Tencent results blow past
forecasts on strength in games, WeChat
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[August 16, 2017]
By Sijia Jiang
HONG KONG (Reuters) - Tencent Holdings Ltd,
China's biggest gaming and social media firm by revenue, trumped
forecasts to post its best-ever quarterly results, driven by higher
income from smartphone games, payments and online advertising.
The most valuable firm listed in Asia - which is riding a wave of
success stemming from the popularity of its social-network based mobile
game Honour of Kings - said its profit came in at 18.23 billion yuan
($2.72 billion) in the second quarter, up 70 percent from a year ago,
the biggest such rise in 7 years.
Tencent's revenue, that has been scaling new highs every quarter since
2007, surged 59 percent to 56.6 billion yuan.
Both profit and revenue were all-time highs and soared past average
estimates of 14.15 billion yuan and 52.98 billion yuan, respectively,
from analysts polled by Thomson Reuters.
The popularity of the fantasy role-playing game Honour of Kings based on
Chinese historical characters helped Tencent's smartphone games revenue
climb 54 percent to 14.8 billion yuan, surpassing that from PC games for
the first time.
Honour of Kings is the top-grossing mobile game in the world. It has
become so popular that Tencent had to introduce curbs on play time last
month amid reports of serious addiction among children.
While the Chinese tech giant noted "exceptional strength" from PC games
including League of Legends, it cautioned revenue growth rates from the
sector were expected to slow down.
Online advertising revenue rose 55 percent to 10.15 billion yuan, helped
by a 61 percent rise in "social and others advertising" revenue, mainly
from WeChat advertisements.
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WeChat mascots are displayed inside Tencent office at the TIT
Creativity Industry Zone in Guangzhou, China May 9, 2017.
REUTERS/Bobby Yip/File Photo
Monthly active users of WeChat, a messaging-to-payment superapp that is at the
core of Tencent's mobile ecosystem and accounts for about a third of the time
spent online by Chinese mobile users, rose to a new record of 963 million.
China's rapid adoption of the cashless lifestyle, evident from an 86 percent
jump in mobile payment transactions in 2016, helped Tencent log fast growth in
its payment services.
Tencent, together with Alibaba's Alipay, dominates China's digital payment
Tencent, which at the end of 2016 had more than 600 million users of its payment
services made up of WeChat Pay and QQ Wallet, said it plans to increase
investment in payment, cloud services and artificial intelligence.
In the three months to June, payment and cloud service helped Tencent's "other"
revenue jump 177 percent, a slower pace of growth that the previous quarter, to
9.65 billion yuan.
Revenue from social networks, driven by that from live broadcast, video and
music, rose 51 percent to 12.94 billion yuan over the period.
Tencent's shares, which have soared 70 percent this year, closed at HK$323
Wednesday before the results, giving it a market value of $387 billion.
(Reporting by Sijia Jiang; Editing by Himani Sarkar)
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