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Tencent (TCEHY) to Report Q1 Earnings: What's in the Cards?
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Tencent Holdings’ (TCEHY - Free Report) first-quarter 2020 results are expected to benefit from its rich gaming portfolio as well as strong distribution capability, especially as users remain confined due to the coronavirus outbreak.
The Zacks Consensus Estimate for first-quarter earnings has been unchanged at 35 cents over the past 30 days, suggesting growth of 9.4% from the figure reported in the year-ago quarter.
Further, the consensus mark for revenues currently stands at $14.2 billion, indicating growth of 12.3% from the figure reported in the year-ago quarter.
Notably, the company’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, while missing in the other three, the average negative surprise being 2%.
Let’s see how things have shaped up for this announcement.
Key Factors to Watch
Tencent is expected to have benefited from its dominance as one of the biggest game distributors in China, which is the world’s largest video game market, in terms of users and revenues.
Per Sensor Tower data, quoted by Bloomberg, flagship games like Honor of Kings and Peacekeeper Elite witnessed a significant surge in February. However, sales from other games declined sequentially and overall revenues fell as people have started to go back to work in China.
While contributions from the aforementioned games could offset the company’s financial woes to an extent, the international user base is expected to have expanded in the quarter under review, courtesy of PUBG Mobile (which became the most popular international mobile game in terms of DAU and MAU in the fourth quarter).
Additionally, Supercell’s Brawl Stars (one of the best performing original IP mobile titles in 2019), the Call of Duty Mobile game (crowned as the Best Mobile Game of the Year in 2019 by TGA, The Game Awards) as well as the new mode Teamfight Tactics within League of Legends are expected to have contributed to the company’s international revenues in the to-be-reported quarter.
Also, growth in digital content revenues, owing to video streaming subscriptions and live broadcast services, is expected to have aided social network revenues, especially as millions of people were confined to their homes due to the coronavirus pandemic.
Tencent’s other segments also seem to have benefited from the pandemic, with users on its WeChat app increasing to 1.4 million since late January, per Apptopia data, quoted by Bloomberg.
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.
Tencent launched Cloud Office Portfolio, which encompasses a variety of collaborative office products such as Tencent Meeting, WeChat Work, QQ, Tencent Doc, TAPD, Lexiangla, and CODING, witnessing the demand for such products, while users work-from-home due to the coronavirus outbreak-led lockdown, which is expected to have contributed to top-line growth in the to-be-reported quarter.
On Mar 20, the company launched the international version of Tencent Meeting available online in more than 100 countries and regions around the world, including Malaysia, Singapore, India, Thailand, Japan, Hong Kong (SAR of China) and Macao (SAR of China), where users can search for VooV Meeting and download the application from App Store and Google Play.
Tencent Meeting makes it possible to host online conferences with up to 300 attendees at one time free of charge unlike Zoom Video (ZM - Free Report) meetings, which cater more than 100 attendees at a time.
This is expected to have contributed to growth in daily active users, as users practiced work from home in the to-be-reported quarter, especially in China, where lockdown started in early January. Notably, within two months of the launch in December 2019, the application has become one of the most widely used video conferencing applications in China, with daily active users exceeding 10 million.
However, media advertising revenues from platforms, including Tencent Video and Tencent News, are expected to have taken a hit due to uncertain broadcasting schedules and fewer telecasts of sports events in the quarter under review.
What Our Model Says
According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Tencent Holdings has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release.
NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +0.15% and currently carries a Zacks Rank of 2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Tencent (TCEHY) to Report Q1 Earnings: What's in the Cards?
Tencent Holdings’ (TCEHY - Free Report) first-quarter 2020 results are expected to benefit from its rich gaming portfolio as well as strong distribution capability, especially as users remain confined due to the coronavirus outbreak.
The Zacks Consensus Estimate for first-quarter earnings has been unchanged at 35 cents over the past 30 days, suggesting growth of 9.4% from the figure reported in the year-ago quarter.
Further, the consensus mark for revenues currently stands at $14.2 billion, indicating growth of 12.3% from the figure reported in the year-ago quarter.
Notably, the company’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters, while missing in the other three, the average negative surprise being 2%.
Let’s see how things have shaped up for this announcement.
Key Factors to Watch
Tencent is expected to have benefited from its dominance as one of the biggest game distributors in China, which is the world’s largest video game market, in terms of users and revenues.
Tencent Holding Ltd Price and EPS Surprise
Tencent Holding Ltd price-eps-surprise | Tencent Holding Ltd Quote
Per Sensor Tower data, quoted by Bloomberg, flagship games like Honor of Kings and Peacekeeper Elite witnessed a significant surge in February. However, sales from other games declined sequentially and overall revenues fell as people have started to go back to work in China.
While contributions from the aforementioned games could offset the company’s financial woes to an extent, the international user base is expected to have expanded in the quarter under review, courtesy of PUBG Mobile (which became the most popular international mobile game in terms of DAU and MAU in the fourth quarter).
Additionally, Supercell’s Brawl Stars (one of the best performing original IP mobile titles in 2019), the Call of Duty Mobile game (crowned as the Best Mobile Game of the Year in 2019 by TGA, The Game Awards) as well as the new mode Teamfight Tactics within League of Legends are expected to have contributed to the company’s international revenues in the to-be-reported quarter.
Also, growth in digital content revenues, owing to video streaming subscriptions and live broadcast services, is expected to have aided social network revenues, especially as millions of people were confined to their homes due to the coronavirus pandemic.
Tencent’s other segments also seem to have benefited from the pandemic, with users on its WeChat app increasing to 1.4 million since late January, per Apptopia data, quoted by Bloomberg.
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.
Tencent launched Cloud Office Portfolio, which encompasses a variety of collaborative office products such as Tencent Meeting, WeChat Work, QQ, Tencent Doc, TAPD, Lexiangla, and CODING, witnessing the demand for such products, while users work-from-home due to the coronavirus outbreak-led lockdown, which is expected to have contributed to top-line growth in the to-be-reported quarter.
On Mar 20, the company launched the international version of Tencent Meeting available online in more than 100 countries and regions around the world, including Malaysia, Singapore, India, Thailand, Japan, Hong Kong (SAR of China) and Macao (SAR of China), where users can search for VooV Meeting and download the application from App Store and Google Play.
Tencent Meeting makes it possible to host online conferences with up to 300 attendees at one time free of charge unlike Zoom Video (ZM - Free Report) meetings, which cater more than 100 attendees at a time.
This is expected to have contributed to growth in daily active users, as users practiced work from home in the to-be-reported quarter, especially in China, where lockdown started in early January. Notably, within two months of the launch in December 2019, the application has become one of the most widely used video conferencing applications in China, with daily active users exceeding 10 million.
However, media advertising revenues from platforms, including Tencent Video and Tencent News, are expected to have taken a hit due to uncertain broadcasting schedules and fewer telecasts of sports events in the quarter under review.
What Our Model Says
According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Tencent Holdings has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release.
BJs Wholesale Club Holdings Inc (BJ - Free Report) has an Earnings ESP of +6.42% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +0.15% and currently carries a Zacks Rank of 2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>