Written by 9:03 am Science & Technology Views: [tptn_views]

China’s Tencent misses expectations despite fastest profit rise since late 2021

Tencent has faced quite a few headwinds in 2022 including a Covid-induced slowdown within the Chinese economy and a tougher marketplace for gaming.

Bobby Yip | Reuters

Tencent on Wednesday reported a surge in profit for the second quarter, but missed expectations, as its cost-cutting measures began to repay and sales rose in its core gaming business and cloud and fintech unit.

Here’s how Tencent did within the second quarter, versus Refinitiv consensus estimates:

  • Revenue: 149.21 billion Chinese yuan ($20.46 billion) vs. 151.73 billion yuan expected, representing an increase of 11% year-on-year.
  • Profit attributable to equity holders of the corporate: 26.17 billion Chinese yuan vs 33.42 billion yuan. That is a 41% year-on-year rise.

Tencent is now beginning to see the advantages of the cost-cutting drive it launched into last 12 months, when it exited non-core businesses and tightened marketing spending.

Tencent has now reported three straight quarters of revenue growth, because the Chinese technology giant recovers from the headwinds of a tricky 2022.

Firstly, its core gaming business slowed dramatically relative to comparisons with 2021, when people relied more on indoors entertainment due to spread of the pandemic. Tencent is one in every of the world’s biggest online gaming corporations.

Secondly, Chinese authorities froze the approval of recent games for several months and only restarted the method in April 2022. It took a couple of months for the regulators after this to approve games published by Tencent.

Tencent, which is the owner of China’s biggest messaging app WeChat, is now beginning to see its businesses from gaming to cloud computing pick up.

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