Tencent, the Chinese tech giant, reported an 82% surge in its quarterly profit, driven by accelerated growth in its key gaming division. The company surpassed both revenue and profit expectations for the second quarter, showcasing a significant rebound after facing its first-ever annual revenue decline in 2022.
In the June quarter, Tencent recorded revenue of 161.12 billion Chinese yuan (approximately $22.5 billion), slightly exceeding the 160.77 billion yuan anticipated by analysts. Profit attributable to equity holders reached 47.63 billion yuan, far surpassing the expected 39.95 billion yuan. This marked an 8% year-on-year increase in revenue and an impressive 82% rise in profit.
Tencent’s core gaming business, which has been a focal point in its recovery strategy, showed notable improvement. The China games division reported a 9% year-on-year revenue increase to 34.6 billion yuan in the second quarter, up from 3% growth in the previous quarter. This growth was fueled by increased sales from the game Valorant and the successful launch of Dungeon & Fighter Mobile (DnF Mobile). Tencent highlighted DnF Mobile as a major success, reactivating millions of fans and positioning itself as a potential long-term hit akin to the company’s previous success with Honor of Kings.
International gaming revenue also rose by 9% compared to the same period last year, reaching 13.9 billion yuan. Meanwhile, Tencent’s online advertising business saw a 19% year-on-year increase, bringing in 29.9 billion yuan, driven by higher video advertising revenue on WeChat, China’s largest messaging app with over 1.3 billion users.
However, the fintech and business services division, including cloud computing and WeChat Pay mobile payments, experienced a more modest 4% year-on-year revenue growth, totaling 50.4 billion yuan. Tencent attributed this slower growth to a moderation in commercial payment revenue, reflecting weaker consumer spending.
This strong performance has been well-received by investors, with Tencent’s shares rising by around 27% this year, partly due to the excitement surrounding DnF Mobile’s success.
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