As cost-cutting measures started to pay off and revenues increased across the board for the company's various divisions, Tencent announced a weaker-than-expected rise in earnings for the second quarter.
Compared to Refinitiv consensus forecasts, here is how Tencent performed in the second quarter:
Revenue increased by 11% year over year to 149.21 billion Chinese yuan ($20.46 billion) as opposed to the anticipated 151.73 billion yuan.
Profit attributable to the company's stockholders was 26.17 billion Chinese yuan as opposed to 33.42 billion yuan. It has increased by 41% year over year.
Tencent started lowering costs last year by exiting non-core businesses and reducing marketing expenditures, and it is now beginning to reap the rewards. The business, which owns WeChat, is currently seeing growth across all of its divisions, from cloud to gaming.
“During the second quarter of 2023, we sustained a solid revenue growth rate, along with a gravitation toward high quality revenue streams with better margins,” Tencent said in a statement.
“This transition, combined with careful cost discipline developed in the previous year, resulted in profit growth exceeding revenue growth.”
As cost-cutting measures started to pay off and revenues increased across the board for the company's various divisions, Tencent announced a weaker-than-expected rise in earnings for the second quarter.
Compared to Refinitiv consensus forecasts, here is how Tencent performed in the second quarter:
Revenue increased by 11% year over year to 149.21 billion Chinese yuan ($20.46 billion) as opposed to the anticipated 151.73 billion yuan.
Profit attributable to the company's stockholders was 26.17 billion Chinese yuan as opposed to 33.42 billion yuan. It has increased by 41% year over year.
Tencent started cutting costs last year by getting out of non-core companies and spending less on marketing, and it is now starting to see the benefits. The company, which owns WeChat, is currently experiencing growth in all of its business segments, including cloud and gaming.
After releasing "less-commercial content"—such as in-game purchases—in its most popular games, Tencent reported that its domestic gaming revenue stayed unchanged year over year at 31.8 billion yuan. The stable outcome was preferable than the 1% revenue drop in the second quarter of 2022. The third quarter of the year should see a return to year-over-year growth in domestic game income, according to Tencent, who called this a "temporary phenomenon".
Due in large part to games like Valorant, revenue from the International Games division climbed by 19% to 12.7 billion yuan. Given the low domestic sales and the strict regulatory environment in China, Tencent has been concentrating on increasing its gaming revenue elsewhere.
There are, according to Tencent, "signs that the post-pandemic dip in activity is moving behind us in mobile games."
Tencent's mediocre gaming performance was mitigated by a significant increase in advertising revenue, which increased by 34% year over year to 25 billion yuan. The amount exceeded the 22.85 billion yuan consensus estimate from Refinitiv for advertising revenue.
Advertising spend on its platforms increased at a "double-digit year-over-year rate from every major advertiser category, except transportation," according to the business, who claimed that this was due to "robust demand" for advertising on its short-video platform.
Sales from Tencent's financial technology and cloud computing segment, which increased 15% year over year to 48.6 billion yuan, also contributed to the company's success. WeChat Pay, one of the largest mobile payment systems in China, is operated by Tencent and is subject to transaction fees.
Tencent's short video platform's e-commerce transactions as well as "modest growth" in cloud services aided the fintech and cloud segment, according to the company.
(Source:www.flipoboard.com)
Compared to Refinitiv consensus forecasts, here is how Tencent performed in the second quarter:
Revenue increased by 11% year over year to 149.21 billion Chinese yuan ($20.46 billion) as opposed to the anticipated 151.73 billion yuan.
Profit attributable to the company's stockholders was 26.17 billion Chinese yuan as opposed to 33.42 billion yuan. It has increased by 41% year over year.
Tencent started lowering costs last year by exiting non-core businesses and reducing marketing expenditures, and it is now beginning to reap the rewards. The business, which owns WeChat, is currently seeing growth across all of its divisions, from cloud to gaming.
“During the second quarter of 2023, we sustained a solid revenue growth rate, along with a gravitation toward high quality revenue streams with better margins,” Tencent said in a statement.
“This transition, combined with careful cost discipline developed in the previous year, resulted in profit growth exceeding revenue growth.”
As cost-cutting measures started to pay off and revenues increased across the board for the company's various divisions, Tencent announced a weaker-than-expected rise in earnings for the second quarter.
Compared to Refinitiv consensus forecasts, here is how Tencent performed in the second quarter:
Revenue increased by 11% year over year to 149.21 billion Chinese yuan ($20.46 billion) as opposed to the anticipated 151.73 billion yuan.
Profit attributable to the company's stockholders was 26.17 billion Chinese yuan as opposed to 33.42 billion yuan. It has increased by 41% year over year.
Tencent started cutting costs last year by getting out of non-core companies and spending less on marketing, and it is now starting to see the benefits. The company, which owns WeChat, is currently experiencing growth in all of its business segments, including cloud and gaming.
After releasing "less-commercial content"—such as in-game purchases—in its most popular games, Tencent reported that its domestic gaming revenue stayed unchanged year over year at 31.8 billion yuan. The stable outcome was preferable than the 1% revenue drop in the second quarter of 2022. The third quarter of the year should see a return to year-over-year growth in domestic game income, according to Tencent, who called this a "temporary phenomenon".
Due in large part to games like Valorant, revenue from the International Games division climbed by 19% to 12.7 billion yuan. Given the low domestic sales and the strict regulatory environment in China, Tencent has been concentrating on increasing its gaming revenue elsewhere.
There are, according to Tencent, "signs that the post-pandemic dip in activity is moving behind us in mobile games."
Tencent's mediocre gaming performance was mitigated by a significant increase in advertising revenue, which increased by 34% year over year to 25 billion yuan. The amount exceeded the 22.85 billion yuan consensus estimate from Refinitiv for advertising revenue.
Advertising spend on its platforms increased at a "double-digit year-over-year rate from every major advertiser category, except transportation," according to the business, who claimed that this was due to "robust demand" for advertising on its short-video platform.
Sales from Tencent's financial technology and cloud computing segment, which increased 15% year over year to 48.6 billion yuan, also contributed to the company's success. WeChat Pay, one of the largest mobile payment systems in China, is operated by Tencent and is subject to transaction fees.
Tencent's short video platform's e-commerce transactions as well as "modest growth" in cloud services aided the fintech and cloud segment, according to the company.
(Source:www.flipoboard.com)
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