Revenue reached 73.52 billion yuan equal to $11.5 billion compared to expectations on Wall Street of 72.04 billion yuan. Last month, Tencent partnered with U.S. developer Epic Games to launch Fortnite in China. PC games remained flat with 14.1 billion yuan in revenue compared to same period a year ago. In a statement accompanying the earnings report, Tencent Chairman and CEO Ma Huateng said, "In the first quarter of 2018, we launched the popular tactical tournament mobile games and enhanced the capabilities of widely-used services such as our Weixin Mini Programs, deepening engagement across our social, games and media platforms".
Smartphone games revenue, the largest revenue contributor, was 21.7 billion yuan in the quarter. Not only can this add to the moat and diversity of Tencent's operations, emerging rivals can also be turned into members of the group at an early stage. Company president Martin Lau Chi-ping had warned in March during its 2017 earnings call that this year Tencent would aggressively step up its investments in long- and short-form video content, digital payments, cloud services, artificial intelligence and smart retail, even though it could harm the company's profitability in the short term.
Between its January peak price of HK$476.6 and a low this year of HK$380 on May 8, Tencent lost US$117 billion in market value. While WeChat has just passed the billion-user mark and is trailing the world's largest social network by more than a billion users, the company's financial results are almost on par with Facebook's.
Over the past year Tencent has completed 62 deals involving direct investments and mergers and acquisitions, according to data compiled by Bloomberg.
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Monthly active user accounts (MAU) declined to 805.5 million, down 6.4 percent from the year before and from 783 million in the previous quarter.
China's largest social network and gaming company defied fears that outsized spending would hammer profitability. Tencent has big stakes in several notable Chinese companies, including e-commerce giant JD.com (JD).
Tencent continues to draw the lion's share of its business from gaming, while counting on advertising and finance via WeChat to drive future growth.