Beijing (PingWest)- Chinese gaming and social media giant Tencent Holding reported a better-than-expected first quarter earnings as video subscriptions and gaming revenues surged during China’s Covid-19 lockdown.
The company booked a revenue of CNY108 billion in the first quarter ended March 31, representing a year-over-year growth of 26%, profit attributable to equity holders of company hit CNY28.9 billion, up 6% compared to same period of last year, Tencent announced on Wednesday.
Revenue from its online games grew 31% year-on-year to CNY37.3 billion, which the company attributed to a surge of daily active users (DAUs) of its flagship games PlayerUnknown’s Battlegrounds Mobile (branded as Peace Elite in China) and Honor of Kings during China’s stay-at-home period in February and March.
“Games play important roles in keeping citizens entertained and socialized, especially during the stay-at-home period. For mobile games, our studios released attractive content and our publishing teams organize outstanding in-game events, which helped to bring our daily active users (DAU) to a new level,” Tencent said in a statement.
Around 15% of Tencent’s revenue comes from advertising, which rose 32% year-on-year to CNY17.7 billion in the first quarter despite a broader slowdown in China’s ad market.
The growth in the advertising business was driven by the higher number of advertisement that were displayed in its WeChat messaging app.
However, compared to the fourth quarter of 2019, the growth in its advertising business still slowed.
“ Our online advertising revenue registered a outstanding growth despite slowdown in broader advertising sector amid Covid-19, its outstanding performance reflected increased consumer time spent on our key apps during the stay-at-home period, thus we were able to deliver attractive return on investments (ROI) to advertisers,” Tencent said in a statement.
Media advertising, however, decreased 10% to CNY3.1 billion , due to lower revenue from Tencent’s video and news platforms as a result of weak macroeconomic conditions and the suspension of sports events.
Revenue from Tencent’s financial technology and business services segment grew 22% to CNY26.5 billion in the first quarter. That was driven by the firm’s commercial payment and wealth management platform, as well as greater contribution from cloud services.
China’s government is expected to increase investment in cloud infrastructure and other relevant technology to push the development in cloud service market, according to Tencent president Martin Lau Chi-ping.
Still, Tencent said revenue from fintech services decreased quarter on quarter because payment activities, especially offline transactions, and cash withdrawals were reduced during China’s extended Lunar New Year break and stay-at-home period.
Tencent should ride through China’s coronavirus outbreak relatively unscathed compared to other as most of its businesses have minimal touchpoints with the physical world,” said Ling Vey-sern, senior industry analyst at Bloomberg Intelligence. He expected Tencent’s online game business to continue expanding in 2020 after a 31% increased in the first quarter