Tencent’s revenue accelerates as China emerges from Covid lockdown

Chinese tech giant Tencent’s revenue accelerated in the first quarter as the world’s second-largest economy came back to life after the country’s zero-Covid policy ended.

The social media and gaming conglomerate on Wednesday reported an 11 percent increase in revenue to Rmb150bn ($21.8bn) in the three months to March from a year earlier. Its net profit rose 10 percent to Rmb25.8bn.

The change comes after Tencent’s revenue fell 1 percent last year, the company’s first annual sales record drop, hit by Beijing’s tough zero-Covid policies, which have cut advertising and spending on the group’s ubiquitous WeChat app. has been reduced.

The growth of rival ByteDance’s Douyin was also stealing ad spend from WeChat, TikTok’s sister app for China. Tencent signaled a resumption of online advertising spending, with revenue rising 17 percent in the first quarter compared with a year earlier, as the group’s 1.3bn WeChat users enjoyed an increasing number of clips in the app’s channel video streams. consumed.

“We estimate that Tencent’s advertising revenue has been growing faster than ByteDance since December,” said Bernstein analyst Robin Zhu.

The company, which has a market value of $420 billion, is also battling a campaign by Beijing to rein in the power and influence of its giant tech conglomerates.

Over the past year, the group has slowed the pace of its investments in emerging start-ups and began reducing its empire of Chinese tech holdings, including trimming stakes in e-commerce group JD.com and food delivery leader Meituan. Is.

Shopping and dining with WeChat Pay helped Tencent’s fintech segment boost revenue by 14 percent in the first quarter from a year earlier, which contributes about one-third of the group’s total revenue.

the sale of virtual armor and other upgrades in games such as honor of kings And triple match 3d Its domestic gaming business contributed another third of revenue, with sales rising for the first time in nearly a year as Beijing lifted punitive sanctions on the industry.

But tighter new limits on the amount of game time minors can play have meant that game time for this category of users fell by 96 per cent compared to the same period last year.

Chief executive officer Pony Ma said on Wednesday that the group is investing in the fast-moving field of generative artificial intelligence. He added: “(We) expect AI to be a growth multiplier that enables us to better serve our users, customers and society at large.”

The Shenzhen-based company has been one of the quietest Chinese groups to replicate OpenAI’s recent advances in AI. While rivals Baidu and Alibaba have trumpeted their plans with great fanfare and released early versions of their AI bots for testing, Tencent has been more circumspect about its AI plans.

Tencent’s holdings in publicly listed companies were valued at Rmb473bn as of March 31, and the group marked the carrying value of shares held by unlisted investors at Rmb333bn.

Tencent said it spent Rmb4bn to repurchase 12.5 million shares in the quarter.

Additional reporting by Eleanor Olcott in Hong Kong