China’s internet giant Tencent Holdings Limited (OTC: TCEHY) on Wednesday announced first quarter earnings that beat analysts’ estimate, eliminating concerns that spending increases could hit margins.
The Shenzhen-based company said first quarter profit jumped 65 percent to 23.29 billion yuan ($3.8 billion), beating analysts’ estimate of 17.5 billion yuan. Operating margin increased to 42 percent from 39 percent from a year earlier.
Revenue rose 48 percent to 73.53 billion yuan ($11.69 billion) in the first quarter of 2018. Analysts polled by Thomson Reuters had estimated revenue of 71.04 billion yuan. Revenue from VAS business and online games grew 34 percent and 26 percent respectively. While revenue from online advertising and other business became the new revenue drivers for Tencent. Revenues from online advertising business rose 55 percent, driven by growth from social and others advertising. Revenues from other businesses, including payment related and cloud services jumped 111 percent.
Mr. Ma Huateng, Chairman and CEO of Tencent, 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. We drove adoption of our infrastructure services, seeing notable progress in areas such as mobile payment, cloud services, online financial services, and smart retail.”
Tencent is the second-most valuable public company in Asia, behind its rival Alibaba Group Holding Limited (NYSE: BABA), the biggest e-commerce company in China.