Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's March Quarter 2025 and Full Fiscal Year 2025 Results Conference call. At this time, all participants are on 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 Lydia Liu, Head of Investor Relations of Alibaba Group. Please go ahead.

Good day, everyone. Welcome to Alibaba Group's March quarter 2024 and full fiscal year 2025 earnings conference call. With us today are Joe Tsai, Chairman; Eddie Wu, Chief Executive Officer; Toby Xu, Chief Financial Officer; Jiang Fan, Chief Executive Officer of Alibaba E-Commerce Business Group. This call is also being webcasted from the Investor Relations section of our corporate website. A replay of the call will be available on our website later today. Now let me quickly cover the safe harbor. Today's discussions may contain forward-looking statements, particularly statements about our business and the financial results that are subject to risk and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor statements that appear in our press release and investor presentation provided today. Please note that certain financial measures that we use on this call are expressed on a non-GAAP basis. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. Unless otherwise stated, growth rate of all stated metrics refer to year-over-year growth versus the same quarter last year. And now, I will turn the call over to Eddie.

Thank you. Welcome to join our quarterly earnings call. We delivered strong performance this quarter with total revenue excluding Sun Art at Intime, growing 10% year-over-year and adjusted EBITDA increasing 36% year-over-year. For fiscal year 2025, our user-first AI-driven strategy continued to deliver meaningful results with accelerated growth across our core businesses. We've established a well-defined growth portfolio centered on AI + Cloud, e-commerce, and other internet platform businesses. We're seizing the historic opportunity presented by AI and stepping up our investments in AI infrastructure and advanced technologies to further strengthen Alibaba's global leadership in technology. These capabilities will also be translated into sustained drivers of business growth. Driven by robust and growing AI demand, Alibaba Cloud's revenue growth accelerated to 18% this quarter, with revenue excluding Alibaba consolidated subsidiaries increasing 17% year-over-year. Public cloud revenue growth continues to accelerate. Revenue from AI-related products has maintained triple-digit year-over-year growth for the seventh consecutive quarter. For the full fiscal year, Alibaba Cloud's revenue grew by double digits, and looking ahead, we expect AI to remain a key driver of accelerated revenue growth for Alibaba Cloud. While uncertainties persist in the global AI supply chain, customer demand remains strong and unwavering. We continue to see growing demand for Cloud and AI, an opportunity that will define the next 10 to 20 years and will not be derailed by short-term supply chain fluctuations. Our confidence and commitment to investing in Cloud and AI infrastructure remains unchanged, and we are actively exploring diversified solutions to meet rising customer demand. We continue to advance foundational research and innovation in large models, pushing the boundaries of model capabilities while remaining firmly committed to open source. In April, we released our next-generation Qwen3 model as open source, ranking amongst the top performers globally on multiple authoritative benchmarks. By the end of April, we had open-sourced over 200 models under the Qwen family with more than 300 million downloads worldwide and over 100,000 derivative models, making it the world's largest open source model family. As we accelerate the adoption of AI + Cloud across a wide range of industries, two clear trends have emerged. Among large and mid-sized enterprises, AI applications are expanding from internal systems to more customer-facing use cases. At the same time, adoption of AI products is rapidly extending from large enterprises to a growing number of small and medium-sized businesses. This quarter, the industry penetration of our AI products expanded rapidly. In addition to faster adoption across sectors like internet services, autonomous driving, financial services, and online education, we're also seeing strong momentum in more traditional industries, such as animal farming and manufacturing, which are actively exploring AI applications and have shown significant growth in demand. In the financial sector we continue to deepen our industry leadership. Recently the Industrial and Commercial Bank of China, ICBC, officially selected Alibaba Cloud's PolarDB as its enterprise-wide transactional distributed database. This represents a strong endorsement of our technological capabilities by one of the most demanding financial institutions in terms of business performance and technology requirements. In e-commerce, we remain focused on putting users first. We continue to invest in user growth and improving user experience. Taobao and Tmall Group saw stronger momentum in user growth and 88VIP members surpassed 50 million. This quarter TTG customer management revenue rose 12% year-over-year, while adjusted EBITDA increased by 8%. We continued to invest in improving the operating environment for merchants, increasing our support for those offering high-quality products and services. Fueled by strong momentum in its cross-border businesses, AIDC achieved year-over-year revenue growth of 22% this quarter. Operational and investment efficiency also continues to improve. Despite potential uncertainties in global trade regulations, we remain confident that AIDC's diversified footprint across global markets positions us well to manage changes effectively, and we remain on track to achieve overall quarterly profitability in our international e-commerce business in the coming fiscal year. Other businesses within the group continued to maintain healthy operations. The Digital Media and Entertainment Group achieved profitability on an adjusted EBITDA basis this quarter. In fiscal year 2026, we will continue to focus on driving growth in our core businesses of e-commerce and AI + Cloud, while shaping a second growth curve powered by technology over the medium to long term. Thank you.

Thank you, Eddie. The strong financial results of the past quarter highlight the good progress we are making in driving growth in our core businesses. On our Taobao and Tmall businesses, we saw a substantial increase in CMR growth, which grew 12% year-over-year, primarily driven by the improvement of the take rate. Our take rate benefited from the impact of the software service fee and the increasing penetration of Quanzhantui. Merchants benefit through Quanzhantui's convenience of use and improvement of marketing efficiency. Our cloud business continues to exhibit robust momentum with revenue growth accelerating to 18% and overall revenue excluding Alibaba consolidated subsidiaries accelerated to 17%, driven by even faster public cloud revenue growth. Notably, our AI momentum remains robust with AI-related product revenue sustaining triple-digit growth for the seventh consecutive quarter. We are seeing our AI products being adopted across an increasingly diverse range of industries, including a set of digital native industries, as well as traditional verticals such as manufacturing, reflecting the broader application of AI technologies in real-world business environments. These demonstrate our commitment to innovation and reinforce our leadership in the Cloud and AI sectors. This quarter, AIDC maintained its rapid growth momentum, primarily driven by strong performance in cross-border businesses. We continue to enrich its product offerings and diversify its business models to meet the needs of local consumers through local supply. We will continue to focus on enhancing operating efficiency and navigating in a dynamic macro and geopolitical environment. Our commitment to sustainable growth and improving efficiency delivered solid results, with all segments achieving year-over-year EBITDA improvement this quarter, leading to a 36% increase in overall group EBITDA. A number of loss-making businesses are on track to turn profitable, while we are investing in selected strategic AI-driven initiatives that position us to capture long-term opportunities and create value for our users and customers. This quarter we continued to optimize our business portfolio by exiting non-core assets. We expect to generate $2.6 billion in maximum cash proceeds from the sale of Sun Art and Intime. These actions allow us to sharpen our focus on core businesses and invest in key growth areas, while also enabling solid cash return to shareholders. Our board of directors has approved an annual dividend of $1.05 per ADS, representing a 5% increase year-over-year. This increase reflects the impact of our share repurchase program, which resulted in a 5.1% net reduction in share count after accounting for ESOP issuance for this fiscal year. The board also approved a special dividend of $0.95 per ADS, which is higher than last year's $0.66 per ADS. This increase demonstrates that we are making solid progress in disposing of non-core businesses in financial investments. In total, we are distributing $2 per ADS in cash dividends this year, amounting to $4.6 billion. Combined with the $11.9 billion in share repurchases, we have returned a total of $16.5 billion to our shareholders for this fiscal year. On a consolidated basis, total consolidated revenue was RMB236.5 billion, an increase of 7% year-over-year. Excluding the revenue from Sun Art and Intime, group revenue would have grown 10% year-over-year. Consolidated adjusted EBITDA increased 36% to RMB32.6 billion, primarily attributable to revenue growth and improved operating efficiency, partly offset by the increase in investments in our e-commerce businesses and technology. Our non-GAAP net income was RMB29.8 billion, an increase of 22%. Our GAAP net income was RMB12 billion, an increase of RMB11.1 billion, primarily due to market-to-market changes from our equity investments. The increase in income from operations and the decrease in impairment of equity method investments, partly offset by the losses arising from the disposal of subsidiaries. Operating cash flow this quarter was RMB27.5 billion, an increase of 18%. Free cash flow this quarter decreased 76% to RMB3.7 billion, which was mainly attributed to the increase in our cloud infrastructure expenditure. As of March 31, 2025, we continue to maintain a strong net cash position of RMB366.4 billion, or $50.5 billion. The strong net cash position and healthy operating cash flow give us confidence and sufficient resources to increase our investment in Cloud and AI infrastructure to capitalize on the sustained strong demand and the substantial growth potential presented by the latest AI innovations. Now let's look at the segment results, starting with Taobao and Tmall Group. Revenue from Taobao and Tmall Group was RMB101.4 billion, an increase of 9%. Customer management revenue increased by 12%, primarily driven by the improvement of the take rate. Our take rate benefited from the impact of software service fees and increasing penetration of Quanzhantui. Merchant benefits through Quanzhantui's convenience of use and improvement in marketing efficiency. We continue to invest in user growth and other strategic initiatives such as price competitive products, customer service, membership program benefits, and AI technology applications to enhance user experience. These efforts led to stronger momentum in new consumer growth and a continuous increase in orders. On the merchant end, we remained focused on improving their operating environment and ensuring their sustainable development on our platform. In particular, we increased support for merchants that provide high-quality products and customer services, including support for marketing, new product launches, and customer management. During this quarter, the number of 88VIP members continued to increase by double digits year-over-year, surpassing 50 million. With solid profitability and increasing ARPU on a cohort basis, we will continue to focus on retention rates. Taobao and Tmall Group adjusted EBITDA increased by 8% to RMB41.7 billion, primarily due to the increase in revenue from customer management service, partly offset by the increase in investments in user experience and technology. Revenue from AIDC grew 22% to RMB33.6 billion this quarter, primarily driven by strong performance in cross-border businesses. AIDC's adjusted EBITDA was a loss of RMB3.6 billion compared to a loss of RMB4.1 billion in the same quarter last year. AIDC continued to focus on enhancing operating and investment efficiency, leading to narrowing the losses this quarter. In particular, the unit economics of the AliExpress’s Choice business improved on a sequential basis. AIDC has a diverse geographical presence. Moving forward, we will continue to diversify and enrich our product offerings by engaging local merchants and partners through different business models in different markets and navigate in the dynamic macro and geopolitical environment. Revenue from Cloud Intelligence Group grew 18% and overall revenue excluding Alibaba consolidated subsidiaries increased by 17%, primarily driven by even faster public cloud revenue growth. Notably, AI-related product revenue maintained triple-digit year-over-year growth for the seventh consecutive quarter. And our AI products are seeing broader adoption across a wide range of industry verticals, including internet, retail, manufacturing, and the media, with a focus on value-added applications. In April, we launched the Qwen3 series, a new generation of hybrid reasoning models that combine the capabilities of fast, simple responses and deeper chains of thought reasoning into a single model. The Qwen3 series covers a full range of model sizes, including two MOE models and six dense models. All Qwen3 models have been fully open sourced on Model Scope, Hugging Face, and other platforms. We believe the full open-sourcing of Qwen3 will drive innovation and new applications by developers, startups, and enterprises. Cloud's adjusted EBITDA increased by 69% year-over-year, primarily due to faster growth of public cloud products and improving operating efficiency, partly offset by increasing investments in customer growth and technology innovation. We will continue to invest in anticipation of customer growth and technology innovation, including AI products and services, to increase cloud adoption for AI and maintain our market leadership. The adjusted EBITDA margin decreased quarter-over-quarter by 1.9 percentage points. We increased our investments in technology and product development to capture the surge in AI demand. And also as we ramp up infrastructure investments to growing demand, higher depreciation and amortization expenses also weighed on margins. Revenue from China decreased by 12% and its adjusted EBITDA increased by 55%. This is the result of the increasing integration of logistic offerings into our e-commerce businesses. Revenue from local service groups grew 10%, driven by the combined order growth of both AMAP and Ele.me, as well as revenue growth from marketing services, while its adjusted EBITDA loss continued to narrow year-over-year as scale increased and unit economics improved due to operating efficiency. Our adjusted EBITDA loss increased quarter-over-quarter mainly due to seasonal effects, including high investments during the Chinese New Year holiday. Revenue from the digital media and entertainment group grew 12% to RMB5.6 billion, primarily driven by the strong performance of the movie and entertainment businesses and the increase in Youku's advertising revenue. Adjusted EBITDA of DME turned positive, primarily driven by Youku's profitability. Revenue from all other segments increased by 5%, primarily due to the increase in revenue from Freshippo and Alibaba Health, partly offset by the decrease in revenue from Sun Art due to its sale and deconsolidation in February 2025, while adjusted EBITDA loss was a loss of RMB2.5 billion. The all-other segment comprises a set of innovative businesses, including several strategic AI-driven technology infrastructures and businesses. While we continue to drive efficiency improvements across business lines, we are also investing in AI opportunities to maintain our competitive edge and to drive future growth. In closing, during this quarter, we are making significant strides in enhancing the competitiveness of our e-commerce and cloud businesses. Our Taobao and Tmall Group delivered solid growth, reflecting the improvement in monetization efficiency. In cloud, revenue growth continues to accelerate sequentially. As we are seeing surging demand and ramping up capacity, we will onboard more customers and accelerate our business growth. We are also focusing on improving the efficiency of all segments to establish a clear path to profitability, with DME turning profitable this quarter. We strengthened our balance sheet by monetizing non-core assets in financial investments. These actions enable us to focus more on our core businesses and provide greater flexibility to invest decisively for growth and to return value to shareholders. We are executing with speed and precision to capture the substantial opportunities we have in the AI era. Thank you. 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 management statement in the original language will prevail. If you are unable to hear the Chinese translation, bilingual transcripts of this call will be available on our website within one week after the end of the meeting. Operator, please start Q&A session. Thank you.

Thank you. To give more people the opportunity to ask questions, please keep yourself to not more than one question at a time. Your first question comes from Gary Yu with Morgan Stanley. Please go ahead.

Thank you. I have two questions about the cloud. First, we've noticed that monetizing AI has been challenging during this AI era. Management mentioned this in a previous earnings call, and over 90% of tokens are functioning in the cloud. I'm curious if you've observed any significant changes in this area while speaking with your customers over the past few months. Additionally, it seems that enterprises that were initially hesitant to transition to the cloud are now being encouraged by AI advancements. Are you seeing any shifts in this trend? If so, could you specify which types of companies and industries are participating, and provide insights along with guidance for cloud service revenues in fiscal year 2026? My second question focuses on AI applications, specifically in e-commerce. Looking ahead two to three years, where do you envision our position, given that we are among the early adopters of AI in e-commerce? Can you share your expectations for market share growth due to this AI implementation? Also, will these new AI tools allow for further monetization opportunities? Thank you.

Thank you. This is Eddie. I'll address the first question. In the recently concluded quarter, our cloud revenue increased by 18% year-over-year, primarily driven by demand related to AI. Specifically, AI-driven demand in the cloud sector has experienced triple-digit growth for seven consecutive quarters. This indicates that many new companies are beginning to utilize AI services. Initially, the companies that adopted AI were mostly in the internet sector, including internet finance, education, and autonomous driving—those early adopter industries. However, we're now observing a rise in new scenarios and companies from various sectors starting to adopt AI services. Many of these companies previously relied on offline services through IDC or their own servers, but now, with the adoption of AI, there is a strong push to move to the cloud. For example, we’ve seen this in the animal farming and manufacturing sectors, as well as in the Yiwu small commodity market, where many companies that used to manage their workloads offline are now transitioning to the cloud for AI and related applications. Initially, they may start with simple applications using API calls, but when it comes to accessing internal proprietary data and processes, they will typically rely on further training based on open-source models to meet their specific needs. We are definitely witnessing a significant demand for services through Bailian or GPU compute leasing on Alibaba Cloud, as well as IS layer services and others, all catering to these requirements. In terms of broader trends, we are noticing that more businesses are transitioning from traditional CPU-based computing to AI and AI computing. Given this shift, we anticipate strong revenue growth for Alibaba Cloud over the next few quarters, and we feel very confident about this trajectory.

Thank you. This is Jiang Fan, and I will take the second part of the question regarding the application of AI in the e-commerce space. So, as we've said several times, there's huge potential for applying AI in e-commerce. Certainly in the present phase, one thing that we're paying a lot of attention to is leveraging AI to further enhance the user experience. And as you know, we have an opportunity to reshape the consumer experience with AI, for example, in terms of search recommendations and advertising, where we are operating these systems based on traditional algorithms. And I think that this is a high priority for us in the near term. We're already making many attempts on this front and are already starting to see results. It has the potential to enhance, of course, the search experience as well as to provide more precise recommendations, as well as to enhance advertising efficiency. So we're seeing AI already making a significant difference in those different ways. Secondly, we're also thinking about how we can leverage AI to enhance working efficiency internally for our employees and beyond our employees also more generally for merchants. Because, as you know, when it comes to e-commerce apart from the platform, the other big player in the system is merchants. We also trust that with the deeper adoption of AI, we will be able to further elevate efficiency across our entire ecosystem. And then the third point is that, we believe in the longer term that AI can create new forms of interaction and engagement. And we're working on innovation-based forms of interaction and engagement for the future. We're piloting these things actively and we believe that AI will play a critical role in terms of driving long-term enhancement in the user experience on Taobao and equally in terms of driving enhancement in the efficiency of commerce.

Next question please.

Thank you. Your next question comes from Alex Yao with JPMorgan. Please go ahead.

Thank you. So I have a couple of questions regarding monetization on Taobao and Tmall. The first is, what is the overall direction that we're moving in and what is the objective, the goal in terms of monetization? We know that starting from last year in April, you launched Quanzhantui, and then in September, you started implementing the 0.6% software service fee on Taobao, where previously it had been 0%. So over the past two or three quarters, we've seen these different monetization initiatives progressively rolled out and making a difference that we can see in the financial statements. But looking more to the mid to long term, when you think about monetization, what are the factors that you are considering? We know that over the last two to three years, the monetization rate has been relatively stable, perhaps with a slight decline, whereas the monetization rates of the competitors have all risen by quite a large margin. So in particular, Taobao, we know has one of the lowest monetization rates among any of the platforms across the industry. So when we're thinking about the take rate and thinking about that gap with the competitors, are we considering merchants and their ROI? Are we considering our own ROI and how are you balancing that? And then the second follow-on question to that is that, we started implementing these monetization initiatives last year, QZT as well as the commission on Taobao. So that's all been in the course of one year. And is that it? Or is there going to be more to this sort of a multi-year initiative, a multiyear cycle where we're going to continue progressively to roll out more monetization measures? Thank you.

Thank you. So I'll take the question regarding the monetization rate and how we're working to continue to enhance monetization. The first thing I would say is that our foremost business objective is to stabilize market share in the mid to long term. And on that basis, our monetization rate essentially reflects the size of our market share. Over the past year, we have indeed rolled out various new products including QZT among others. And what that did is, allowed us to take some of the traditional advertising products that we weren't able very well to monetize with respect to certain merchants and make a big improvement on that score. For example, for white-label merchants, these are merchants who in the past represented a much lower level of monetization, and that's been significantly improved. So I think in the next few quarters to come, we will certainly continue to see this trend going forward. And of course, we've also begun charging commission on payments. So and that has made a difference in this present phase in terms of monetization. But looking more to the long term, on the one hand, we want to enhance the user experience and enhance our business model on that basis. That will result in the optimization of the monetization rate. We want to see growth in our GMV and stability in our market share. And on that basis, we will certainly go about implementing more different kinds of monetization products and make different attempts, pilot different monetization models. I already spoke earlier about some of the attempts we're making already around AI, and I think there's certainly potential there. So on that basis, we will continue to innovate and to enhance our monetization rate and to create more possibilities for higher levels of monetization.

Operator, next question please.

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

Thank you. I have a question about Alibaba Cloud's growth rate. I remember it was mentioned last quarter that starting from the spring festival, there was an increase in demand for inference workloads. Can you tell me if the rapid acceleration continued in February and March compared to January, and what the month-over-month growth looks like? I believe the overall growth for the quarter was around 18%, which averages January, February, and March. Also, regarding the different AI models within the Qwen family, there are both smaller and larger models. How do we evaluate these models since they are run on the cloud? I would like to hear your perspective on the growth in demand for inference computing power concerning these models, especially since some are quite small. Thank you.

Thanks for your question. This is Eddie. Your first question was about the pace of cloud revenue growth over the months of the quarter. In the first quarter, due to the spring festival and Chinese New Year during January, February, and March, the period isn't very representative of the overall development pace. However, after the spring festival, we are definitely seeing a rise in new customers and demand, particularly for inference workloads. You can expect significant large-scale adoption in the coming months, not just in February and March but also in April and May. The surge in demand growth reflects a more typical growth rate moving forward. Given the supply chain disruptions and the seasonal impact during the earlier months, it's important to look past that to see the regular trends ahead. Customer demand is primarily driven by inference, which continues to grow steadily. You also asked about the impact of different AI model sizes on the cloud business. Our Q1 open-source models have many edge applications, with some that are better suited for the cloud. Smaller models, around 3 billion parameters or less, tend to be run on local devices, like mobile phones and smart gadgets, and won't significantly impact cloud business. However, those customers also utilize Qwen models, which can lead to increased use of cloud resources. Larger models, such as those with 32 billion parameters or more, typically require cloud resources to run effectively, as they need the elasticity to handle substantial workloads and offer better pricing for compute. Therefore, edge models complement our large cloud-based models, working together as a strong business model. The use of smaller models also leads to greater reliance on Alibaba Cloud's relevant products. Thank you.

Next question please.

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

Hi. Good evening, management, and thanks for taking my question. I have a question about our recent announcement in the Instant Shopping investment that we said we will invest RMB10 billion with Ele.me to grow the pre-commerce business. Can management share some plans on, let's say, the area of investment, why we do it now? And how would it impact the profitability for local service, especially in light of the intensified competition in the food delivery business recently? Thank you.

Thank you. This is Jiang Fan. I will address this question. Instant commerce is not new for Alibaba; we've been enhancing our capabilities in this area for many years. We have also invested in Freshippo, contributing to our efforts in this marketplace. Given our long-standing presence, it's natural for us to continue growing in this market. Recently, we've seen significant developments in instant commerce, positioning us well to succeed due to our strong advantages. The instant retail market is substantial, as nearly every consumer in China has a need for instant commerce. Currently, we estimate around 500 to 600 million potential consumers, with that number likely to reach 1 billion in the future. This market is rapidly evolving, and Taobao already boasts a broad user base, making the integration of instant commerce into our platform a logical step forward. We also have a mature and experienced merchant base, thanks to Freshippo's long-standing operations in this sector, along with a robust logistics system that supports instant commerce. These factors enable us to deliver an exceptional service experience on Taobao. By leveraging these advantages, we aim to provide a remarkable service experience while maintaining business efficiency. In recent weeks, we have trialed the Taobao Shango, our instant commerce offering, and the results have significantly surpassed our initial expectations in terms of growth and operational efficiency. This demonstrates that cultivating this new business format can lead to numerous benefits for Taobao. As an e-commerce app, fostering instant commerce will enhance user engagement, which is beneficial for Taobao's long-term success. We see an opportunity to blend nationwide e-commerce with hyper-local commerce and plan to invest aggressively to accelerate this integration. Our goal is to convert more Taobao app users into users of our instant commerce offerings. In the long run, we believe that developing this new business model will lead to further engagement with our app. Therefore, we will focus our short-term investments on attracting new users, recognizing the significant growth potential for the Taobao app and converting existing users into instant commerce users. We will be making substantial investments in this area.

Next question please.

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

Thanks management for taking my question. So as we know recently, this year's 618 campaign has begun. So first of all, I'd like to know what different strategies we can expect to see this year around the 618 promotion in terms of events or in terms of the pace of the presales period and so on? And then secondly, I'm wondering how the feedback is on the merchant side and on the user side. And then just to follow on from that previous question, before mine, I'm wondering if there's any connection that we can expect to see between instant commerce or rapid commerce and this year's 618 campaign in terms of synergies and if there might be some nice happy surprises waiting for us in the instant commerce space in connection with 618.

Thank you. This is Jiang Fan, and I will address the question about the strategic direction for instant commerce. In the short term, our main goal is to rapidly convert existing Taobao users into instant commerce users and to establish a strong presence in consumers' minds. We are already seeing promising results from our initial efforts, as users tend to return with high engagement and frequency after trying instant commerce. Our key focus now is to refine the instant commerce business. In the longer term, there are many opportunities to create synergies between instant commerce, hyper-local, and nationwide commerce. Regarding the 618 campaign, this is just beginning, and the official start is tomorrow. You can expect changes in marketing and the pacing of the campaign to better align with the new competitive landscape and to enhance the consumer experience with good prices and services. However, since the campaign hasn't started yet, I cannot share specific details, but I look forward to providing a more comprehensive update during our next quarterly earnings call.

Due to time limit, we'll now take the last question.

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

Hi, good evening. Thanks for taking my questions. I wanted to follow up on the CMR this quarter. So, I wanted management to elaborate a little bit on the strong performance this quarter. How much of that is driven by the GMV versus the 0.6% fee and the Quanzhantui improvement? And also wanted to follow up on how many more levers that this improvement on Quanzhantui could further drive the monetization improvement in this upcoming fiscal 2026? And then also follow up, will the step-up investment in the food delivery business put some pressure on the TTG EBITDA in the coming quarters? Thank you.

Thank you. This is Toby. Let me address your question about CMR. There were two main drivers of CMR growth this quarter. The first was the software service fee, the 0.6% charge that we implemented starting in September of last year. The second factor was the increasing penetration of Quanzhantui, QZT, particularly in relation to advertising revenues. Looking ahead to the new fiscal year, I believe both of these factors will persist and contribute positively. Starting with the software service fee, we are still in the early stages of implementation, having begun from a low base last year. We will continue to roll out and charge this fee. Initially, we offered various merchant-friendly measures, including rebates to certain merchants. In the coming fiscal year, we will gradually begin to reduce these rebates. Therefore, the software service fee will remain a positive contributor to our monetization growth. Regarding QZT, we will keep driving its penetration, and I can confirm that our progress aligns with our expectations. The penetration rate is steadily increasing, positively influencing monetization rates. An essential aspect of this is attracting new merchants, particularly small and medium-sized ones, who have started using our advertising products, as well as white label merchants. This shift represents additional budget and new advertising revenue, which will support growth in monetization in the upcoming fiscal year. Now, concerning your second question about EBITDA, as Jiang Fan mentioned, our primary medium-term goal is to stabilize our overall market share. We are making significant investments in areas such as user experience and price-competitive products. We remain in an investment phase, which will certainly affect our EBITDA in response to competitive developments. You should anticipate quarterly fluctuations in EBITDA, which we have observed over the past several quarters. Additionally, we are making new investments in quick commerce, which will also impact EBITDA. These investments will help us acquire new users, boost user growth, and increase engagement. You can view this as replacing some of our previous market growth investments. However, we expect TTG's EBITDA to experience fluctuations in the next few quarters in line with competitive dynamics.

Thank you, everyone, for joining us today. We appreciate your time. We will see you next quarter.

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