Restrictions on new video games hurt Tencent's profit

Tencent Holdings Ltd posted a major quarterly profit decline on Thursday, in part due to restrictions on new video game approvals and children's play time in China has hit hard on the tech giant's checkbook.

The Hong Kong-listed firm reported 14.2 billion yuan ($2.1 billion) of net profit for the three months ending December, down 32 percent year-on-year. Full-year net profit reached 78.7 billion yuan, up 10 percent from a year ago.

Group revenues in the quarter jumped 28 percent to 84.9 billion yuan, in part buoyed by robust smart phone game businesses, which rose 12 percent to 19 billion yuan. But overall games accounted for just 28 percent of the quarterly revenue.

Meanwhile cost of revenue jumped roughly 70 percent both for the quarter and for the year, due to investment in cloud, content and financial technologies to boost sales.

Chairman and CEO Pony Ma said Tencent will strengthen game portfolio, expand overseas businesses and strengthen overseas publishing capability.

The company is also looking to diversify its income by investing in core infrastructure and frontier technologies to embrace the trend of industrial internet and continue to drive the evolution of the consumer internet.

"For cloud, we will integrate our advanced cloud computing capability, data analytics, AI and security solutions, to develop customized solutions," he said in a regulatory filing.

Shares of Tencent fell nearly two percent on Thursday in Hong Kong ahead of the earnings announcement. The firm's market cap ebbed to around $442 billion from an all-time high of over $500 billion in January 2018.