Tencent’s (0700) first-half net profit increased by 15.6 percent year-on-year to 103 billion yuan (HK$112.67 billion), thanks to robust second-quarter demand in advertising and AI utilization, although its gaming revenue growth slowed.
Ahead of the results announcement, shares of the Chinese tech giant jumped 4.7 percent to HK$586 apiece, the highest since the end of March 2021.
For the April-June period, Tencent’s revenue totaled 184.5 billion yuan, up by 14.5 percent from one year ago, beating the average market estimates of 178.9 billion yuan. The second-quarter figure increased the interim income to 364 billion yuan, 13.7 percent higher than one year earlier.
Tencent attributed the double-digit rise in second-quarter revenue partly to the investment and the benefits from the utilization of artificial intelligence, in which the tech giant promised to increase capital expenditure amid the intensified race in the home market following 2024’s 70.7 billion yuan in research and development.
Despite the vow, Tencent spent 22.9 billion yuan during the April-June period primarily to support its AI-related initiatives, slightly fewer than 23 billion yuan in the first quarter.
Net cash flow generated from operating activities also dropped by 0.3 percent quarter-on-quarter to 74.4 billion yuan.
Tencent bought back HK$36.5 billion worth of stock during the first half without announcing new repurchase schemes.
The company's value-added services expanded 15.9 percent year-on-year to 91.4 billion yuan in the second quarter, as revenue from international video games such as Supercell and PUBG Mobile saw the income surge 35 percent to 18.8 billion yuan.
However, revenue from domestic games decreased 6 percent quarter-on-quarter to 40.4 billion yuan, with year-on-year growth slowing to 17 percent, which Tencent described as the “seasonal decline” following the Spring Festival period.
Revenue from marketing services grew to 35.8 billion yuan for the three months ending in June, up by 12 percent quarter-on-quarter and 20 percent year-on-year. Tencent cited robust advertiser demand across Video accounts, resulting from AI-driven improvements to its advertising platform and enhancements to the Weixin transaction ecosystem.
Its fintech and business services contributed 55.5 billion yuan in the past quarter, up by 1 percent from a quarter ago and 10 percent from one year ago, thanks to higher revenues from cloud services and e-commerce technology service fees.
