Tencent has confronted quite a few headwinds in 2022, together with a Covid-19-induced slowdown within the Chinese language financial system and a harder gaming market.
Bobby Yip | Reuters
Tencent beat analyst estimates for first-quarter income and revenue, due to barely higher gross sales within the Chinese language tech big’s core gaming enterprise and improved profitability in its promoting and enterprise companies division.
This is how Tencent fared in opposition to LSEG consensus estimates within the March quarter:
- Income: 159.5 billion Chinese language yuan ($22 billion) versus 158.4 billion yuan anticipated.
- Revenue attributable to the corporate’s shareholders: 41.9 billion yuan versus 36.64 billion yuan anticipated.
Tencent’s adjusted internet revenue rose 62% year-on-year, marking the quickest progress because the March 2021 quarter, in accordance with LSEG information. Income rose 6% year-on-year.
The Chinese language web big, which operates the world’s largest messaging app WeChat, is on the highway to restoration after its first annual income decline in 2022.
It launched into a cost-cutting drive that 12 months and exited non-core companies, making an attempt to deal with its core gaming division and different areas corresponding to promoting and cloud computing.
Buyers have rewarded the corporate’s efforts up to now, with shares up 30% this 12 months.
Tencent mentioned income from its Chinese language gaming enterprise fell 2% year-on-year within the first quarter, an enchancment from the three% decline within the fourth quarter. The corporate mentioned income from one among its high-profile video games “Honour of Kings” fell year-on-year from a excessive base over Chinese language New 12 months, whereas there was “weak monetization content material” from “Peacekeeper Elite” .
Worldwide video games income rose 3% year-over-year within the first quarter, higher than the 1% enhance within the earlier quarter. Tencent mentioned the expansion was because of an increase in PUBG Cell participant numbers and a resurgence within the recognition of video games from its studio Supercell.
Nonetheless, progress in Tencent’s gaming division stays weak.
“Throughout the first quarter of 2024, a number of of our main video games in China and internationally started to learn from the workforce reorganizations we had applied, leading to a rise in video games gross revenues and making a basis for our video games revenues to speed up progress in future quarters,” Tencent mentioned in its earnings launch.
Promoting and cloud assist Tencent’s backside line
Tencent’s different companies helped the corporate within the first quarter.
The internet advertising division posted income of 26.5 billion yuan, up 26% year-on-year – an acceleration from the fourth quarter. The corporate attributed this to elevated engagement throughout numerous options on WeChat and the “steady enchancment” of Tencent’s “AI-powered promoting infrastructure.”
Gross revenue for the promoting sector grew 66% year-on-year to 14.5 billion yuan.
Tencent’s fintech and enterprise companies unit, which additionally contains cellular cost service WeChat Pay and cloud computing division, posted a 7% year-on-year income enhance to 52.3 billion yuan. The corporate’s gross revenue elevated 42% 12 months over 12 months.
“We proceed to domesticate high-quality income streams, together with promoting in video accounts and Weixin Search, service charges for mini-game platforms and repair charges for e-commerce expertise, driving our gross and working revenue progress to exceed our income progress,” Tencent mentioned in its earnings launch. .
