Tencent Quarterly Profits Rebound to $6.7 Billion as China Games Segment Returns to Growth and

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Tencent, China’s leading social media, streaming and games group, enjoyed a rebound in profitability in the second quarter of the year that it says vindicates its position as platform operator and content producer.

Revenues in the April to June period increased by 8% to RMB161 billion ($22.5 billion), but net profit surged ahead by 82% to RMB47.6 billion ($6.67 billion). On a six month, or first half year, view, Tencent reported Revenues up 7% to RMB320 billion ($44.8 billion) and net profits up 70% at RMB89.5 billion ($12.5 billion).

Tencent Video saw a year-on-year growth in video streaming subscribers of 13% to a (restated) 117 million. Management credited intra-group synergies for some of the gains. Its “Joy of Life 2” and “The Legend of Shen Li” were two most watched drama series on China online platforms during the first half of 2024. Both drama series were based on listed subsidiary company China Literature’s web novel IPs and produced by Tencent’s New Classics Media.

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The separately-reported Tencent Music unit also hit 117 million paying subscribers, helped by a expanded catalog and soundtracks from Tencent Video shows.

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The group’s massive games businesses also improved at home and abroad. International games revenues were $1.94 billion, up by 9%, primarily driven by a strong performance from “PUBG Mobile” and enhanced popularity for Supercell’s games.

Its “Brawl Stars” achieved historical high quarterly daily average user (DAU) figures and ranked third internationally among all mobile games measured by DAU. It benefitted from frequent content updates and social features and saw a more than tenfold growth in gross receipts.

The China games business returned to growth after previous woes, with 9% year-on-year revenue growth to $4.84 billion. This was driven by increased revenue from “Valorant” and the successful launch of “DnF Mobile,” which the group says reactivated millions of IP fans, is retaining players well and is shaping up to become the group’s next evergreen major hit.

“Honour of Kings” and “Peacekeeper Elite,” both resumed year-on-year growth in gross receipts in the second quarter. “Naruto Mobile” reached a new milestone of 10 million monthly DAU in May.

Quarterly gross profitability across the subscription-based businesses grew 12% year-on-year to $6.29 billion.

Social network revenues were barely changed at RMB30.3 billion ($4.23 billion), while online advertising grew by 19% to RMB29.9 billion ($4.18 billion) – despite a decline in mobile ad revenues as clients cut their spending.

“Our second quarter 2024 results demonstrated the strengths of our platform plus content strategy. Our domestic games revenue resumed growth, and our international games revenue accelerated growth, due to increased user engagement at several of our evergreen titles, and the successful launches of certain new games,” Tencent management said in a regulatory filing. “Looking forward, we continue to invest in our platforms and technologies including AI, enabling us to create new business value and better serve user needs.”

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