Tencent Reports 31% Increase in Online Games Revenues, Ends Q1 2020 on $4.15B Profit

  • Tencent reported its Q1 2020 financial results, with total revenues for the period up 26% to ¥108.1B RMB ($15.2B USD) from ¥85.5B ($12.1B) in the same period of 2019.
  • In total, Tencent generated a net profit of ¥29.4B ($4.15B), up 6% compared to the same period last year. 
  • As game playing time and in-game consumption activity increased due to COVID-19 policies, the company recorded a year-over-year increase in quarterly online games revenues of 31% to ¥37.3B ($5.26B).

Today, Chinese multinational investment holding conglomerate Tencent Holdings released its financial earnings report for the first quarter of 2020. The company generated total net revenues of ¥108.1B ($15.2B) in Q1 2020, an increase of 26% from ¥85.5B ($12.1B) in the same period of 2019.

The company reported that its quarterly revenues from online games increased by 31% year-over-year to ¥37.3B ($5.26B), which it attributed primarily to revenue contributions from domestic mobile games such as Peacekeeper Elite and Honor of Kings as well as raised contributions from Tencent’s overseas titles including PUBG MOBILE and Clash of Clans. Its games revenues growth was partially offset by lower revenues of PC client games such as DnF.

In total, mobile games revenues were ¥34.8B ($4.91B), parts of which are attributed to the company’s social network business, while PC client games revenues were ¥11.8B ($1.66B) for Q1 2020. Tencent explained that PC games activity in China declined due to temporary closures of internet cafes as part of novel coronavirus (COVID-19) policies and the weak performance of the game DnF. In contrast, game playing time and in-game consumption activity increased as people stayed at home during the lockdown.

Commenting on Tencent’s ability to remain profitable during the global COVID-19 pandemic as a company primarily offering digital products, Ma Huateng, the company’s chairman and CEO said that “during this difficult period, we seek to provide online services that keep people connected, informed, productive, and entertained. So far, our businesses have proved resilient and cashflow-generative.”

Tencent ended the quarter on a ¥29.4B ($4.15B) net profit, up 6% compared to the same period of 2019. Distributed to shareholders of the company, the profit translated into earnings per share (EPS) of ¥3.05 ($0.43). While its profit increased, the company’s net margin decreased year-over-year from 33% in Q1 2019 to 27% in the first quarter of 2020.

Note: The Esports Observer used the exchange rate in effect as of May 13 at a rate of 7.08978 RMB to 1 USD for currency conversions in this article.

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