Tencent Holdings, the tech giant based in China, has reported a significant upsurge in its third-quarter revenue, showcasing a remarkable recovery in its gaming sector and a surge in online advertising sales.
For the three months ending in September, Tencent’s revenue soared to 154.6 billion yuan ($21.4 billion), marking a 10 percent increase from the same period last year. This growth aligns with market expectations and represents the third consecutive quarter of revenue growth for the conglomerate.
Tencent weathered a challenging phase in the previous year due to stringent regulatory actions impacting the gaming industry. A regulatory crackdown initiated in 2021 resulted in an eight-month hiatus in new game licenses and stricter regulations regarding minors’ gaming duration. Consequently, Tencent recorded its inaugural annual revenue decline.
However, the tides have turned in 2023 as regulatory authorities resumed issuing game licenses, leading to a substantial revival in the gaming sector. Tencent’s domestic games revenue witnessed a 5 percent surge, propelled by the successful launches of popular titles like “Lost Ark” and “Valorant” in China, developed by Riot Games, a company in which Tencent holds stakes.
The gaming industry, collectively, reached a milestone in August by generating a combined revenue of 29.2 billion yuan, the highest level recorded in over 20 months, as reported by CNG, a government-endorsed industry data firm.
In addition to gaming, Tencent’s online advertising arm experienced a remarkable 20 percent surge in revenue. The surge was attributed to the robust demand for advertising across its video content platforms.
Furthermore, the company’s fintech division, its second-largest business unit, witnessed a commendable 16 percent increase in sales. This growth was fueled by improved performances in wealth management services and online transactions.
Despite the overall positive performance, Tencent’s net profit saw a decline of 9 percent, settling at 36.1 billion yuan compared to the previous year. This drop was primarily attributed to the company’s strong performance in the previous year after divesting stakes in portfolio companies like Sea.
Tencent’s latest quarterly report underscores a notable rebound in its key business segments despite lingering challenges. The company’s strategic initiatives and the resurgence of the gaming sector signal a promising trajectory in the wake of regulatory hurdles.