Tencent posted its first ever quarterly year-on-year revenue decline as stricter regulations around gaming in China and a resurgence of Covid-19 in the world’s second-largest economy hit the technology giant.
Revenue: 134.03 billion Chinese yuan ($19.78 billion) vs. 134.6 billion yuan expected, a decline of 3% year-on-year.
Profit attributable to equity holders of the company: 18.62 billion yuan vs. 25.28 billion yuan expected, a decline of 56% year-on-year.
Tencent missed both revenue and profit forecasts. During the quarter, Tencent faced macroeconomic headwinds stemming from a resurgence of Covid in China and subsequent lockdowns of major cities, including the financial metropolis of Shanghai. Authorities have committed to a “Zero Covid” policy which has caused disruptions across the world’s second-largest economy.
China’s economy grew just 0.4% in the second quarter, missing analyst expectations. That had an impact on the company’s fintech, cloud and advertising revenue.
Meanwhile, China’s domestic video games industry has also faced challenges due to stricter regulation. Tencent makes about a third of its total revenue from gaming.