The company FCF definition retains adjustments for certain capital expenditures and changes in buyer protection funds. The additional adjustment in the bridge below reflects this definition difference and has not been arbitrarily set to 0.
- Consolidated net income
- 2.205 B$
- Total net adjustments for noncash items, working capital and other items¹
- 2.878 B$
- Operating cash flow
- 5.083 B$
- Company-defined cash CapEx
- −4.091 B$
- Additional company-defined adjustments and disclosure rounding²
- 0.608 B$
- Company-defined FCF
- 1.601 B$
¹ Total net adjustments calculated as OCF−net income. This is not a single disclosed line item; it combines noncash items, working capital, classification differences and other adjustments.
² Difference between company FCF and OCF−cash CapEx. The detailed scope follows the explanation above and the original company definition.
FCF versus previous quarter · −3.052 → 1.601 B$, 4.652 B$ improvement.
04 Financial capacity · Net debt and payment obligations
Previous-quarter net cash · 2025-09-30
Cash and current investments 46.118 / Debt 39.555 B$
Current-quarter net cash · 2025-12-31
Cash and current investments 44.062 / Debt 37.571 B$
Net debt worsened by 0.072 B$ from the previous quarter. The carrying amount of current debt is 3.526 B$. It may differ from the principal maturity schedule.
Broad liquidity holdings and the common net cash measure below include different sets of investment assets. Debt reflects bank borrowings and the disclosed carrying amounts of bonds and convertible securities.
Common definition · Cash and current investments = cash equivalents + current investments and deposits. Debt = carrying amount of interest-bearing borrowings (current + noncurrent), excluding separately reported lease liabilities. This differs from total liabilities of 110.448 B$. Restricted cash, noncurrent securities and noncurrent deposits are excluded from cash and current investments.
05 Investment, capital allocation and cash returns
Cloud growth accelerated, but the time needed to recover capacity investment in cash requires separate assessment. For quick commerce, assess unit economics incorporating subsidies and logistics efficiency, and cash generation, rather than order volume alone.
This quarter, cash CapEx/revenue is 10.2% and company-defined FCF/revenue is 4.0%. These ratios should not be used as a simple ranking of companies with different business models and FCF definitions.
Quarterly results · CY-aligned presentation
Amounts in B$. Based on the CY-aligned year of this report, the table shows all 4 quarters of the preceding year and the current year to date. Each fiscal quarter is assigned to the CY quarter with the greatest overlap in actual reporting dates, alongside its original FY/CY quarter and start/end dates. Amounts have not been recalculated into actual calendar quarters.
| CY alignment | 2024 · 4 quarters | 2025 · 4 quarters | Change this quarter | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Metric | 2024 total4-quarter totalBalances are period-end | 1QFY2024 Q424-01-01 ~24-03-31 | 2QFY2025 Q124-04-01 ~24-06-30 | 3QFY2025 Q224-07-01 ~24-09-30 | 4QFY2025 Q324-10-01 ~24-12-31 | 2025 total4-quarter totalBalances are period-end | 1QFY2025 Q425-01-01 ~25-03-31 | 2QFY2026 Q125-04-01 ~25-06-30 | 3QFY2026 Q225-07-01 ~25-09-30 | 4QFY2026 Q325-10-01 ~25-12-31 | QoQvs FY2026 Q2 | YoYvs FY2025 Q3 |
| Revenue | 136.436 | 30.865 | 33.591 | 33.012 | 38.967 | 141.555 | 32.512 | 34.239 | 34.623 | 40.181 | +16.1%+5.559 B$ | +3.1%+1.215 B$ |
| Operating income | 17.675 | 2.054 | 4.970 | 4.920 | 5.731 | 11.002 | 3.914 | 4.837 | 0.750 | 1.502 | +100.3%+0.752 B$ | −73.8%−4.230 B$ |
| Operating margin | 13.0% | 6.7% | 14.8% | 14.9% | 14.7% | 7.8% | 12.0% | 14.1% | 2.2% | 3.7% | +1.6%p | −11.0%p |
| FCF · Company definition | 11.881 | 2.137 | 2.399 | 1.917 | 5.427 | −3.538 | 0.515 | −2.601 | −3.052 | 1.601 | +4.652 B$ | −3.827 B$ |
| Operating cash flow | 22.144 | 3.247 | 4.645 | 4.388 | 9.864 | 13.136 | 3.784 | 2.858 | 1.411 | 5.083 | +260.2%+3.672 B$ | −48.5%−4.781 B$ |
| Cash CapEx · Company definition | 10.083 | 1.552 | 1.670 | 2.441 | 4.420 | 17.223 | 3.384 | 5.347 | 4.401 | 4.091 | −7.1%−0.311 B$ | −7.4%−0.329 B$ |
| Net cash | 23.044 | 47.132 | 25.768 | 19.417 | 23.044 | 6.491 | 19.790 | 19.928 | 6.563 | 6.491 | −0.072 B$ | −16.553 B$ |
| Cash and current investments | 54.763 | 70.784 | 54.381 | 48.239 | 54.763 | 44.062 | 51.582 | 52.328 | 46.118 | 44.062 | −4.5%−2.056 B$ | −19.5%−10.701 B$ |
| Debt | 31.719 | 23.652 | 28.613 | 28.822 | 31.719 | 37.571 | 31.792 | 32.400 | 39.555 | 37.571 | −5.0%−1.984 B$ | +18.4%+5.852 B$ |
Indented rows are components or reference items for the parent metric. Net cash = cash and current investments − debt. Depending on the company definition, FCF may include additional adjustments such as lease principal and therefore differ from operating cash flow − cash CapEx. See the cash flow discussion for the detailed definition.
Annual totals and year-to-date totals appear before each year’s quarters. Revenue, earnings and cash flow are sums of quarterly figures; margin is total operating income ÷ total revenue; net cash, cash and debt are balances at the end of the last quarter. Do not treat totals covering different lengths of time as directly comparable annual figures.
Net cash = cash and current investments − debt. A negative figure indicates net debt. Changes in FCF and net cash are shown as absolute amounts in B$. Quarterly figures have not been adjusted to force reconciliation with disclosed annual totals.
Comparison bases, calculation methods and quarterly sources
Calculation and presentation · Amounts in B$. Figures disclosed in millions of US dollars are divided by 1,000 without altering the source values. Where only cumulative cash flows are available, the previous cumulative period within the same fiscal year is deducted. YoY, QoQ and margins are calculated using amounts before display rounding. Earnings changes from negative or 0 bases are expressed as profit/loss transitions and absolute amounts.
Opinions and outlook · Management quotations include original excerpts and their translations. Quotations not identified as earnings-call transcripts come from earnings releases. Interpretations and implications are the author’s judgments. No numerical probability of achieving a target is assigned without quantitative verification.
Currency translation · Earnings and cash flow use the quarterly average of 7.088929 RMB/USD; balances use 6.9931 RMB/USD as of 2025-12-31. Each historical quarter also uses its own exchange rate. This differs from the company’s convenience translation at the period-end rate. Company FCF and cash CapEx are kept separate from the common definition. Original exchange-rate data ↗