Forward covenant
Capex to free-cash-flow plumbing and the payback covenant AI infrastructure buildout capex ramp Q1 FY27 capex RMB 67.7B FY26 RMB 126B · 3-yr 380B RMB 190B spent Operating cash generation OCF RMB 22.9B / qtr operating inflow, +11% y/y inflow can't cover the ramp AI compute demand > supply to 2030 cash buffer RMB 474.5B liquid Free-cash-flow gap cash burn FCF -RMB 44.7B vs -RMB 18.8B yr ago Margin and earnings compression AI Labs loss RMB 13.9B quick-commerce subsidies goodwill impairment RMB 4.5B NI -38% non-GAAP · GAAP -75% Payback covenant compress payback horizon target ≤2.5 yrs Returns keep pace FCF turns positive forward multiple expands Returns lag cash burn persists forward multiple compresses returns refill buffer payback horizon (yrs) 0 1 yr 2 yr 3 yr 4 yr → ≤2.5 yrs

Capex payback ~3 yrs toward ≤2.5 yrs is management guidance, not a reported result. Cash buffer is Alibaba-reported cash and liquid investments; it is not a net-debt figure.