Tencent's annual revenue drops for first time as China crackdown bites

Tencent reported a drop in annual revenue for the first time ever, as China's economic slowdown due to the pandemic and a long-running regulatory crackdown took a toll. 

The world's largest video game company and the operator of the WeChat messaging platform posted a revenue of 554.55 billion yuan (US$81 billion) for 2022, down 1 per cent from a year earlier.

Analysts on an average had expected 555.15 billion yuan, according to Refinitiv.

Its revenue for the fourth quarter ended December rose 1 per cent from a year earlier to 144.95 billion yuan, versus a consensus estimate for about 144 billion yuan.

Tencent's profit attributable to equity holders fell 16 per cent to 188.24 billion yuan for the year, versus a consensus estimate of 114.19 billion yuan.

The results come amid an uncertain business outlook in the world's largest gaming market after two years of crackdown, but sector participants are cautiously optimistic about a recovery as regulators have started granting publishing licences since late last year after a months-long freeze.

Unlike in most other countries, video games need approval from regulators before release in China.

Tencent's domestic gaming revenue fell 6 per cent to 27.9 billion yuan in the fourth quarter, while international gaming revenue rose 5 per cent to 13.9 billion yuan.

Tencent's revenue from online ads rose 15 per cent to 24.7 billion yuan as brands widened spending amid a recovery.

Revenue from fintech and business services slid 1 per cent in the quarter to 47.2 billion yuan even as Tencent continues to expand in the two areas.