Shortly after hitting US$ 300 billion milestone earlier this month, Chinese internet giant Tencent reported Wednesday better-than expected results for the first quarter of this year ended on March 31, 2017.

The company’s revenue surged 55 percent year-on-year (YOY) to RMB 49.55 billion (around US$ 7.18 billion), beating the market estimation of RMB 46.23 billion (US$ 6.7 billion). The profit for the period was RMB 14.54 billion (US$ 2.10 billion), a 57 percent increase YoY.

Tencent-17q1

Source: Tencent

Revenue from value-added services, which include online games and social networking services increased by 41 percent to RMB 35.10 billion for 1Q2017 on a YoY basis. Online advertising revenues increased by 47percent to RMB 6.88 billion in the reporting period. Other revenues increased by 224 percent to RMB 7.55 billion, primarily driven by higher revenues from their payment related and cloud services.
Tencent-2017-q1

Source: Tencent

“We delivered a strong set of operating and financial results for the first quarter of 2017. Financially, our smart phone games, payment related services, digital content subscriptions, PC games and social advertising businesses all contributed to our broad-based revenue growth,” said company chairman and CEO Pony Ma.

Entertainment service benefits from Chinese New Year

The company’s entertainment services from the video platform to newer products such as karaoke app WeSing (全民K歌), photo editing app Pitu (天天P图), and mobile games such as Honor of Kings (王者荣耀) have achieved notable growth during the quarter.

As China’s dominant provider of online and mobile games, the company’s online games revenues grew by 34 percent YoY to RMB 22.81 billion in the reporting period. The increase mainly reflected higher revenues from both smart phone games (such as Honour of Kings and Dragon Nest Mobile) and PC client games (such as LoL and DnF). Of the total, smartphone games contributed RMB 12.9 billion, up 57 percent YOY.

Tencent’s blockbuster MOBA game Honor of Kings went viral since its launch two years ago, driving users in WeChat and QQ to spend money on game items. The firm’s 2016 annual report showed that the game has booked over 50 million daily active users. In Q4 last year, the game has generated a revenue of RMB 10.7 billion. Local media reports that its DAU surged to 80 million during the lunar New Year in February this year.

The company seems to be confident about the growth potential of the MOBA game. “[Honor of Kings] is still in the early stage of its life circle. We will continue to improve and optimize with new features and contents,” company president Martin Lau said in a call conference.

In addition to gaming, the company’s video platform, which featured popular original content also contributed greatly to the revenue growth. Revenue from video subscription services doubled YOY in the reporting period, major driven by self-produced TV drama Ghost Blows Out the Light and licensed TV series Country Love 9.

WeChat keeps strong momentum, QQ growth stagnates

Tencent’s killer app WeChat continues growth momentum as its monthly active users hit 938 million, up 23 percent YOY. It’s also a notable jump from 889 million in Q4 last year.

However, QQ witnessed a slight drop in the period. Its monthly active user dropped 2 percent YOY to 861 million, while that for Q Zone dipped 3 percent YOY to 632 million.