Tencent showcased its technologies at the World AI Conference 2023 in Shanghai, on July 8, 2023.
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Tencent The company beat earnings and revenue estimates in the second quarter as growth accelerated in its core gaming division.
Here’s Tencent’s Q2 performance compared to LSEG consensus estimates:
- profit: 161.12 billion yuan ($22.5 billion) versus 160.77 billion yuan expected.
- Profit attributable to the company’s shareholders: 47.63 billion yuan versus 39.95 billion yuan expected.
Revenues increased by 8% year-on-year while profits increased by 82%.
After suffering its first-ever annual revenue decline in 2022, Tencent is looking to reaccelerate growth in its core gaming business.
Investors have rewarded the company so far, with its shares up about 27% this year. That’s partly due to excitement around a new game called Dungeon & Fighter Mobile (DnF Mobile) that’s being made by South Korean company Nexon and distributed by Tencent in China.
DnF Mobile dominates the top-grossing games charts in China, and investors are hoping that Tencent can reap the benefits of its popularity for years to come, as it did with Honor of Kings.
Tencent said its gaming business in China generated revenue of 34.6 billion yuan in the second quarter, up 9% year-on-year. That was faster than the 3% growth seen in the first quarter of the year. Tencent attributed the performance to increased sales of Valorant and the “successful launch” of DnF Mobile.
“The newly released DnF Mobile has re-energized millions of fans of the intellectual property and is retaining players well, positioning it to become our next big hit,” Tencent said in its earnings statement.
International gaming revenue also rose 9% year-on-year to 13.9 billion yuan.
Tencent’s online advertising business generated revenue of 29.9 billion yuan in the second quarter, up 19% year-on-year. The tech giant attributed the increase to increased revenue from video ads on WeChat, China’s largest messaging app owned by Tencent.
Investors have long been excited about Tencent’s ability to monetize video on WeChat, which has more than 1.3 billion users.
Revenue from Tencent’s financial and business services division, which includes cloud computing and mobile payment feature WeChat Pay, rose 4% year-on-year to $50.4 billion. Tencent said the growth was hit by “further slowdown in commercial payment revenue growth reflecting slower consumer spending.”
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