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Tencent gains in spite of Q3 miss; WeChat base at 468M

Nov. 12, 2014 3:10 PM ETTencent Holdings Limited (TCEHY) StockTCTZF, TCEHYBy: Eric Jhonsa, SA News Editor
  • Tencent (OTCPK:TCEHY +1.3% in Hong Kong) had Q3 revenue of RMB19.8B ($3.2B), +28% Y/Y but missing a consensus of RMB20.6B. Likewise, net income totaled RMB5.7B ($924M), +46% Y/Y but below an RMB6.2B consensus. Y/Y revenue growth slowed from Q2's 37%.
  • WeChat monthly active users (MAUs) totaled 468M at the end of Q3, +7% Q/Q and +39% Y/Y. Q/Q growth slowed from Q2's 11%.
  • The older QQ messaging/gaming platform finished with 820M MAUs (542M on "smart devices"), -1% Q/Q and +1% Y/Y. The Qzone social networking platform had 629M MAUs (506M on smart devices), -2% Q/Q and +1% Y/Y.
  • Value-added service revenue rose 38% Y/Y to RMB16.1B, thanks to a 35% increase in online game revenue to RMB11.3B (57% of total revenue) and a 47% increase in social networks revenue to RMB4.7B. Online ad revenue +76% to RMB2.4B; e-commerce revenue -81% to RMB459M thanks to the JD.com partnership.
  • Gross margin rose 900 bps Y/Y to 64%, which allowed op. margin to rise 700 bps to 38%. Sales/marketing spend rose 30% to RMB1.9B, and G&A spend 44% to RMB3.8B.
  • Earnings Release (.pdf)

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