Alibaba's March-quarter FY2026 results marked an AI commercialization inflection: cloud external revenue accelerated to 40% growth, AI-related product revenue hit an RMB 36 billion (~$5.3 billion) run rate at triple-digit growth for the 11th straight quarter, and MaaS ARR topped RMB 8 billion. Consumption also rebounded, with like-for-like CMR up 8% and quick commerce revenue up 57% on improving unit economics. However, aggressive AI, quick commerce, and technology investment cut total adjusted EBITDA 84% and produced a RMB 17.3 billion free cash flow outflow, even as GAAP net income rose 96% on investment gains. Management guided to continued cloud acceleration, MaaS ARR of RMB 30 billion by year-end, and likely CapEx above the RMB 380 billion plan.
Good day, everyone. Thank you for joining Alibaba Group's March quarter and full fiscal year 2026 earnings call. On the call with me 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. As a reminder, this call is being webcast live. A replay of the call will be available on our website later today. On this call, we may make forward-looking statements and discuss certain non-GAAP financial measures. The forward-looking statements reflect management's current expectations that are subject to risks and uncertainties. Our GAAP results and reconciliations of GAAP to non-GAAP measures is included in today's earnings press release and investor presentation. Our comments will be on year-over-year comparisons unless we state otherwise. With that, let me turn the call over to Eddie.
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Welcome to Alibaba Group's fiscal year 2026 fourth quarter earnings call. Over the past quarter, Alibaba's high-intensity investment in our two strategic priorities of AI plus cloud and consumption is rapidly translating into tangible business results, with group revenue growing 11% year-over-year. This quarter, Cloud Intelligence Group's external revenue growth accelerated to 40%, and AI-related product revenue achieved triple-digit growth for the 11th consecutive quarter. China E-commerce CMR grew 8% year-over-year on a like-for-like basis, and the quick commerce market achieved significant unit economics improvement while maintaining market share. We are at a pivotal inflection point in the evolution from conversational chatbots to autonomous AI agents, which is directly driving explosive growth across three core workload categories: training, inference, and agent orchestration.
Against this backdrop, Alibaba's AI has moved beyond the initial investment phase and progressed commercialization at scale. Next, let me walk you through four areas in detail: AI commercialization, cloud infrastructure, the AI application ecosystem, and our consumption business. First, the AI and cloud commercialization inflection point has arrived. This quarter, Cloud Intelligence Group's annualized AI-related product revenue has surpassed RMB 35.8 billion, continuing to maintain triple-digit growth. AI-related product revenue now accounts for 30% of Cloud Intelligence Group's external revenue. We expect that in about one year, AI-related product revenue will cross the 50% threshold, becoming the primary engine driving the cloud business's revenue growth. As a result, Cloud Intelligence Group's external revenue growth is expected to continue accelerating beyond its current 40% rate over the coming quarters.
Given the certainty of long-term AI demand and our full stack technology advantages, we expect this trajectory to sustain strong growth over the medium to long term. This reflects AI's role in driving a comprehensive upgrade of Alibaba Cloud's entire business as its growth engine fully pivots from traditional compute and storage to models AI compute and agent services. We're also seeing exponential growth in AI model and application services revenue, a new revenue engine driven jointly by foundation model services and AI native software. Over the past three months, token consumption volumes on our model services platform grew substantially quarter-over-quarter as enterprise customers accelerated their shift from simple tasks to production scale and complex workloads, driving continued growth and demand for model and application services on the Model Studio platform.
We expect model and application services annualized recurring revenue, ARR, inclusive of the Model Studio platform, to surpass RMB 10 billion in the June quarter and RMB 30 billion by year-end. The high-margin profile of this revenue stream is becoming increasingly apparent, making it a source of healthy, high-quality growth. Second, our AI infrastructure underpins our full technology stack and constitutes a durable moat. T-Head's proprietary GPU chips have achieved scaled mass production, with over 60% of compute capacity already serving external customers across internet, financial services, and autonomous driving verticals. As the only AI cloud provider in China capable of delivering self-developed AI chips at scale, we've secured autonomy over our compute supply chain while providing customers with highly competitive AI inference and training services. In an environment of compute scarcity, this structural advantage is favorable to our revenue growth and gross margin improvement.
At the same time, our cloud products are accelerating their AI-oriented upgrade. The surge in agent workloads has significantly elevated demand for traditional cloud products built around CPU storage and containers, and we're upgrading these into infrastructure solutions optimized for the agent era. Third, at the application layer, we've built a complete closed loop spanning AI native software to a full agent ecosystem. Alibaba Token Hub, ATH, continues to launch new products, connecting consumer and enterprise environments with breakthrough progress in AI native software and coding agents. The Qwen model continues to iterate across reasoning, coding, and agentic capabilities. On the enterprise side, we've launched a range of products spanning intelligent workplace tools, AI coding, and business operations management, helping enterprises unlock greater productivity. On the consumer side, the Qwen app fully integrated Taobao and Tmall's commerce service capabilities on May the 7th.
With this Qwen app is now deeply embedded across the ecosystem, spanning Taobao, Alipay, Amap, and Fliggy, making it China's first all-in-one personal assistant to seamlessly bridge everyday life productivity and learning. Fourth, across our consumption business and at the group level, we're prioritizing long-term value. Beyond AI, our consumption strategy continues to progress steadily with CMR growth rebounding significantly. This quarter, CMR grew 8% year-over-year on a like-for-like basis as we continue to improve user experience and merchant operating efficiency. The quick commerce business achieved significant unit economics improvement while maintaining stable market scale. In summary, the return on our investments in AI plus cloud and consumption are increasingly clear. AI plus cloud revenue growth is accelerating with improving margins.
Model and application services ARR continues to grow at pace, and operating efficiency across our consumption business continues to improve. Facing the historical opportunity that AI represents, Alibaba is at a pivotal juncture where our technology investments are beginning to pay off commercially. We'll maintain our strategic resolve and leverage our full stack AI capabilities to support long-term growth. That concludes my prepared remarks. Next, I'll hand over to Toby to walk you through our financial results. Thank you.
Thank you, Eddie. Our strategic priorities remain laser-focused on AI plus cloud and consumption businesses. Multiple growth catalysts, including technological advancement and business innovation, are aligning to create strong tailwinds. On AI plus cloud, our full stack capabilities span models, cloud infrastructure, and applications. With established leadership in every layer, the strong growth of our AI plus cloud businesses and the clear path to monetization of our MaaS platform give us confidence to make significant investments to extend our leadership. On consumption, we achieved a strong CMR growth on a like-for-like basis during the quarter, and our quick commerce business continued to improve UE and AOV quarter-over-quarter. Now let's look at the financial results for this quarter. On a consolidated basis, total revenue was RMB 243.4 billion.
Excluding revenue from Sun Art and Intime, revenue on a like-for-like basis would have grown by 11%. Total adjusted EBITDA decreased 84%, primarily due to our strategic investments in technology businesses, quick commerce, and user experience, partly offset by the improved operating results, supported by continued growth in consumer management service in the cloud business and enhanced operating efficiencies across various businesses. Our GAAP net income was RMB 23.5 billion, an increase of 96%, primarily attributable to the year-over-year increase in net gain from mark-to-mark changes of our equity investments and disposal losses of Sun Art and Intime in the same quarter last year, partly offset by the decrease in adjusted EBITDA. Operating cash flow was an inflow of RMB 9.4 billion. Free cash flow was an outflow of RMB 17.3 billion.
We are reinvesting our operating cash flow to enhance our competitive advantage in AI. As of March 31st, 2026, we held approximately $38 billion in net cash. Excluding debt with maturities beyond five years, our net cash position stands at approximately $59 billion. This balance sheet strength gives us confidence to invest for growth. Let's look at our consumption businesses. Revenue from Alibaba China E-commerce Group was RMB 122 billion, an increase of 6%. Customer management revenue increased by 1%. To help merchants grow their businesses and increase willingness to spend on our platform, we upgraded our business development program for select merchants during the quarter. Under which, the level of platform subsidies for these merchants is directly tied to their marketing spend on our platform.
For accounting purpose, such subsidies previously recorded as sales and marketing expenses are now recorded as a contra revenue item to CMR. Accordingly, CMR grew 1% year-over-year during the quarter. Excluding the contra revenue impact from the program, on a like-for-like basis, CMR would have grown 8% year-over-year. Revenue from our quick commerce business increased 57% to RMB 20 billion. The quick commerce business further improved UE and increased the AOV quarter-over-quarter, primarily driven by order mix optimization. Alibaba China E-commerce Group adjusted EBITDA was RMB 24 billion, a decrease of 40%, primarily due to the investment in quick commerce, user experience and technology. While there's positive contribution from customer management service.
Excluding loss from our quick commerce business, our Alibaba China E-commerce Group EBITDA would have been stable year-over-year, and will fluctuate quarter-over-quarter due to significant investment in merchant retention and the user experience. Revenue from AIDC grew 6% this quarter. AIDC's adjusted EBITDA loss narrowed significantly year-over-year, approaching break-even, driven by a combination of logistics optimization and operating efficiency. The unit economics of AliExpress's Choice business continued to improve substantially on a sequential basis. Next, let's look at the business updates and results of Cloud Intelligence Group. Our cloud business delivered another quarter of accelerating growth. Revenue from external customers accelerated to grow 40%. AI-related products continued to lead this momentum. We delivered our 11th consecutive quarter of triple-digit growth in AI revenue. Its share of external cloud revenue continued to increase, now account for 30%.
This quarter's AI revenue is RMB 9 billion. The annual revenue run rate is RMB 36 billion, or $5.3 billion. This is a clear reflection of the scale and acceleration in our AI business. The adjusted EBITDA margin remained relatively stable at 9.1%. All other segment revenue decreased by 21% to RMB 65.5 billion, mainly due to the disposal of Sun Art and Intime businesses, as well as the decrease in revenue from [Cainiao], partially offset by the increase in revenue from Freshippo and Amap. All others adjusted EBITDA was a loss of RMB 21.2 billion, primarily due to the increased investment in technology businesses, including foundation models and the consumer facing Qwen [app]. As we close this fiscal year, we remain committed to delivering consistent shareholder returns.
Our board of directors has approved an annual dividend of $1.05 per ADS. We will continue to invest decisively in AI and consumption businesses, where we seek significant long-term growth potential and our competitive advantages are compounding. We believe these investments to deliver growth and returns over time, ultimately creating greater value for our shareholders. Thank you. We will now open for Q&A.
Hi, everyone. You're welcome to ask questions in Chinese or English. A third party translator will provide consecutive interpretation. In the case of any discrepancy, our management statement in the original language will prevail.
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Operator, please start Q&A session. Thank you.