Tencent earnings dip 13pc on lower games and ad revenues

Business | Reuters 14 Nov 2019

China's biggest gaming and social media company Tencent (0700) reported a surprise 13 percent drop in quarterly profit yesterday hurt by a weaker-than-expected core smartphone games business and falls in media advertising and computer games revenue.

Net profit fell to 20.38 billion yuan (HK$22.74 billion) from 23.33 billion a year earlier and missed the 23.45 billion expected by analysts, 15 estimates compiled by Refinitiv for the three months to September 30 showed. It was Tencent's lowest quarterly profit this year and its first profit fall since the fourth quarter of 2018.

Revenue rose 21 percent to 97.2 billion yuan but was short of the 98.2 billion expected by 17 analysts on average.

Its core smartphone gaming business, including major titles such as Honour of Kings, Perfect World Mobile and Peacekeeper Elite, reported a 25 percent rise in revenue to 24.3 billion yuan.

Jefferies analysts said this was weaker than their forecast of 32 percent growth.

China's regulator stopped approving new games for monetization for about nine months last year, resulting in Tencent reporting its lowest annual profit growth in 13 years.

Approvals restarted in December, with Tencent receiving permission to monetize Perfect World Mobile in the first quarter of 2019.

Media advertising revenue fell 28 percent to 3.7 billion yuan due to lower intake on platforms including Tencent Video which the firm attributed in part to "unpredictability in scheduling major content releases."

Personal computer games revenue fell by 7 percent after a recent update of Dungeon Fighter Online attracted fewer paying users than a year earlier, it said.

Revenue in FinTech and Business Services, a category set up this year incorporating payment and cloud services, rose 36 percent to 26.8 billion yuan, helped by rapid growth in commercial payment services. Cloud service revenue grew 80 percent to 4.7 billion yuan due to "increased consumption from existing customers and an expanded customer base in the education, financial, municipal services and retail sectors," the company said in a statement. Tencent's shares fell 0.85 percent yesterday ahead of its earnings release.

Search Archive

Advanced Search
July 2020

Today's Standard

Yearly Magazine

Yearly Magazine