Tencent Holdings on Thursday reported a 25% gain in first quarter revenue from a year earlier, as the Chinese tech giant pledged to further ramp up investment across various areas.
The Shenzhen-headquartered company reported 135.3 billion yuan ($20.6 billion) in total revenues for the three months ended March, narrowly ahead of analysts’ expectations of 133.7 billion yuan. Profits climbed 65% to 47.8 billion yuan ($7.42 billion) for the period.
Tencent Games, which accounts for the bulk of the tech firm’s overall income (32%) and is lumped under its value-added service (VAS) segment, reported a revenue increase of 17% year-on-year to 43.6 billion yuan ($6.7 billion), benefiting from robust growth of existing titles such as Honor of Kings, PUBG Mobile, Peacekeeper Elite and newer games including Moonlight Blade Mobile. The company also unveiled a pipeline of more than 60 new mobile and PC titles at its annual video gaming conference last week.
Meanwhile, Tencent’s online advertising segment raked in 21.8 billion yuan ($33.8 billion) for the quarter while its fintech and business services segment generated 39 billion yuan ($6.1 billion).
Combined monthly active users on its messaging and social app WeChat and its Chinese counterpart Weixin grew to 1.24 billion in 2020 from 1.2 billion a year earlier, the company added.
“As we look into the future, we see expanding opportunities in the various verticals in which we operate, enabled by technology innovation and increasing acceptance of digital solutions among users and businesses,” expressed Tencent Chairman and CEO Pony Ma in written remarks.
President Martin Lau said in an earnings call that the firm is actively seeking opportunities to invest in four key areas “where [it] can be an early mover and a shaper of industry evolution,” including business services, high-production value games, short-form video content and sustainable social value.
Regarding regulator scrutiny of its non-bank payment business, Lau said the company has been “very focused on risk management” and “very self-restrained” in terms of the size of non-payment financial products.
“When we look into internal review, and when we look [at what needs to be done] … to make sure we are compliant with the spirit of regulators, it’s actually relatively manageable,” said Lau.
In late April, representatives of 13 companies including Tencent, ByteDance, JD, Didi Chuxing and Meituan were summoned to a meeting by Chinese regulators and asked to comply with tougher regulations and rectify a number of problems related to information monopolies, gathering of personal data and “improper links” between existing payments services and financial products.
Beijing’s crackdown on the country’s biggest tech firms began when the Chinese government abruptly halted Alibaba Ant Group’s $34.5 billion IPO last November. Last month, regulators imposed a record $2.8 billion fine on Alibaba for anti-competitive behavior.
Tencent’s NYSE-listed shares stock dropped 2% to close at $77.20 on Thursday.