Nandini Roy Choudhury, writer
Brief news
- Tencent’s second-quarter revenue exceeded expectations, reaching 161.12 billion Chinese yuan ($22.5 billion).
- The company’s gaming division experienced accelerated growth, with revenue increasing by 9% in China and 9% internationally.
- Tencent’s online advertising operation also saw a 19% increase in revenue, driven by video advertising on WeChat.
Detailed news
Tencent’s second-quarter top and bottom line estimates were exceeded due to the acceleration of growth in its primary gaming division.
Tencent’s performance in the June quarter in comparison to the LSEG consensus estimates is as follows:
Revenue: 161.12 billion Chinese yuan ($22.5 billion), as opposed to the anticipated 160.77 billion yuan.
The company’s equity holders received a profit of 47.63 billion Chinese yuan, which was higher than the anticipated 39.95 billion yuan.
Profit increased by 82%, while revenue increased by 8% year over year.
Having experienced its first-ever annual revenue decline in 2022, Tencent has been striving to reestablish growth in its core gaming business.
The company has been rewarded by investors thus far, as its shares have increased by approximately 27% this year. This is partially due to the enthusiasm surrounding a new game called Dungeon & Fighter Mobile (DnF Mobile), which is developed by Nexon, a South Korean company, and distributed in China by Tencent.
In China, DnF Mobile has been the top-grossing game, and investors are optimistic that Tencent will continue to capitalize on its popularity for years to come, as it did with Honor of Kings.
Tencent reported that its China games division generated revenue of 34.6 billion yuan in the second quarter, representing a 9% increase from the previous year. This exceeded the 3% growth rate observed in the first quarter of the year. Tencent attributed the performance to the “successful launch” of DnF Mobile and increased sales from Valorant.
“In its earnings release, Tencent stated that DnF Mobile, a recently released game, has successfully retained players and reactivated millions of IP (intellectual property) fans, thereby positioning it to become our next evergreen major hit.”
There was also a 9% increase in international games revenue compared to the previous year, reaching 13.9 billion yuan.
In the second quarter, Tencent’s online advertising operation generated 29.9 billion yuan in revenue, representing a 19% increase from the previous year. The tech behemoth attributed this to the increased revenue generated by video advertising on WeChat, the largest messaging app in China, which is owned by Tencent.
Tencent’s capacity to commercialize video on the WeChat app, which has a user base of over 1.3 billion, has long been a source of excitement for investors.
The revenue of Tencent’s fintech and business services division, which encompasses cloud computing and the WeChat Pay mobile payments feature, increased by 4% year over year to $50.4 billion. The growth was further impeded by “further moderation in commercial payment revenue growth that reflected slow consumption spending,” according to Tencent.
Source : CNBC News
