Chinese tech giant Tencent’s first-quarter revenue accelerated as the world’s second-largest economy bounced back to life after ending the country’s coronavirus policy.
The social media and gaming group on Wednesday reported an 11 percent increase in revenue to 150 billion renminbi ($21.8 billion) in the three months to March, compared to a year ago. Its net profit rose 10 percent to 25.8 billion RMB.
The shift comes after Tencent’s revenue fell 1 percent last year, the company’s first-ever annual sales decline, hurt by Beijing’s strict no-Covid policies that hampered advertising and spending on the group’s ubiquitous WeChat app.
The growth of ByteDance’s Douyin, the sister app to China’s TikTok, has been stealing ad spending away from WeChat. Tencent noted online ad spending has resumed, with revenue up 17 percent in the first quarter compared to a year ago, as WeChat’s 1.3 billion users consumed an increasing number of clips in the app’s channel video streams.
“We estimate that Tencent’s advertising revenue has been growing faster than ByteDance since around December,” said Robin Zhu, an analyst at Bernstein, noting that channels account for the vast majority of the advertising segment’s growth.
The company, which has a market value of $420 billion, has also been reeling from Beijing’s campaign to rein in the power and influence of expanding tech groups.
Over the past year, the group has slowed the pace of investing in start-up startups and begun trimming its empire from Chinese tech holdings, including reducing stakes in e-commerce group JD.com and food delivery leader Meituan.
Shoppers and shoppers who register with WeChat Pay helped Tencent’s fintech segment grow revenue by 14 percent in the first quarter from a year earlier, contributing about a third of the group’s total revenue.
Sales of virtual shields and other promotions in games such as Honor of kings And 3d matching trilogy It contributed another third of revenue, with sales growing in its domestic gaming business for the first time in about a year as Beijing lifted punitive restrictions on the industry.
But tough new limits on the amount of time minors can play games mean that gaming time from this category of users is down 96 per cent compared to the same period last year.
CEO Pony Ma said Wednesday that the group is investing in the rapid advancement of generative AI. He said: “[We] We expect AI to be a growth multiplier that enables us to better serve our users, customers and society at large. “
The Shenzhen-based company has been among the quietest Chinese conglomerates vying to replicate OpenAI’s recent advances in artificial intelligence. While competitors Baidu and Alibaba have hailed their plans with great fanfare and released early versions of their AI bots for testing, Tencent has been more cautious about its AI plans.
Tencent’s holdings in listed companies were valued at 473 billion RMB on March 31, and the group has set the book value of shares in unlisted invested companies at 333 billion RMB.
Tencent said it spent 4 billion yuan to buy back 12.5 million shares in the quarter.
Additional reporting by Eleanor Olcott in Hong Kong