Tencent profit surges on smartphone gaming boom
Tencent almost doubled its profit in the third quarter as the Chinese tech conglomerate continued to cash in on booming demand for its online games.
The tech giant, which is the world’s largest gaming firm by revenue, reported a 38.5bn yuan (£4.4bn) profit in the three months to the end of September, up 89 per cent on last year.
Total revenue was up 29 per cent over the period to 125.4bn yuan.
The company was boosted by continued strong demand for its online video games, which have proved wildly popular and enjoyed an increase in user numbers since the start of the pandemic.
Tencent said growth in smartphone titles such as Peacekeeper Elite and Honour of Kings had helped drive up online games revenue by 45 per cent to 41.4bn yuan.
The Shenzhen-headquartered conglomerate said advertising activity in China had largely returned to normal following the Covid-19 slump, with only a few exceptions in sectors such as travel.
It said growing demand in categories such as education, internet services and ecommerce platforms had driven a 16 per cent increase in online ad revenue.
The group’s fintech division, which includes payments through social media platform Wechat, also grew over the quarter.
However, Tencent reported slowing growth in cloud and other business services due to the continued impact delays in projects and new contract sign-ups as a result of the pandemic.
“This quarter marked the second anniversary of our strategic organisation upgrade, which was intended to enhance our strength in consumer internet and extend our presence to industrial internet,” said Ma Huateng, Tencent chairman and chief executive.
“While the upgrade was designed to bear fruit over the longer run, we are already seeing initial benefits in areas such as consolidating our advertising services, rejuvenating our product and content platforms, growing our cloud and SaaS businesses and building an internal open source code base.”
The upbeat figures come as Chinese tech giants face increased scrutiny from regulators in their home country.
Beijing this week unveiled draft rules designed to curb monopoly power and block companies from engaging in anti-competitive practices.
If passed, the new laws are likely to impact Tencent’s Wechat Pay, as well as rival Alipay, which is owned by Ant Group, and ecommerce giants such as Alibaba and JD.com.