Tencent's online ad revenue grows for the first time in more than a year

Chinese tech giant Tencent released quarterly results Wednesday.
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BEIJING — Chinese tech giant Tencent reported better-than-expected quarterly revenue on Wednesday, helped by growth in ads within its growing "video accounts" business.

Overall revenue for the quarter ended Dec. 31 came in at 144.95 billion yuan ($21.07 billion), higher than the 143.89 billion yuan estimated by FactSet.

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Tencent's online advertising revenue overall grew by 15% to 24.7 billion yuan, beating a FactSet estimate of 22.18 billion yuan — and growing for the first time since the second quarter of 2021. The company said most ad spend came from e-commerce companies, fast-moving consumer goods and games.

Video accounts sit within the WeChat messaging and social media app and are a way for individuals and businesses to share short videos and livestreams on the platform. Average monthly users of WeChat in China and overseas rose by 3.5% from a year ago 1.31 billion accounts in the fourth quarter.

Ad spending

Revenue sources

The largest revenue segment, which includes the giant gaming business, fell by 2% to 70.4 billion yuan in the fourth quarter, in line with FactSet estimates for 70.2 billion yuan. In April 2022, Beijing started to regularly approve new game titles again after a hiatus of more than six months.

Tencent's second-largest revenue source, financial technology and business services revenue fell by 1% to 47.2 billion yuan, below FactSet estimates for 49.49 billion yuan.

"FinTech Services revenue growth was slower than the previous quarter due to COVID-19 outbreaks temporarily suppressing payment activity," Tencent said in a release. "Business Services revenues decreased year-on-year as we scaled back loss-making activities."

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For the first three months of 2023, daily average commercial payment volume rebounded by double-digits from a year ago as consumption recovered, the company said.

As the regulatory environment in China "normalizes," the company sees opportunities to develop financial products such as in wealth management, loans and insurance over the longer term, Martin Lau, executive director and president, said on the earnings call.

Earnings per share for the quarter were 3.04 yuan, slightly better than FactSet expectations of 3 yuan. That's on a non-International Financial Reporting Standards basis, similar to the "non-GAAP" (Generally Accepted Accounting Principles) standard used in the U.S.

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