Tencent’s Q1 2023 earnings report

Tencent reported an 11% increase in quarterly revenue on Wednesday, marking its fastest growth in more than a year, as the company saw a massive rebound in payment volumes, ad sales, and sales. game.

Here’s how Tencent did in the first quarter, compared to Refinitiv’s consensus estimate:

• Revenue: 150 billion Chinese yuan ($21.4 billion) versus 146.09 billion yuan expected, up 11%% annually.
• Profits distributed to shareholders of the company: 25.8 billion yuan compared with 31 billion yuan expected, up 10% year-on-year.

related investment news

This result marks a strong recovery to growth for Tencent after a series of negative and non-growth quarters. The company said in its earnings that it has benefited from a solid recovery in domestic consumption in China, the country that finally began easing positive Covid-19 restrictions in December. .

Net profit “increased at a faster pace, reflecting a positive revenue structure shift, operating efficiency, and easy base period,” Tencent said in Wednesday’s report.

Investors are focused on whether the reopening of China’s economy will give impetus to the country’s tech giants, including Tencent. China’s economy grew 4.5% in the first quarter, the fastest pace in a year.

China’s technology industry as a whole faces Thorough inspection as part of a larger tighten regulations by Beijing began in late 2020 and wiped a total of more than $1 trillion from the country’s largest companies.

But recently, there have been signs that the central government is soften its stance for internet giants like Tencent, alibabaand Didi.

In 2021, Chinese regulators froze the approval of new video game releases, which adversely affected Tencent. Over the past few months, however, Beijing has loosened its grip on the industry, giving the green light to more titles for release.

The company says restrictions on when kids can play games have a big impact on minors’ contribution to the company’s total game revenue. Minors contributed 0.4% of total time spent and 0.7% of total revenue to domestic games during the quarter, down 96% and 90% respectively year-over-year.

In the midst of a more difficult game market at home, Tencent has increased focus on international markets. Tencent says its international games business has seen strong growth, with the company’s battle royale title Valorant seeing gross annual revenue growth of 30%.

Tencent said that PUBG Mobile, another popular battle royale title, has continued to grow steadily in terms of daily active users.

Tencent, the owner and major investor of technology businesses around the world, has reduced some of its equity investments as Beijing remains on high alert about the size of domestic tech companies. .