China's Tencent Posts 58% Jump in First-Quarter Profit -- 2nd Update

By Dan Strumpf Features Dow Jones Newswires

Chinese internet giant Tencent Holdings Ltd. reported a steep rise in profit and revenue in the first quarter, notching solid growth in its core gaming and online-advertising businesses.

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Tencent, China's largest company by market capitalization and the world's biggest videogame publisher by revenue, operates the popular social-media app WeChat. Its share price has soared 36% this year.

The company said higher revenue from some of its most popular online games helped boost its net profit to 14.48 billion yuan ($2.1 billion) for the three months ended in March, up 58% from a year earlier. Overall revenue was up 55% to 49.55 billion yuan.

"Our key platforms continue to grow robustly," Chief Executive Officer Pony Ma told investors, pointing to the more than 900 million users of the company's popular WeChat social-media app. "We believe our video, news, literature and music services are each the largest in China as measured by usage."

Already a major force in China, Tencent has been quietly raising its overseas profile through partnerships and investments. Last year it joined with Chinese investors to buy Finnish game developer Supercell Oy, maker of "Clash of Clans," for $8.6 billion. In March it disclosed a $1.8 billion investment in electric-vehicle maker Tesla Inc.

Though it said little about the goals of its investment in Tesla at the time, Tencent on Wednesday said it sees the car maker as a partner in connecting more devices to the internet. "The automobile is becoming a smart device, and there will be much more connections between the physical world and the virtual world," Tencent President Martin Lau said.

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Earlier this week the company announced a big expansion of its music-streaming business with a licensing agreement with Universal Music Group. Tencent distributes music through its QQ Music, KuGou and Kuwo services, and the deal makes it the main distributor in China for Universal records and artists.

Tencent said its revenue from online gaming, its biggest source, was up 34% to 22.8 billion yuan, lifted by the likes of "Honor of Kings" and "Dragon Nest Mobile." Online advertising revenue was up 47%, to 6.9 billion yuan.

The company said its WeChat app, together with the Chinese version, Weixin, boasted 938 million monthly average users in the first quarter, 23% more than a year earlier.

Write to Dan Strumpf at daniel.strumpf@wsj.com

(END) Dow Jones Newswires

May 17, 2017 09:50 ET (13:50 GMT)