--- title: "Alibaba 2026Q2: Net profit evaporates by half, is the food delivery battle worth it?" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/36738991.md" description: "Source: Dongge's E-commerce Analysis Author: Jinshan July to September is the most intense period for the food delivery battle. Q3 earnings reports are also a key focus. On November 25th before the U.S. market opened, Alibaba released its earnings announcement. The report shows that in Q2 of fiscal year 2026 (Q3 of calendar year 2025), Alibaba's revenue was 247.8 billion yuan, a year-on-year increase of 5%; excluding the revenue from disposed businesses of RT-Mart and Intime, the year-on-year growth was as high as 15%. Net profit was 20.61 billion yuan, a year-on-year decline of 53%..." datetime: "2025-11-26T10:22:35.000Z" locales: - [en](https://longbridge.com/en/topics/36738991.md) - [zh-CN](https://longbridge.com/zh-CN/topics/36738991.md) - [zh-HK](https://longbridge.com/zh-HK/topics/36738991.md) author: "[东哥解读电商](https://longbridge.com/en/profiles/2290632.md)" --- # Alibaba 2026Q2: Net profit evaporates by half, is the food delivery battle worth it? Source: Dongge's E-commerce Insights Author: Jin Shan July to September is the most intense period for the food delivery war. The Q3 earnings report is also a key focus. On November 25, before the U.S. market opened, Alibaba released its earnings announcement. The report showed that for Q2 of fiscal year 2026 (Q3 of calendar year 2025), Alibaba's revenue was 247.8 billion yuan, a year-on-year increase of 5%; excluding the revenue from disposed businesses of Sun Art Retail and Intime, the year-on-year growth was as high as 15%. Net profit was 20.61 billion yuan, a year-on-year decline of 53%. Alibaba's U.S. stock closed at $157.65 after hours, a year-on-year increase of 0.41%. At this point, two of the three major food delivery giants have submitted their reports, with both losing about half of their profits. JD.com's net profit fell by 55%, and Alibaba's net profit fell by 53%. Was the food delivery war worth it? **Performance Overview: Subsidy War Wipes Out Half of Profits** Alibaba is currently in a phase of 疯狂投入赌未来 (frenzied investment betting on the future). On the surface, the 5% growth rate doesn't seem high, but in reality, after shedding the burdens of Sun Art and Intime, Alibaba's growth is still decent. Total revenue for Q2 of fiscal year 2026 was 247.8 billion yuan, a year-on-year increase of 5.0%. Excluding the revenue from disposed businesses of Sun Art Retail and Intime, the year-on-year growth would have been 15.0%. Revenue is divided into three parts: domestic, overseas, cloud business, and other businesses. Alibaba China Commerce Group's revenue was 132.6 billion yuan, a year-on-year increase of 16%. E-commerce business revenue was 102.93 billion yuan, a year-on-year increase of 9.0%. This includes commissions and advertising, with customer management revenue at 78.93 billion yuan, a year-on-year increase of 10.0%, mainly due to the increase in Take rate. Direct sales, logistics, and other revenue, including Tmall Global and Tmall Supermarket, were 24.01 billion yuan, a year-on-year increase of 5.0%. Instant retail business revenue was 22.91 billion yuan, a year-on-year increase of 60.0%. China wholesale commerce revenue was 6.74 billion yuan, a year-on-year increase of 13.0%. Alibaba International Digital Commerce Group's revenue increased by 10.0% year-on-year to 34.8 billion yuan. Adjusted EBITA profit was 160 million yuan. Cloud Intelligence Group's revenue was 39.82 billion yuan. Total revenue and revenue excluding Alibaba's consolidated businesses accelerated to year-on-year growth of 34.0% and 29.0%, respectively. Revenue from all other segments was 62.97 billion yuan, a year-on-year decrease of 25.0%, mainly due to the decline in revenue from the disposal of Sun Art Retail and Intime businesses, as well as the decline in Cainiao's revenue, partially offset by the revenue growth of Freshippo, AliHealth, and Amap. **It can be seen that the contribution of instant retail to total revenue growth has exceeded that of advertising and commissions, second only to the cloud business. However, Taobao Flash Sale has also cut Alibaba's net profit by half. In particular, the nearly doubled marketing expenses are the reason for the decline in profits.** Operating costs were 150.78 billion yuan, a year-on-year increase of 4.7%, accounting for 60.8% of revenue. Product development expenses were 17.1 billion yuan, a year-on-year increase of 20.5%, accounting for 6.9% of revenue. **Sales and marketing expenses were 66.5 billion yuan, a year-on-year increase of 104.8%, accounting for 26.8% of revenue.** General and administrative expenses were 7.38 billion yuan, a year-on-year decrease of 24.5%, accounting for 3.0% of revenue. Operating profit was 5.37 billion yuan, a year-on-year decrease of 85.0%, mainly due to the decrease in adjusted EBITA. Adjusted EBITA decreased by 78.0% year-on-year to 9.07 billion yuan. Net profit attributable to ordinary shareholders was 20.99 billion yuan. Net profit was 20.61 billion yuan, a year-on-year decrease of 53.0%. Non-GAAP net profit was 10.35 billion yuan, a year-on-year decrease of 72.0%. The food delivery war also caused Alibaba's net cash flow from operating activities to be 10.1 billion yuan, a year-on-year decrease of 68.0%. As of September 30, 2025, cash and other liquid investments were 573.89 billion yuan. **Taobao Flash Sale: Losing Money for the Future** Judging by the numbers alone, this is a very unprofitable business. **It consumed 33.8 billion yuan in profits but only brought 17.1 billion yuan in incremental revenue to e-commerce and instant retail.** Alibaba China Commerce Group's adjusted EBITA for this quarter decreased by 33.8 billion yuan compared to the same period last year, a year-on-year decline of 76%; however, the revenue from e-commerce and instant retail businesses only increased by 17.1 billion yuan compared to last year. **What did Taobao Flash Sale bring?** **The benefit is that it activated Alibaba's core users.** One member is worth six regular users. **The number of 88VIP members grew by double digits year-on-year, exceeding 56 million.** Data from fiscal year 2022 shows that the average annual spending per buyer is about 9,000 yuan, while the average annual spending per 88VIP is as high as 56,800 yuan, more than six times that of regular users. During Double 11, Taobao app consumers achieved double-digit year-on-year growth. **As a result, Alibaba's e-commerce performance has been very stable, making it the best-performing company this quarter.** JD.com's revenue growth slowed due to the weakening of state subsidies. It is worth noting that this is the first time Alibaba's e-commerce advertising growth has surpassed that of Pinduoduo. Pinduoduo's advertising growth slowed to 3%. **The growth in Alibaba's advertising and commissions is mainly due to the increase in monetization rates.** The 0.6% increase in basic software service fees introduced in September last year was the main growth factor. At the same time, more merchants are using the full-site promotion tool launched by Alibaba. **Similarly, Taobao Flash Sale has also revitalized Alibaba's existing Freshippo and Tmall Supermarket.** Flash sale orders for these two businesses increased by 30% compared to August. Direct sales and other businesses, including Tmall Supermarket, saw a negative growth of 1% in the March quarter. Now, through bundled marketing with Taobao Flash Sale, the year-on-year growth rate has rebounded to 5%. Taobao Flash Sale is a ticket to the instant retail arena. In terms of results, the income is not proportional to the 付出 (付出). But it is strategically important. **Next, Taobao Flash Sale will also begin to narrow its losses.** This is mainly due to the 接入 (接入) of brand stores, the increase in average order value, and the decline in logistics costs. **Compared to July and August, the loss per flash sale order in October has been reduced by half.** As of now, about 3,500 Tmall brands have connected their offline stores to instant retail. Non-beverage orders account for more than 75%, and the average purchase price per flash sale has increased by double digits compared to August. The increase in the proportion of high-value orders has reduced the average logistics cost per order, which is lower than before Taobao Flash Sale's large-scale investment. With the 收缩 (收缩) of subsidies and the overall improvement in losses, whether the existing advantages can be maintained in the future remains questionable. Although profits have declined significantly, Alibaba's senior management still warns that the current adjusted EBITDA is a 阶段性 (阶段性) high point and will slow down in the future. **Alibaba Cloud Orders in Short Supply** "The pace of Alibaba Cloud's AI **server deployment is seriously lagging behind the growth rate of customer orders, and the backlog of orders in hand continues to expand.**" said Eddie Wu, CEO of Alibaba Group, during the earnings call. The cloud business continues to advance rapidly, with Cloud Intelligence Group's revenue reaching 39.82 billion yuan, a year-on-year increase of 34%, and revenue excluding Alibaba's consolidated businesses growing by 29% year-on-year. The growth was mainly driven by public cloud revenue, including AI-related product revenue, which grew by triple digits year-on-year. Alibaba has made a three-year capital expenditure plan, investing 380 billion yuan. **Alibaba now believes this number is still conservative and does not rule out the possibility of 追加 (追加) higher investments in the future.** Alibaba has always wanted to become a full-stack AI service provider, like an "AI one-stop shop," which refers to a company that can provide products and services covering the entire technology stack of AI projects, from 底层 (底层) hardware to 顶层 (顶层) applications. As of October 31, 2025, the number of derivative models developed based on the Qwen family on Hugging Face has exceeded 180,000, more than double that of the second place. Omdia's "China AI Cloud Market, 1H25" report pointed out that Alibaba Cloud ranks first in China's AI cloud market share, accounting for 35.8%. Alibaba believes there will be no AI bubble in the next three years. Alibaba is still in a phase of 全面投入 (全面投入), trading today's profits for high-growth future. References: 1\. Sina Tech: Full Text | Alibaba Earnings Call Transcript: AI Bubble Unlikely in Next Three Years 2\. 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