Tencent Q2 profit blows past estimates on gaming strength

Credit: REUTERS/Aly Song

Tencent Holdings on Wednesday posted a better-than-expected 35% rise in quarterly net profit, as its gaming arm regained growth momentum on a thaw in new approvals by China after a freeze for most of last year.

By Sijia Jiang

HONG KONG, Aug 14 (Reuters) - Tencent Holdings 0700.HK on Wednesday posted a better-than-expected 35% rise in quarterly net profit, as its gaming arm regained growth momentum on a thaw in new approvals by China after a freeze for most of last year.

The world's largest gaming firm by revenue reported 24.14 billion yuan ($3.44 billion) in net profit for the second quarter ended June, versus an average estimate of 20.74 billion yuan from 13 analysts polled by Refinitiv.

Revenue rose 21% to 88.8 billion yuan, versus an average forecast of 93.4 billion yuan from 16 analysts.

Smartphone gaming revenue rose 26% to 22.2 billion yuan, helped by major titles including "Honour of Kings", "Perfect World Mobile", "Peacekeeper Elite", as well as new releases.

Tencent said it launched 10 new games in the quarter, versus only 1 in the previous quarter.

In 2018, Tencent turned in its slowest annual profit growth in 13 years on the suspension in the approval for new games.

Approvals restarted in December, with Tencent receiving permission to launch "Perfect World Mobile" in the January-March quarter.

"FinTech and Business Services", a new revenue category set up this year that includes payment and cloud services, generated 22.9 billion yuan, up 37%, helped by rapid growth in commercial payment services.

"Amid the evolving macro-economic and competitive challenges, we continue to invest in enhancing our platforms, services and technologies, for better supporting our users and enterprise customers," Tencent said in a filing.

($1 = 7.0173 Chinese yuan)

(Reporting by Sijia Jiang; Editing by Himani Sarkar)

((Sijia.Jiang@thomsonreuters.com; +852 65313893;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More