Chinese internet giant Tencent reported its lowest revenue growth since 2007 as mobile gaming revenue and WeChat additions both slowed in Q3.
Mobile gaming revenue actually fell from CNY3 billion ($488 million) in Q2 to CNY2.6 billion in Q3 due to delayed launches, but was up year-on-year. WeChat/Weixin monthly active users rose just 6.8 per cent to 468 million from the previous quarter but were up 39 per cent from a year ago.
Tencent said it is spending less on promoting WeChat in western markets because of slow demand.
The company’s net income expanded 46 per cent to CNY5.66 billion, but analysts had forecast 7-8 per cent higher. Its revenue increased just 28 per cent to CNY19.8 billion.
Online gaming revenue, which accounts for 57 per cent of its total revenue, was up 34 per cent to CNY11.3 billion, while social networking revenue rose 47 per cent to CNY4.72 billion and online advertising increased 76 per cent to CNY2.44 billion.
Tencent Chairman CEO Ma Huateng said its online advertising business expanded “particularly swiftly”, as it deployed targeted performance-based advertising in its mobile Qzone and Weixin accounts. “We see ample scope for growth in our performance-based advertising business.”
Ma said the company has consolidated its position as China’s leading publisher for smartphone games. “We worked with more third-party developers on new titles and achieved encouraging results. For instance, Modoo Marble was ranked the most downloaded game in China’s iOS App Store in August and Candy Crush Saga became the most downloaded game in September, according to App Annie.”
Meanwhile, its e-commerce business fell 81 per cent to CNY459 million during the quarter because traffic has shifted to JD.com, which it formed a partnership with in March.
Its EBITDA rose 55 per cent to CNY8.17 billion and EBITDA margin increased to 44 per cent from 36 per cent a year ago. Capex fell 35 per cent to CNY1.06 billion from Q3 last year.