Tencent Holdings Ltd marked a return to revenue growth in the first quarter as the company recovered from COVID-19-related disruptions and China’s restrictions on gaming.
The world’s largest video game company and messaging platform operator WeChat posted an 11% increase in revenue, beating analysts’ expectations. Revenue came in at 149.98 billion yuan ($21.70 billion) in the three months ended March 31, higher than the 146.09 billion expected by 17 analysts polled by Refinitiv.
Net profit rose 11% to 25.83 billion yuan, lower than the 29.61 billion expected by analysts. Tencent posted its first annual revenue decline last year, hit by China’s now-repealed “no COVID” policy and the freezing of game licenses by regulators. many months.
Two of Tencent’s most popular games, Honor of Kings and CrossFire, earned record sales thanks to newly added features and promotions, while newly launched games also recorded gains. User growth and solid revenue. Domestic game revenue increased 6% to 35.1 billion yuan while international game revenue increased 25% to 13.2 billion yuan.
Chief strategy officer James Mitchell said on a call with analysts that the company has seen a “fundamental recovery” to its games business. “Of our top 15 games, 12 are up year-over-year,” James said. “Time will tell and confirm this recovery.” Tencent’s online advertising revenue grew 17% to 21 billion yuan. Revenue from fintech and business services grew 14% to 48.7 billion yuan.
Martin Lau, president of Tencent, told analysts that China’s regulations on fintech are moving towards normalization. China’s central bank will begin testing Tencent’s WeChat Pay payment service, also known as Tenpay, in 2021. “Inspection results are in the process of being finalized,” Lau said. Lau said Tencent is “making good progress” in building AI models, and that the Chinese government supports innovations in this area.
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