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Research Alert: Baba: Another Mixed Quarter As Strategic Investments Dent Profits

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CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

BABA reported mixed Mar-Q results with revenue up 3% to CNY243.4B, below the CNY247.1B consensus, though up 11% on a like-for-like basis excluding disposed businesses. BABA posted its first operating loss since 2021 at -CNY0.8B, with adj-EBITA margins compressing to 2% vs. 14% in the prior year, mainly due to strategic investments in e-commerce (e.g., quick commerce) and AI initiatives. Cloud Intelligence Group revenue accelerated to 38% growth (+40% from external customers) vs. 36% growth in the Dec-Q, with AI products now representing 30% of external cloud revenue after 11 quarters of triple-digit growth. Management expressed confidence despite near-term margin pressure, emphasizing strategic investments position the company for competitive advantages. Quick commerce revenue surged 57% to CNY20.0B, though unit economics remain under development. We expect more significant improvement in quick commerce unit economics in FY 27 as strategic investments in AI and cloud infrastructure scale toward profitability.

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