Chinese digital giant Tencent Holdings reported a return to revenue growth in the first quarter as the company recovered from COVID-19-related restrictions and China’s crackdown on video game developers a year earlier.
The world’s largest video game company and operator of messaging platform WeChat reported an 11% increase in revenue on Wednesday, beating analysts’ expectations. Revenue reached 149.98 billion yuan ($21.70 billion) in the three months ended March 31, beating the forecast of 146.09 billion yuan expected by 17 analysts polled by Refinitiv. Net profit rose 11% to 25.83 billion yuan ($3.7 billion), falling short of 29.61 billion yuan ($3 billion) expected by analysts. Tencent last year reported its first annual revenue decline, which was attributed to China’s COVID-19 policies and months-long regulatory freezes on gaming licenses.
This year, however, is likely to see a rebound as the government has resumed licensing approvals and the cash flow from players has not stopped. Two of Tencent’s most popular titles, Honor of Kings and CrossFire, saw record revenues thanks to new add-on features and promotions. Newly released games also saw strong revenue and user growth. China gaming revenue rose 6% to 35.1 billion yuan ($5 billion), while international gaming revenue rose 25% to 13.2 billion yuan ($1.8 billion). Tencent’s online advertising revenue rose 17% to 21 billion yuan ($3 billion). Fintech and business services revenue rose 14% to 48.7 billion yuan ($6.8 billion).
Martin Lau, president of Tencent, said China’s fintech rules are heading towards normalization. On the US imposing export controls on AI chips that can be shipped to China, Lau said the chips are mostly available: “and there are workarounds for GPUs that can be sold in China“.