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Chinese tech giant posts first ever revenue decline

Tencent has confronted quite a few headwinds in 2022 together with a Covid-induced slowdown within the Chinese economic system and a more durable market for gaming.

Bobby Yip | Reuters

Tencent posted its first ever quarterly year-on-year revenue decline as stricter rules round gaming in China and a resurgence of Covid-19 on the earth’s second-largest economic system hit the technology giant.

Here’s how Tencent did within the second quarter, versus Refinitiv consensus estimates: 

  • Revenue: 134.03 billion Chinese yuan ($19.78 billion) vs. 134.6 billion yuan anticipated, a decline of three% year-on-year.
  • Profit attributable to fairness holders of the company: 18.62 billion yuan vs. 25.28 billion yuan anticipated, a decline of 56% year-on-year

During the quarter, Tencent confronted macroeconomic headwinds stemming from a resurgence of Covid in China and subsequent lockdowns of main cities, together with the monetary metropolis of Shanghai. Authorities have dedicated to a zero-Covid coverage which has triggered disruptions the world over’s second-largest economic system.

China’s economic system grew simply 0.4% within the second quarter, lacking analyst expectations. 

Meanwhile, China’s home video video games trade has additionally confronted challenges on account of stricter regulation. Tencent makes a couple of third of its whole revenue from gaming.

Last year, Chinese regulators launched a rule limiting the period of time youngsters underneath 18-years-old might spend enjoying on-line video games to a most of three hours per week and solely throughout particular instances.

Regulators additionally froze the approval of recent video games between July 2021 and April this year. In China, video games must get the inexperienced mild from regulators earlier than being launched and monetized.

Analysts at China Renaissance mentioned in a word printed final month that Tencent launched simply three cell video games within the second quarter. So the company has relied on its present fashionable titles to generate revenue.

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