Tencent sees highest profit growth in three years thanks to strong performance in online ads and business services, balancing slower growth in gaming revenue

Tencent Beats Analyst Expectations for Revenue and Profit in Q1 2023 thanks to Gaming Division’s Recovery and Advertising and Business Services Division’s Growth

Tencent surpassed analyst expectations for revenue and profit in the first quarter of 2023, thanks to an improved performance in its core gaming business and increased profitability in its advertising and business services division. After facing its first annual revenue decline in 2022, the company has been on a path to recovery ever since.

Tencent’s revenue in the March quarter was 159.5 billion Chinese yuan ($22 billion), higher than the expected 158.4 billion yuan. Its profit attributable to equity holders was 41.9 billion yuan, surpassing the anticipated 36.64 billion yuan, while its adjusted net profit saw a whopping 62% year-on-year increase, the fastest growth since the same quarter last year. Revenue also increased by 6% year-on-year.

The company has focused on cost-cutting measures and exiting non-core businesses to concentrate on its core gaming division and other key areas like advertising and cloud computing. Investors have responded positively to these efforts, with Tencent’s shares rising by an impressive 30% this year alone.

Tencent’s China gaming business revenue saw a modest decline of just 2% year-on-year in the first quarter, despite “Honour of Kings” declining compared to the previous year due to a high base from Chinese New Year and reduced monetizable content from “Peacekeeper Elite.” However, revenue from international games increased by an impressive 3% year-on-year, driven by higher player numbers in PUBG Mobile and a resurgence in popularity of games from the Supercell studio.

Despite these improvements, growth in Tencent’s gaming division remains modest as this is an evolving news story that requires further updates as more information becomes available.

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