The topline woes of Chinese tech giant Tencent extended into the second quarter of 2022, as the effects of Beijing’s regulatory crackdown on gaming continued to hit its business.
Photo credit: Tencent
Revenue for the quarter came in at 134 billion yuan (US$19.7 billion), down marginally from the preceding quarter’s US$20.1 billion – a 3% fall from a year ago. This is the company’s first revenue decline since it went public in 2004, according to South China Morning Post.
The firm’s operating profit slumped further, dropping 19% to 30.1 billion yuan (US$4.4 billion), compared with the previous quarter’s US$5.5 billion. The operating profit was down 43% from a year ago.
Net profit attributable to equity holders of the company dropped 56%, year on year.
Revenue for value-added services – games, live streaming, and music, the firm’s moneymakers – dipped slightly, hurt by lower revenue from domestic games that negated gains made in revenue from international games. Fewer big game releases, lower user spending, and the implementation of protection measures for minors were highlighted as the major reasons for the lower contribution from domestic games.
Online advertising revenue saw a recovery in June, toward the end of the quarter, after being severely affected by a resurgence of Covid-19 in April and May. However, media advertising revenues strengthened due to stronger content releases and positive seasonality.
The firm acknowledged the “difficult revenue conditions” for the quarter.
“During the second quarter, we actively exited non-core businesses, tightened our marketing spending, and trimmed operating expenses,” stated the company. The firm let go over 5,400 employees during the period.
Looking forward, the company said it will focus on enhancing the efficiency of its businesses and launching new revenue initiatives, including in-feed advertisements in video accounts, while continuing to drive innovation through research and development.
See also: Tencent’s financial health in 5 charts
Currency converted from Chinese yuan to US dollar: US$1 = 6.78 yuan
Editing by Samreen Ahmad and Arpit Nayak
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