Tencent tops analysts’ estimates for earnings and revenue in the first quarter

Tencent tops analysts’ estimates for earnings and revenue in the first quarter
  • Tencent Holdings posts £12.37 billion in revenue in the first quarter and £3.31 billion in profit.
  • The Chinese multinational conglomerate sees a 31% YoY increase in its online gaming revenue.
  • Tencent's quarterly ad revenue increases 32% on an annualized basis to £2.03 billion in Q1.

Tencent Holdings (HKG: 0700) released its quarterly financial results on Wednesday that topped analysts’ estimates for earnings and revenue. The company attributed its success to a strong demand for its gaming business. Tencent’s advertising and financial technology segments also reported stronger than expected results in the first quarter.

Experts had forecast the company to print £11.61 billion in revenue in the first quarter. In terms of profit attributable to Tencent’s equity holders, their estimate was capped at £2.73 billion. In its report on Wednesday, Tencent topped both estimates posting a higher £12.37 billion in revenue in Q1 and £3.31 billion in profit.

Tencent’s revenue translates to a 26% increase as compared to the same quarter last year while its profit came in 6% stronger on an annualized basis.

Tencent’s revenue from online gaming climbs 31%

At £4.27 billion, the Chinese multinational conglomerate saw a 31% year over year (YoY) increase in its revenue from online gaming in the first quarter. Its total quarterly revenue from smartphone games printed at £3.97 billion. As per Tencent, much of this revenue was attributed to the popular titles like Peacekeeper Elite, and Honor of Kings.

Revenue from PC games, on the other hand, tanked 17% in the first quarter to £1.35 billion. The company cited the Coronavirus pandemic that pushed internet cafes into temporarily shutting down for this decline. Tencent’s DnF (Dungeon & Fighter) also performed weaker in the recent quarter.

Other noticeable figures in Tencent’s earnings report include a 32% year over year increase in quarterly ad revenue to £2.03 billion. In the fourth quarter, the Chinese company had registered a 19% YoY growth in ad revenue. Comparatively, however, its ad revenue was 12% lower as compared to Q4.  

Tencent’s ad revenue from social media rises 47% in Q1

Tencent’s advertising revenue from social media was 47% up on an annualized basis to £1.67 billion in Q1. At £3.04 billion, its revenue from the financial technology and business services segment noted a 22% YoY increase but came in 12% lower than the prior quarter.  

At £45 per share, Tencent is currently around 12% up year to date in the stock market after recovering from £35 per share in March. Its performance in 2019 was also reported fairly upbeat with an annual gain of a little over 20%.

At the time of writing, Tencent is valued at £430 billion and has a price to earnings ratio of 40.65.

By Wajeeh Khan
Mr. Khan specialises in Public Health by academia but is a trader by passion. Taking up two new hobbies of writing and trading in his teen years, he is now a professional trader and news writer with over 5 years of experience in various financial markets. Khan is passionate about bringing insightful articles to his readers and hopes to add value to their portfolios.
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