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Alibaba cloud revenues surge 130% as company says profitability is 'not top priority'

Profitability for Alibaba's cloud division is "not the top priority", the e-commerce giant's finance chief said on Wednesday, after the division posted a surge in second-quarter revenue but continued to lose money.

Cloud computing revenue for the three months ended September 30 came in at 1.49 billion yuan ($224 million), a 130 percent year-on-year rise, and is one of the firm's fastest-growing units. Alibaba also reported that the number of paying customers of its cloud computing business grew to 651,000 from 577,000 in the previous quarter.

But, the company posted a $60 million loss for its cloud division which narrowed from the same time last year.

Still, Maggie Wu, Alibaba's chief financial officer, told investors that continued investments are needed to grow.

Inside Alibaba Group Holdings headquarters.
Jeff Pohlman | CNBC
Inside Alibaba Group Holdings headquarters.

"Making the business profitable is not the top priority for Alicloud at this stage. The top priority is to keep expanding our market leadership, therefore we will continue to make investments to develop our cloud business for rapid expansion," Wu said on an earnings call on Wednesday.

The company announced a price cut on several cloud products earlier this year, some as high as 50 percent, but these won't have a "materially negative impact" on Alibaba's financials.

Alibaba's cloud hosts and provides security products and services for over 35 percent of the total number of websites in China, the company claims. But the division still only accounts for 4 percent of the company's total revenues and Alibaba is looking to expand beyond its home country.

Last year, it chose Singapore as a site for a new data center and international headquarters. Alibaba has continued its expansion globally as it looks to take on the dominance of Amazon Web Services and Microsoft. Earlier this year, Alibaba and SoftBank announced plans to form a joint venture on Friday to launch cloud computing services in Japan.