Tencent Is Powering Ahead, Thanks to Online Gaming

Tencent, Webank, Wechat
Illustration by Ben Fearnley for Fortune

TencentHoldings Ltd (TCEHY), China’s biggest social network and online entertainment firm, on Thursday said revenue rose 45 percent in the fourth quarter, its quickest rate in three years, driven by gaming and online advertising.

Revenue for the three months through December reached 30.4 billion yuan ($4.69 billion), compared with the 27.88 billion yuan average of 12 analyst estimates in a Thomson Reuters poll.

Net income rose 22 percent to 7.16 billion yuan, its slowest in three quarters.

The online gaming business has long been Tencent‘s main cash cow. But as its WeChat mobile messaging app continues to gain users, Tencent has sought to make more money from advertising akin to U.S. peer Facebook Inc. (FB).

Conversely, Facebook is making its messaging apps more like Tencent‘s, which offers services from mobile gaming to taxi hailing and personal wealth management.

For its efforts, Tencent‘s online advertising revenue more than doubled in the fourth quarter to 5.7 billion yuan.

Revenue from value-added services, which includes online gaming, grew 35 percent to 23.07 billion yuan.

Global monthly active users of WeChat reached 697 million at December-end, Tencent said, representing growth of 39 percent from a year earlier.

Tencent also said the company will invest in its core communications and social platforms, especially in areas such as group messaging and video.

It aims to expand its advertising business, particularly through data-mining, and offer more music, video and literature content through its online entertainment businesses.

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