Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's March Quarter 2024 and Full Fiscal Year 2024 Results Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a Q&A session. I would now like to turn the call over to Rob Lin, Head of Investor Relations of Alibaba Group. Please go ahead.

Thank you. Good day, everyone. Welcome to Alibaba Group's March quarter and full fiscal year 2024 results conference call. With us are Joe Tsai, Chairman; Eddie Wu, Chief Executive Officer; Toby Xu, Chief Financial Officer. We have also invited Jiang Fan, Co-Chairman and CEO of Alibaba International Digital Commerce Group to join the call. This call is also being webcast on the IR section of our corporate website. A replay of the call will be available on our website later today. Now let me cover the Safe Harbor. Today's discussion may contain forward-looking statements including statements about our new organization and governance structure, Alibaba’s plan to convert to primary listing in Hong Kong, Alibaba’s strategies and business plans, as well as our beliefs, expectations, and guidance about our business prospects such as future growth, revenue, and return on investment. Forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest annual report on Form 20-F and other documents filed with the U.S. SEC or announced on the website of the Hong Kong Stock Exchange. Any forward-looking statements we make on this call are based on assumptions as of today, and we do not undertake any obligation to update these statements, except as required under applicable law. Please note that certain financial measures we use on this call, such as adjusted EBITDA or free cash flow are expressed on a non-GAAP basis. Our GAAP results and reconciliation of GAAP to non-GAAP measures can be found in the earnings press release. Unless otherwise stated, the growth rate of all metrics during this call refers to year-over-year growth versus the same quarter last year. With that, I will now turn to Eddie.

Hello, everyone. Following several quarters of adjustments and continued user experience enhancement, our core business has gradually returned to healthy growth. The Taobao and Tmall Group achieved double-digit year-over-year growth in GMV this quarter. Alibaba International Digital Commerce revenue increased by 45%. Our core public cloud offerings recorded double-digit year-over-year growth in revenue. AI-related revenue increased triple-digit year-over-year. This quarter's results demonstrate that our strategies are working and we are returning to growth. TTG continued to execute its user-first strategy by creating a system for brands, merchants, and industrial belts to operate efficiently and to meet the diverse needs of China's domestic consumers through a shopping experience that offers quality products at attractive prices supported by exemplary service. Our investments in driving price competitiveness and elevating the user experience have received positive consumer feedback. We've seen tangible progress, strong growth in quarterly buyers, and purchase frequency that has driven robust double-digit growth in GMV, reflecting a continued improvement in consumption and user trust. At the same time, we continue to enhance member benefits and service experience with 88VIP membership numbers growing by double digits year-over-year to surpass 35 million. Last quarter, I shared TTG's three key investment areas aimed at enhancing overall capabilities. First, product supply; second, competitive pricing; and third, quality service. We are committed to boosting consumption and purchase frequency through these measures, driving further growth. For fiscal year 2025, we expect TTG's GMV will gradually return to healthy growth as our platform's overall shopping experience continues to improve. At the same time, our schedule of launching monetization products will also proceed as planned. In the second half of the fiscal year, we will gradually introduce new monetization mechanisms aligned with new platform algorithms and product features that will further enhance CMR-centered revenue growth. As we continue to improve platform products and investment tactics under our user-first strategy, we're very confident we will win more consumer trust and maintain our market share leadership. This quarter, we completed adjustments to Alibaba Cloud's product strategy for the AI era, and the quality of our revenue continued to improve. We focused on creating competitive advantages in Alibaba Cloud's technology and scale, and reduced pricing for public cloud products globally. Driven by strong demand from various sectors, including foundational model companies and internet companies, as well as customers from industries such as financial services and automotive, AI-related revenue accelerated and continued to record triple-digit growth year-over-year. We believe that this wave of Generative AI-driven technological innovation is in the early stages of the industry cycle. Starting in 2024, we've seen a rapid increase in customer demand for AI. It has also stimulated growth and demand for traditional cloud computing needs, including general computing storage and big data. Therefore, we are actively investing in our cloud computing product matrix, especially in AI infrastructure to capture the monumental opportunities. Currently, Alibaba Cloud has established strategic partnerships with the vast majority of leading foundational model companies in China. At the same time, Alibaba's proprietary foundational model, Tongyi, released a 110 billion parameter model in late April, which is on par with the top open-source models globally. Looking ahead, we will deeply integrate our Tongyi large model with Alibaba Cloud's advanced AI infrastructure to realize synergies and optimization across software and hardware. We aim to create the premier AI development platform that combines outstanding AI capabilities and high-cost efficiency, redefining the industry benchmark for cost performance. Based on our leading product portfolio, substantial infrastructure investments, and proactive industry partner strategy, we are confident that Alibaba Cloud's revenue will return to double-digit growth in the second half of the 2025 fiscal year. For our overseas e-commerce, AIDC revenue grew 45% and order volume grew 20% year-over-year this quarter due to continued focus on expanding cross-border retail operations and enhancing the consumer experience. In March this year, we withdrew Cainiao’s IPO application. Cainiao provides essential infrastructure to Alibaba's core e-commerce business, and we hope Cainiao will strengthen its synergies with our Chinese domestic and international e-commerce operations. Alibaba Group will continue to support the expansion of Cainiao’s global logistics network. The past year has been a year of self-transformation for Alibaba. We're pleased that adjustments in our business and organization have yielded results. A journey of transformation will undoubtedly have challenges, but we are well-prepared. In the new fiscal year, Alibaba Group will continue to focus on investing and executing our user-first AI-driven strategy, and we are confident in the long-term healthy development of our company. Thank you.

Greetings. This is Jiang Fan, and it's a pleasure to be back to give you an update on AIDC's business. AIDC continued to achieve rapid growth this quarter despite widespread and intense market competition in different countries across AIDC. Total orders were up by 20% year-on-year, with especially significant growth in our cross-border business. Next, let me share with you on the progress we've made around the three major drivers that are our consistent focus. First, business model and supply chain service upgrade. Driven by AE Choice, AliExpress continued to realize robust order growth. AE continued to advance in its transition from the original platform business model to a supply chain efficiency-driven platform, the semi-consignment plus full consignment hybrid business model. While maintaining a rich merchandise assortment, we significantly enhanced user experience. By April 2024, AE Choice orders accounted for around 70% of total orders on AliExpress. At the same time, synergies between AliExpress and the cross-border logistics capabilities of Cainiao have further strengthened AE's competitiveness with the five-day and ten-day delivery completion rates both doubling year-over-year, and we will continue to make effective investments while paying attention to improving the efficiency of the choice model. Second is product and technology innovation. We continue to bring more localized, high-quality user experiences to different consumers around the world. AI and intelligent technologies continue to enhance efficiency and user experience in cross-platform smart product assortment, optimized presentation of product details, multi-language search, targeted recommendations, and so on. Additionally, more and more small and medium enterprises are starting to leverage AI to enhance their operating efficiency. 17,000 SMEs have subscribed to the AI business helper launched on Alibaba.com, and millions of products have now been launched with AI, and searches for AI-optimized products have increased by 37%. Third is sustained growth in key markets. Our continued investment in key markets for AliExpress has brought about growth in our user base, as well as enhanced user experience, supporting our sustained rapid growth and continued leading position locally. Trendyol is actively investing in cross-border business, achieving very rapid growth in the Gulf region. Trendyol's brand recognition has improved rapidly, driven by significant expansion in its merchandise supply, and it has become one of the most downloaded e-commerce apps in the region. There remains huge potential for AIDC to grow user penetration in the majority of its markets. We will achieve quality growth by providing better and more differentiated merchandise and services. At the same time, we'll focus on enhancing operating efficiency, both by narrowing losses in certain businesses, and by making higher efficiency investments to continue to grow actively in markets around the world. Thank you.

Thank you, Jiang Fan. First, I will provide a recap of the key financial highlights for fiscal year 2024. Following the overview, I will provide a detailed review of the financials for the March quarter. During this fiscal year 2024, our total consolidated revenue was RMB 941.2 billion, an increase of 8%. Consolidated adjusted EBITDA increased by 12% to RMB 165 billion. Non-GAAP net income increased 11% to RMB 157.5 billion, while non-GAAP diluted earnings per ADS, saw a fast increase of 14%, strengthened by our ongoing share repurchase program. Excluding Sun Art, Freshippo, and Intime businesses that have physical retail operations, group revenue would have grown at approximately 11%, and our group consolidated adjusted EBITDA margin would have been approximately 3.6 percentage points higher at approximately 21%. During the fiscal year ‘24, under the leadership of the Capital Management Committee and our Board of Directors, we have increased cash return to the shareholders. We repurchased about 1.25 billion ordinary shares, or equivalent to 156 million ADS, for a total consideration of $12.5 billion. After accounting for ESOP issuance, our outstanding shares decreased by 5.1% in fiscal year 2024. Regarding cash dividends, we declared an annual cash dividend of $1 per ADS, totaling about $2.5 billion for fiscal year 2023, which was paid out in January 2024. Furthermore, our Board of Directors has approved an annual cash dividend for fiscal year 2024 of $1 per ADS, and a one-time extraordinary cash dividend is a distribution of proceeds from certain financial investments in an amount of $0.66 per ADS, with total cash dividends amounting to approximately $4 billion. Through a combination of share repurchase and cash dividends, we have returned and plan to return about $16.5 billion to shareholders for fiscal year 2024, up from $13.4 billion for fiscal year 2023. We are committed to returning value to our shareholders and will continue to execute our capital return programs. Now, let me provide a review of our financial performance for the March 2024 quarter. Overall, we observed improving fundamentals across our major businesses, supported by enhanced investments aimed at steering growth. During the quarter, our total consolidated revenue was RMB 221.9 billion, an increase of 7%. Consolidated adjusted EBITDA decreased by 5% to RMB 24 billion. Our non-GAAP net income was RMB 24.4 billion, a decrease of 11%. However, the decline in our non-GAAP dilutive earnings per ADS was more moderate at 5% given our ongoing share repurchase program. Our GAAP net income was RMB 0.9 billion, a decrease of RMB 21.1 billion. This decline was primarily due to mark-to-market changes of RMB 19.9 billion from our equity investments in publicly traded companies, which shifted from a gain in previous years to a loss this year. As of March 31, 2024, we continued to maintain a strong net cash position of RMB 446.5 billion or $61.8 billion. Free cash flow this quarter was RMB 15.4 billion, a decrease of RMB 16.9 billion compared to the same quarter last year. The decrease mainly reflected the increase of RMB 7.7 billion in capital expenditure, the majority of which reflected our investments in Alibaba Cloud infrastructure, as well as a special dividend of RMB 10.5 billion from Ant Group in the same quarter last year. Now let's look at cost trends as a percentage of revenue excluding SBC during this quarter. Cost of revenue ratio increased by 1 percentage point to 67%. Product development expenses ratio remained stable at 5%. Sales and marketing expenses ratio increased by 1 percentage point to 13%. G&A expenses ratio decreased by 1 percentage point to 4%. Now let's look at segment results starting with Taobao and Tmall Group. Revenue from Taobao and Tmall Group was RMB 93.2 billion an increase of 4%. During the quarter, our online GMV achieved double-digit growth, which is driven by rapid order growth, supported by strong increase in the number of purchases and the purchase frequency. Strong GMV growth supported a 5% increase in customer management revenue, though the overall take rate declined slightly. The overall take rate was impacted by a combination of two factors. Firstly, Taobao and Tmall Group GMV both increased strongly. The decrease in take rate was due to Taobao's GMV growth outpacing that of Tmall. This trend continues to reflect increasing demand for price-competitive products offered on our platform. Secondly, take rate was also impacted by the introduction of new models that currently have low monetization rates. We believe our overall take rate has room to improve as the percentage of paying merchants among our SME merchants remains relatively low, and we have yet to roll out the new advertising tools. As we gradually introduce the new advertising tools that would further enhance merchants' ROI, we see upside from the potential increase in merchant adoption as well as higher incremental spending from paying merchants. Direct sales and other revenue decreased 2% to RMB 24.7 billion. China Commerce wholesale business revenue increased 20% to RMB 5 billion, primarily due to an increase in revenue from value-added services provided to paying members. Taobao and Tmall Group adjusted EBITDA was RMB 38.5 billion compared to RMB 39 billion in the same quarter last year, primarily due to the increase in investment in user experience, which resulted in improved customer retention and higher purchase frequency, and technology infrastructure partly offset by the increase in revenue from customer management services. Revenue from Cloud Intelligence Group was RMB 25.6 billion during the quarter, an increase of 3%. We are committed to our strategy of focusing on high-quality revenues from increasing public cloud adoption while reducing low-margin project-based contracts. During the quarter, our core public cloud offerings, which include products such as Elastic Compute, Database, and AI products, recorded double-digit growth in revenue. During this quarter, AI-related revenue experienced accelerated growth and continued to record triple-digit growth. We expect the strong revenue growth in public cloud and AI-related products will offset the impact of the roll-off of project-based revenues. Cloud's adjusted EBITDA increased by 45% to RMB 1.4 billion. The increase was primarily due to improving product mix through our focus on public cloud and operating efficiency. Alibaba International Digital Commerce Group revenue was RMB 27.4 billion, an increase of 45%. Revenue from the International Commerce Retail Business increased by 56% to RMB 22.3 billion. The increase in revenue was primarily due to the solid combined order growth of AIDC's retail businesses, revenue contributions from AliExpress Choice, as well as improvements in monetization. Revenue from our International Commerce Wholesale Business increased by 11% to RMB 5.2 billion. The increase was primarily due to an increase in revenue generated by cross-border-related value-added services. AIDC's adjusted EBITDA was a loss of RMB 4.1 billion compared to a loss of RMB 2.2 billion in the same quarter last year. Loss increased primarily because of increased investment in businesses including AliExpress Choice and Trendyol's cross-border business, partly offset by improvements in monetization. Total revenue for Cainiao grew 30% to RMB 24.6 billion, primarily contributed by the increase in revenue from cross-border fulfillment services. Cainiao's adjusted EBITDA was a loss of RMB 1.3 billion compared to a loss of RMB 319 million in the same quarter last year, primarily due to additional retention incentives granted to Cainiao employees recognized during the quarter, in connection with the withdrawal of its IPO. Local Service Group revenue in the March quarter grew 19% to RMB 14.6 billion, primarily due to the order growth of Ele.me and Amap. Local Service Group's adjusted EBITDA was a loss of RMB 3.2 billion this quarter, compared to a loss of RMB 4.1 billion in the same quarter last year, primarily due to the continued narrowing of loss from our to-home business driven by Ele.me’s improved unit economics and increasing business scale. Revenue from our DME Group was RMB 4.9 billion, a decrease of 1%. Adjusted EBITDA was a loss of RMB 884 million, compared to a loss of RMB 1.1 billion in the same quarter last year, loss reduced primarily due to the reduced loss of Youku. Revenue from all other segments decreased 3% to RMB 51.5 billion, mainly due to the decrease in revenue from Sun Art and Alibaba Health, partly offset by the increase in revenue from Freshippo. The decrease in revenue from Sun Art was mainly driven by the scale down of supply chain business and decrease in bucket size. Adjusted EBITDA from all other segments was a loss of RMB 2.8 billion, compared to a loss of RMB 1.9 billion in the same quarter last year, primarily due to the increased losses from Freshippo and the decrease in profitability of Lingxi Games. Lastly, we have been preparing for our primary listing in Hong Kong and currently expect to complete this by the end of August 2024. We will make a further announcement on the primary conversion date in due course. In closing, our robust balance sheet positions us well to strategically reinvest our cash flows to foster growth and strengthen leadership in core businesses, thereby improving future returns on invested capital. As Eddie and Jiang Fan mentioned, we anticipate that near-term investment will yield improved firstly, improved user experience in our domestic e-commerce platform that supports strong GMV growth in FY’25 and enhance the monetization in the second half of FY’25. Secondly, a return to double-digit revenue growth in the second half of fiscal year’25 for the Alibaba Cloud business, and thirdly, continuous rapid growth momentum while improving unit economics from AIDC. We are seeing positive initial results, making us even more confident in achieving strong and sustainable growth in our core businesses. Thank you. And that's the end of our prepared remarks. We can open up for Q&A.

Hi everyone. For today's call, you are welcome to ask questions in Chinese or English. A third-party translator will provide consecutive interpretation for the Q&A session. Please note that the translation is for convenience purposes only. In the case of any discrepancy, our manager's statement in the original language will prevail. If you are unable to hear the Chinese translation, a bilingual transcript of this call will be available on our website within one week after the meeting. Operator, please connect the speakers and SI Conference lines now and start the Q&A session when ready. Thank you.

Thank you. Your first question comes from Kenneth Fong with UBS. Please go ahead.

Hi. Good evening, management. Thanks for taking my question. I have a question regarding the CMR versus GMV growth. Our strategy for focusing on user experience and price competitiveness has yielded solid results, delivering double-digit GMV growth despite the intense competition. As Toby earlier highlighted, because of the mixed shift and early in monetization, we see CMR underperforming GMV at only 5% growth. With our new ad product, site-wide marketing, to be launched, how should we think about the pace for this gap to narrow over time? And then down to EBITDA for the incremental growth in the CMR, should we expect this to reinvest back to the business, or should we actually expect a margin gradual expansion as the CMR growth gradually reaccelerates? Thank you.

Kenny, thanks for the question. I think I will just start, provide my explanation, then Eddie can add. I think, as you can see, in this quarter the GMV had a double-digit growth. As I said, actually this growth is both quite strong in Taobao and Tmall merchants. So, the first thing is, I think the execution of our strategy has shown results. Basically, we are backing growth. That's a very important message. Secondly, as we were saying, we are introducing, enhancing our monetization product, and we'll be gradually rolling out the monetization product, which will help to enhance the ROI, and eventually enhance the penetration into the merchants, particularly the SME merchants, as well as increase their spending in the monetization product. However, it would take some time, since we are rolling out gradually. So we will be able to see the growth throughout the year, particularly in the second half of the year, that you will see the results coming out during the second quarter of the year.

Okay, before Eddie adds on, gives you more color on this sort of rollout of the monetization product, I would just also explain on the investments we are making. For Taobao and Tmall, as we're saying, we see the early success of executing our strategy by investing in the customer experience, various things focusing on consumer first. So we see the result, and we are willing to invest. So that's the first point. Secondly, in terms of the investment we are making, on the other hand, we are doing it in a very disciplined way. We do closely monitor the ROI. For the investment we can make, definitely we will see a good ROI from it. So it's in a very disciplined way. So, we will continue to make the investment. In terms of how much we are going to invest, it really depends on the space, we're ramping up the consumer experience as well as the supplies. So we have the resources, and we are committed to making the investment.

Thank you. Yes. So moving ahead with Omni platform marketing and whole platform charging is an important direction that we are moving in as we are making it easier for SMEs to advertise. Of course, it’s important to ensure that money that merchants are spending on advertising achieves solid ROI. So to that extent, we are currently adjusting and tweaking the algorithms, training the models, doing testing, and using the data from the testing to further improve the service and enhance ROI. So, all of this will of course take some time, but it is certain that we are moving in that direction and we will eventually get there and further optimize it for different customers and for different sectors as a means of enhancing our revenues. So, I expect that this process will take something like 12 months because it does take time to tweak the algorithms, get those data in place and ensure everything is optimal. But what I can tell you is that's certainly the direction that we are moving in and we continue to fine-tune.

Okay. Next question.

Thank you. Your next question comes from Gary Yu with Morgan Stanley. Please go ahead.

Hi. Thank you, management, for the opportunity. My question is regarding the Ali Cloud business. It's encouraged to hear from management that we expect it to resume double-digit growth in the second half of the year. Could management please share some of the composition of the revenue growth driver behind? How much of the improvement in growth is coming from AI-related products? How much is it coming from public cloud, and how much of it is coming from low-margin private cloud projects becoming a smaller part of the business? And then also related to that is once we are back up to the double-digit growth level, how should we look at the kind of medium-term margin for the cloud business going forward? Thank you.

Thank you. This is Eddie. I’ll take that. If you look at the overall revenue growth of the Cloud business today, most of that is already being driven, I would say by AI and AI-related new products. So going forward, a lot of the incremental growth we can expect to see in the Cloud business will be related to investments customers are making in AI. But also there is a complementary effect because the more customers invest in and make use of AI the more demand they will also have for our other various cloud offerings. So the two things go hand in hand. At the same time we continue to decrease the share of project-based revenue within cloud’s overall revenues. In fact, other parts of the cloud business already achieved double-digit growth in this quarter, but that continues to be offset by the ongoing, although diminishing, still ongoing impact of that low-margin project-based business. But as we continue to phase out that low-margin project-based business we expect revenues to grow faster, primarily driven again by public cloud and AI-enabled offerings. We expect that we see the complete disappearance of that drag within say one or two quarters into the New Year. On the second part of your question, which had to do with the kinds of profit margins we expect to achieve in the medium to long term, once we get to that place where public cloud is primarily driving our growth and we are back to double-digit growth, I would say that for the most part, our public cloud offerings have very healthy profit margins. When it comes to AI, of course, we are looking at a 10-year IT new technology cycle. We are in the very early stage of that cycle. So we are talking about healthy margins, but with ongoing longer-term investment. But overall, the profit margins from AI products will be healthy.

Next question please.

Thank you. Your next question comes from Alex Yao with J.P. Morgan. Please go ahead.

Good evening management team. And thank you for taking my question. So, for the domestic e-commerce business, it's great to see the GMV growth rate has recovered back to double digits in this quarter. Can you help us to understand what is driving the GMV growth rates to narrow the pace versus the e-commerce market? Or put it another way, what did you do in the past quarter that leads to a slowdown of market share loss? And a broader question is, what does it take to be competitive in the current China e-commerce market given the rise of alternative e-commerce competitors in the market? Thank you.

Thank you. Overall, I think it's really about enhancing the user's shopping experience. As I've said, that really consists of getting three things right. First is having good merchandise, secondly having that at a good price and thirdly supporting that with excellent service. If we break that down further, when it comes to goods – the assortment of goods, there are actually different models that we can apply with different products to better support them. We can think about goods from brands, goods from channel merchants, and goods from industry belts or manufacturers of white-label goods. We can provide different products and take differentiated approaches to ensure that those three different kinds of players are getting their goods to consumers in a way that is cost competitive, they're offering a good price, and achieve high conversion efficiency for their merchandise. All of that can be further supported with strong logistics and good customer service. So, we can take a different approach regarding those three different kinds of supply, always with the aim of increasing customer purchase frequency and attracting new customers to achieve that advantage. Secondly, I can add to that, as we know there's been very intense competition in China's domestic e-commerce market and we've made some very clear strategic choices on Taobao as to how to address this competition and win going forward. A big part of this is ensuring high product efficiency, referring to conversion and also to providing optimized services as well. Of course, another very important part of the equation for Taobao is what I've referred to as omnipotent Taobao or universal Taobao. Taobao has everything that anybody could want. The richest possible assortment. So, while maintaining that rich and diversified assortment, also focusing on achieving better efficiency with respect to high volume selling goods to maintain that unique competitive advantage.

Next question.

Thank you. Your next question comes from Ellie Jiang with Macquarie. Please go ahead.

Thank you. I have a follow-up question about the whole platform charges and the new marketing tools that you've mentioned that will be launched. We understand that there are some similar products that have been launched or are being launched on the market by competitors. I'm wondering how we would evaluate our products versus the competitors? How differentiated are our products and what are some of the factors that determine conversion rates for these kinds of products, if you could share some of the underlying logic? Thank you.

Just to clarify the question, are you asking about our marketing products and how they are differentiated versus other platforms? Is that the question?

So basically focusing on the omni-platform Marketing Solution?

Right understood. I think different platforms are going to be very different if you look at the way they achieve monetization and their monetization products because the platforms are fundamentally different in terms of their traffic, the business model, and the different groups of users on the platform. So, I don't think there's any direct comparability. I think certainly what merchants are looking at, at the end of the day, is the ROI that they achieve on their investments in marketing. So, I don't think we can directly compare user design and algorithms and things of that nature, but you can certainly look at the ROI on marketing investment. I can tell you that on Taobao today, merchants are achieving probably the highest ROI they can get on any platform for their marketing investments.

Next question.

Thank you. The next question comes from Alicia Yap with Citigroup. Please go ahead.

Hi. Good evening, management. Thanks for taking my questions. Congrats on the solid quarter. I have a follow-up on the overall CMR growth. Obviously the 5% growth is very good and the double-digit GMV growth is good. Any obstacles that we foresee could prevent GMV and CMR from further improving from here? I'm just wondering how is the overall consumer consumption trend? It seems that we are gaining momentum that allows us to enjoy faster growth despite a potentially more muted macro outlook. Any color you can share with us with the latest trend that you are seeing for April and May on the GMV growth would be helpful? Thank you.

Alicia, thanks for the question. I'll take on this question. I think, as we explained, we see the results from our investments, the GMV growth. Then, I think that the growth trend is sustainable, we can observe. So, we're still observing a good, healthy growth in April and May. And in terms of CMR, as we were explaining, because the GMV growth, the mixed shift in the GMV towards Taobao merchants and also some of the new sort of model business products which have relatively low monetization at this stage. So there's a big gap room for it to increase the monetization rate. With the introduction rollout of our monetization product, we will be seeing the growth of CMR catch up with GMV gradually. So it will lag behind a few quarters, but it will eventually catch up. So that's our belief in terms of the effectiveness of the investments and also on both GMV and revenue sides.

Sorry, Rob. Alicia this is Joe Tsai. I'd also like to sort of supplement what Eddie and Toby said. I think implicit in your question is you're looking at our March quarter GMV growth in double digits, and compared to last year, it was an easy comp, because last year was partially coming out of the lockup from the COVID lockdown. So the implicit question is, are we going to see, from a macro standpoint, what do we see from our platform that could reflect broader consumption trends? What I would like to say is, as we look at the Chinese consumers, the number one, right now, household cash is at its highest point. We're looking at something like $19 trillion of household cash savings that's in the system. So the Chinese consumer has the ability to spend. I think all we're looking at is what's their confidence level of spending on a going forward basis? First of all, I think we've all seen some of the growth in the services sector during the May 1st holidays. Within our platform, we've seen some green shoots; some discretionary items like apparel and electronics are also actually growing. The growth is pretty good. So what that tells us is consumers are starting to reflect that willingness to spend. We have no doubt that they have the ability, but the willingness reflects the confidence in what they have about the future. So we're seeing some positive signals, but it is probably still too early to tell because the macro environment is still broadly affected by the property sector downturn. On that front, we've been very encouraged that the local governments now have been relaxing the property purchase restrictions. So, we're going to wait and see, but so far, confidence level, we've seen some early signs of growth.

Yeah. This is Eddie. I’d just like to chip in to be even clearer on this point. Because I detect a common pattern across the past several questions, and I was just actually joking with Joe about this. Because it seems like investors are even more anxious than we are to make money. So, I’d like to be really clear about what our primary objective is this year, and that is on top of certainly to invest in merchandise assortment and competitiveness and enhance user experience to drive GMV growth as well as purchase frequency, right. That’s our number one objective this year. Only after being able to achieve that objective successfully can we really increase CMR. In fact, increasing CMR will just be a natural result of those efforts. Talking about advertising and commercialization, I was personally part of the whole growth story of Taobao from zero in revenues and the development of Alibaba from zero through 100 million to 1 billion to 10 billion and beyond. So, I can tell you that we have the capabilities to put in place those kinds of advertising products that will drive CMR growth. We are certain that we can do that, but we are controlling the pace at which we move forward to ensure a really good experience for our merchants and for our consumers. So, this year we are really focused on enhancing consumer experience and growing GMV, and we will move forward on that basis.

Thank you. Next question.

Your next question comes from Ronald Keung with Goldman Sachs. Please go ahead.

Thank you. Thank you Joe, Eddie, Toby, and Rob. So, I guess no one asked about the AIDC so far and haven't really deeply discussed. So, I want to ask about the, because this quarter it was mostly the increase in AIDC losses to the group earnings. Otherwise, the Taobao team has been relatively stable. So, I want to hear how do we see the investment scale evolve for international e-commerce. We have also seen some of our peers shifting from fully entrusted to semi-entrusted which is they kind of leave merchants to do their local warehousing. How do we see a loss or investment evolve with these trends? Thank you.

Thank you. I think there are really two principal reasons for the losses in this quarter, or for the heightened spending in this quarter. First was that in certain emerging markets and especially in the Middle East, this was a time of year that represents peak sales with Ramadan in Middle Eastern countries. So Trendyol was taking advantage of that with advertising, spending, promotions, and reaching out to consumers. Then the second reason has to do with AE Choice. AE Choice occupies an increasing proportion of overall orders of the overall business. As we are switching over to this new business model, it's going to take a little time for the profit margins in AE Choice to catch up. So there is a margin gap there to be filled. We are working rapidly to optimize the efficiency of the AE Choice model. I think you will see within several quarters very clear enhancement in the unit economics of the AE Choice model. So as the new model stabilizes, we will continue to pay attention, of course to achieving growth but balancing that also with more efficiency. Regarding your second question, which had to do with semi-consignment versus full-consignment model. So, that’s not really about cross-border per se. It's about where merchants pre-place their merchandise in a local warehouse for local shipping. Our take on that is that some categories are just better suited to a cross-border business model because of characteristics of the merchandise. For other categories, that kind of local shipment model can work better. We've done a lot of this in the past as well, pre-placing merchandise into overseas warehouses to be shipped locally. We're working on developing more local sellers in places like the Middle East, South Korea, and Europe. We think at the end of the day, for some categories, local merchants can be more competitive, but for other categories, the cross-border model will work better. It really comes down to competitiveness and consumer preference. So we continue to track how consumers receive these different approaches and plan accordingly.

Thank you. Next question.

Thank you. Your next question comes from Yang Bai with CICC. Please go ahead.

Thank you. My question has to do with the company's plans to deliver returns to shareholders. We see those plans now resulting in something like the equivalent of an 8% dividend yield. But, I have some concerns about the share repurchase plan going forward because it seems to be related to the currently rather low stock price. But in the longer term, how will this play out and how can you guarantee your ability to continue to make those kinds of returns to shareholders?

Thank you for that question. Our share repurchase plan isn’t something that we just stated to implement over the past one to two years. It’s a long-term plan that was stated several years back and the current plan we have in place has been approved by the board to run all the way through to March of 2027. If you look at the amount of share repurchase that we did in the last year, it was around $13 billion. In the more recent year, it was $16.5 billion approximately. That leaves us with around $30 billion to continue to deploy. So this is a long-term plan that we're committed to. For us, as management of the company, to think about how we’ll continue to deliver those returns to shareholders in the future, we have to look on the one hand at the company's cash flows and on the other hand at the investment needs of the company related to our core business, but also in new emerging areas that are important, like AI for example, and also AIDC right now. But going forward, we will be committed to continue to make those kinds of returns to shareholders on that basis and we take an integrated view. In other words, the share buyback program and dividend distributions together comprise our shareholder return program. We look at the two together.

Thank you. Next question.

Thank you. Your next question comes from Joyce Ju with Bank of America. Please go ahead.

Thank you. My question is also about AIDC in particular. We understand that the AE Choice model now represents around 70% of total orders on AliExpress. Perhaps you could give us a little more detail on how that model is growing, how you see it growing in the next couple of quarters or even in the next years on a longer-term basis, in terms of which regions and which categories, what kind of users represent the more stable sources of growth or whether it’s the most potential for further growth. I’m also wanting to understand more about your collaboration with Cainiao in terms of making further investments together on the cross-border.

AE Choice is a business model that is best suited for light and small packages, light and small goods, as it has a strong advantage in that space. Goods that can be air-shipped cost-effectively, and in the past, that is really where Alibaba Express has had an advantage in those kinds of categories. We are also working on growing different kinds of supply chain models for different markets. For example, for South Korea, we are working on developing additional ocean freight for larger and heavier kinds of goods, and piloting the deployment of local warehouses as well. Our general strategy in any market is to start with those categories where we have that advantage, the light and small packages, then to build up a supply chain to support other kinds of demands that make sense for that particular market. Another important thing is that we have these local platforms in different regions. For example, Lazada in Southeast Asia, Trendyol in the Middle East, and AE Choice is currently integrating with those different platforms to allow for direct sales into those markets, meaning that AE Choice doesn't need to make any big investments in branding and marketing to consumer offering in those markets. So that's allowing us to move ahead very rapidly into those different markets. Of course, different categories make better sense in different markets. In the case of Turkey, for example, they have an advantage when it comes to apparel, but we can achieve an advantage there in other categories where they don't have that kind of local supply. So in each market, of course, we look at our own resources, what we can bring. We look at the situation in that market and then decide which categories we're going to bring to that market and how.

Thank you. Let's invite the last question.

Thank you. Your next question comes from James Lee with Mizuho. Please go ahead.

Great. Thanks for taking my question. And this will be a particular question about AI and cloud. Can you maybe talk about your development of your own large language model, and help us understand where your focus is? Is it scale? Is it usually scale to be the largest one based on the number of parameters, or are you focused on different modalities of data, voice, text, image, or video? And should we think about the end goal for your large language model to create maybe applications such as AI agents, shopping agents for your consumers, and business agents for your merchants? Thanks so much.

I think it's okay. Could I just ask you please to clarify the thrust of your first question? Are you asking about the main objectives for our ongoing development of large models?

Yes, it's development of large language model. Is it to scale to have one of the largest ones in China based on the parameters? Is that the focus or the modality of the data? You know, voice, text, image as the focus, because different companies throughout internationally, they have different focuses in terms of growing that large language model.

Right. Well, I think all of the companies in the large model space. Anyone who is developing foundational models shares the same goal, which is working towards AGI, Artificial General Intelligence. But different companies will take different routes to get there and along the way can make different choices and may choose to develop certain kinds of vertical applications, leveraging their models along the way. But at the end of the day, I think for all players, the ultimate goal is to achieve AGI, covering everything from voice and audio through to image, video, and text, and encompassing all of that. So different pathways to getting there, perhaps different kinds of vertical models along the way, but the objective I think is a common objective. For Alibaba, I think there are really three major objectives underlying our ongoing large investments in research and development around AI and large models. The first is the pursuit of AGI as I just explained, per se developing our own foundational models for AI moving towards AGI. The second objective is internally within Alibaba, integrating our cloud offering with Tongyi, our large language model, integrating them tightly so that we can provide to our customers extremely well-integrated software and hardware offerings, bringing together our cloud capabilities and our AI capabilities, and enabling them to benefit from very high, highly effective and cost-efficient AI functionality. I think if you look around the world, I don't think there's really any other company anywhere like Alibaba that has cloud as one of its major businesses and AI as one of its major businesses simultaneously. So we see that as a huge opportunity. And then the third objective really is leveraging the development of Tongyi to enable other businesses within the Alibaba group to better develop their own applications and their own business models. So thinking of applications like Dingding, but also Quark and even Taobao, they can benefit from leveraging our large model, Tongyi, to further improve their own applications. Just to further expand on that second point I just made about the tight integration between our Tongyi model and our cloud offerings, our open-source model that we've made available is undoubtedly the number one top open-source model anywhere in the Chinese-speaking world, and it's also certainly the most widely adopted. So when you have developers using our open-source model in their own development environment to develop something, when it comes time to deploy that, it's a very natural choice for them to choose Alibaba Cloud, because of the very high level of cost efficiency, but also because that's the most familiar environment to them. So that's just a very simple example showing how we can leverage that tight integration between Tongyi, our model, and cloud, and indeed other aspects of Alibaba's business and business models.

Okay, that concludes our earnings call today and thank you everyone for your participation.

That does conclude our conference for today. Thank you for participating. You may now disconnect.