Tencent, China’s biggest social network and online entertainment firm, said on Wednesday it might invest more to build up its WeChat messaging app mobile payment service should the opportunity arise.
In the first quarter there was a drop off in funding of subsidies to promote taxi calling apps, which used WeChat Payment to settle bills and so encouraged new users to sign up to the service, Tencent executives said on a conference call after the company posted its first quarter earnings results.
This led to a drop in sales and marketing expenses in the three months ended March versus the previous year, the company said.
Tencent’s first-quarter revenues were higher than analysts had forecast, as a drive to sell more advertising on its social networks and entertainment services began to pay off.
China’s biggest social network and online entertainment firm, Tencent said revenue for the quarter ending March rose 21.7 percent year-on-year to CNY 22.4 billion ($3.61 billion), the slowest growth in eight years but above analysts’ forecasts of 22.01 billion yuan, according to a Thomson Reuters SmartEstimate poll of 11 analysts.
Tencent’s social networks are as ubiquitous in China as Facebook is in many parts of the world, and the company has said it wants to emulate the success of its U.S. peer in using social networks for advertising.
Online advertising revenues leapt 131 percent from the previous year to CNY 2.72 billion ($438.41 million), and sales from brand display and performance-based ads rose 90 percent and 199 percent respectively, it said. Tencent, which has a market value of $190 billion, pegged this to more viewer traffic on its burgeoning online video business, and more sales of mobile social networking ads