Tencent continues modest growth in Q3 with $1.8b in revenue, $511m in profit

Tencent, China’s largest Internet company in terms of revenue, steamed ahead in the third quarter of 2012 with steady growth to $1.82 billion (RMB 11.56 billion) in revenue, up 9.9 percent sequentially, and profit of $511 million (RMB 3.24 billion), up 4.7 percent since last quarter.

By comparison, Tencent brought in $1.7 billion in revenue and $419.8 million in profit last quarter.

Earnings per share came to $0.28 (RMB 1.759), while revenues from online advertising went up 15.4 percent quarter over quarter to $160 million (RMB 1.02 billion). Looking forward, however, Tencent warned that its online advertising revenue might drop in coming quarters due to slow-down after the London Olympics and “decelerating economic growth in China”.

Commenting on the quarter’s performance, Tencent Chairman and CEO Pony Ma said:

“Our platform strength enabled us to achieve solid year-on-year growth in operating and financial metrics during the third quarter 2012. Several of our investment initiatives, such as open platform, Weixin and online video, made progress in driving user engagement or monetisation. Looking forward, we will extend our open platform from desktop to mobile Internet, and we will enrich the platform by encouraging a greater diversity of applications.”

Tencent’s has saturated the Chinese market with its QQ instant messaging service, as evidenced by the fact that it stayed at 784 million user accounts, roughly flat with last quarter, though it’s an increase of 10.1 percent year over year. Monthly active users of its Qzone social network were slightly down from the previous quarter at 592.8 million.

Fee-based Internet Value-Added Services subscribers decreased by 1.2 percent QoQ and 4.8 percent YoY to 73.8 million, while Mobile Value-Added Subscription Services fell to 33.7 million, down 2.6 percent sequentially but up 8 percent year over year.

While QQ growth has stalled,  Tencent’s WeChat message app is its new growth story. The service passed the 200 million user mark during the third quarter, doubling its user base in just six months.

Image via Flickr / faykwong