In the first quarter of the year, Tencent surpassed analyst expectations for revenue and profit. The Chinese tech giant experienced improved performance in its core gaming business and increased profitability in its advertising and business services division. This positive trend comes after Tencent faced its first annual revenue decline in 2022, and the company has been on a path to recovery since then.
Tencent’s revenue in the March quarter was 159.5 billion Chinese yuan ($22 billion), higher than the expected 158.4 billion yuan. Profit attributable to equity holders of the company was 41.9 billion yuan, which is above the anticipated 36.64 billion yuan. The company’s adjusted net profit saw a 62% year-on-year increase, which is the fastest growth since the same quarter in 2021. Revenue also increased by 6% year-on-year.
Tencent has focused on cost-cutting measures and exiting non-core businesses to concentrate on its core gaming division and other key areas like advertising and cloud computing. Investors have responded positively to these efforts, with Tencent’s shares rising by 30% this year.
While Tencent’s China gaming business revenue saw a slight decline year-on-year in the first quarter, it was an improvement from the previous quarter. The company noted that revenue from its game “Honour of Kings” declined compared to the previous year due to a high base from Chinese New Year, and there was reduced monetizable content from “Peacekeeper Elite.” However, revenue from international games increased by 3% year-on-year, driven by higher player numbers in PUBG Mobile and a resurgence in popularity of games from the Supercell studio. Despite these improvements, growth in Tencent’s gaming division remains modest
