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Tencent's Q1: Profit Up 61%, Nearly $1 Billion In Revenues, 700 Million IM Users

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Tencent, a major provider of Internet and mobile services in China, this morning revealed earnings for the first quarter of 2011, reporting a better-than-expected 61 percent jump in net income.

The company’s profit rose to 2.87 billion yuan (roughly $442 million), up from 1.78 billion yuan (roughly $274 million) a year earlier.

Total revenues were 6,33 billion yuan (approximately $975 million), an increase of 14.7 percent over the fourth quarter of 2010 or an increase of 50 percent over the first quarter of 2010.

Tencent active instant messaging (QQ) user accounts grew another 4.1 percent compared to the last quarter of 2010, reaching a whopping 674.3 million. Active Qzone (social network) user accounts increased 2.6 compared to the quarter prior to nearly 505 million, while active Pengyou accounts increased 19.9 percent quarter-over-quarter to nearly 102 million.

The big climb in revenues mostly came from the company’s online gaming business and other ‘Internet value-added services’, such as QQ-related subscription fees.

Despite increasing pressure from gaming industry rivals like Netease, Shanda Games, Perfect World and Changyou, Tencent managed to increase its share of China’s online games market to 29.1 percent in 2010, up from 21.1 percent a year earlier, according to researcher iResearch.

In the first quarter of this year, Tencent’s revenue from Internet value-added services jumped 55 percent to 5.25 billion yuan (roughly $808.5 million) from 3.39 billion yuan ($522 million).

“Looking forward, we remain committed to making significant investments in our existing core businesses and new strategic initiatives including microblog, e-commerce, search, online security, online video and international expansion,” the company said in a canned statement.

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