Chart: Tencent Sees Strong First-Quarter, WeChat Passes Milestone

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Warnings that Tencent, Asia's highest-valued tech company, might suffer a rare poor quarter of business proved unwarranted after the company smashed analyst expectations for its latest earnings thanks to its fast-growing mobile games business.

Net profit came in at 23.29 billion yuan versus an estimate of 17.5 billion yuan.

Revenue rose 48 per cent to 73.53bn yuan, beating the 70.93bn yuan average estimate of 14 analysts, according to Thomson Reuters data. The Hong Kong-listed company reported an operating margin of 42 per cent, up 3 percentage points from the same period a year ago. That represented a quarter-on-quarter rise of 12 per cent.

Tencent's PC games, which are more lucrative than smartphone games and was once its largest revenue contributor, saw a decline in active user numbers due to the continued shift to smartphones, with revenue from the segment flat at 14.1 billion yuan.

Tencent said mobile game revenue hit 21.7 billion RMB ($3.4 billion) during the quarter, up 68 year-on-year.

One dead, several injured in Paris knife attack
In addition to the person who died, two others were seriously injured and were transferred to George Pompidou Hospital, he added. On Monday, police officials sustained injuries after two bike-borne assailants attacked the police headquarters in the city.

Social and other advertising sales increased 69 per cent year-on-year as a result of more advertisers on WeChat Moments, the social media platform within its hugely popular messaging service. The company announced that had seen growth in the double digits related to the number of daily active users for that game. Last month, Tencent partnered with United States developer Epic Games to launch Fortnite in China. This upturn was largely driven by revenue from online games, advertisements and social networks.

The overall online games business was boosted by two major games. Tencent's "Honour of Kings" remains the highest grossing smartphone game in China's iOS Top Grossing Chart. It's a tournament-style game that is popular in e-sports, which is competitive video gaming.

The game has gone viral and has over 40 million monthly active users across PC and consoles. Now not available in China, it is scheduled to be launched there during the next couple of months. Company president Martin Lau Chi-ping had warned in March during its 2017 earnings call that this year Tencent would aggressively step up its investments in long- and short-form video content, digital payments, cloud services, artificial intelligence and smart retail, even though it could harm the company's profitability in the short term.

Other earnings drivers for Tencent included a video subscription service that is similar to that of Netflix.

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