Tencent Brings a Hidden Giant Into View

(Bloomberg Opinion) -- Tencent Holdings Ltd.’s top line looked weak in the first quarter and its bottom line looked great. Gains on investments were the difference.

Yet the big revelation from the Chinese internet company’s earnings announcement late Wednesday is the size of its hidden giant: fintech and business services. For the first time, Tencent started breaking out revenue and costs for the division, which includes payments, wealth management, cloud services and smart retail.

Tencent Brings a Hidden Giant Into View

It accounted for 25% of revenue for the March quarter, surpassing every other division except for online games, which contributed 33%. What’s more, the unit’s growth outpaced all other segments while margins expanded.

For a long time, investors have been betting that Tencent’s new services would be the next driver of earnings amid troubles in the games sector and macroeconomic headwinds that could hurt advertising. Now they’ve got the proof they need.

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Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.

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