Daily Management Review

Tencent’s profit jumps by 61% in the I quarter


05/17/2018


Profit of Chinese Internet giant Tencent Holdings Ltd. for the first quarter exceeded expectations of analysts due to a significant increase in revenues from the gaming business, reports Bloomberg.



ChrisYunker via flickr
ChrisYunker via flickr
Net profit of Tencent in January-March jumped by 61% compared to the same period last year to 23.29 billion yuan ($ 3.7 billion). Analysts on average forecast a profit of 17.4 billion yuan.

The profit was boosted by a one-time income of almost 7.6 billion yuan, as the cost of the company's investment in various sites - from streaming video to news content - increased.

Adjusted earnings per share were 1.92 yuan, falling short of the forecast (1.94 yuan).

In the first quarter, Tencent's revenues grew 48% yoy to 73.53 billion yuan ($ 11.5 billion). Analysts predicted lower revenue - 70.8 billion yuan.

Revenue of Value Added Services, which includes online games and instant messengers, in January-March increased by 34% to 46.9 billion yuan.

Revenues from games for smartphones jumped by 68% in annual terms to 21.7 billion yuan. Mobile game Honor of Kings continues to be the main source of income. Tencent said that there was "double-digit growth" in the number of active users per day (daily active users) for this game.

Revenues from computer games remained at the level of the first quarter of last year. However, analysts note that in general the game business of the company was in good shape.

Revenues from online advertising in January-March increased by 55% in annual terms.

Total revenue from video increased by 75%. Investing in the original content contributed to the growth of paid video subscriptions by 85%.

The number of active monthly users (active users) of the WeChat instant messenger, owned by the company, for the first time exceeded 1 billion and amounted to 1.04 billion.

At the same time, the number of monthly active users of the QQ messaging service decreased by 6.4% to 805.5 million people.

Total expenses of Tencent in the first quarter increased by 51%. The company’s management signaled its readiness to sacrifice current profitability in favor of long-term growth of new lines of business.

In November 2017, Tencent outstripped Alibaba Group Holding Ltd. of Jack Ma and became the first Chinese technology company to overcome the threshold of capitalization of $ 500 billion.

This year, however, the company's shares fell 2.4%, while shares of Alibaba, traded in New York, increased by 14%.

source: bloomberg.com






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