(Yicai Global) March 22 -- Tencent Holdings reported a worse-than-expected drop in fourth-quarter profit due to non-recurring investment costs and higher spending on restructuring aimed at cutting its reliance on gaming revenue.

Profit attributable to shareholders fell 32 percent to CNY14.23 billion (USD2.12 billion) in the quarter ended December, the Shenzhen-based company said in an earnings report yesterday. That fell short of the average estimate for CNY18.3 billion from analysts surveyed by Refinitiv. Revenue gained 28 percent to CNY84.9 billion.

Tencent's gaming business suffered last year after Chinese authorities suspended the approval of new titles for nine months, stymying the sector. One-off expenses related to Tencent's investments, such as the initial public offerings of car retailer Yixin Group and search engine Sogou in 2017, contributed to rising expenses. The company has invested in more than 100 unicorns, over 60 of which have gone public.

Tencent's game titles were left out of the regulator's selection of new releases for most of last year. That caused the business to contribute 29 percent to overall quarterly revenue, 8 percentage points less than in 2017. But, the future looks brighter as the company has now gotten the green light for eight new releases, seven of which are mobile titles, the firm said in the report.

Shares of Tencent [HKG:0700] rose almost 0.6 percent today to end the week at HKD365 (USD45.51) each. After slumping last year, the stock has gained more than 16 percent so far this year.

WeChat Boost

The company's two powerful platforms of WeChat and Tencent Video helped buoy its performance. Tencent Video narrowly surpassed its archrival Baidu's iQiyi with 89 million subscribers, and WeChat enlarged its advertising inventory in Moments and mini-programs. Revenue from online ads rose 38 percent to CNY17 billion and ads on social media contributed 20 percent of the company's total revenue. 

The firm invested increasingly in original video content, licensing programs and online banking -- which paid off. Revenue from the category 'other businesses,' which includes cloud computing, fintech and film production, jumped 72 percent to CNY24.2 billion. 

WeChat and its local version Weixin had 1.1 billion monthly active users, up 11 percent annually, by the end of last year. The company launched Instagram Stories-like WeChat Time Capsule last year in order to compete with Bytedance Technology's massively popular video platform Tik Tok. 

WeChat Pay's total daily settlement volume exceeded 1 billion during the year. The firm expanded the mobile payment platform's cross-border features last October by opening a channel for Hong Kong residents to pay with the app on China's mainland.

For the full year, profit attributable to shareholders rose 10 percent to CNY78.7 billion on a 32 percent gain in revenue to CNY312.7 billion thanks to the company's fintech services, social and video ads, digital content subscription and sales.

Editor: Emmi Laine