China's Tencent Holdings Ltd. (TCEHY) posted surprisingly strong first quarter earnings Wednesday thanks to sold gaming-sector ad sales and said combined users on its flagship WeChat and Weixin platforms topped 1 billion.
Tencent said net profit for the three months ending in March, the company's fiscal first quarter, rose 61% from the same period last year to 23.29 billion yuan ($3.66 billion), easily topping the Reuters-collected forecast of 17.5 billion yuan. Group revenues rose 48% to 73.528 billion yuan, the company said, while online advertising revenues rose 14% to 10.7 billion yuan.
On behalf of the Board, I would like to express our gratitude to all our staff and the management team for their commitment to excellence, strong teamwork and valuable contribution," said Chairman Ma Huateng. "I would also like to thank all our shareholders and stakeholders for their complete confidence in and support to our Group."
"Looking ahead, we will continue striving to enhance people's quality of life through our innovative products and services and to develop a healthy and balanced technology-enabled ecosystem," he added.
Tencent also reported an operating margin of 42%, which rose 300 basis points from the same period last year. On a non-GAAP basis, however, the figure fell 300 basis points to 36%.
Tencent shares closed at HK$396 each in Hong Kong Wednesday, prior to the release of its first-quarter earnings, down 0.45% on the session to extends its year-to-date decline to 2.4% compared to a 3.98% gain for the Hang Seng index benchmark. Tencent's U.S.-listed American Depository Receipts closed 3.8% higher yesterday in New York at $50.36 each.
Tencent now has a market cap of $480 billion, meaning the Shenzen, China-based group trails only Apple Inc. (AAPL) - Get Report , Google parent Alphabet (GOOGL) - Get Report , Microsoft (MSFT) - Get Report Facebook Inc. (FB) - Get Report , Berkshire Hathaway (BRK.A) - Get Report and Amazon Inc. (AMZN) - Get Report in the global table of the world's most-valuable companies.
The company's two main social media platforms, WeChat and Wexin, saw average monthly user growth of 10.9%, Tencent said, taking the total past the 1 billion mark -- to 1.04 billion -- for the first time.
Tencent also said revenues from its smartphone games business, which includes the popular Honour of Kings franchise, generated 21.7 billion yuan in revenues, the company said, up 68% from the same period last year.
"Honour of Kings remained as the highest grossing smart phone game in China's iOS Top Grossing Chart. Its metrics were healthy with double-digit growth in (daily active users) and strong growth in revenues on year-on-year basis," the company said.