Home Finance Tencent reports Q1 profit slump, no growth in revenue

Tencent reports Q1 profit slump, no growth in revenue

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A emblem of Tencent is seen through the World Web Convention (WIC) in Wuzhen, Zhejiang province, China, November 23, 2020. REUTERS/Aly Track

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HONG KONG, Could 18 (Reuters) – China’s Tencent (0700.HK) posted a quarterly revenue that halved from a 12 months in the past and recorded no income progress, its worst efficiency because it went public, and warned that advertisers in client, eCommerce and journey companies have slashed spending.

Income totalled 135.5 billion yuan ($20.08 billion) within the quarter ended March, versus 135.3 billion yuan in the identical quarter final 12 months, and under a mean estimate of 141 billion yuan from 16 analysts, in keeping with Refinitiv.

Tencent, operator of the WeChat messaging platform and the world’s largest online game firm, stated revenue attributable to fairness holders of the corporate for the quarter fell 51%. It was the most important revenue decline because the firm went public in 2004, in keeping with Refinitiv knowledge.

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Tencent’s market worth has greater than halved from its peak of HK$7.3 trillion ($930 billion) in February 2021 to about $451 billion now, nevertheless it stays the nation’s Most worthy firm.

The abrupt halt in income progress follows two earlier quarters of softening gross sales. Tencent has seen its enlargement alternatives clipped by a regulatory crackdown by Beijing to rein the affect of the nation’s largest web companies.

The Shenzhen-based tech large has been impacted by person spending on video games normalising after a surge over the previous two years. In the meantime, a COVID resurgence in China has additionally dampened fee actions.

Promoting gross sales have declined sharply, falling 18% within the first quarter, following a 13% drop within the October-December interval as elevated competitors from rivals together with TikTok proprietor ByteDance and COVID-19 lockdowns hit promoting urge for food.

Beijing’s 8-month freeze on new sport licences additionally dealt a blow to Tencent, which makes a lot of its cash by growing video games equivalent to ‘Honour of Kings’ and ‘Name of Obligation Cellular’.

China resumed issuing licenses in April however the newest batch of recent licenses didn’t embrace video games from Tencent, and Beijing had but to subject a brand new batch of sport licenses this month.

Tencent’s home sport income dropped 1% within the first quarter whereas its worldwide sport income noticed a 4% rise. With Chinese language regulators releasing draconian measures to restrict minors from taking part in video video games and cracking down on aggressive monetization options, Tencent has turned to abroad markets for progress.

China’s financial slowdown can be curbing demand within the firm’s fintech and enterprise companies phase, with income progress slowing to 10% within the first quarter from 47% within the first quarter final 12 months.

($1 = 6.7488 Chinese language yuan renminbi)

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Reporting by Josh Ye; Enhancing by Louise Heavens and Kim Coghill

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