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Tencent (TCEHY) to Report Q4 Earnings: What's in the Cards?

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Tencent Holdings (TCEHY - Free Report) fourth-quarter 2019 results are expected to benefit from its rich gaming portfolio as well as strong distribution capability. The company derived 29.4% of revenues from online games in the last reported quarter (third quarter of 2019).

Notably, in the last reported quarter, the company reported earnings of 36 cents per share that missed the Zacks Consensus Estimate by 5.3%. Revenues of $13.86 billion were in line with the consensus mark.

The Zacks Consensus Estimate for fourth-quarter earnings has been steady at 39 cents over the past 30 days, suggesting growth of 30% from the figure reported in the year-ago quarter.

Further, the consensus mark for revenues currently stands at $14.76 billion, indicating growth of 20.2% from the figure reported in the year-ago quarter.

Let’s see how things have shaped up for this announcement.

Tencent Holding Ltd. Price and EPS Surprise

Tencent Holding Ltd. Price and EPS Surprise

Tencent Holding Ltd. price-eps-surprise | Tencent Holding Ltd. Quote

Key Factors to Watch

Tencent and NetEase (NTES - Free Report) are among the biggest game distributors in China. The company is expected to have benefited from its dominance in the country, which is the world’s largest video game market, in terms of users and revenues.

The company’s PUBG Mobile was the sixth most downloaded game in December 2019, per Sensor Tower data. Moreover, PUBG Mobile and Honor of Kings were placed in #1 and #2 spots, respectively as top revenue generating mobile games in the month.

Moreover, Peacekeeper Elite is expected to have continued its momentum in the to-be-reported quarter.

Additionally, international user base is expected to have expanded in the to-be-reported quarter, courtesy of PUBG Mobile (which doubled its MAU year over year in the third-quarter) and the Call of Duty Mobile game that exceeded 100 million downloads within a month of its launch.

Also, growth in digital content revenues, owing to video streaming subscriptions and live broadcast services, is expected to have aided social network revenues.

Per Sensor Tower data, global spending on entertainment apps, which include subscription-based video-on-demand services like Tencent Video and Disney’s (DIS - Free Report) Disney+ accounted for 24%, the largest portion of non-game spending, on the App Store

Further, momentum in cloud services is expected to have continued owing to fast penetration into key sectors, including finance. This is expected to have driven FinTech and Business Services revenues in the to-be-reported quarter.

Key Q4 Developments

Tencent reportedly launched Pocket Reader II, its second-generation e-book reader in China during the quarter. The device priced at 1,099 yuan (approximately $158) features the latest Carta 2 ink screen along with 2.5D AG process glass optical technology. The device is powered by a quad-core A53 CPU.

Moreover, a Tencent-led consortium that includes Tencent Music Entertainment (TME - Free Report) inked an agreement to buy a 10% stake in Universal Music Group, which is owned by Vivendi. Notably, Universal Music is behind artists like Lady Gaga, Taylor Swift and Billie Eilish among others.

Zacks Rank

Tencent currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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