Chinese Internet giant Tencent, often ranked the third biggest Web firm on the planet, has announced Q1 2013 profit of RMB 4.04 million ($645 million), up 16.8 percent on the last quarter, from revenue of RMB 13.54 billion ($2.16 billion), up 11.5 percent on Q4 2012. Income came in ahead of analyst estimates of $3.75 billion.

Looking at those figures in an annual context, revenue is up 40.4 percent on Q1 2012, while the company’s profit increased by 37.1 percent on a year prior. Basic earnings per share were RMB2.204 ($0.36).

The lionshare of income came via value added services (RMB 10.66 billion ($1.70 billion), which grew 13.6 percent quarter-by-quarter and 28.6 percent year-on-year. Tencent’s online advertising business contracted by 10.3 percent on the previous quarter — bringing in RMB 849.5 million ($135.5 million), while its e-commerce efforts accounted for RMB 1.913 billion ($305.2 million), up 10.3 percent quarter-by-quarter.

In its ever extensive earnings report, Tencent says its WeChat mobile messaging service (known as Weixin in China) is at 194.4 million monthly active users, which represents 23.1 quarterly growth a whopping 228.4 percent rise in the past year. An estimated 40 million users are thought to be based overseas, with the remainder of the 300 million plus registered users located in China.

Ma Huateng, Chairman and CEO, said growth has enabled Tencent to focus on the internationalization of WeChat:

During the first quarter of 2013, we saw broad-based growth in user engagement and revenue across our key activities. This growth has enabled us to fund investments in longer-term opportunities such as WeChat international user acquisition, online video content aggregation, and eCommerce footprint expansion, while maintaining a healthy expansion rate in earnings and cash flow.

The company is yet to monetize the WeChat service — which lets users send and receive free text messages and make voice calls — but it has previously committed to integrating its Paypal-like Tenpay system to encourage e-commerce. It is also thought to be considering a games platform, following the success of Korea’s KakaoTalk, which Tencent is an investor in.

Tencent makes no mention of specific upcoming plans, but its note to investors says it is “integrating new services into Weixin to explore emerging business opportunities” and “investing in user acquisition activities in international markets”.

In terms of other products: PC games platform Qzone record 611 million month active users — up 5.9 percent year-on-year and 1.4 percent quarterly, while its Tencent Weibo microblog — which so often plays second fiddle to Sina Weibo — recorded 81 million active users per day.

Rival Baidu has been busy bulking up its video service with the $370 million acquisition of PPS Video, and Tencent says its own video service “enjoyed significant year-on-year growth in users” in China, although it did not share precise figures.

Going into more detail on its value added services business, Tencent sees the potential for improvement, saying its base of paying users declined due to new metrics and, importantly, the growth in users going online smartphones. The company admits its offerings are fine tuned to PC-based users, and it is working on redeveloping its offer to appeal to smartphone-based users.

Headline image via faykwong / Flickr