Chinese Internet giant Tencent Holdings Ltd. said its
first-quarter net profit rose 60% from a year earlier on improved
revenue from online games.
Over the past year, the Shenzhen-based company's earnings have
been helped by revenue from its diverse Web services. That has
managed to offset a slowdown in ad spending in China as
Internet-penetration growth has continued to moderate. The company
is also able to make money by selling ads and mobile games on its
popular mobile-messaging application, WeChat, which had 395.8
million monthly average users at the end of March.
On Wednesday, Tencent said it generated more than 1.8 billion
yuan ($289 million) in first-quarter revenue from games released on
its mobile-messaging platforms.
The news is likely to cheer analysts who have been watching to
see how quickly Tencent would be able to make money from its
applications, WeChat and Mobile QQ.
Tencent said its net profit for the three months ended March 31
rose to CNY6.46 billion ($1.04 billion) from CNY4.04 billion a year
earlier. Analysts, according to Thomson Reuters, expected a
first-quarter profit of CNY4.86 billion. Revenue rose 36% to
CNY18.40 billion from CNY13.55 billion, beating analysts'
expectations for CNY18.17 billion.
Tencent operates online games including "Cross Fire" and "League
of Legends" as well as games portal QQ Game and social-networking
site Qzone.
Tencent's strong earnings come even as competition in China's
Internet market has intensified. Rival Alibaba Group Holding Ltd.
has tried to muscle in on Tencent's turf. The company has been on a
buying spree to battle Alibaba for dominance in the world's largest
Internet market by users. Over the past eight months, Tencent has
struck several deals worth more than $1 billion in total. In March,
the company announced a $215 million deal to buy a 15% stake in
Chinese e-commerce company JD.com., a smaller Alibaba rival. It
also agreed to buy 28% of Korean mobile games firm CJ Games
Corp.
Meanwhile, e-commerce giant Alibaba has also been strengthening
its Internet muscle through acquisitions. Since the start of last
year, the Hangzhou-based company has spent more than $3.5 billion
on seven acquisitions, including AutoNavi Holdings Ltd., an online
mapmaker, and a minority stake in Sina Corp.'s Twitter-like Weibo
microblog business.
Write to Paul Mozur at paul.mozur@wsj.com and Lorraine Luk at
lorraine.luk@wsj.com
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