Tencent Holdings Ltd. Has reported its earnings for the first quarter of 2022. The company reported disappointing results for the quarter and recorded no growth in revenue. This is the company’s worst performance ever and it also missed the estimates of analysts. The results come in a period of economic slowdown and a halt on the acquisition of new game licenses which had a huge impact on Tencent’s gaming business.
For the quarter ended March, the company reported revenue of 135.5 billion yuan, or $20.08 billion. The company reported 135.3 billion yuan for 2021first quarter revenue, which means the company virtually had no revenue growth. Revenue for the first quarter of 2022 fell below the expectations of analysts who had expected it to come in at 141 billion yuan in the first quarter, according to Refinitiv.
The company also reported that profit attributable to equity holders f the company for the quarter declined by 51 percent, marking its biggest profit decline since going public in 2004, according to Refinitiv data. The company makes the majority of its revenue by developing games such as its popular Honour of Kings and Call of Duty Mobile.
The decline in both profit and revenue can be traced back to the previous two quarters when a decline in sales began. This was a result of the regulatory crackdowns by the Chinese government on tech companies such as Tencent. These crackdowns have reduced both expansion opportunities and have had a huge impact on Tencent’s business.
The company also said user spending has normalized to pre-Covid times. The company like a handful of others experienced a surge during the pandemic. This surge lasted for about two years for Tencent. The recent Covid-19 resurgence in China has also taken a toll on Tencent’s business.
Tencent Music Entertainment also reported a revenue decline of 15 percent for its first-quarter earnings. Tencent Music Entertainment reported that revenue declined to 6.64 billion yuan ($979 million) in the first quarter which ended on the 31st of March. The company blamed reduced ad sales and a fresh outbreak of Covid-19 cases in China for the revenue decline it experienced in the quarter. For the quarter, net income attributable to equity holders dropped to 609 million yuan.