Tencent Misses Q1 Revenue As Regulatory Crackdown Takes Its Toll

  • Tencent Holding Ltd TCEHY reported first-quarter FY22 flat revenue growth year-on-year to 135.5 billion yuan ($20.1 billion), missing the consensus of 141 billion yuan as China started approving gaming licenses.
  • Revenues from VAS were stable Y/Y at 72.7 billion yuan.
  • Domestic Games revenues decreased by 1% Y/Y to 33.0 billion yuan due to the minor protection measures. International Games revenues grew by 4% to 10.6 billion yuan, reflecting an increase in revenues from games including VALORANT and Clash of Clans.
  • Also Read: Alibaba, Tencent To Post Lack-Luster Quarterly Results As Domestic Regulatory Crackdown Takes A Toll
  • Online Advertising revenues decreased by 18% Y/Y to 18 billion yuan, reflecting weak demand from advertiser categories, including education, Internet services, and eCommerce, plus regulatory changes impacting the online advertising industry.
  • Revenues from FinTech and Business Services increased by 10% Y/Y to 42.8 billion yuan.
  • On a non-IFRS basis, the operating margin contracted 1,500 bps to 27%. Tencent's net income attributable to equity holders declined 51% Y/Y to 23.4 billion yuan ($3.7 billion). EPS was 2.40 yuan.
  • Tencent held $47.9 billion in cash and equivalents.
  • Tencent had been doing its bit to remain in regulatory compliance. The gaming giant had blocked Chinese gamers' access to foreign and illegal games. Tencent's messaging service WeChat began revealing users' locations when they posted on the platform.
  • Price Action: TCEHY shares closed higher by 3.61% at $46.77 on Tuesday.
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