Tencent revenue proves better than expected
Tencent reported better-than-expected revenue in the first quarter thanks to rising gaming income, offsetting negative trends in cloud business amid the coronavirus pandemic.
Total revenues were 108 billion yuan (US$15.25 billion), an increase of 26 percent over the first quarter of 2019.
Profits rose 6 percent to 28.9 billion yuan from a year earlier thanks to a one-off investment gain.
Online gaming income jumped 31 percent to 37.3 billion yuan after the strong performance of domestic smartphone games.
Its digital entertainment subscriptions user base increased 19 percent year on year to 197 million, reflecting robust growth in self-commissioned video content and music subscriptions.
Online advertising revenue also picked up by 32 percent to 17.7 billion yuan thanks to strong social advertising income, which added 47 percent year on year.
"This reflected increased consumer time spent on our key apps during the stay-at-home period and the attractive return on investments for advertisers," Tencent said in a statement.
Sectors like games, Internet services and online education increased spending while advertising expenditure from the consumer goods, automobile and travel sectors declined from the fourth quarter of last year.
Project deployment and new accounts acquisition for cloud business were delayed due to the pandemic, causing a decline in revenue.
But any boost from the lockdown period might be temporary.
"We expect in-game consumption activities to largely normalise as people return to work, and we see some headwinds for the online advertising industry," it added.
Industry-wide, it points to lower advertisement impression growth, advertisers adjusting their customer acquisition budgets and sharp cuts by multinational brands to their global marketing budgets as potential risk factors.
BOCOM International said in a research note before the earnings that payment and cloud business were still under a negative impact while gaming and livestreaming traffic costs would continue to hurt profitability.