Tencent's revenue in the first quarter increased by 43% year-on-year. Online game revenue accounted for 53.4%

On May 18, Tencent Holdings Limited, a leading Internet value-added service provider in China, announced its unaudited comprehensive results for the first quarter ended March 31, 2016. The financial report shows that in the first quarter of 2016, Tencent's total revenue was RMB 31.995 billion (US$4.952 billion), an increase of 43% over the same period last year.

Original title: Tencent's total revenue in the first quarter was 31.995 billion yuan, a year-on-year increase of 43%

. On May 18, Tencent Holdings Limited, China's leading Internet value-added service provider, announced its unaudited comprehensive results for the first quarter as of March 31, 2016. The financial report shows that in the first quarter of 2016, Tencent's total revenue was RMB 31.995 billion (US$4.952 billion), an increase of 43% over the same period last year.

Total revenue for the first quarter of 2016

was RMB 31.995 billion (US$4.952 billion), an increase of 43% from the same period last year.

Operating profit was RMB 13.398 billion (US$2.074 billion), an increase of 43% over the same period last year; operating profit margin was 42%, unchanged from the same period last year.

Profit for the period was RMB 9.268 billion (US$1.434 billion), an increase of 34% from the same period last year; net profit margin dropped to 29% from 31% in the same period last year.

Profit attributable to equity holders of the Company was RMB 9.183 billion (US$1.421 billion), an increase of 33% over the same period last year.

Basic earnings per share were RMB 0.981, and diluted earnings per share were RMB 0.970.

Ma Huateng, Chairman and CEO of Tencent, said:

In the first quarter of 2016, we recorded strong financial results and made progress in developing social, gaming and media platforms. Thanks to more popular games, professional operations and a large user base, our smart mobile games have achieved healthy user growth and revenue growth. Rich high-quality content and China's continuously improving copyright protection environment also contribute to the growth of our digital content business. In terms of advertising, we are improving our targeted delivery tools and launching new advertising forms to increase returns for advertisers, which will also allow us to better seize long-term and considerable market opportunities. As we connect users to a range of online and offline services, the usage and transaction volume of our payment services have achieved steady growth.

Value-added services for financial analysis in the first quarter of 2016

. Revenue from the company's value-added services business increased by 34% year-on-year to RMB 24.964 billion in the first quarter of 2016. Online game revenue increased 28% year-on-year to RMB 17.085 billion, accounting for 53.4% of total revenue in the first quarter. The increase mainly reflects the contribution of new smart mobile games (such as "Crossing the Line of Fire: The King of War","Glory of the King","Legend 2" and "Naruto"), as well as the growth in PC game revenue (mainly driven by Tencent's main games and the launch of new games in the second half of 2015). Social networks revenue increased 48% year-on-year to RMB 7.879 billion. This increase mainly reflects the higher subscription revenue from digital content subscription services and QQ members, as well as the increase in sales revenue from virtual props.

Internet advertising. Revenue from the company's online advertising business increased by 73% year-on-year to RMB 4.701 billion in the first quarter of 2016. Effect advertising revenue increased by 90% year-on-year to RMB 2.532 billion, mainly driven by the increase in advertising revenue from the mobile version of Qzone, Tencent News, WeChat Friends Circle and WeChat public accounts. Brand display advertising revenue increased by 56% year-on-year to RMB 2.169 billion, mainly reflecting the growth in revenue from Tencent News and Tencent Video.

Business Review and Outlook

Business Information

-The number of monthly active accounts in QQ reached 877 million, an increase of 5% over the same period last year.

- The monthly active accounts of QQ smart terminals reached 658 million, an increase of 9% over the same period last year.

- The highest number of simultaneous online accounts in QQ (quarter) reached 260 million, an increase of 14% over the same period last year.

- The combined number of monthly active accounts on Combined MAU of Weixin and WeChat reached 762 million, an increase of 39% over the same period last year.

- The number of monthly active accounts in Qzone reached 648 million, down 3% from the same period last year.

- The number of monthly active accounts on smart terminals in Qzone reached 588 million, an increase of 4% over the same period last year.

- The number of registered accounts for fee-based value-added services was 108 million, an increase of 33% over the same period last year.

Major platforms

-In terms of QQ, monthly active accounts on smart terminals increased by 9% year-on-year to 658 million at the end of the quarter, and the overall highest simultaneous online accounts increased by 14% year-on-year to 260 million. The activity of the mobile version of QQ benefits from the enhancement of functions such as video messaging and virtual gift giving. The user activity of interest tribes (interest communities embedded in QQ) benefits from rich content display functions, such as accurate information streaming push.

- In terms of Qzone, monthly active accounts of smart terminals increased by 4% year-on-year to 588 million at the end of the quarter. Benefiting from enhanced functions such as photo editing and video browsing, user activity has increased.

- For WeChat and WeChat as a whole, monthly active accounts increased by 39% year-on-year to 762 million at the end of the quarter. The growth in user indicators benefited from the popular red envelope event during the Spring Festival holiday in early 2016 and the increase in original content posted on public accounts. The volume of commercial payment transactions (such as e-commerce and O2O service transaction payments) conducted through Weixin Pay has increased significantly, and the volume of C2C payment transactions has also continued to increase.

In April 2016, Tencent launched Enterprise WeChat, a stand-alone application dedicated to work communication scenarios. The application provides mobile office solutions such as calendar and company announcement management.

Value-added services

In the first quarter of 2016, Tencent's Social networks business revenue maintained steady growth as Tencent increased sales of virtual props, added high-quality content to digital content subscription services, and strengthened mobile privileges for QQ member subscription services.

In terms of online games, Tencent has expanded its leading position in the China market.

- In terms of PC games, contributions from Tencent's major games and new games launched in the second half of 2015 increased thanks to promotional activities such as expansion packs and e-sports competitions.

- In terms of smart mobile games, Tencent has increased user activity in e-sports through platforms such as QQ, WeChat, Tencent Video and Tencent News. In addition, Tencent has also expanded Tencent's medium game portfolio.

Looking forward, Tencent aims to strengthen Tencent's smart mobile games portfolio by leveraging proven PC game IPs such as "The Swordsman" and "Journey" and by launching new game genres such as fishing games.

Online Advertising

In the first quarter of 2016, Tencent's online advertising business maintained rapid year-on-year growth, mainly driven by the expansion of the number of advertisers, increased mobile platform traffic and increased commercialization of advertising resources. During the quarter, about 80% of Tencent's total advertising revenue came from mobile platforms.

According to the new exclusive cooperation agreement between Tencent and the NBA, the online video playback of NBA events in China has increased significantly, making it increasingly attractive to high-budget advertisers. Tencent has launched a self-service advertising tool to commercialize WeChat circle of friends traffic generated in third-and fourth-tier cities, especially to meet the needs of long-tail advertisers.

Editor: Nancy