Internet giant Alibaba posted encouraging results for its second quarter. The company also reported an increase in its China revenue, underscoring the return of prosperity to the local economy.

Alibaba further announced a 130 percent growth in its cloud revenue, opening up a new income stream for the company.

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Alibaba's revenue for the quarter stood at $5.1 billion, showing a 55 percent growth on a year-over-year basis. Its core business of selling goods in China also reported a 41 percent increase to $4.2 billion. The company reported a 69 percent decline in its net profit to $1.06 billion. However, its previous year's quarterly net profit was propped up by a one-time accounting gain.

However, the most stellar performances were provided by its new cloud segment and entertainment segment. The company's cloud revenue popped by 130 percent while entertainment segment revenue jumped by 302 percent. The company's cloud computing segment reported $224 million in revenue and $60 million in operating losses. The company currently has 651,000 paid subscribers, adding 74,000 during the second quarter.

Joseph Tsai, the company's executive vice chairman, said that its cloud and digital entertainment units are "coming into their own in terms of scale." However, he cautioned that the new investments might take five to 10 years to yield a profit.

Last month, Alibaba elaborated on its future course of action as the company plans to collaborate with traditional retailers. It is looking to roll out the feature in China as well as in overseas markets. In an annual letter to investors, the company CEO Daniel Zhang said that Alibaba aspires to help "traditional retailers upgrade into a brand new retail model." 

TagsAlibaba, daniel zhang, Joseph Tsai