Games boost Tencent’s unexpectedly high Q1 earnings

Tencent Holdings Ltd reported higher-than-expected earnings Wednesday as its booming games business drove first quarter results.

Net profits from January to March jumped 61 percent to hit 23.3 billion yuan ($3.65 billion), as the gaming to social media conglomerate dispelled investors’ fears of lower margins and increasing costs incurred by a series of acquisitions.

Revenue for the quarter totaled 73.5 billion yuan, up 48 percent year-on-year.

Hit gaming titles like King of Glory continue to be a core source of earnings. The smartphone games business yielded 68 percent growth in the quarter to reach 21.7 billion yuan.

Meanwhile, overall costs surged 51 percent, as the company engaged in a constant buying spree to sustain growth in areas like retail, cloud computing and entertainment, in part to offset the slowing PC gaming business and take on rival Alibaba Group.

“We will continue to invest in improving our own products as well as enabling services for our partners,” Chairman and CEO Pony Ma said in a statement.

Messaging app WeChat recorded over 1 billion active users, and the company has been counting on them to promote its online advertising and finance businesses.

Other earnings drivers included its video subscription service. The Chinese giant said that daily mobile video views were up over 60 percent year-on-year in the first quarter, which could in turn boost its video ads segment.