Tencent smashed its market expectations in Q1 2019, driven largely by surges in its fintech and cloud revenue:
This is an excerpt from a story delivered exclusively to Business Insider Intelligence Fintech Briefing subscribers.Tencent posted record quarterly profits and smashed market expectations in Q1 2019, driven largely by surges in its fintech and cloud revenue,The firm's struggled in recent times due to regulatory action aimed at weaning players from addictive and violent games hobbling its gaming division.
Fintech and business services is now Tencent's second largest division, responsible for a quarter of its revenue. This was the first time the tech giant broke out earnings for the unit, which brought in revenue of Rmb21.79bn , a 44% year-over-year spike. Key in driving this growth is its payments wallet for WeChat, whose 1.11 billion users make it the largest social media platform in China, as well as its insurance services, which include a 20% stake in, and its cloud computing service.
In addition to regulatory action, macroeconomic conditions are likely to see the firm up its fintech efforts beyond the mainland. Tencent's online advertising grew 25% YoY, compared with 55% YoY in the same period last year, suggesting that China's slowing economy and continued trade tensions with the US are hitting the firm. These pressures could see Tencent accelerate its fintech efforts abroad.
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