Alibaba Group Holding (NYSE:BABA) announced its financial results for the quarter ended December 31, 2025, revealing a strategic pivot toward reinvestment and market share defense.
The company generated revenue of RMB 284,843 million ($40,732 million), representing a 2% increase year-over-year.
However, on a like-for-like basis—excluding the impact of the Sun Art and Intime divestitures—revenue growth was a more robust 9%, signaling healthy underlying demand in its core commerce and technology segments.
Profitability for the quarter was impacted by significant capital allocation toward future growth drivers.
Income from operations fell 74% to RMB 10,645 million ($1,522 million), while adjusted EBITA decreased 57% to RMB 23,397 million.
Management attributed this compression primarily to increased investments in "quick commerce" capabilities, enhanced user experiences, and advanced AI technology.
Meanwhile, net income attributable to ordinary shareholders was RMB 16,322 million ($2,334 million), a 66% decrease compared to the same period in 2024.
Non-GAAP diluted earnings per ADS came in at RMB 7.09 ($1.01).
The company’s liquidity also reflected this investment phase, with free cash flow decreasing 71% to RMB 11,346 million.
Despite the heightened spending, Alibaba maintains one of the strongest balance sheets in the global tech sector, ending the year with RMB 560,175 million ($80,104 million) in cash and liquid investments.
A key highlight of the quarter was the continued momentum of the Alibaba Cloud segment, which benefited from the ongoing integration of proprietary large language models across enterprise clients.