Tencent posts a $5b profit for Q1 2021, boosted by demand for video games

Chinese internet giant Tencent raked in 135.3 billion yuan (US$21 billion) in revenue for the first quarter of the year, up by 25% from 108.07 billion yuan (US$15.3 billion) a year ago.

Photo credit: Tencent

It also generated profits of 33.1 billion yuan (US$5 billion) on a non-IFRS (International Financial Reporting Standards) basis for Q1 2021, a year-on-year increase of 22%.

Most of the company’s revenues came from its value-added services (VAS) segment, which includes virtual offerings such as video games and social media. It contributed nearly 72.4 billion yuan (US$11.2 billion) compared to 62.4 billion yuan (US$9.7 billion) the prior year.

According to its financial statements, Tencent’s fee-based VAS subscriptions grew 14.3% year on year to 225.7 million, driven by revenue growth from its mobile games including Honor of Kings, PUBG Mobile, and Peacekeeper Elite, as well as recently launched titles such as Moonlight Blade Mobile.

“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,” said Ma Huateng, chairman and CEO of Tencent.

The figures come despite heightened scrutiny on the company over antitrust issues, which has wiped away about US$200 billion off the value of China’s largest company in just a span of a few months.

Recently, it was reported that the company may face a fine of US$1.5 billion from Chinese regulators for allegedly breaching antitrust laws.

In addition, the firm’s music arm Tencent Music commented on the matter for the first time and said it was “actively cooperating” with Chinese regulators to comply with all laws, including those related to antitrust.

Tencent said that the combined monthly active users of WeChat and its Chinese counterpart Weixin grew to 1.24 billion in 2020 from 1.2 billion a year earlier.

Meanwhile, its online advertising segment pulled in 21.8 billion yuan (US$33.8 billion) and its fintech and business service segment generated 39.03 billion yuan (US$6.1 billion).

Looking forward, the company will upgrade its instant messaging software service QQ’s technology, operations, and content. It will also merge the Tencent Video and WeiShi teams to upgrade their algorithmic recommendations and bring integrated viewing experiences to users, as well as develop short video clips adapted from its long-form video library.

Currency converted from US dollar to Chinese yuan: US$1 = 6.44 yuan.

Correction (June 11, 5.10pm): The story has been corrected to reflect that the company’s revenues from its VAS segment stood at  62.4 billion yuan (US$9.7 billion) in the previous year, not 62.4 million yuan (US$9.7 million).