Tencent Q4 revenue falls below market estimates due to less gaming demand

Tencent Q4 revenue: Tencent Holdings of China reported a modest 7 per cent increase in fourth-quarter revenue on Wednesday, falling short of market expectations due to a decline in gaming revenue. The company, renowned as the world's largest video game company and operator of the popular WeChat messaging platform, disclosed revenue of 155.19 billion yuan ($21.56 billion) for the period ending December 31.

This figure missed the average estimate of 157.2 billion yuan from 23 analysts surveyed by LSEG. Notably, Tencent's core gaming segment experienced a slowdown, with gaming revenue in China decreasing by 3 per cent to 27 billion yuan, while international gaming revenue saw only a marginal 1 per cent increase to 13.9 billion yuan.

Share buyback program

In response to its performance, Tencent announced plans to significantly boost its share buyback program, aiming to double its share repurchases from HK$49 billion in 2023 to over HK$100 billion ($12.78 billion) in 2024. This move comes amid a 16 per cent decline in its shares over the past year until Tuesday's market close.

Despite falling short of expectations, Tencent's full-year revenue for 2023 reached 609 billion yuan, marking a 10 per cent increase compared to the previous year. This signifies a recovery for the company, which had experienced its first annual revenue decline in 2022 amidst regulatory pressures from Beijing's tech crackdown. Notably, Tencent achieved revenue growth in every quarter of the past year.

Tencent's revenue diversification efforts yielded positive results, with revenue from online advertising increasing by 21 per cent to 29.8 billion yuan, while revenue from fintech and business services grew by 15 per cent to 54.5 billion yuan.

Although net income for the quarter declined by 74 per cent year-on-year, this was primarily attributed to Tencent's sale of its stake in Meituan. Excluding the impact of investment-related transactions, Tencent reported a robust 44 per cent year-on-year growth in quarterly profit, amounting to 42.68 billion yuan.

(With Reuters inputs)