Tencent, the tech giant from China, has once again exceeded expectations in its second-quarter earnings report. The company reported a revenue of 161.12 billion Chinese yuan, beating the LSEG consensus estimate by a small margin. Profit attributable to equity holders of the company also outperformed, coming in at 47.63 billion Chinese yuan compared to the expected 39.95 billion yuan. This marks an 8% year-on-year increase in revenue and an impressive 82% rise in profit for Tencent.
After facing a decline in annual revenue in 2022, Tencent has been focusing on reaccelerating growth in its core gaming business. The efforts seem to be paying off, with the company’s China games business bringing in revenue of 34.6 billion yuan in the second quarter, a 9% year-on-year rise. This growth was primarily driven by increased sales from popular games like Valorant and the successful launch of DnF Mobile, a game that has been dominating the top grossing charts in China.
Tencent’s international games revenue also saw a 9% increase compared to the previous year, reaching 13.9 billion yuan. The company’s online advertising business experienced a significant boost, bringing in 29.9 billion yuan in revenue, up 19% year-on-year. This growth was attributed to increased revenue from video advertising on WeChat, China’s largest messaging app owned by Tencent. With over 1.3 billion users on WeChat, investors are excited about the potential for Tencent to monetize video content on the platform.
In addition to its gaming and advertising successes, Tencent’s fintech and business services division also saw revenue growth in the second quarter. Revenue rose by 4% year-on-year to 50.4 billion yuan. However, the growth was slightly hindered by a moderation in commercial payment revenue growth, reflecting slower consumption spending trends.
Tencent’s second-quarter earnings report showcases the company’s ability to adapt and excel in a competitive market. With a focus on core gaming offerings, international expansion, and innovative monetization strategies, Tencent is well-positioned for continued success in the future. Investors can expect to see further growth and development from Tencent as it continues to innovate and expand its reach in the global tech industry.
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