Tencent, the Chinese tech giant, exceeded both revenue and profit expectations in the second quarter of the year. The company reported revenue of 161.12 billion Chinese yuan, surpassing the 160.77 billion yuan that was anticipated by analysts. Additionally, Tencent’s profit attributable to equity holders came in at 47.63 billion Chinese yuan, compared to the estimated 39.95 billion yuan. These figures represent an 8% year-on-year increase in revenue and an impressive 82% rise in profit.
After experiencing a decline in revenue in 2022, Tencent has been focusing on revitalizing growth in its core gaming business. The company’s China games division generated 34.6 billion yuan in revenue in the second quarter, marking a 9% year-on-year growth. This acceleration in growth was driven by the success of titles such as Valorant and the launch of the highly popular game, Dungeon & Fighter Mobile (DnF Mobile). The company expressed optimism about DnF Mobile’s potential to become a long-term hit, similar to the success of its previous game, Honor of Kings.
Tencent also saw a 9% increase in revenue from its international games division, reaching 13.9 billion yuan in the second quarter. Additionally, the company’s online advertising business brought in 29.9 billion yuan, reflecting a 19% year-on-year growth. This growth was primarily attributed to higher revenue from video advertising on WeChat, Tencent’s messaging app with over 1.3 billion users. Investors have high expectations for Tencent’s ability to monetize video content on the platform.
Tencent’s fintech and business services division, which includes cloud computing and WeChat Pay, reported a 4% year-on-year revenue increase to 50.4 billion yuan. However, the growth in this segment was partially offset by a slowdown in commercial payment revenue due to decreased consumer spending. Tencent acknowledged that this moderation in revenue growth was a challenge for the division.
Overall, Tencent’s performance in the second quarter demonstrated strong growth in its key gaming division, as well as positive results in international games, online advertising, and fintech services. The company’s focus on driving growth and innovation in its core businesses has resonated well with investors, reflected in the significant increase in its stock price this year.
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