Unlike most other companies that have struggled to keep afloat amid the coronavirus pandemic, Chinese tech giant Tencent Holdings has managed to do very well over the past few months. On Wednesday, the company reported better-than-expected earnings for its first quarter, mainly backed by the increase in online and gaming activities throughout its platforms.
For its first quarter, the owner of China's largest social media platform and the world's largest gaming business reported a 6 percent increase in its net profits to 28.9 billion yuan, or roughly around $4.1 billion. The figure was above the 27.2 billion yuan it reported over the same period last year and higher than initial analysts' estimates of 23.6 billion yuan for the quarter ending in March.
Revenues for the quarter were also up by more than 26 percent to roughly 108.1 billion, beating analysts' estimates of 101.1 billion yuan. The surge in its profits and revenues is mainly attributed to Tencent's rapidly growing value-added services (VAS) segment, which includes its slew of online and mobile video games. The segment's contributions rose by about 27 percent for the quarter to around 62.4 billion yuan.
Tencent's share prices have remained relatively unchanged since the start of the year despite the global economic downturn. As of Wednesday's close, the company's share prices have remained at around HK$429.60 per share.
Throughout the nationwide shelter-in-place orders and lockdowns in the first few months of the year, Tencent managed to meet the needs of people stuck at home through its various video, gaming, and internet services. Average daily users throughout its various platforms surged to record numbers since the start of the year, as more people flocked to online platforms for their businesses, entertainment, and information needs.
Tencent president, Martin Lau Chi-ping, mentioned during the company's conference call with analysts, that he expects sweeping changes across China's industrial landscape as more institutions realize the importance of having an online presence. He added that pandemic has managed to open the eyes of businesses and how it is essential for them to reach customers through online channels.
Tencent is apparently prepared to meet this challenge by providing both consumers and businesses with the tools they need to adapt to the ever-changing business environment. The company is prepared to work with other firms and the government to make additional investments in technologies such as cloud computing and artificial intelligence to meet emerging needs such as online education, digital healthcare, and teleconferencing.
