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Tencent Posted Record Profit, but Revenue Growth Slumped

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Tencent’s revenue growth fell to the lowest ever

Chinese tech giant Tencent (TCEHY) reported its first-quarter results on May 15. The company’s revenue growth fell to the lowest level since going public. The company generated 85.26 billion Chinese yuan, or $12.7 billion, in revenue during the first quarter, growing 16.0% YoY, which represents a steep deceleration from the 28% YoY growth it saw in the fourth quarter of 2018.

However, Asia’s biggest company posted a record net profit of 27.85 billion Chinese yuan, or $4.14 billion, growing 16% YoY and beating analysts’ estimates.

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WeChat now has 1.11 billion users

Tencent said that its messaging app, WeChat, along with its local version, Weixin, reached a monthly active base of 1.11 billion users at the end of the first quarter, growing 6.9% YoY. Meanwhile, its QQ app reached a monthly active base of 823 million, growing only 2.2% YoY. The company has been adding some AI-enhanced features to its QQ app to engage its younger audience.

Tencent has not yet monetized its social media apps to the extent that Facebook has. However, the company’s ad revenue grew 25% YoY to 13.4 billion yuan, or $1.94 billion. The online ad business now accounts for nearly 16% of the company’s revenue and is growing fast.

Tencent’s gaming revenue, which the company depends heavily on, has been struggling to grow recently due to the license freeze from the government. The revenue from the segment fell 1% to 28.5 billion yuan. However, the company is seeing robust growth in its fintech and cloud businesses.

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