Chinese social media and gaming company Tencent on Wednesday reported better-than-expected profit in the third quarter, spurred by growth in games, advertising and cloud services.
Tencent reported profit attributable to shareholders surged by 47% year-on-year to 53.23 billion yuan ($7.37 billion) in the third quarter, compared with an LSEG estimate of 46.18 billion yuan for the period.
The company’s revenue rose by an annual 8% to 167.19 billion yuan, short of the 167.82 billion yuan analyst forecast.
Gaming remained the company’s backbone, with the unit’s domestic revenue up 14% year-on-year to 37.3 billion yuan, while that for international games shot up by 11% to 14.5 billion yuan on a constant currency basis.
The company noted that existing and new games had “evergreen potential.”
Marketing services revenue, previously called online advertising, surged by an annual 17% to 29.99 billion yuan, making it one of the fastest-growing categories outside gaming. Tencent attributed the growth to “robust advertiser demand” for its short-videos, mini programs and search features within its messaging app — called Weixin in China and WeChat overseas.
Global monthly average users for the messaging app rose by 3% from a year ago to 1.38 billion in the third quarter.
Advertising spend from games and e-commerce gained ground, more than offsetting a revenue drop from real estate and food and beverage.
The company also boasted the benefits of employing its self-developed artificial intelligence tools, amid a broader global boom in the AI space:
“We are increasingly seeing tangible benefits of deploying AI across our products and operations including marketing services and cloud, and will continue investing in AI technology, tools and solutions that assist users and partners,” Tencent said in an earnings release.
The company said that search within the Weixin app saw growth in commercial queries and click-through rates, thanks to large language model capabilities.
In June, Tencent upgraded an advertising feature that uses AI to select or help create targeted ads that sit inside articles and videos based inside its messaging app. That update drove a nine-fold increase from last year in the number of accounts using the feature — to more than 200,000 users, according to the company.
Tencent has sought to build up its short video accounts and mini-program e-commerce offerings to compete with ByteDance’s Douyin — the local version of TikTok — and major online shopping platforms.
In the third quarter, Tencent said mini programs’ gross merchandise value — an industry measure of sales over time— expanded by the “high teens” from a year ago to more than 2 trillion yuan, as people used the app for help with ordering food, electric vehicle charging and medical services.
