China’s Largest Internet Company Tencent Reports Higher Profit

The company has a stake in Huayi Brothers, China's largest non-state film studio, and runs many of the country’s most popular mobile and online messaging services.

Tencent Holdings, China’s largest Internet company, reported an increased, but lower than expected second-quarter profit Thursday.

Earnings at the tech giant came in at $605 million (3.7 billion yuan) during the April-to-June period, which marked a 18.4 percent increase over the same time last year. Compared to the previous quarter, however, profit slipped 9.5 percent.

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The company said that its profit margin took a hit due to increased global marketing for its smart phone app, WeChat.

The investment appears to be paying off though, as active users of WeChat climbed to 235.8 million during quarter two – with over 100 million active users now outside China. The global user total is up 176 percent from a year ago.

Tencent, often ranked as the world’s third-largest Internet company by market capitalization behind Google and Amazon, has a wide variety of holdings. They include a Twitter-like micro-blogging service, the “QQ” instant messaging and social-media platform, multiplayer video games, e-commerce sites and WeChat.

In the entertainment sector, the company owns a 4.6 percent stake in Huayi Brothers Media, China's biggest non-state film company.

In January, Tencent announced it would be partnering with Hollywood film companies Warner Bros., Universal Studios, Miramax Films and Lionsgate for a new online video venture called Hollywood VIP. The service will involve online distribution of the U.S. studios' copyrighted films and content via Tencent's various online video channels and social-media platforms. It is understood that the project is still in development.

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The company also has a the exclusive online streaming rights to 13 popular British TV shows, with a total of 500 episodes.

Tencent is headed by Chinese billionaire Huateng “Pony” Ma and based in the southern Chinese city of Shenzhen, just across the border from Hong Kong.

The company’s current emphasis is in expanding its presence in the mobile app space. "We will continue to increase our investment in mobile apps in order to reinforce our position in China, and to extend our presence to international markets through WeChat," said Ma, in a statement.