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Tencent (0700.HK) 1Q17 Results: Strong Beat Led by Strength in Gaming and Social Network

Executive Summary

  • Tencent reported 1Q17 revenues of ¥49.6 billion, up 54.9% year over year. Non-GAAP diluted EPS was ¥1.49, up 41.0% year over year. The solid results were largely driven by the gaming and social network segments.
  • Value-added services (VAS) revenues, which accounted for 71% of total revenue, increased by 40.6% year over year, mainly driven by strong revenue growth in both PC games and smartphone games.
  • Advertising revenues were up 46.5% year over year, thanks to strong growth from the mobile media platform, higher ad fill rates in WeChat’s Moments and a higher click-through rate in WeChat’s Official Accounts.
  • Other revenue surged 244.3% year over year, driven by mobile payment and cloud services. Management reiterated mobile payment as a key element of Tencent’s ecosystem rather than as a profit center.

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