Tencent advances revenues 48%, profit over 60% in Q1

Tencent advances revenues 48%, profit over 60% in Q1

The company reported a net profit of 23.29 billion CNY ($3.7 billion) on revenue of 73.53 billion yuan ($11.5 billion) - beating a Thomson Reuters estimate of 71.04 billion CNY revenue.

Between its January peak price of HK$476.6 and a low this year of HK$380 on May 8, Tencent lost US$117 billion in market value.

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

Tencent has historically done well in the games space with the PC its cash cow, but past year its smartphone games business overtook that of PC based on revenue.

The gross profit margin in the quarter was more than 50 per cent, higher than the 47 per cent expected by analysts.

Profit was also helped by one-time gains of nearly 7.6bn yuan from its investments in arenas like video and news. "The increase primarily reflected growth in revenues from digital content services such as live broadcast, video streaming subscriptions and our music service namely WeSing, as well as from in-game virtual item sales", Tencent said.

Shares of Tencent closed little changed before earnings were released. Naspers Ltd., which as Tencent's top shareholder is often regarded as a proxy for the Chinese firm, rose more than 6 percent Wednesday.

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Warning: file_get_contents (https://ca.finance.yahoo.com/quote/HD/profile?p=HD): failed to open stream: HTTP request failed! Finally, West Coast Financial LLC grew its stake in shares of The Home Depot by 32.8% in the third quarter.

"It is a matter of a fact that the competition is actually very heavy, there have been a lot of subsidies provided in the market by our market peers, and as a result we have to follow suit", Tencent President Martin Lau said on an earnings call. The company has however been leery of barraging its users with ads - on Wednesday, it declared it had raised the maximum number of ads that customers see on WeChat Moments, a function similar to Facebook's newsfeed, to just two a day from one previously. Fortnite has been developed by video game developer Epic Games who Tencent has a stake in - the game is now unavailable in China, but there are plans to launch the game in the region in the coming months.

But overall costs surged 51 percent.

"We will continue to invest in improving our own products as well as enabling services for our partners", founder and Chief Executive Officer Ma Huateng said in a statement.

The game has gone viral and has over 40 million monthly active users across PC and consoles.

Fortnite is the other game that is driving a strong quarter.

The company, however, warned that delays in earning revenues from those games in China and heavy marketing expenses are expected to hit mobile games revenue in the short term.

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