WeChat, the Chinese social media smartphone app, saw an increase in user numbers of 41 per cent year on year to 500m at the end of 2014, in a sign that parent company Tencent is extending its reach for the mobile internet.
Tencent made the announcement on Wednesday, as it reported results that missed analysts’ forecasts. Fourth-quarter net profits were up 51 per cent year on year and net income for the quarter ending December increased to Rmb5.95bn.
Revenue grew 24 per cent to Rmb20.98bn, slightly higher than forecasts, driven mainly by online gaming revenues.
It is unclear how much WeChat contributed to Tencent’s revenues but the app’s growth is a strong indicator of the company’s long-term health as it tries to adjust its business to be more suitable for mobile devices.
“We extended our leadership in games and online media, and made breakthroughs in emerging platforms such as online security…and mobile payments,” Ma Huateng, Tencent chairman, said in a statement.
WeChat is the second highest ranked app in China, behind QQ, Tencent’s other chatting app, which claimed to have 815m registered monthly users at the end of 2014. However, that figure is more than the total number of internet users in China, which the government puts at 649m.
Tencent has been reluctant to monetise WeChat by flooding it with advertising, which could impair efforts to increase the user base. But this is expected to change.
Ricky Lai, at Guotai Junan International, a Hong Kong brokerage, said analysts anticipated that advertising would be introduced on a large scale later this year.
Early attempts to test ads on the service have not always gone smoothly. After a BMW ad was introduced on some users’ feeds in January, many users who were not targeted by the luxury brand’s marketing complained of “discrimination” by Tencent’s data mining algorithm. They claimed it unfairly profiled them as not wealthy or successful enough to view the sought-after BMW ad.