Asia's second-most valuable listed company said on Wednesday net profit for the quarter was 23.29 billion yuan ($3.66 billion), against an average estimate of 17.5 billion yuan from 11 analysts polled by Thomson Reuters. That was buoyed by a one-time gain of nearly 7.6 billion yuan as the value of investments in arenas from video streaming to news content rose. That helped drive a 55% local currency gain in advertising revenue to 10.69 billion yuan.
The company is investing in cloud computing, online entertainment and physical retail stores as it locks horns with Alibaba Group.
Fortnite is the other game that is driving a strong quarter.
Jefferies revised up its 2018 revenue target by 1 per cent and lowered the non-GAAP earnings forecast by 4 per cent to reflect a higher revenue contribution from ad and financial services, they wrote. The company's revenue rose by 48 percent year-on-year while net profit was up by 61 percent for the same period. Its share price has slipped to 36 times expected earnings, down from 43 times at its recent peak in March, according to S&P Global Market Intelligence.
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In addition, Tencent's largest shareholder, Naspers, reduced 2% of its holdings.
That came after Tencent's rare miss in revenue growth the quarter before, which had prompted worries about a slowdown in games sales, its largest profit driver. All businesses contributed to growth, with revenues going up 340 percent at Value Added Services, and rising 26 percent at online games.
Honour of Kings continues to be a core source of earnings. Fortnite has been developed by video game developer Epic Games who Tencent has a stake in - the game is now unavailable in China, but there are plans to launch the game in the region in the coming months.
But overall costs surged 51 percent. WeChat had 1.04 billion monthly active users while the mobile version of QQ - the older of its two social networks - saw users drop 6.4 percent to 805.5 million at the end of the quarter.
"We expect Tencent to consolidate both the PC and mobile games markets", Alex Yao, a Hong Kong-based analyst at JPMorgan Chase & Co, said in a report. The market had also anxious that Tencent's spending plans for its videos, artificial intelligence and mobile payments could hurt its margins.