Shenzhen-based Tencent Holdings’ quarterly reports are out and they are disappointing. The company has reported profits that have missed the estimates. In the December quarter, the gaming and social media company reported a lower net income of 21.6 billion Yuan ($3.1 billion) than what was anticipated. The company’s overall costs also swelled 20% in Q4.
Earlier this week, China released data that forecast the world’s second-biggest economy may see a large-scale contraction due to the COVID-19 pandemic. In this scenario, the lackluster results for Tencent will increase the concern regarding the extent to which the pandemic is going to affect the first quarter of 2020.
Its main competitor, Alibaba Holdings too warned that the coronavirus outbreak may affect the Chinese economy greatly.
But Tencent is being seen as one of the few beneficiaries of the pandemic as more and more people spend more time indoors. “Our users spent more time on online entertainment, including video and games, during the coronavirus outbreak,” Martin Lau, Tencent’s president, said during the earnings call on Wednesday. “But we shifted more resources and people […] to public service sectors, such as online health care and online education during the pandemic.”
The company though remains focused on the gaming sector to make its big buck and quite rightly so. The company’s online gaming revenue grew by 25% in Q4. Tencent’s smartphone game sales also increased by 37% this quarter.
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