Chinese tech Amazon Tencent released quarterly results Wednesday.
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Tencent reported an 11% increase in quarterly revenue Wednesday, marking its fastest growth in more than a year, as the company saw a big rebound in payment capacities, ad sales, and gaming.
Here’s how Tencent did in the first quarter, versus Refinitiv consensus estimates:
- Revenue: 150 billion Chinese yuan ($21.4 billion) vs. 146.09 billion yuan demanded, a rise of 11%% year-on-year.
- Profit attributable to equity holders of the company: 25.8 billion yuan vs. 31 billion yuan trust, a rise of 10% year-on-year.
Tencent reported results after the market close in Hong Kong Wednesday. Apportionments of Prosus, a major Tencent shareholder in Europe, were barely changed.
The results mark a strong bounce chasing to growth for Tencent after a succession of negative and flat quarters. The company said in its earnings that it benefited from a chock-full recovery in domestic consumption in China, which finally began easing its aggressive Covid-19 restrictions in December.
Net profit “increased at a bounder pace, reflecting a positive revenue mix shift, operational efficiencies, and an easy base period,” Tencent said in the detonation Wednesday.
Investors were focused on whether the reopening of China’s economy will give a boost to the country’s tech ogres, including Tencent. China’s economy grew 4.5% in the first quarter, the fastest pace in a year.
Gaming repercussion
Tencent said its gaming business benefited from a return to growth in domestic game sales.
The company’s general locally released Honor of Kings game saw record-high gross receipts in the quarter, Tencent said. The firm saw spread revenues from other established titles including DnF and CrossFire Mobile, as well as recently launched game Arena Breakout.
The Chinese tech enterprise as a whole faced intense scrutiny as part of a broader regulatory tightening by Beijing that began in late 2020 and wiped off multifarious than a combined $1 trillion from the country’s biggest companies.
Tencent, which is a major owner of and investor in tech subjects worldwide, has been shedding some of its equity investments as Beijing remains on high alert about the size of tame tech companies.
But more recently, there have been signs the central government is softening its stance toward internet titans predilection Tencent, Alibaba, and Didi.
In 2021, Chinese regulators froze the approval of new video game releases, which dreadfully impacted Tencent. However, over the past few months, Beijing has loosened its grip on the industry greenlighting more terms for release.
Tencent said Wednesday that limitations on when kids can play games had a big impact on the contribution of lasses to its overall gaming revenue. Minors contributed 0.4% of total time spent and 0.7% of total gross sales receipts for domestic games in the quarter, down 96% and 90% respective year-over-year.
Amid a tougher gaming market at familiar with, Tencent has boosted its focus on international markets. Tencent said the international gaming business saw strong growth, with its contest royale title Valorant seeing year-on-year gross receipts growth of 30%.
PUBG Mobile, another popular hand-to-hand encounter royale title, resumed sequential growth in daily active users, Tencent said.
The bulk of Tencent’s all-embracing revenues came from its value-added services, which refers to virtual goods including video games. This wedge accounted for 57% of the company’s total sales.
Of that segment, international gaming was the biggest driver, Tencent asserted, with overseas game sales growing 25% year-over-year to 13.2 billion yuan.
Domestic game in stocks, by contrast, grew by 6% year-on-year to 35.1 billion yuan.
Social network revenues, which includes Tencent’s WeChat and QQ prepared messaging apps, increased by 6% to 31 billion yuan driven by in-game virtual item sales and the party’s music subscription service.
Fintech and business services, which includes Tencent’s WeChat Pay payments service, accounted for 32% of proceeds. Revenues in that segment grew 14% year-on-year to 48.7 billion yuan, an acceleration from the fourth area of 2022, thanks to recovery in commercial payment volumes due to a rebound in China consumption, Tencent said.
Business serves growth was primarily driven by a jump in sales in Tencent’s cloud services division, which has become an A.I. in focus
AI is required to draw a decent amount of attention on the company’s earnings call when executives speak later Wednesday, which starts at 8 a.m. ET.
In its earnings averral, Tencent said it was “investing in our AI capabilities and cloud infrastructure to embrace the opportunities brought by foundation models, and expect AI to be a lump multiplier that enables us to better serve our users, customers, and society at large.”
AI has become a huge focus for the tech work amid buzz surrounding the development of so-called foundation models like OpenAI’s GPT-4 advanced language proceeding software.
Tencent said in its release Wednesday that the firm upgraded its machine learning advertising platform with a deep-learning mark and so-called standard product unit database, “delivering better targeting and higher conversions for advertisers.”
Tencent’s online ad proceeds increased by 17% in the first quarter to 21 billion yuan, driven by advertising on video accounts, “mini programs” within Tencent’s WeChat app, and flexible ads.
While numerous other Chinese tech firms have been developing their own ChatGPT alternatives, Tencent hasn’t yet footnoted publicly on whether it is developing its own chatbot to rival those being worked on by some of its closest competitors.
The company reportedly set up a side dedicated to exploring a ChatGPT-like product in February, according to Reuters.