Chinese technology giant Tencent Holdings posted on Wednesday an 8% rise in third-quarter revenue, extending momentum in its gaming business, while growth in its fintech segments softened amid China’s economic headwinds.
Tencent, the world’s largest video game company and operator of the WeChat messaging platform, reported revenue of 167.19 billion yuan ($23.14 billion) for the quarter ended Sept. 30, in line with the average analyst estimate of 167.8 billion yuan, according to LSEG data.
Domestic gaming revenue rose 14% to 37.3 billion yuan, extending the previous quarter’s 9% growth and marking two straight quarters of expansion after earlier declines. International gaming revenue increased 9% to 14.5 billion yuan.
The result was partly driven by “Dungeon & Fighter Mobile”, a marquee title launched in May, as well as the release of a new shooting game, “Delta Force”, in September.
The August release of “Black Myth: Wukong,” a globally successful game based on the Chinese classic “Journey to the West,” boosted Tencent’s investment portfolio, where the company holds a stake in the game’s developer.
As part of its gaming expansion strategy, Tencent’s Chief Strategy Officer James Mitchell said in a post-earnings call that the company aims to discover and invest in more game studios like Black Myth: Wukong’s developer, while continuing to leverage its own studios.
The company’s fintech and cloud services reported modest growth of 2% to 53.1 billion yuan, with its payments business declining amid weak consumer spending in China.
Revenue from its marketing services unit, formerly known as online advertising, grew 17% to 30 billion yuan.
Like many other Chinese internet firms, Tencent has deepened its artificial intelligence push over the past two years, building out computing services for users to train and deploy large language models.
However, President Martin Lau said in the post-earnings call that the company’s AI revenue trails U.S. cloud providers due to lower domestic demand for computing services.
Lau added that while Tencent has implemented AI to enhance products like targeted advertising, these investments have not yet generated significant revenue.
Tencent’s net income rose 47% to 53.23 billion yuan. Analysts had on average expected net income of 52.89 billion yuan, according to LSEG.
($1 = 7.7791 Hong Kong dollars)
($1 = 7.2242 Chinese yuan renminbi)
Reuters
