Tencent’s Q2 revenue grows on recovery in gaming unit boosted by new title ‘DnF Mobile’

Tencent’s (OTCPK:TCEHY) (OTCPK:TCTZF) second quarter revenue rose 8% year-over-year, driven by recovery in its gaming business following the release of a new hit game Dungeon & Fighter Mobile in May.

Total revenues for Tencent — a video game company and operator of WeChat messaging service — amounted to RMB161.12B ($22.6B), compared to RMB149.21B in the second quarter of 2023. The numbers came in above analysts estimates of RMB160.77B, Reuters reportedciting LSEG data.

On an IFRS basis, profit attributable to equity holders of the company surged 82% year-over year to RMB47.6B ($6.7B).

“Our Domestic Games revenue resumed growth, and our International Games revenue accelerated growth, due to increased user engagement at several of our evergreen titles, and the successful launches of certain new games. Tencent Video achieved notable audience and subscriber growth with drama series developed from China Literature IP and produced internally,” said Tencent’s Chairman and CEO Ma Huateng.

Revenue from VAS (value-added services) segment, increased 8% year-over year to RMB78.8B.

International Games revenues were up 9% year-on-year to RMB13.9B, driven by a strong performance from PUBG Mobile and increased popularity for Supercell’s games.

Tencent noted that gross receipts for International Games increased at a substantially faster rate than revenues.

Domestic Games revenues resumed year-on-year growth, up by 9% to RMB34.6B, driven by increased revenue from VALORANT and the successful launch of DnF Mobilethe company noted.

DnF Mobile — based on Tokyo-based Nexon’s (OTCPK:NEXOF) (OTCPK:NEXOY) game franchise — was expected to bring a fresh boost to Tencent’s gaming pipeline. The game was released on May 21 and reportedly garnered about $270M in the 30 days since its release in China, taking the top spot in downloads and revenue among games on Apple devices in the Asian nation.

But Tencent does face strong competition in China. NetEase (NTES) and Genshin Impact studio Mihoyo both unveiled games that have seen strong initial momentum.

Tencent said gross receipts increase for Domestic Games outpaced revenue growth.

Social Networks revenues rose 2% year-over-year to RMB30.3B helped by growth in music and long-form video subscription revenues, Mini Games platform service fees and app-based game virtual item sales. However, it was partially offset by a decline in music-related and games-related live-streaming revenues, according to the company.

The combined monthly active users, or MAU, of the messaging/social media apps Weixin and WeChat rose 3% year-over-year to 1.371B. Quarter-over-quarter, there was a 0.9% increase.

Mobile device MAU of instant messaging service QQ were flat year-over-year at 571M. Fee-based VAS registered subscriptions rose 12% to 263M.

The Chinese tech giant noted that revenues from Online Advertising jumped 19% year-on-year to RMB29.9B.

Meanwhile, revenues from FinTech and Business Services in the second quarter increased 4% year-on-year to RMB50.4B.

Tencent said FinTech Services revenue growth decelerated to a low single-digit percentage rate, impacted by further moderation in commercial payment revenue growth which reflected slow consumption spending, alongside a decline in consumer loan services revenue due to stronger risk control measures. However, wealth management services revenues saw double-digit percentage growth.

Business Services revenues saw a teens growth rate, driven by a rise in cloud services revenues, which included improved monetization of WeCom, and higher eCommerce technology service fees within Video Accounts, the company added.