Chinese technology company Tencent is a gaming giant and the parent company of WeChat, a widely popular social messaging app in China.
Chen Xin | Getty Images News | Getty Images
Chinese social media and gaming company tencent on Wednesday reported better-than-expected profits in the third quarter, driven by growth in gaming, advertising and cloud services.
Tencent reported third-quarter profit attributable to shareholders of 53.23 billion yuan ($7.37 billion), up 47% year-on-year, compared to LSEG’s forecast for the same period of 46.18 billion yuan.
The company’s sales rose 8% annually to 167.19 billion yuan, lower than analysts’ expectations of 167.82 billion yuan.
Games remain the company’s backbone, with the division’s domestic sales increasing 14% year-on-year to 37.3 billion yuan, while overseas game sales rose 11% on a constant currency basis to 14.5 billion yuan.
The company noted that existing games and new games have “everlasting potential.”
Revenue from marketing services, formerly known as online advertising, rose 17% annually to 29.99 billion yuan, making it one of the fastest-growing categories outside of gaming. Tencent attributed the growth to “strong advertiser demand” for short videos, mini-programs and search features within the messaging app, called Weixin in China and WeChat overseas.
Global average monthly users of messaging apps increased 3% year-over-year to 1.38 billion in the third quarter.
Advertising spending from gaming and e-commerce has grown, more than offsetting the decline in revenue from real estate and food and beverages.
The company also boasted the benefits of adopting homegrown artificial intelligence tools amid a broader global boom in the AI field.
“We are increasingly seeing tangible benefits from deploying AI across our products and operations, including marketing services and cloud, and we are investing in AI technologies, tools and solutions to help our users and partners,” Tencent said in a statement. We will continue to do so.” earnings release.
The company said it has increased commercial queries and click-through rates for searches within the Weixin app thanks to its extensive language model capabilities.
In June, Tencent upgraded its advertising feature, which uses AI to select or create targeted ads that appear within articles and videos within the messaging app. The company says the update increases the number of accounts using the feature nine times over last year, bringing the number of users to more than 200,000.
Tencent has been trying to beef up its e-commerce services of short video accounts and mini-programs to compete with ByteDance’s Douyin, the local version of TikTok, and major online shopping platforms.
Tencent said its mini-program gross merchandise value (a long-term indicator of industry sales) was in the “high teens” range from a year ago in the third quarter as people used the app to help order food. It was announced that the amount has increased to more than 2 trillion yuan. , electric vehicle charging and medical services.
