Chinese Tech Giant Tencent Sees Revenue Growth After Two Consecutive Quarters Of Contraction

Tencent Holdings ADR TCEHY, China's gaming and social media giant, reported a 1% increase in revenue, marking an end to two consecutive quarters of contractions, as per Bloomberg.

Tencent attributed a 15% rise in online advertising revenue in the last three months of 2022 to its TikTok-style video feature that drew marketers.

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The company's executives have also cited an improving economy as a driving factor behind the increased spending and remain optimistic that Beijing will loosen regulations following the crackdown in 2021 that impacted multiple sectors, including gaming and content.

In addition to the revenue growth, the results have had a positive impact on Tencent's biggest shareholders, Prosus NV PROSF and Naspers Limited NPSNY. After the announcement, their shares rose as much as 2.7%.

Tencent's revenue for the December quarter reached 144.95 billion yuan ($21 billion), meeting the expectations of analysts.

Despite the positive news of revenue growth, the current rate still falls significantly short of Tencent's previous double-digit gains from just a few years ago. This decline can be attributed to the regulatory crackdown that Tencent faced, which aimed to curb undesirable online content and addiction and resulted in the freezing of gaming approvals.

Tencent Prepares For Future Growth With Emphasis On AI

Tencent President Martin Lau highlighted the company's prospects in the international gaming scene and AI for 2023.

Lau stated Tencent will gradually integrate artificial intelligence capabilities across its suite of products (including WeChat and online media), and called AI a "growth multiplier."

“We have longstanding experience in adopting and developing AI technologies,” Lau said. "The rise of AI interest and adoption is very beneficial to us as our core social and gaming businesses are user-to-user oriented, which are hard to disrupt with AI technology, but stand to be enhanced by it.”

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Photo: Donald Wu via Unsplash