Tencent earnings beat, revenue growth slows down

Reuters

• Tencent posted
  better than expected earnings,
  beating on both the top and bottom lines.
• But its revenue grew at the slowest pace in three
  years.
• Core online gaming sales dropped 4% in the wake of a
  Chinese clampdown on licenses.
• 
  Watch
  Tencent trade live.
  

Chinese tech giant Tencent on
Wednesday posted better-than-expected earnings for the third
quarter, sending shares up 2%. However, its core gaming business
showed signs of slowing down.

Tencent earned 2.47 Chinese yuan per share, beating the
1.96 Chinese yuan that was expected by Wall Street, according to
Bloomberg data. It generate revenue of 
80.6
billion Chinese yuan ($11.7 billion), edging out the 80.4 billion
Chinese yuan that was anticipated.

Its revenue increased 24% year-over-year, driven primarily
by
 growth in payment-related services, online
advertising, digital content sales, and cloud services. Despite
that, top line growth was the slowest in three years as a Chinese
clampdown on gaming licenses continued to weigh on its core
online-gaming business, which saw a 4% in
revenue
.

“During the third quarter of 2018, we registered strong
operating results in our businesses and maintained healthy
financial metrics,” CEO
Ma Huateng said in the press release.

“Our advertising, digital content, payment and cloud
services sustained robust activity and revenue growth, and now
account for the majority of our revenue. 
For
our game business, we implemented stringent self-imposed
limitations on games playing by minors, which we believe put the
game industry on a healthy and more solid foundation for future
development.” 

Last quarter, Tencent reported its
first profit decline in almost 13 years, exhibiting a trend
of disappointing results from technology companies amid China’s
economy cooling down. Tencent shares have fallen
20% since releasing those results. It has seen $200
billion of market cap wiped out since February.

Shares were down 29% this year through Tuesday.

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