Chinese online giant Tencent posts 61% rise in net profit

Adjust Comment Print

Tencent Holdings (00700.HK) managed to beat market expectations, reporting a 61 percent year -on-year increase in net profit for the first quarter, at 23.29 billion yuan.

Facebook and Tencent both generated nearly the same amount of revenue in the first three months of the year. In a statement accompanying the earnings report, Tencent Chairman and CEO Ma Huateng said, "In the first quarter of 2018, we launched the popular tactical tournament mobile games and enhanced the capabilities of widely-used services such as our Weixin Mini Programs, deepening engagement across our social, games and media platforms". Tencent has exclusive release rights for PUBG in China but says the game is "yet to be monetized", implying future additional revenue stream from the title. It has developed a mobile version of the former that is available globally, while it owns almost half of Epic Games, the developer of Fortnite.

Tencent has invested heavily in video in the past year.

The figures also revealed Tencent's expansionary activity, with the company holding net debt of RMB 14.5 billion as of March 31 due to investments and acquisitions in sectors such as e-commerce and automobiles. That helped drive a 55% local currency gain in advertising revenue to 10.69 billion yuan. Tencent attributed the increase to growth in digital content services such as live broadcast, video streaming and in-game virtual item sales, and its Karaoke app WeSing.

Calling Killer Nanny 'Pure Evil,' Judge Sentences Her To Life in Prison
Yoselyn Ortega was convicted last month in the deaths of 6-year-old Lucia Krim and 2-year-old Leo Krim and was sentenced Monday. Kim said that during the investigation, neither the babysitter nor her family showed no regret over the death of children.

With strong cashflows and a huge customer base in excess of one billion users, Tencent has been aggressively seeking out start-ups with good potential and boosting their chance of success by providing funding support as well as customer traffic.

Monthly active user accounts (MAU) declined to 805.5 million, down 6.4 percent from the year before and from 783 million in the previous quarter. That was followed by a $95 million stake in online short video platform Pear, after the end of the quarter.

China's largest social network and gaming company defied fears that outsized spending would hammer profitability.

Earlier this month, an online essay criticised Tencent's apparent focus on investments over product innovation, sparking a heated debate in China.