In the first quarter of the year, Tencent exceeded analyst estimates for both revenue and profit. The Chinese tech company showed slightly better performance in its core gaming business and boosted profitability in its advertising and business services division. Despite some improvements, the growth in Tencent’s gaming division remains slow.
Tencent’s revenue of 159.5 billion Chinese yuan ($22 billion) beat the expected 158.4 billion yuan, while its profit attributable to equity holders reached 41.9 billion yuan, exceeding the anticipated 36.64 billion yuan. Adjusted net profit was up 62% year-on-year, the fastest growth since the March quarter of 2021, with revenue increasing by 6% year-on-year.
The company focused on cost-cutting and exiting non-core businesses to prioritize its core gaming division, advertising, and cloud computing. Investors have responded positively, with Tencent’s shares rising by 30% this year. As a result of this strategy, Tencent reported a 2% year-on-year decline in revenue for its China gaming business, an improvement from the 3% drop seen in the previous quarter. Revenue from “Honour of Kings” decreased year-on-year due to tough comparisons with Chinese New Year, while “Peacekeeper Elite” had weak monetizable content. International games revenue increased by 3%, driven by PUBG Mobile and games from Supercell.
This story is still developing, so more updates may follow as Tencent continues to focus on improving its core gaming division while also growing its advertising and business services division.