Tencent reported second-quarter revenue of 204.78 billion Chinese yuan ($30.36 billion), surpassing the expected 202.17 billion yuan, marking an 11% year-on-year increase. However, its net profit of 56 billion yuan fell below the anticipated 61.82 billion yuan.
The company's domestic gaming revenue rose 17% year-on-year to 47.3 billion yuan, driven by popular titles like Delta Force and Valorant, which is a significant improvement from the 6% growth in the previous quarter. In contrast, international gaming revenue declined slightly by 0.8% due to currency fluctuations, although it increased by 4% on a constant currency basis.
Despite these gains, Tencent's stock has dropped 26% year-to-date, reflecting investor concerns over rising competition in AI and increased spending, with capital expenditures rising 65% to 52.8 billion yuan. The company is actively developing its AI capabilities, including the testing of an AI assistant called Xiaowei within WeChat and the launch of its AI model Hy3.
Additionally, Tencent's marketing services revenue grew 22% year-on-year to 43.6 billion yuan, benefiting from enhancements to its AI-driven ad recommendation model. Overall, while Tencent's revenue growth is promising, the company faces significant challenges that could impact its future performance