Tencent earnings see 26 per cent increase boosted by lockdown gaming
Tencent exceeds first quarter earnings expectations
Chinese technology giant Tencent has exceeded earnings expectations, with sales growing 26 per cent in the first quarter due to an increase demand in online games and entertainment as people spent more time indoors to combat coronavirus.
The social media and gaming group posted a profit of Rmb28.9bn ($4.1bn, €3.7bn, £3,3bn) on sales of Rmb108bn for the three-month period, beating the Rmb101bn forecast by analysts.
Tencent’s video subscriber numbers increased to 112m, and its music streamers to 43m, as gamers took to their smartphones to play its battle and adventure games including Peacekeeper Elite and Honor of Kings.
The company’s online gaming segment contributed 35 per cent of total revenue, up from 30 per cent last year, as sales rose 31 per cent year-on-year.
Tencent warned that the positive turn for its gaming business may not last, as people gradually return to work.
Social media advertising revenues also grew as the company packed more ads into users’ feeds. Late last year, Tencent began experimenting with delivering four ads per day to its 1.2bn monthly WeChat users.
However, Tencent said cloud sales fell from the previous quarter and predicted spending would remain low in the near term.
President Martin Lau said in January that Tencent had invested in more than 800 companies, 160 of which were valued at more than $1bn, including 70 listed publicly.
The portfolio includes 16.5 per cent of e-commerce juggernaut Pinduoduo, which has gained as the virus forced Chinese shoppers to avoid stores and buy from their phones.
Tencent also owns a 17.9 per cent stake in sports retailer JD, worth roughly $12.3bn. The company’s holdings include shares in food-delivery giant Meituan, south-east Asia’s gaming and e-commerce giant SEA, as well as Fortnite creator Epic Games and Uber rival Didi.
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