China's Tech Crackdown Dampens Tencent's Growth In Q3, Misses Consensus

Tencent Holdings Ltd TCEHY reported third-quarter FY21 revenue growth of 13% year-on-year to 142.4 billion yuan ($22.3 billion), missing the consensus of 145.4 billion yuan.
Revenues from VAS increased by 8% Y/Y to 75.2 billion yuan, and Online Advertising increased by 5% Y/Y to 22.5 billion yuan.
Revenues from FinTech and Business Services increased by 30% Y/Y to 43.3 billion yuan.
The slowdown was due to the Chinese tech crackdown on businesses like gaming, advertising, and extending up to fintech, education, and online entertainment, Bloomberg reports.
The growth decelerated for the sixth consecutive quarter and reached the slowest pace since Tencent went public in 2004.
China's deadliest blows were July's tutoring purge that decimated a key source of ad revenue and a cap on kids' gaming time in August. The regulators also refrained from approving any new gaming releases since July.
Tencent's net income of 39.5 billion yuan ($6.1 billion), up 3% Y/Y, missed the consensus of 32.6 billion yuan. The EPS was 4.074 yuan.
Tencent made a deeper foray into the enterprise software and advanced technologies following the year-long crackdown on the consumer internet arena.
Tencent pledged $3 billion worth of resources over the next three years to its cloud business partners and showcased its first self-made chips for use cases like search and video-transcoding.
For now, Tencent's enduring hits like Honor of Kings continue to be its biggest gaming cash cows. Fully-owned Riot Games Inc may offer the most significant potential, the report adds.
Riot's League of Legends mobile game finally debuted in China last month. The franchise's e-sports tournament and new anime series drew hundreds of millions of views for Tencent and its affiliates over the past weekend.
Price Action: TCEHY shares closed higher by 0.08% at $59.85 on Tuesday.

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