The company’s core gaming business had faced headwinds, with China revenue declining for two consecutive quarters since the fourth quarter. room last year, partly affected by the successful launch of rival games from competitors.
Business is now showing signs of recovery, helped by the launch of the long-awaited “Dungeon & Fighter Mobile.” qualification which dominated the top-grossing charts on Apple’s iOS platform in China for nearly a month since its release in May, according to industry data.
Tencent, the world’s largest gaming company and operator of the WeChat messaging platform, reported revenue of 161.12 billion yuan ($22.5 billion) in the second quarter ended June 30. Analysts had expected 160.77 billion yuan, according to data from LSEG.
“We had a good quarter … but let’s not lose sight of the fact that we had a very challenging business environment over the past two years,” Tencent Chairman Martin Lau said. During the quarter, Tencent’s domestic gaming revenue rose 9% to 34.6 billion yuan, while international gaming revenue also rose 9% to 13.9 billion yuan. The company said it spent HK$52.3 billion ($6.71 billion) on share buybacks in the first half of 2024, before expenses. Earlier this year, Tencent pledged to more than double its share buybacks in 2024 to more than HK$100 billion from HK$49 billion in 2023.
Chinese technology companies have stepped up share buybacks to boost investor confidence as the sector recovers from a regulatory crackdown. The move comes amid concerns about slowing economic growth in China.
Tencent online advertising Revenue rose 19% to 29.9 billion yuan in the quarter, driven by strong advertising spending in sectors such as gaming and education, despite tough economic conditions.
The company’s management warned that the macroeconomic environment would pose challenges for some parts of its business. Growth in Tencent’s fintech services slowed to a low single-digit percentage rate, partly due to weak consumer spending.
Like many of its internet peers, Tencent has invested heavily in artificial intelligence. The company’s quarterly operating report capital Spending increased 144%, driven in part by investments in GPU servers.
The company said it already uses AI internally to grow its advertising business and that the technology has increasingly contributed to its Cloud computing business.
Tencent’s second-quarter net profit rose 82% to 47.6 billion yuan.
(1 dollar = 7.1484 Chinese yuan renminbi) (1 dollar = 7.7897 Hong Kong dollars)
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