(Yicai) Aug. 16 -- Shares of Alibaba Group Holding advanced in Hong Kong despite the Chinese e-commerce giant saying profit sank 27 percent in the fiscal first quarter from a year ago.

Alibaba [HKG: 9988] finished 4.8 percent higher at HKD80.10 (USD10.27) a share in Hong Kong today. Its New York-listed stock [NYSE: BABA] gained 0.1 percent to USD79.54 yesterday.

Net profit was CNY24 billion (USD3.3 million) in the three months ended June 30, mainly because of a decrease in income from operations and an increase in impairment of some investments, partly offset by the mark-to-market changes from its equity investments, the Hangzhou-based firm earnings report showed yesterday. Revenue rose 4 percent to CNY243.2 billion (USD33.5 billion).

Income from operations fell 15 percent to CNY36 billion, primarily due to a reversal of share-based compensation expenses of CNY6.9 billion. Adjusted earnings before interest, taxes, and amortization fell 1 percent to CNY45 billion.

“We continued to invest for growth in our core businesses, while reducing losses in other business units through operating efficiency,” said Chief Financial Officer Toby Xu. “We also returned significant value to shareholders at a pace higher than past quarters.”

“Our focus on enhancing user experience by offering quality products at attractive prices with great service led to stabilizing market share of Taobao and Tmall Group as we returned the business on the growth trajectory,” said Chief Executive Officer Eddie Wu.

“The cloud business achieved positive revenue growth momentum, driven by public cloud and artificial intelligence-related product adoption, as we continue to invest to maintain our market leadership,” Wu added.

Revenue from Taobao and Tmall Group fell 1 percent to CNY113.4 billion. But its gross merchandise and order volumes both increased, thanks especially to a strong showing during China’s so-called 618 Shopping Festival in June.

Alibaba International Digital Commerce Group reported CNY29.3 billion in revenue in the quarter, a 32 percent year-on-year gain. The growth was driven by strong performances from cross-border e-commerce sites Choice, AliExpress, and Trendyol.

Revenue from Alibaba’s logistics business Cainiao Smart Logistics Network jumped 16 percent to CNY26.8 billion, driven by higher revenue from cross-border fulfillment solutions.

Cloud Intelligence Group logged a 6 percent jump in revenue to CNY26.5 billion, thanks to double-digit public cloud growth and increasing adoption of AI-related products.

“AI-related product revenue continued to grow at triple-digits year-over-year,” Alibaba pointed out. “We will continue to invest in customers and technology, particularly in AI infrastructure, to increase cloud adoption for AI and maintain our market leadership.”

Revenues from Local Services Group and Digital Media and Entertainment Group soared 12 percent and 4 percent to CNY16.2 billion and CNY5.6 billion, respectively.

During the earnings conference call, Alibaba’s executives predicted that almost all business segments will likely break even and start forming a large profitability model within one to two years.

Editor: Futura Costaglione