Tencent Revenue Drops as Videogame, Online Ad Businesses Struggle
SINGAPORE—
Tencent Holdings Ltd.
TCEHY 10.78%
’s revenue declined for a second consecutive quarter as China’s slowing economy dented videogame user spending and the marketing budgets of digital advertisers.
Tencent said its revenue fell 2% in the third quarter from a year earlier to 140.1 billion yuan, which is equivalent to about $19.7 billion, coming in below analyst expectations. That narrowed from a 3% decline in the previous quarter, when the Chinese social media and videogame giant ended a nearly two-decade growth streak. Analysts polled by FactSet expected third-quarter revenue to decline 0.8%.
Net profit rose 1% to 39.9 billion yuan, or around $5.6 billion.
Tencent also said it is shedding most of its stake in
Meituan.
3690 -2.46%
The company will distribute more than 958 million Meituan shares, worth roughly $20 billion, with a special dividend to Tencent shareholders, it said in a stock exchange filing. The Wall Street Journal has reported that Tencent was looking to sell its stake in the food-delivery company.
China’s economic slowdown has hurt the country’s tech industry, which was already struggling with a regulatory clampdown. While China’s economy expanded at a stronger-than-expected rate of 3.9% in the third quarter, its recovery remains fragile under the weight of strict Covid-19 control measures. Economic activity cooled across the board in October—including retail sales—which fell 0.5% from a year earlier.
Revenue from Tencent’s videogame business fell around 4% from a year ago to about 42.9 billion yuan, company data showed. Its domestic videogame revenue dropped 7% as regulatory uncertainty lingers over new game approvals in China.
In September, Tencent obtained a videogame license for the first time since June 2021 for a small nonprofit videogame. Beijing hasn’t granted approvals to any titles since, prompting game makers to extend the lifetime of existing offerings. China’s videogame market shrank 19% in the third quarter from a year earlier, according to industry data provider Gamma Data.
Revenue from its international gaming business rose 3%, Tencent said. Tencent and its smaller rival
NetEase Inc.
have sought to cushion contraction in China by investing in foreign videogame studios. They are also exporting domestic hits such as “Honor of Kings” and adapting foreign console and computer game titles like “Monster Hunter” to mobile games.
Online-advertising business revenue fell 5% from a year earlier, as advertisers cut back on their marketing budgets. Globally, tech companies including
parent
Meta Platforms Inc.
and TikTok have been struggling with a slowing digital-advertising industry.
Tencent’s fintech and business services segment, which includes its mobile-payment tool WeChat Pay and cloud-computing business, remained the sole major growth driver for the company. Revenue rose 4% from a year earlier to 44.8 billion yuan and surpassed the revenue of the videogame business, as some activities resumed following disruptions from an earlier Covid outbreak. Tencent has also been pursuing clients overseas, building a new data center in Japan and recruiting more businesses in Southeast Asia to use WeChat Pay to attract Chinese tourists.
Tencent’s total number of employees at the end of September fell by about 2% from three months earlier to 108,836, its filing showed. It has cut head counts and tightened rules for staff performance reviews, the company said previously. To improve efficiency, Tencent recently retreated from some loss-making businesses such as its nonfungible token marketplace and tightened controls on marketing expenses, it has said.
Tencent’s Hong Kong-traded shares have tumbled more than 35% this year. The company has spent the equivalent of $2.3 billion to buy back shares since
Prosus
NV, its biggest shareholder, said in June that it would reduce its Tencent stake. Since mid-October, it has halted regular share buybacks.
Write to Raffaele Huang at [email protected] and Yoko Kubota at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
SINGAPORE—
Tencent Holdings Ltd.
TCEHY 10.78%
’s revenue declined for a second consecutive quarter as China’s slowing economy dented videogame user spending and the marketing budgets of digital advertisers.
Tencent said its revenue fell 2% in the third quarter from a year earlier to 140.1 billion yuan, which is equivalent to about $19.7 billion, coming in below analyst expectations. That narrowed from a 3% decline in the previous quarter, when the Chinese social media and videogame giant ended a nearly two-decade growth streak. Analysts polled by FactSet expected third-quarter revenue to decline 0.8%.
Net profit rose 1% to 39.9 billion yuan, or around $5.6 billion.
Tencent also said it is shedding most of its stake in
Meituan.
3690 -2.46%
The company will distribute more than 958 million Meituan shares, worth roughly $20 billion, with a special dividend to Tencent shareholders, it said in a stock exchange filing. The Wall Street Journal has reported that Tencent was looking to sell its stake in the food-delivery company.
China’s economic slowdown has hurt the country’s tech industry, which was already struggling with a regulatory clampdown. While China’s economy expanded at a stronger-than-expected rate of 3.9% in the third quarter, its recovery remains fragile under the weight of strict Covid-19 control measures. Economic activity cooled across the board in October—including retail sales—which fell 0.5% from a year earlier.
Revenue from Tencent’s videogame business fell around 4% from a year ago to about 42.9 billion yuan, company data showed. Its domestic videogame revenue dropped 7% as regulatory uncertainty lingers over new game approvals in China.
In September, Tencent obtained a videogame license for the first time since June 2021 for a small nonprofit videogame. Beijing hasn’t granted approvals to any titles since, prompting game makers to extend the lifetime of existing offerings. China’s videogame market shrank 19% in the third quarter from a year earlier, according to industry data provider Gamma Data.
Revenue from its international gaming business rose 3%, Tencent said. Tencent and its smaller rival
NetEase Inc.
have sought to cushion contraction in China by investing in foreign videogame studios. They are also exporting domestic hits such as “Honor of Kings” and adapting foreign console and computer game titles like “Monster Hunter” to mobile games.
Online-advertising business revenue fell 5% from a year earlier, as advertisers cut back on their marketing budgets. Globally, tech companies including
parent
Meta Platforms Inc.
and TikTok have been struggling with a slowing digital-advertising industry.
Tencent’s fintech and business services segment, which includes its mobile-payment tool WeChat Pay and cloud-computing business, remained the sole major growth driver for the company. Revenue rose 4% from a year earlier to 44.8 billion yuan and surpassed the revenue of the videogame business, as some activities resumed following disruptions from an earlier Covid outbreak. Tencent has also been pursuing clients overseas, building a new data center in Japan and recruiting more businesses in Southeast Asia to use WeChat Pay to attract Chinese tourists.
Tencent’s total number of employees at the end of September fell by about 2% from three months earlier to 108,836, its filing showed. It has cut head counts and tightened rules for staff performance reviews, the company said previously. To improve efficiency, Tencent recently retreated from some loss-making businesses such as its nonfungible token marketplace and tightened controls on marketing expenses, it has said.
Tencent’s Hong Kong-traded shares have tumbled more than 35% this year. The company has spent the equivalent of $2.3 billion to buy back shares since
Prosus
NV, its biggest shareholder, said in June that it would reduce its Tencent stake. Since mid-October, it has halted regular share buybacks.
Write to Raffaele Huang at [email protected] and Yoko Kubota at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Denial of responsibility! Techno Blender is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.