Tencent, the Chinese Internet giant and Asia’s most valuable tech firm, has delivered an astonishing drop in profit on account of lower investment gains.
The firm’s net profit slipped by two percent annually to reach around $2.6 billion but recorded a strong growth with revenue up 30 percent year-on-year to reach $10.7 billion in Q2 2018.
According to Techcrunch, the figures broke a growth streak that stretches back more than a decade and, more crucially, it comes at a time of relative crisis for Tencent.
The company became Asia’s first $500 billion tech business November 2017, but it has endured a torrid 2018 with its share price slipping more than 25 percent since a January high — controversy around a banned game knocked it down further this week.
Gaming has always been Tencent’s strongest point, which has helped the firm beef up profit
Sources told Bloomberg that there has been a freeze in awarding game licenses in China as part of changing within the agency that approves them. That’s impacted mobile, PC and console and it has particularly rattled Tencent, which is one of the major players.
Not only did China clamp down on popular title Monster Hunt, but Tencent still doesn’t have the approval to bring PUBG or Fortnite to PC in China, and its financial results show some slowing. Its PC gaming business recorded a five percent yearly drop to $1.9 billion
The smartphone games business, which includes smash hits PUBG and Fortnite posted 19 percent year-on-year growth to hit sales of $2.5 billion, but that was done 19 percent on that previous blockbuster quarter.
“In China, DAU for our smartphone games grew at a double-digit rate year-on-year, but monetization per user declined as users shifted time to non-monetized tactical tournament games,” Tencent said in a filing.