Tencent Holdings, operator of China's biggest social media app and the world's largest video gaming business by revenue, beat analyst estimates with a 47 per cent profit jump in the third quarter, helped by renewed growth in the video gaming segment.
Profit reached 53.2 billion yuan (US$7.4 billion) in the three months ended September, up from 36.2 billion yuan in the same period a year ago. That exceeded the consensus estimates of 45.3 billion yuan from analysts polled by Bloomberg.
Revenue for the Shenzhen-based firm reached 167.2 billion yuan, up 8 per cent year on year from 154.6 billion. It was in line with analyst estimates of 167.9 billion yuan.
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"During the third quarter of 2024, we delivered robust revenue growth in our games business, underpinned by consistent performance of evergreen games globally and contributions from new games with evergreen potential," said Tencent founder and CEO Pony Ma Huateng.
Robust video game sales boosted Tencent's latest quarterly earnings. Photo: AFP alt=Robust video game sales boosted Tencent's latest quarterly earnings. Photo: AFP>
"We are increasingly seeing tangible benefits of deploying [artificial intelligence (AI)] across our products and operations, including marketing services and cloud, and will continue investing in AI technology, tools and solutions that assist users and partners," Ma said.
Tencent's shares closed flat at HK$403.8 on Wednesday ahead of the results. The stock has risen over 36 per cent this year amid a wider rebound in the market since September.
The results came after Tencent enjoyed its first full-quarter contribution of Dungeon & Fighter (DnF) Mobile, which was released in May and became an instant hit in China. Its other mobile titles have also shown strong performances.
Video gaming sales, traditionally Tencent's strongest revenue driver, grew 14 per cent in the domestic market while rising 9 per cent overseas, reaching 37.3 billion yuan and 14.5 billion yuan, respectively. The strong domestic growth came on the back of titles including Valorant, Honour of Kings, Peacekeeper Elite and DnF Mobile, the company said.
Honor of Kings, DnF Mobile, Peacekeeper Elite and Battle of the Golden Spatula were the four highest-grossing games in Apple China's iOS store in September, according to data from analytics firm Sensor Tower.
The Chinese tech giant's game portfolio also expanded during the quarter after it had new titles approved by the government in every month from July to September.
Outside China, Tencent and Ubisoft's founding family, the Guillemots, are reportedly considering a buyout of the Assassin's Creed publisher, the largest video-gaming firm in France.
On the electronic payments front, e-commerce giant Alibaba Group Holding announced a landmark deal with Tencent in September to allow sellers in China's largest online marketplaces, Taobao and Tmall, to accept Tencent's WeChat Pay. Alibaba owns the South China Morning Post.
In AI, Tencent is looking for new growth opportunities, as it pushes the adoption of its self-developed Hunyuan large language model in various industries, as well as its AI infrastructure for enterprise clients.
The company is also exploring new cloud-computing opportunities overseas, banking on rising demand for AI technologies globally to offset competition at home, where major players and start-ups are engaged in a full-fledged price war.
DreamStar, a mobile game by Tencent, is seen on a mobile phone next to a logo of Tencent Games, in this illustration picture taken March 19, 2024. Photo: Reuters alt=DreamStar, a mobile game by Tencent, is seen on a mobile phone next to a logo of Tencent Games, in this illustration picture taken March 19, 2024. Photo: Reuters>
Revenue from Tencent's value-added services, comprising the company's video gaming and social network businesses, came in at 82.7 billion yuan in the third quarter of 2024, up 9 per cent from a year ago.
Tencent's revenue from marketing services, previously known as its online advertising business, grew by 17 per cent year on year to 30 billion yuan in the September quarter. The demand for ads in WeChat's Video Accounts, Mini Programs and Weixin Search helped propel the advertising performance, as ad spending from games and e-commerce industries saw year-on-year increases. Combined monthly active users for Weixin and WeChat had reached 1.38 billion by the end of September.
The gross merchandise value, a metric for e-commerce sales, in WeChat's Mini Program was 2 trillion yuan in the third quarter with a high teens year-on-year growth, on the back of food ordering, electric vehicle charging and medical services, according to the company.
Revenue from fintech and business services grew 2 per cent to 53.1 billion yuan in the quarter, as payment services sales declined amid weakened consumption spending.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright ? 2024 South China Morning Post Publishers Ltd. All rights reserved.
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