Technology and entertainment conglomerate, Tencent saw its adjusted fourth-quarter net profit drop 25 percent year-on-year to RMB24.9 billion yuan, while adjusted profit last year inched up only 1 percent to RMB123.8 billion. Both figures were worse than estimated.
Revenue for the whole year jumped 16 percent to RMB560 billion, also at its slowest-ever pace. Income from value-added services last year rose by 10 percent to RMB291.6 billion, of which domestic games revenue went up 6 percent to MB128.8 billion.
The tech giant said the implementation of minor protection measures is directly affecting its domestic game revenue but it expects to fully digest the impact in the second half of this year.
It believes it will benefit from more new game launches when the regulators resume new-game approvals.
In the December quarter, online advertising brought the firm only RMB21.5 billion in revenue, 13 percent less than a year ago, mainly due to the weakness in advertiser categories, including education, games, and internet services.
It expects the advertising business to resume growth in late 2022 after adapting to regulatory changes and the evolving macroeconomic environment.
“We are proactively embracing changes to better align ourselves with the new industry paradigm,” president Martin Lau said in a conference call after the results.
“We have a long-term oriented corporate culture that focuses on user value, social responsibility, technology innovations and compliance, the key elements for sustainable and healthy growth,” he added.
The company also waved aside speculation it will embark on a share-buyback program like rival Alibaba announced this week, saying it will focus instead on core businesses like international games, cloud services and its WeChat messaging service, developing new games for its pipeline when the regulatory environment stabilizes later in 2022.
Meanwhile, data from digital and mobile intelligence firm Sensor Tower showed mobile game players spent US$430 million on Tencent’s hit games Honor of Kings and PUBG Mobile last month, which were the top two games by global consumer spending across the App Store and Google Play.
According to analysts, it is normal for domestic internet firms to report a moderation in revenue and earnings growth, as the heated growth in the past is not sustainable.
