Tencent's profits slump on weak gaming and regulatory struggles

Tencent, the Chinese gaming and social media giant, has revealed a more than 50% drop in profit for the three months to June 2022, the second quarter of its financial year. The numbers were impacted by a slowing economy in China, an operating environment made more difficult by regulatory changes and a slowdown in video games as users adjust to post-pandemic activity.

Net profit for the quarter was RMB 19.2 billion ($2.83 billion), down 55% from the same quarter in 2021, and down 19% from the first quarter of the current year. Revenue was RMB 134 billion ($19.8 billion), down 3% year-on-year and 1% quarter-on-quarter.

Six-month revenue fell just 1% to RMB 270 million ($39.8 billion). But net profit was RMB 43 billion ($6.34 billion), down 53%.

“During the second quarter, we actively exited our non-core businesses, tightened our marketing spend and reduced our operating expenses, which enabled us to sequentially increase our non-IFRS earnings, despite difficult income conditions," said Pony Ma, chairman of Tencent. and CEO. "Going forward, we will focus on improving the efficiency of our business and launching new revenue initiatives, including in-app ads in our popular video accounts, while continuing to drive innovation through R&D. We generate about half of our revenue from fintech and business services, as well as online advertising, which directly contribute to and benefit from overall economic activity, which should help us grow our revenue. as China's economy grows."

A slowing Chinese economy and sporadic resurgence of COVID meant consumers spent less, hurting growth in Tencent's large commercial payments business in the second quarter.

The number of paid subscribers for music, games and video increased by 2% to reach 235 million at the end of June. For Tencent Video, China's largest long-form video streaming platform, the number of subscriptions was 122 million, up from 124 million at the end of March.

The group is the largest games company in the world in terms of turnover. In China, the industry had been held back by government intervention which slowed new game launches and limited playtime.

"The domestic [Chinese] game industry is facing transitional challenges, including fewer big game releases, lower user spending, and measures to protect minors," the company said in its filing. regulation, published on Wednesday. "Honor of Kings" and "Peacekeeper Elite" were the top two ranked games by total time spent in the industry. Each has increased its total time spent by adult users year after year. New releases include "Fight of The Golden Spatula" and "Arena Breakout".

The international games market has seen “a period of post-pandemic digestion as gamers resume offline activities,” the company said.

– More to follow.

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Tencent, the Chinese gaming and social media giant, has revealed a more than 50% drop in profit for the three months to June 2022, the second quarter of its financial year. The numbers were impacted by a slowing economy in China, an operating environment made more difficult by regulatory changes and a slowdown in video games as users adjust to post-pandemic activity.

Net profit for the quarter was RMB 19.2 billion ($2.83 billion), down 55% from the same quarter in 2021, and down 19% from the first quarter of the current year. Revenue was RMB 134 billion ($19.8 billion), down 3% year-on-year and 1% quarter-on-quarter.

Six-month revenue fell just 1% to RMB 270 million ($39.8 billion). But net profit was RMB 43 billion ($6.34 billion), down 53%.

“During the second quarter, we actively exited our non-core businesses, tightened our marketing spend and reduced our operating expenses, which enabled us to sequentially increase our non-IFRS earnings, despite difficult income conditions," said Pony Ma, chairman of Tencent. and CEO. "Going forward, we will focus on improving the efficiency of our business and launching new revenue initiatives, including in-app ads in our popular video accounts, while continuing to drive innovation through R&D. We generate about half of our revenue from fintech and business services, as well as online advertising, which directly contribute to and benefit from overall economic activity, which should help us grow our revenue. as China's economy grows."

A slowing Chinese economy and sporadic resurgence of COVID meant consumers spent less, hurting growth in Tencent's large commercial payments business in the second quarter.

The number of paid subscribers for music, games and video increased by 2% to reach 235 million at the end of June. For Tencent Video, China's largest long-form video streaming platform, the number of subscriptions was 122 million, up from 124 million at the end of March.

The group is the largest games company in the world in terms of turnover. In China, the industry had been held back by government intervention which slowed new game launches and limited playtime.

"The domestic [Chinese] game industry is facing transitional challenges, including fewer big game releases, lower user spending, and measures to protect minors," the company said in its filing. regulation, published on Wednesday. "Honor of Kings" and "Peacekeeper Elite" were the top two ranked games by total time spent in the industry. Each has increased its total time spent by adult users year after year. New releases include "Fight of The Golden Spatula" and "Arena Breakout".

The international games market has seen “a period of post-pandemic digestion as gamers resume offline activities,” the company said.

– More to follow.

Comments