Tencent reports first annual revenue decline since going public, but international gaming business sees growth

Tencent has announced its financial results for the year ended December 31, 2022. Let’s focus on the key points and results that the Chinese company achieved in the gaming business.

Financial highlights

• According to the 2022 earnings release, Tencent’s annual revenue was 554.6 billion yuan ($79.6 billion), down 1% year-over-year. As pointed out by Reuters, this is the first-ever decline since the Chinese company went public in 2004.
• The company’s operating profit fell 13% year-over-year to 235.7 billion yuan ($33.8 billion). On a non-IFRS basis*, it fell 4% to 153.5 billion ($22 billion).

*Non-IFRS adjustments exclude share-based compensation, net gains or losses from investee companies, income tax effects, and some other metrics.

• Tencent’s net profit was 188.7 billion yuan ($27 billion), down 17% year-over-year.
• Domestic games revenue reached 123.9 billion yuan ($17.7 billion), down 4% year-over-year. And revenue from international games grew 3% to 46.8 billion yuan ($6.7 billion).
• Overall, Tencent’s gaming business accounted for 43% of its total revenue in 2022.

More takeaways from the report about Tencent’s gaming division

• Mobile games revenue, which Tencent attributes to its Social Networks business, reached 39.2 billion yuan ($5.6 billion) in Q4, down 2% year-over-year. PC games revenue grew 8% to 11.5 billion yuan ($1.65 billion) in the three-month period.
• Tencent cited Honor of Kings, Dungeon Fighter Online, and Undawn as the main drivers of its domestic games revenue.

• The growth in its international games revenue was due to strong performances of League of Legends, Valorant, PUBG Mobile, and Call of Duty: Mobile. The company also launched several succesful new releases like NIKKE and Darktide.
• As part of its business strategy, Tencent plans to focus on making new titles in high potential genres, building games based on popular IPs, and publishing leading global franchises.
• On top of that, the company will bring more top PC and console IPs to mobile and expand its in-house franchises.