China’s Tencent posts strong revenue growth as ad sales, business services shine

By Thomson Reuters May 14, 2024 | 3:38 AM

By Josh Ye

HONG KONG (Reuters) -China’s Tencent Holdings posted a 6% rise in first-quarter revenue on Tuesday, beating analyst expectations, as business services and advertising sales deliver strong revenue growth. The world’s largest video game company and operator of the WeChat messaging platform said revenue reached 159.5 billion yuan ($22.04 billion) for the three months ended March 31. That compared with the 158.44 billion yuan average of 19 analyst estimates compiled by LSEG.

This marks the fifth straight quarter where Tencent has experienced quarterly revenue growth as it comes out of Beijing’s regulatory crackdown in 2022. While the company’s business services and advertising revenue continue to grow, its core gaming business is facing a notable slowdown as popularity for its existing hits plateaus and fades.

For the first quarter, domestic gaming revenue declined 2% to 34.5 billion yuan, while international gaming revenue rose 3% to 13.6 billion yuan.

Revenue from online ads jumped 26% to 26.5 billion yuan as Tencent upgraded its ad infrastructure and further commercialised its short video platform WeChat Video Accounts, a rival to ByteDance’ TikTok-like app Douyin in China.

Revenue from fintech and business services grew 7% to 52.3 billion yuan as the firm’s suite of payment, ecommerce and productivity software and services continued to gain traction in China.

Net profit rose 62% to 41.8 billion yuan, versus the 43.03 billion yuan average analyst estimate.

($1 = 7.2378 Chinese yuan)

(Reporting by Josh Ye; Editing by Jacqueline Wong)