Tencent posts sharpest jump in quarterly revenue in more than a year after China reopens

Tencent reported an 11% rise in quarterly revenue on Wednesday, marking its sharpest growth in more than a year, as the company saw a big rebound in payment volume, ad sales and gaming.

Here’s how Tencent performed in the first quarter against Refinitiv consensus estimates:

• Income: 150 billion Chinese yuan ($21.4 billion) versus 146.09 billion yuan expected, an increase of 11%% year on year.
• Benefits attributable to equity holders of the company: 25.8 billion yuan versus 31 billion yuan expected, an increase of 10% year-on-year.

The results mark a strong rebound for Tencent’s growth after a succession of negative and flat quarters. The company said in its earnings call that it benefited from a solid recovery in domestic consumption in China, which finally started easing its aggressive COVID-19 restrictions in December.

Net profit grew at a sharp pace, Tencent said in the report on Wednesday, reflecting a positive revenue mix shift, operational efficiencies and an easier base period.

Investors were focused on whether the reopening of China’s economy would boost the country’s tech giants, including Tencent. China’s economy grew 4.5% in the first quarter, the fastest pace in a year.

Tencent said its gaming business benefited from increased domestic game sales.

The company’s popular locally released Honor of Kings game saw record-high gross receipts in the quarter, while Crossfire PC and Crossfire Mobile attracted returning players thanks to promotions aimed at Internet cafes and additional in-game content.

The Chinese tech industry as a whole suffered close scrutiny as part of a comprehensive regulatory rigor The crackdown by Beijing that began in late 2020 wiped off more than a combined $1 trillion from the country’s largest companies.

But recently, there have been indications that the central government is softening his stance to Internet giants like Tencent, alibabaAnd sister.

In 2021, Chinese regulators withheld approval of new video game releases, which severely affected Tencent. However, over the past few months, Beijing has loosened its grip on the industry, flagging more titles for release.

The company said that limits on when children can play games had a major impact on the contribution of minors to its overall gaming revenue. Minors contributed 0.4% of total time spent and 0.7% of total gross receipts for home games in the quarter, 96% and 90% of the respective year-over-years.

Amid tough gaming market at home, Tencent has Increased focus on international markets, Tencent said its international gaming business saw strong growth, with the company’s battle royale title Valorant seeing a 30% increase in gross receipts year-over-year.

Tencent said that another popular battle royale title, PUBG Mobile, resumed sequential growth in daily active users.

Tencent, a major owner and investor in tech businesses around the world, is shedding some of its equity investments as Beijing remains on high alert about the size of domestic tech companies.