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BEIJING: Chinese internet giant Tencent announced on Wednesday (Aug 14) that its second-quarter net profit surged 82%, the biggest increase since the end of 2020, thanks to a recovery in its gaming business.
Tencent is one of the most valuable companies in China’s technology sector, operating China’s ubiquitous instant messaging and services “super app” WeChat, as well as products such as gaming, cloud computing and content streaming.
However, earlier this year the company reported its lowest annual profit since 2019, due in part to stagnant gaming revenue in the final quarter of 2023.
Net profit reached $6.7 billion in April-June, compared with $3.7 billion in the same period last year, the Shenzhen-based company said in a filing to the Hong Kong stock exchange.
The company said sales rose 8% year-over-year to $22.5 billion.
“Our second quarter 2024 results demonstrate the strength of our platform-plus-content strategy,” Tencent said in the filing.
“Looking ahead, we will continue to invest in platforms and technologies, including artificial intelligence, that will enable us to create new business value and better meet user needs,” the company said.
Tencent said its domestic gaming revenue “resumed growth” while “international gaming revenue growth accelerated.”
The company said this was due to “increased user engagement in several of our classic games and the successful launch of certain new titles”.
After decades of rapid development, China’s technology industry has become one of the most dynamic industries in the world. However, this momentum came to an abrupt halt in 2020 as Beijing introduced stricter regulatory measures.
After years of relatively light regulation, China’s big tech companies are facing a series of regulatory crackdowns related to competition and personal data that have thrown the industry into turmoil.
Since 2021, the Chinese government has also strictly limited the time minors under the age of 18 can play online games to 3 hours per week in an effort to curb young people’s addiction to online games.
The restrictions have severely impacted Tencent’s profitability, with the group reporting its first decline in quarterly revenue in 18 years in 2022.
In search of new opportunities, Tencent is eyeing the promising artificial intelligence (AI) market, joining other Chinese tech giants such as Baidu, Huawei, Alibaba and ByteDance.
In September, Tencent launched its AI chatbot Hunyuan, designed to compete with the US-based ChatGPT, which is not available in China.
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