Chinese giant Tencent announced its second-quarter financial results, marking the second consecutive period of double-digit growth in profit and revenue. During an earnings conference, Chairman Martin Lau noted that consumption in China is gradually returning to normal after the critical period of the Covid-19. However, he stressed that the pace of this recovery may not be as rapid as initially expected or hoped for. Against this backdrop, Lau noted that Tencent is demonstrating remarkable resilience, reporting solid revenue growth and even faster profit growth. This result is particularly significant given that many companies are still in a kind of “hold-up mode”, hoping for a faster economic recovery. An interesting element that emerged from the conference is Tencent’s internal experimentation of a proprietary generative AI model, applicable to various situations. Lau said the tests conducted so far show that this model is among the best of its kind produced in China. It is expected that Tencent will release this innovation by the end of the current year.
In terms of numbers, the net profit attributable to shareholders increased by 41% over the previous year, reaching the remarkable amount of 26.2 billion yuan (about 3.3 billion US dollars). Total revenue experienced an increase of 11%, reaching 149.2 billion yuan. This increase was mainly driven by a 34% increase in online advertising revenue to 25 billion yuan due to growing demand for video ads. The social networking and fintech services divisions contributed to these financial successes, reporting a 2% and 15% increase in their revenues, respectively. This has been made possible in part by optimizing costs and creating new tariff-based revenue sources, as pointed out by the company’s director of strategy, James Mitchell. Tencent also achieved a positive performance in the gaming industries, with international gaming revenue increasing by 19%, reaching 12.7 billion yuan. However, domestic game sales remained stable at 31.8 billion yuan. Additionally, the company highlighted continued interest in its messaging platforms, with a 2% increase in the total number of monthly active users of WeChat and Weixin, now standing at 1.3 billion. Meanwhile, mobile messaging platform QQ maintained its 571 million monthly active users. Tencent increased its investments in technology infrastructure, with capital investment expenditure (capex) rising 31% to 4 billion yuan. This increase was driven by increased investment in graphics processing units (GPUs) and servers, reflecting the strategic importance of enhancing its technology capabilities.