Tencent Reports $1 Billion In Revenues In Q2 But Falls Short Of Analyst Expectations

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Tencent, a major provider of Internet and mobile services in China, has reported second quarter earnings today, and unfortunately fell short of analyst expectations. Revenue came in at $1 billion, an increase of 44.3% from the second quarter of 2010.

Profit for the period was 2.35 Yuan (Around $362.1 million), which is an increase of 21.3% year over year. Analysts expected 2.54 billion Yuan in terms of net profit. Net margin decreased to 34.8% from 45.5% last quarter. For the first half of 2011, Tencent’s total revenues were 2.02 billion, an increase of 47% from 2010.

Tencent active instant messaging (QQ) user accounts grew 4.1% from the first quarter 2011 to 701.9 million accounts. Active Qzone (social network) user accounts increased 5.1% compared to the quarter prior to 530 million, while active Pengyou accounts increased 27.5% quarter-over-quarter to nearly 129.3 million.

Chairman and CEO of Tencent Ma Huateng reassured in a statement “Despite a seasonally weaker period, we achieved solid growth in both operational and financial metrics in the second quarter of 2011. As we continued to unfold our open platform strategies during the period under review, we have made significant progress in forming partnerships and making strategic investments across industries including e-commerce, entertainment and security, which are aligned with our key development initiatives…In addition, we remain dedicated to making investments in strategic new product areas including microblog, e-commerce, search, online security, online video and international expansion, as we outlined earlier this year. We believe these investments, though bringing margin pressure, will enhance our platforms and generate returns over time.”

Tencent recently partnered with Zynga to bring CityVille to the Chinese market, and invested in Chinese travel site eLong.