# China’s Tencent reports first revenue drop as gaming regulations and COVID-19 bite Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-08-17 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Tencent Holdings Suffers First Quarterly Sales Fall Meta Description: China's tech giant Tencent faces first sales decline due to government regulations, COVID-19, and economic downturn. Double digit growth trend broken. URL: https://financedigest.com/chinas-tencent-reports-first-revenue-drop-as-gaming-regulations-and-covid-19-bitehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-08-17t083734z1lynxmpei7g092rtroptp4tencent-holdings-divestiture-meituan-1736815449653-compressed.jpg) By Josh Ye HONG KONG (Reuters) -China’s Tencent Holdings suffered its first ever quarterly sales fall on Wednesday, hurt by a government clampdown on game approvals and playing time as well as COVID-19 lockdowns and a weakening economy that squeezed ad sales. The contraction marks a nadir for the gaming giant and owner of the WeChat messaging platform which has reported double digit growth almost every quarter since it went public in 2004, as Beijing’s crackdown on big tech companies that began in late 2020 puts the brakes on its expansion. Tencent plans to [sell all or a bulk of its $24 billion stake](https://www.financedigest.com/intercos-fund-shareholders-l-catterton-otpp-sell-6-stake-at-7-discount.html "Intercos fund shareholders L Catterton, OTPP sell 6% stake at 7% discount") in food delivery firm Meituan to placate domestic regulators, Reuters reported on Tuesday. The company said on Wednesday revenue declined 3% to 134 billion yuan ($19.78 billion) for the three months [ended June 30 from 138.3 billion](https://www.financedigest.com/td-other-banks-reach-1-35-billion-settlements-to-end-stanford-litigation.html "TD, other banks reach .35 billion settlements to end Stanford litigation") yuan a year earlier. It has [fallen for two straight quarters](https://www.financedigest.com/a-quarter-of-uk-adults-have-fallen-for-phishing-scams.html "A quarter of UK adults have fallen for phishing scams") and analysts were anticipating the decline. During the second quarter, we actively exited non-core businesses, tightened our marketing spending, and trimmed operating expenses,” Ma Huateng, [chairman and CEO](https://www.financedigest.com/novartis-names-firmenich-ceo-as-chairman-designate-of-sandoz-2.html "Novartis names Firmenich CEO as chairman designate of Sandoz") of Tencent, said. Net profit attributable to equity holders [tumbled 56% to 18.6 billion yuan](https://www.financedigest.com/u-s-dollar-climbs-to-two-year-peak-as-risk-appetite-tumbles-yuan-drops.html "U.S. dollar climbs to two-year peak as risk appetite tumbles; yuan drops"), below analysts estimate of 25 billion yuan. China cut key lending rates on Monday to revive demand as data showed a slowdown in July, indicating the [world’s second-largest economy](https://www.financedigest.com/at-chinas-largest-trade-fair-exporters-worry-about-world-economy.html "At China’s largest trade fair, exporters worry about world economy") is struggling to shake off the second quarter’s hit to growth from strict COVID restrictions. E-commerce giant Alibaba Group Holding Ltd, reported earlier this month flat quarterly [revenue growth](https://www.financedigest.com/visa-revenue-growth-slows-more-as-tough-economy-sobers-spending.html "Visa revenue growth slows more as tough economy sobers spending") for the first time in its history. Tencent has been reducing [holdings in portfolio companies partly to appease the Chinese regulators](https://www.financedigest.com/bahamas-regulator-holds-ftx-assets-pending-delivery-to-customers-creditors.html "Bahamas regulator holds FTX assets pending delivery to customers, creditors") and partly to book its hefty profits on those bets, according to sources. The Shenzhen-based giant has lost nearly 60% of its market value [since it peaked in February](https://www.financedigest.com/dollar-heads-for-first-weekly-gain-since-february.html "Dollar heads for first weekly gain since February") 2021 following Beijing’s regulatory crackdown to rein in the influence of large internet firm. However the $373 billion company has held onto its crown as [China’s](https://www.financedigest.com/companies-in-china-distance-themselves-from-taiwan-amid-pelosi-backlash.html "Companies in China distance themselves from Taiwan amid Pelosi backlash") most valuable company. Revenue from online games, Tencent’s big profit driver, decreased both at home and abroad, with each declining by 1%. Tencent has yet to receive a new game license from Chinese regulators after they [temporarily halted](https://www.financedigest.com/exclusive-kazakh-mcdonalds-shut-outlets-temporarily-after-halting-supplies-from-russia-sources.html "Exclusive-Kazakh McDonald’s shut outlets temporarily after halting supplies from Russia – sources") approvals. Its social [network services reported](https://www.financedigest.com/uks-morgan-advanced-materials-reports-cyber-security-incident-on-its-network.html "UK’s Morgan Advanced Materials reports cyber security incident on its network") a 1% increase in revenue as WeChat earned more from its video content. In the short term, that may be its biggest growth driver,” Shawn Yang, [manager director](https://www.financedigest.com/anya-libova-joins-apester-as-uk-managing-director.html "Anya Libova joins Apester as UK Managing Director") of Blue Lotus Capital Advisor said, referring to WeChat video revenue. Tencent [reported 18.6 billion](https://www.financedigest.com/australias-macquarie-explores-6-billion-deal-for-britains-mg-sky-news-reports.html "Australia’s Macquarie explores billion deal for Britain’s M&G, Sky News reports") yuan ($2.74 billion) in revenue for ads in the second quarter, down by 18%, as advertisers remain cautious with their budgets, but not as bad as some analysts had anticipated, according to Yang. Revenue growth from the company’s fintech and business services, slowed to 1% to 42.2 billion yuan ($6.22 billion) due to the [impact of lockdowns on business](https://www.financedigest.com/exclusive-qatarenergy-boss-says-world-cup-tension-will-not-impact-german-business.html "Exclusive-QatarEnergy boss says World Cup tension will not impact German business") activities. Shares in Prosus NV, Tencent’s largest shareholder, shed 0.54% in Europe. Results are quite weak, but an even worse scenario had been priced into the stock price prior to the earnings,” said Charlie Chai, an analyst with 86Research. ($1 = 6.7756 Chinese yuan renminbi) (Reporting by Josh Ye; editing by Elaine Hardcastle) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---