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Tencent eyes revenue growth, triples chat app users in first-quarter

Tencent headquarters is seen at Nanshan Hi-Tech Industrial Park in the southern Chinese city of Shenzhen June 9, 2011. REUTERS/Bobby Yip
Tencent headquarters is seen at Nanshan Hi-Tech Industrial Park in the southern Chinese city of Shenzhen June 9, 2011. REUTERS/Bobby Yip

(Reuters) - Tencent Holdings more than tripled the number of active users for its mobile chat application in the first quarter, a boon to China's largest online gaming and social networking firm as it tries to diversify its revenue stream.

Tencent, which is hoping to monetize its Weixin, or WeChat, app, said on Wednesday active user numbers soared 228 percent to 194 million in the quarter that ended March 31. Weixin is similar to WhatsApp, Line or KakaoTalk, apps that allow users to swap messages, stickers, voice messages over a data connection.

Tencent has invested heavily in the app and e-commerce to stimulate revenue growth, as other Chinese Internet companies also try to broaden their business. In May, Alibaba Group bought stakes in Sina Corp's social-networking website Weibo and in navigation and maps firm AutoNavi.

Strong sales of online advertising and gaming helped Tencent report a 37 percent rise in first-quarter profit to 4.0 billion yuan ($645 million), in line with analysts' estimates.

Major online gaming titles such as "League of Legends" and the newly released "Legend of Yulong" helped increase revenues by 40.4 percent to 13.5 billion yuan in the quarter, beating analysts' estimates of 12.9 billion yuan.

Revenue from non-mobile online games was up 34 percent year-on-year to 7.1 billion yuan while sales from e-commerce transactions rose 14 percent from the previous quarter to 1.9 billion yuan.

Tencent shares closed up 1.7 percent before the results were announced, beating a 0.5 percent rise for the Hang Seng Index. The shares are up about 10 percent since the start of the year, outperforming a mostly flat Hang Seng Index.

The company is more than 30 percent owned by South African media group Naspers Ltd.

(Reporting by Melanie Lee and Lee Chyen Yee; Editing by Chris Gallagher and Miral Fahmy)

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