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BABA-W: AI Model and Application Services ARR to Top RMB10B in Jun Qtr, Surpass RMB30B by Yr-end
2026-05-14 08:28:37 BABA-W (09988.HK) CEO Eddie Wu said on a conference call that the Group disclosed revenue from model and application services for the first time this quarter. The revenue mainly comprises two parts: API service revenue from Bailian MaaS and subscription revenue from AI-native software. Currently, the vast majority of revenue comes from Bailian MaaS API services. By nature, the gross margin of the MaaS business is structurally ahead of that of the IaaS business. As model capabilities continue to improve, model pricing is projected to maintain an uptrend over the next 1-2 years. Therefore, the rapid growth of the MaaS business over the coming quarters will have a very positive impact on overall gross margin. Over the next 3-5 years, returns on investment in AI data center construction are highly certain. Separately, CFO Toby Xu attributable the negative free cash flow this quarter to substantial investments in AI over the past year. Looking ahead, the Group will continue to invest adamantly over the next two years, as this window of opportunity will last only a few years. From a cash flow perspective, the core operating logic remains largely unchanged. First, Taobao and Tmall, as the key contributors to the Group's operating cash flow, continue to generate stable cash flows. Over the next two years, as losses from the quick commerce business narrow radically and the AIGC business turns from loss to profit, operating cash flow from consumer businesses will show strong positive growth. In addition, the Group has strong capital market financing capabilities and can meet strategic development needs through various financing channels. Wu added that revenue from AI model and application services is experiencing exponential growth and is becoming a brand-new revenue engine. For the quarter ending June, ARR from AI model and application services, including the Bailian MaaS platform, is expected to surpass RMB10 billion and top RMB30 billion by year-end. The high-margin advantage of this revenue stream is slowly becoming more prominent and will serve as a key pillar for the Group's healthy and high-quality revenue growth in the future. ~ AASTOCKS Financial News Website: www.aastocks.com | |