Tencent’s Non-IFRS Net Profit in Q1 Decreases by 23% YoY

On Wednesday, Chinese tech giant Tencent released its first quarter financial report. In the first quarter of this year, Tencent achieved a revenue of 135.47 billion yuan ($20 billion), which the company considered stable. On a non-IFRS basis, the company’s net profit was 25.5 billion yuan, down 23% year-on-year, the third decline in as many quarters.

Revenue for the value-added service sector (including games and videos) was 72.74 billion yuan, accounting for 54% of total revenue. Online advertising revenue was 17.99 billion yuan, accounting for 13%, and the revenue of financial technology and enterprise services sector was 42.77 billion yuan, accounting for 32%.

In the first quarter, Tencent‘s game revenue in the Chinese market decreased by 1% to 33 billion yuan. In the international market, Tencent‘s game revenue increased by 4% to 10.6 billion yuan, reflecting an increase in revenues from games including VALORANT and Clash of Clans, partly offset by a decrease in revenues from PUBG Mobile as user spending normalised post-COVID.

In the value-added service sector, social network revenue increased by 1% to 29.1 billion. Revenue from the online advertising business decreased by 18% year-on-year to 18 billion, reflecting weak demand from advertiser categories including education, Internet services and e-commerce, plus regulatory changes impacting the online advertising industry itself.

Finally, financial technology and enterprise services witnessed an increase in revenue of 10% year-on-year to 42.8 billion yuan.

According to the financial report, Tencent‘s business targeting enterprise customers was adjusted and its resources in PaaS fields such as video cloud and network security were added.

In recent years, Tencent has taken the lead in developing the SaaS field as it launched iconic products such as VooV Meeting and WeCom. In the first quarter of 2022, the number of registered users and monthly active users on VooV Meeting exceeded 300 million and 100 million respectively. On January 11, 2022, VooV Meeting, WeCom and Tencent Docs established internal links to connect these three office tools in order to bring a smoother and more efficient collaboration experience to enterprises.

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Tencent also increased its investment in R&D in this quarter. In the first quarter of 2022, the R&D investment maintained a year-on-year growth of 36%, reaching 15.38 billion yuan. Since 2019, its accumulated investment in R&D has reached 136.5 billion yuan.