Tencent's Q2 revenue rises 11%, but misses expectations

August 17, 2023 0:09 am

Tencent reported lower-than-expected second-quarter revenue growth on Wednesday.

Second-quarter revenue came in at 149.21 billion yuan ($20.44 billion), missing estimates of 151.73 billion yuan and up 11% year-over-year.

Domestic game revenue was flat year-over-year at 31.8 billion yuan, while international game revenue was up 19% year-over-year at 12.7 billion yuan. Tencent has been working to increase its international game revenues in light of weak domestic sales and the tough regulatory environment in China.

Advertising revenue grew 34% year-on-year to 25 billion yuan. The figure exceeded Refinitiv's consensus estimate for advertising revenue of 22.85 billion yuan. The company said this was due to "strong demand" for ads on its short-form video platform.

Revenue from its financial technology and cloud computing divisions rose 15% year-on-year to $48.6 billion. In July, Tencent’s payment subsidiary Tenpay was fined 2.99 billion yuan by Chinese financial regulators for “past regulatory breaches”.

Profit attributable to equity holders came in at 26.17 billion yuan, below estimates of 33.42 billion yuan and up 41% year-on-year.

Tencent is investing heavily in generative artificial intelligence (AI), which it sees as a key growth driver for the future. 

During the earnings call with analysts, Tencent President Martin Lau said that the company is building a proprietary foundation model and hopes to incorporate it into various businesses. In June, the tech giant launched the Tencent Cloud MaaS (Model as a Service) solutions, leveraging its proprietary vector database and high-performance computing clusters.