This week Tencent Holdings announced its results for Q3 2009, with $493.3 million in revenue. This figure is up 17% quarter-over-quarter and up 66.4% year-over-year. The company's revenue from value-added services in its online offerings, a category that includes virtual goods and microtransactions, was $384 million. Mobile value-added services brought in $65.3 million. The remainder of revenue was generated by advertising. 

Tencent's online value-added revenue was up 21.6% quarter-over-quarter and 87.3% year-over-year. Mobile value-added services actually declined 5.1% quarter-over-quarter, but were up 19.8% year-over-year. Gross profit for the company was $343 million, up 20.6% quarter-over-quarter and 70.1% year-over-year. Tencent reports gross margins of 69.6%. 

Tencent's core service, its QQ instant messenger, grew its total number of accounts to over 1 billion, an increase of 6.8% quarter-over-quarter. Peak concurrency for QQ IM was roughly 75.5 million users, up 23.2% quarter-over-quarter. Peak concurrency at its QQ Games casual gaming portal had declined to 5.7 million, down 8.1% quarter-over-quarter. 

The company attributes its tremendous Q3 online growth to seasonality, as summer holidays meant that many users were home from school or work. Young users home from school boosted the monetization of many of Tencent's online games, including Cross Fire, Dungeon and Fighter, QQ Dancer and QQ Speed. Cross Fire reached a new record high peak concurrency of $1.6 million, with QQ Dancer achieving one million and Dungeon and Fighter achieving 2 million.  

Online advertising revenue for the quarter was believed to be up due to seasonality and a recovering Chinese economy. Mobile revenues were down due to simple decline in demand for certain key value-added services, such as special ringback tones. QQ Games revenue was down due to increased competition and an aging suite of games. 

Ending An Extraordinary Year

Tencent plans to release at least three new online games in 2010. There will be A.V.A., a first person shooter, and then a pair of MMORPGs named Feng Shen Ji and Fantasy World. There is no word on plans by Tencent to refresh its QQ Games business, although the company is working toward enhancing mobile revenues by offering better consumer services packages. 

Tencent's $1 billion revenues in 2008 have long been considered an example of how much more mature the Chinese virtual goods market is when compared to the more emergent Western market. Given Tencent's tremendous growth during 2009, the company is well on its way toward increasing that figure by 50%. Totaling up Tencent's Q3 revenue with its earnings from Q1 and Q2 yields a total of roughly $1.3 billion. It seems very likely that Tencent's Q4 numbers will push that total well over $1.5 billion. 

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

This week Tencent Holdings announced its results for Q3 2009, with $493.3 million in revenue. This figure is up 17% quarter-over-quarter and up 66.4% year-over-year. The company's revenue from value-added services in its online offerings, a category that includes virtual goods and microtransactions, was $384 million. Mobile value-added services brought in $65.3 million. The remainder of revenue was generated by advertising. 

Tencent's online value-added revenue was up 21.6% quarter-over-quarter and 87.3% year-over-year. Mobile value-added services actually declined 5.1% quarter-over-quarter, but were up 19.8% year-over-year. Gross profit for the company was $343 million, up 20.6% quarter-over-quarter and 70.1% year-over-year. Tencent reports gross margins of 69.6%. 

Tencent's core service, its QQ instant messenger, grew its total number of accounts to over 1 billion, an increase of 6.8% quarter-over-quarter. Peak concurrency for QQ IM was roughly 75.5 million users, up 23.2% quarter-over-quarter. Peak concurrency at its QQ Games casual gaming portal had declined to 5.7 million, down 8.1% quarter-over-quarter. 

The company attributes its tremendous Q3 online growth to seasonality, as summer holidays meant that many users were home from school or work. Young users home from school boosted the monetization of many of Tencent's online games, including Cross Fire, Dungeon and Fighter, QQ Dancer and QQ Speed. Cross Fire reached a new record high peak concurrency of $1.6 million, with QQ Dancer achieving one million and Dungeon and Fighter achieving 2 million.  

Online advertising revenue for the quarter was believed to be up due to seasonality and a recovering Chinese economy. Mobile revenues were down due to simple decline in demand for certain key value-added services, such as special ringback tones. QQ Games revenue was down due to increased competition and an aging suite of games. 

Ending An Extraordinary Year

Tencent plans to release at least three new online games in 2010. There will be A.V.A., a first person shooter, and then a pair of MMORPGs named Feng Shen Ji and Fantasy World. There is no word on plans by Tencent to refresh its QQ Games business, although the company is working toward enhancing mobile revenues by offering better consumer services packages. 

Tencent's $1 billion revenues in 2008 have long been considered an example of how much more mature the Chinese virtual goods market is when compared to the more emergent Western market. Given Tencent's tremendous growth during 2009, the company is well on its way toward increasing that figure by 50%. Totaling up Tencent's Q3 revenue with its earnings from Q1 and Q2 yields a total of roughly $1.3 billion. It seems very likely that Tencent's Q4 numbers will push that total well over $1.5 billion. 

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