Tencent showed off its tech at the 2023 World Artificial Intelligence Conference in Shanghai, July 8, 2023.
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Tencent beat second-quarter top and bottom line estimates as growth in its key gaming division accelerated.
Here’s how Tencent did in the June quarter against LSEG consensus estimates:
- Revenue: 161.12 billion Chinese yuan ($22.5 billion) versus 160.77 billion yuan expected.
- Profit attributable to equity holders of the company: 47.63 billion Chinese yuan versus 39.95 billion yuan expected.
Revenue was up 8% year-on-year while profit rose 82%.
After suffering its first ever annual revenue decline in 2022, Tencent has been looking to reaccelerate growth in its core gaming business.
Investors have rewarded the company so far, with shares up around 27% this year. That’s in part thanks to the excitement around a new game called Dungeon & Fighter Mobile (DnF Mobile) which is produced by South Korean firm Nexon and distributed in China by Tencent.
DnF Mobile has been dominating the top grossing game charts in China, and investors are hoping Tencent could reap the benefits of its popularity for years to come, as it did with Honor of Kings.
Tencent said its China games business brought in revenue of 34.6 billion yuan in the second quarter, a 9% year-on-year rise. That was faster than the 3% growth seen in the first quarter of the year. Tencent attributed the performance to increased sales from Valorant and the “successful launch” of DnF Mobile.
“DnF Mobile, a newly released game, reactivated millions of IP (intellectual property) fans and is retaining players well, positioning it to become our next evergreen major hit,” Tencent said in its earnings release.
International games revenue also rose 9% versus the year ago period to 13.9 billion yuan.
Tencent’s online advertising business brought in 29.9 billion yuan in revenue in the second quarter, up 19% year-on-year. The tech giant attributed this to increased revnuee from video advertising on WeChat, China’s largest messaging app that Tencent owns.
Investors have long been excited about the ability for Tencent to monetize video on the WeChat app, which has more than 1.3 billion users.
Tencent’s fintech and business services division, which includes cloud computing and the WeChat Pay mobile payments feature saw revenue rise 4% year-on-year to 50.4 billion. The growth was dragged down by “further moderation in commercial payment revenue growth that reflected slow consumption spending,” Tencent said.