Tencent Holdings Beats Estimates With 65% Increase in First Quarter Profit

Reuters  |

Image source: Tencent Holdings

By Pei Li

Chinese gaming and social media giant Tencent Holdings Ltd reported a forecast-beating 65% rise in quarterly profit on Thursday, driven by a surge in users for its video games in China and international markets.

Tencent, the world's largest gaming firm by revenue, booked profit of 47.77 billion yuan ($7.42 billion) for the three months through March, higher than the average analyst estimates published by Refinitiv of 35.45 billion yuan.

Revenue rose 25% to 135.3 billion yuan, versus market expectations of 134.39 billion yuan.

Tencent said revenue from online games grew by 17%.

The results come as Chinese regulators have stepped up a sweeping anti-trust clampdown on its internet giants, and have already penalized Tencent rival Alibaba $2.75 billion.

Reuters reported last month that Tencent was told by Chinese anti-trust regulators to pay a fine that could exceed 10 billion yuan, give up exclusive music rights, and sell some of its music assets.

Tencent has not yet commented on the matter. Tencent Music, a music streaming company controlled by Tencent, said earlier this week that it is facing heightened scrutiny from Chinese regulators.

Tencent is also facing mounting competition from ByteDance, the owner of TikTok, and the similar short-video platform Douyin, which have made sizeable inroads into the video games business, including acquisition of a couple game studios this year.

Tencent, which gets 32% of its revenue from video games, unveiled more than 60 new titles at its annual video gaming conference last week. It is looking to launch a mobile version of its League of Legends game, and also a Pokemon game in partnership with Nintendo later this year.

"We are stepping up our investments in game development, and in particular focusing on large-scale and high-production-value games that can appeal to users globally," Tencent said in a statement.

($1 = 6.4355 Chinese yuan renminbi)

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Source: Reuters

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