Tencent's online ad revenue grows for the first time in more than a year

BEIJING — Chinese tech elephantine Tencent reported better-than-expected quarterly gross connected Wednesday, helped by maturation successful ads wrong its increasing "video accounts" business.

Overall gross for the 4th ended Dec. 31 came successful astatine 144.95 cardinal yuan ($21.07 billion), higher than the 143.89 cardinal yuan estimated by FactSet.

Tencent's online advertizing gross wide grew by 15% to 24.7 cardinal yuan, beating a FactSet estimation of 22.18 cardinal yuan — and increasing for the archetypal clip since the 2nd 4th of 2021. The institution said astir advertisement walk came from e-commerce companies, fast-moving user goods and games.

Video accounts beryllium wrong the WeChat messaging and societal media app and are a mode for individuals and businesses to stock abbreviated videos and livestreams connected the platform. Average monthly users of WeChat successful China and overseas roseate by 3.5% from a twelvemonth agone 1.31 cardinal accounts successful the 4th quarter.

In-feed ads for video accounts generated much than 1 cardinal yuan successful gross successful the 4th quarter, Tencent said. It said idiosyncratic clip spent connected video accounts was much than 1.2 times that spent connected WeChat Moments, which is akin to Facebook's News Feed.

"This advertizing portion allowed them to unlock gross coming from e-commerce, which has done beauteous well," James Lee, U.S. and China net expert astatine Mizuho Securities, said connected CNBC's "Squawk Box Asia." He has a neutral standing connected Tencent and a terms people of 400 Hong Kong dollars.

Shares of Tencent successful Hong Kong were trading 5% higher connected Thursday, astatine HK$366.40.

Tencent

WeChat besides has mini-programs that let users to bargain products from merchants wrong the app. Tencent said idiosyncratic clip spent connected mini-programs astir doubled successful the 4th fourth to besides transcend that spent connected Moments — generating "several trillions" yuan of gross merchandise worth past year.

GMV measures full income worth implicit a definite play of time.

That level of GMV makes Tencent "one of the largest e-commerce platforms" that the institution is starting to monetize, Lee said. "I deliberation that has a precise bully imaginable going forward."

Tencent did not disclose nonstop GMV figures. It was unclear however the numbers compared to Alibaba, which generated 540.3 cardinal yuan successful GMV during its yearly buying festival successful November 2021, the latest figures available.

Advertising expenditure is often an indicator connected economical sentiment.

Companies selling little priced goods are "seeing a broad-based betterment already," Tencent Chief Strategy Officer James Mitchell said connected an net call. "For companies that merchantability higher-ticket priced items, it varies category-by-category."

He said those merchants and advertisers mostly expect depletion to prime up aboriginal this year. Many video relationship viewers don't usage existing short-video apps specified arsenic Kuaishou oregon ByteDance's Douyin, Mitchell said.

However, ads inactive relationship for little than one-fifth of Tencent's wide gross — which hardly grew successful the 4th fourth and fell for each of 2022 arsenic Covid controls dragged down economical growth.

The largest gross segment, which includes the elephantine gaming business, fell by 2% to 70.4 cardinal yuan successful the 4th quarter, successful enactment with FactSet estimates for 70.2 cardinal yuan. In April 2022, Beijing started to regularly o.k. caller crippled titles again aft a hiatus of much than six months.

Tencent's second-largest gross source, fiscal exertion and concern services gross fell by 1% to 47.2 cardinal yuan, beneath FactSet estimates for 49.49 cardinal yuan.

"FinTech Services gross maturation was slower than the erstwhile 4th owed to COVID-19 outbreaks temporarily suppressing outgo activity," Tencent said successful a release. "Business Services revenues decreased year-on-year arsenic we scaled backmost loss-making activities."

For the archetypal 3 months of 2023, regular mean commercialized outgo measurement rebounded by double-digits from a twelvemonth agone arsenic depletion recovered, the institution said.

As the regulatory situation successful China "normalizes," the institution sees opportunities to make fiscal products specified arsenic successful wealthiness management, loans and security implicit the longer term, Martin Lau, enforcement manager and president, said connected the net call.

Earnings per stock for the 4th were 3.04 yuan, somewhat amended than FactSet expectations of 3 yuan. That's connected a non-International Financial Reporting Standards basis, akin to the "non-GAAP" (Generally Accepted Accounting Principles) modular utilized successful the U.S.

Tencent did not stock galore details connected however it plans to instrumentality artificial quality successful the aftermath of OpenAI's wildly fashionable ChatGPT chatbot, though the institution said it expected to motorboat a chatbot astatine immoderate unspecified point.

Lau said connected a abstracted telephone with media helium expects artificial quality would beryllium an "important amplifier" for aboriginal growth, peculiarly successful AI-generated content, but formed the company's enactment successful the tech arsenic inactive successful aboriginal stages.

Tencent is processing a ample artificial quality "foundation" exemplary called Hunyuan.

"The instauration exemplary is thing we person been processing since past year," Lau connected the telephone with reporters. He did not remark connected ChatGPT oregon Baidu's Ernie bot, which was launched past week.

"It's overmuch much important for america to bash it close than to bash it fast."