Chinese tech giant Tencent says net profits soar in second quarter

Chinese internet giant Tencent announced on Wednesday an 82 percent surge in second-quarter net profit, its biggest jump since late 2020, after a resurgence in its gaming business.

Tencent is one of the most valuable players in China’s tech industry, operating the country’s ubiquitous WeChat messaging and services “super-app” as well as offerings across gaming, cloud computing and content streaming.

However, it posted its lowest annual profit since 2019 earlier this year, due in part to stagnating gaming revenue in the final quarter of 2023.

The Shenzhen-based company said in a filing to the Hong Kong Stock Exchange that net profit hit $6.7 billion in April-June, compared with $3.7 billion in the same period last year.

Sales rose by eight percent year-on-year to $22.5 billion, it said.

“Our second quarter 2024 results demonstrated the strengths of our platform plus content strategy,” Tencent said in the 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,” it said.

Tencent’s revenue from domestic gaming “resumed growth”, it said, while “international games revenue accelerated growth”.

That was driven by “increased user engagement at several of our evergreen titles, and the successful launches of certain new games”, it said.

Decades of meteoric growth that transformed China’s tech industry into one of the world’s most dynamic came to an abrupt stop in 2020 after Beijing introduced more stringent oversight measures.

Major Chinese tech companies have faced a series of regulatory crackdowns related to competition and personal data, following years of relative leniency, which has unsettled the sector.

Since 2021, Chinese authorities have also imposed a strict weekly limit of three hours of online games for minors under 18 to curb addiction among younger people.

The restrictions significantly affected Tencent’s profitability and the group reported its first quarterly revenue drop in 18 years in 2022.

In search of new opportunities, Tencent is now eyeing the promising artificial intelligence (AI) market, like other Chinese tech giants such as Baidu, Huawei, Alibaba, and ByteDance.

In September, Tencent unveiled Hunyuan, an AI-powered chatbot designed to compete with the United States’ ChatGPT, which is not accessible in China.