Tencent has outperformed expectations in the second quarter, with both revenue and profit exceeding LSEG consensus estimates. The company reported revenue of 161.12 billion Chinese yuan, surpassing the expected 160.77 billion yuan. Profit attributable to equity holders of the company also exceeded expectations, reaching 47.63 billion Chinese yuan compared to the anticipated 39.95 billion yuan.
Growth in Gaming Business Drives Revenue Increase
After experiencing a decline in annual revenue in 2022, Tencent focused on reaccelerating growth in its core gaming business. The company’s China games business generated 34.6 billion yuan in revenue in the second quarter, marking a 9% year-on-year increase. This growth was driven by the success of games such as Valorant and the newly released Dungeon & Fighter Mobile (DnF Mobile), which has been dominating the top grossing game charts in China.
Strong Performance in International Games and Online Advertising
In addition to the growth in its China games business, Tencent also saw a 9% increase in revenue from international games, reaching 13.9 billion yuan. The company’s online advertising business brought in 29.9 billion yuan in revenue, up 19% year-on-year. This growth was attributed to increased revenue from video advertising on WeChat, Tencent’s messaging app with over 1.3 billion users.
Tencent’s fintech and business services division, which includes cloud computing and WeChat Pay mobile payments, saw revenue rise 4% year-on-year to 50.4 billion yuan. However, the growth in this division was impacted by a slowdown in commercial payment revenue growth due to sluggish consumption spending.
Investors have responded positively to Tencent’s performance, with shares up around 27% so far this year. The success of DnF Mobile and the continued growth of Tencent’s gaming business have boosted confidence in the company’s ability to deliver sustained revenue growth. With a strong presence in the gaming industry and promising opportunities in online advertising and fintech services, Tencent is well-positioned for future success.