Tencent reports $1.5B profit thanks to its WeChat messaging app and mobile games

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Tencent, Asia’s most valuable tech company, posted another healthy profit thanks to its growing mobile messaging app WeChat and its mobile games business.

The company reported a net profit of RMB 10.6 billion ($1.5 billion), up 43 percent year-on-year, on revenue of RMB 40.4 billion ($6 billion), up 52 percent, for Q3 2016. That was around analysts estimates of RMB 10.9 billion profit on revenue of RMB 39.3 billion, according to an S&P Capital IQ poll via Wall Street Journal.

Tencent just turned 18, a milestone it celebrating by giving employees $220 million in shares, yet it is best known for WeChat, its blockbuster messaging app known as Weixin in China, which was created just five years ago.

WeChat now counts 846 million users per month, which is up 30 percent year-on-year and a decent increase on 806 million MAUs in the previous quarter. WeChat pulled its weigh on the business side by helping Tencent’s advertising business, its fastest-growing monetization stream, continue positive growth.

Total online ad revenue came in at RMB 7.5 billion, up 51 percent on Q2 2015, with “performance marketing” sales jumping by 83 percent to hit RMB 4.4 billion. Tencent said advertising in the timeline of WeChat, its mobile news app and revenue from official accounts for brands inside WeChat, were the key drivers.

Mobile games remain Tencent’s biggest revenue generator and a primary focus for investment, as evidenced by its acquisition of SuperCell, the maker of hugely popular Clash Of Clans, in June.

Tencent’s mobile games business accounted for RMB 9.9 billion of revenue in Q3 2016, that’s up 87 percent annually and a large chunk of the RMB 18.2 billion that Tencent’s total gaming business — PC and mobile — clocked in the quarter. PC gaming remains a large part of that total, but its revenues grew just 10 percent year-on-year.

Earlier this year, Tencent revealed the first figures for its WePay mobile payments service, which sits inside WeChat and was seeing $50 billion in bank transfers flow across its platform per month. The company didn’t break out specific payment data this time around, but it did say that WePay and its cloud service pushed “revenues from our others businesses” up 348 percent to RMB 5 billion in the quarter.

“Our smart phone games and social performance advertising businesses reported above-industry YoY revenue growth rates and continued to generate healthy margins. Meanwhile, our ecosystem infrastructure services such as online payment and cloud-based services saw significant progress in adoption and usage,” Chairman and CEO Pony Ma said in a statement.

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