Tencent revenues up 43% in Q1, warns of possible ad slowdown

Chinese internet services provider Tencent reported total revenues in the first quarter up 43 percent year-on-year to CNY 31.995 billion (USD 4.952 billion). Operating profit was CNY 13.398 billion, an increase of 43 percent year-on-year, and the operating margin was unchanged at 42 percent. Net profit rose 33 percent to CNY 9.183 billion. Basic earnings per share were CNY 0.981 and diluted earnings per share were CNY 0.970.

EBITDA totaled CNY 14.329 billion, up 44 percent year-on-year, and adjusted EBITDA was CNY 15.004 billion, up 43 percent. Capital expenditure reached CNY 4.105 billion, up 208 percent year-on-year, and free cash flow rose 67 percent to CNY 13.927 billion. At 31 March, the company's net cash position totalled CNY 27.429 billion, up 8 percent year-on-year. 

Tencent is the owner of the popular messaging app WeChat. The app and its related service Weixin counted 762 million active monthly users in Q1, up 39 percent from a year earlier, while the service QQ counted 877 million active accounts, up 5 percent. Tencent also launched an enterprise version of Weixin in April. 

The company said its revenue from social networks increased by 48 percent to CNY 7.879 billion, thanks to more digital content subscriptions and sales of virtual items. It also grew online gaming revenue by 28 percent to CNY 17.085 billion following the launch of new mobile and PC games. Online advertising was the main growth driver, up 73 percent to CNY 4.701 billion, helped by its new agreement to show NBA matches. However, Tencent noted that the weak macroeconomic climate in China could have a negative impact on its advertising business in the near term.