Tencent’s second-quarter results exceeded market expectations, with revenue reaching 161.12 billion Chinese yuan and profit attributable to equity holders of the company hitting 47.63 billion Chinese yuan. These figures surpassed analysts’ consensus estimates, showcasing strong growth in the company’s core gaming division. Comparing year-on-year data, revenue increased by 8%, while profit saw a significant 82% rise.
Following a period of revenue decline in 2022, Tencent focused on reaccelerating growth in its gaming business. This strategy paid off, as the company’s China games business generated 34.6 billion yuan in revenue in the second quarter, marking a 9% increase from the previous year. The success was attributed to the popularity of games like Valorant and the launch of Dungeon & Fighter Mobile (DnF Mobile), which quickly climbed the top grossing game charts in China. Tencent aims to capitalize on DnF Mobile’s success, similar to its previous hit, Honor of Kings.
Tencent also reported a 9% increase in international games revenue, reaching 13.9 billion yuan in the second quarter. This growth highlights the company’s efforts to expand its gaming offerings beyond China. Additionally, Tencent’s online advertising business saw a 19% year-on-year revenue increase, driven by the success of video advertising on WeChat, the largest messaging app in China. Despite concerns about moderating commercial payment growth, Tencent’s fintech and business services division, including cloud computing and WeChat Pay, experienced a 4% revenue increase, demonstrating the company’s diversification strategy.
Investors have responded positively to Tencent’s second-quarter performance, with shares rising by approximately 27% during the year. The excitement surrounding DnF Mobile’s success and Tencent’s ongoing efforts to monetize video on WeChat have contributed to investor optimism. Looking ahead, Tencent aims to leverage its strong gaming portfolio, expand internationally, and capitalize on emerging trends in fintech and online advertising. The company’s ability to maintain its growth trajectory and innovate in key sectors will be crucial in sustaining investor confidence and driving long-term value.