Chinese internet giant Tencent posted its fastest revenue growth in seven years in Q2 and a record profit of CNY18.2 billion ($2.7 billion) thanks to robust increases from its gaming division and mobile messaging platform.
Driven by the widely popular Honour of Kings mobile game, online games revenue rose 39 per cent year-on-year during the quarter to CNY23.9 billion. Its combined Weixin and WeChat monthly active user numbers increased 19.5 per cent to 963 million.
The company’s profit attributable to shareholders of the company jumped 70 per cent compared with Q2 2016, on revenue of CNY56.6 billion, which was up 59 per cent. Part of the profit gain was due to a more than CNY5 billion jump in valuations from its investments in startups in the fintech and ride-sharing sectors, Bloomberg reported.
Future investments
Ma Huateng, Tencent chairman and CEO, said strong revenue growth from multiple businesses enabled it to reinvest in innovations and new technologies including cloud services and artificial intelligence, to keep pace with an increasingly competitive industry.
Tencent, the world’s largest gaming company, grew smartphone games revenue 54 per cent year-on-year to CNY14.8 billion, exceeding PC client games revenue for the first time. PC client games sales rose 29 per cent to CNY13.6 billion. It expects PC client games revenue growth rates to decelerate in the future.
Growth in smartphone games was driven by existing titles such as Honour of Kings, and new titles such as the China version of Contra Return, Dragon Nest Mobile and Legacy TLBB Mobile.
Social network revenue increased 51 per cent to CNY12.9 billion, mainly due to growth from digital content services such as live broadcast, video and music, as well as from item sales in smartphone games.
Online advertising turnover grew 55 per cent to CNY10.1 billion and media advertising revenue was up 48 per cent to CNY4.08 billion due to higher traffic for its video services and news feed advertisements for Tencent News products. Social and other advertising revenues jumped 61 per cent to CNY6.07 billion on top of growth in ad revenue from Weixin and mobile apps.
Tencent’s Q2 results were released the same day China Unicom announced the company is one of a group of 14 strategic investorswhich will invest CNY78 billion in the operator as part of the government’s mixed-ownership reforms.
