Tencent Announces $342.3M In Virtual Goods Revenue For Q1 2009

Today Tencent announced that it had earned $366.4 million in revenue for Q1 2009, up 19.4% quarter-over-quarter and 74.8% year-over-year. This figure breaks down into $278 million strictly from sales of Internet virtual goods and related services and $64.3 million from mobile sales of virtual goods and services. The remainder of Tencent's revenue, about $21 million, is accounted for by advertising.

Tencent's Internet virtual goods-related revenue was up 28.8% percent quarter-over-quarter and 90.7% year-over-year, and mobile virtual goods-related revenue was up 9.9% quarter-over-quarter and 52.5% year-over-year. Tencent reported $154.1 million of its revenues as profit for the quarter, up 20.3% quarter-over-quarter and 94.4% year-over-year. Last year, Tencent reported nearly $1 billion in total revenues and may on track to exceed $1 billion in 2009.

During the quarter total registrations for Tencent's flagship QQ IM program increased to 934.9 million, up about 4.8% quarter-over-quarter. Of those accounts, about 410.8 million are active.

While Tencent's virtual goods revenue on both Internet and mobile was way up, the company reported a 30.1% downward slide in advertising revenues as a result of the ongoing global economic downturn. Advertising accounted for only 5.9% of Tencent's total Q1 revenue. 

While Tencent was willing to describe its virtual goods revenue streams as "resilient," the company retained a tone of caution. With a downturn of this length of intensity unprecedented in the company's history, Tencent intends to spend the coming year investing money with an eye toward long-term growth.

It should be noted that the huge increases reported in the Internet and mobile virtual goods categories may be affected by seasonal changes in consumer behavior patterns. Chinese New Year and student winter break periods bring major increases in spending on Tencent's QQ value-added services. For strictly game-related value-added services, Cross Fire, QQ Dancer, and Dungeon and Fighter all posted positive revenues and gains in numbers of users. Exact amounts were not disclosed. 

Looking ahead to Q2, Tencent expects to see virtual goods sales decline as a result of seasonality while the advertising segment is expected to improve somewhat. Generally, though, Tencent expects users to continue spending a lot of time online.

So long as users are on the Internet in their day-to-day lives, then Tencent believes it has ample opportunity to engage users and encourage them to spend on virtual goods and other services.

Join us for the App Developers Conference – October 26-27, 2011 in Santa Clara