Tencent Holdings (TCEHY) posted stronger-than-expected first-quarter earnings Wednesday as video subscriptions and gaming revenues at Asia's biggest tech company surged during China's coronavirus lockdown.
Tencent said net profit for the three months ending in March came in at 28.9 billion Chinese yuan ($4.07 billion), up 6.2% from the same period last year, and well ahead of the Street consensus forecast of 23.83 billion yuan. Group revenues, Tencent said, rose 26.4% to 108 billion Chinese yuan, again beatings analysts' forecasts of a 101.4 billion tally.
"In the first quarter of 2020, we harnessed the power of technology to enable users to stay connected, informed and entertained, to help advertisers reach target audiences effectively, and to assist enterprises in achieving service continuity," Tencent said.
"Looking forward, we see several likely industry-wide headwinds, including consumer time spent online normalizing which will lead to lower advertisement impression growth, online services advertisers adjusting their customer acquisition budgets to reflect revised lifetime value assumptions, and multinational brands sharply reducing their global marketing budgets as they faced the pandemic in their home markets."
Tencent's U.S. listed shares were little changed in pre-market trading Wednesday following the earnings release to indicate an opening bell price of $55.35 each.
Tencent's two main online platforms -- WeChat and Weixin -- saw monthly average user growth rise 3.2% from the last quarter, and 8.2% on the year, to nearly 1.202.5 billion.
Video game revenue rose 31% from last year to 37.3 billion yuan, "primarily reflected revenue contributions from domestic smartphone games such as Peacekeeper Elite and Honour of Kings", while smartphone gaming revenue rising to 34.8 billion yuan.