Asia's second-most valuable listed company said net profit for the quarter was 23.29 billion yuan (Dh13.44bn), against an average estimate of 17.5bn yuan from 11 analysts polled by Thomson Reuters. According to Wednesday's release, the company flipped to net debt of 14.5 billion yuan as of March 31, compared to net cash of 16.3 billion yuan at the end of 2017, as a direct result of its investments and mergers and acquisitions activity.
The company, however, warned that delayed monetization and heavy marketing expenses are expected to hit mobile games revenue in the short term. That represented a quarter-on-quarter rise of 12 per cent.
Operating margin rose to 42 percent from 39 percent in the first quarter of past year. Revenue from smartphone games alone was up more than 68% compared to the same quarter in 2017 to just over 21.7 billion yuan with the help of titles like Honour of Kings.
Tencent has been actively investing in areas including gaming, entertainment, autonomous driving, and artificial intelligence.
Tencent continues to draw the lion's share of its business from gaming, while counting on advertising and finance via WeChat to drive future growth.
Revenue from PC games was flat compared to a year ago, but analysts believe the comparison was tough with the 2017 first quarter, and overall its games business was strong.
Strong revenue from games and advertising lifted revenue and profit margins at Chinese social media giant Tencent. The first is called "PlayerUnknown's Battlegrounds" or PUBG, which is a massive multiplayer online game.
Tencent is banking next on the latest global phenomenon-"battle royale" games, in which a large group of players shoot each other until only one remains standing. It has developed a mobile version of the former that is available globally, while it owns almost half of Epic Games, the developer of Fortnite.
In comparison, WhatsApp has 1.5bn monthly active users while 1.3bn people use Facebook Messenger.
Earlier this month, an online essay criticised Tencent's apparent focus on investments over product innovation, sparking a heated debate in China.
Tencent shares have been under pressure and are down around 17 percent from the record high seen in January. Epic is a company in which Tencent has a large stake.
Other earnings drivers for Tencent included a video subscription service that is similar to that of Netflix.
For the first time, WeChat's monthly active users passed 1 billion.