Tencent posts revenue and profit growth in Q2

Chinese leading tech company Tencent Holdings posted a rise in both revenue and net profit in the second quarter this year, as the company started to see benefits from the cost-cutting drive that it embarked on last year.

According to its fiscal report on Tuesday, Tencent raked in more than 149.2 billion yuan ($20.7 billion) in revenue for the three months ending on June 30, up 11 percent year-on-year. Its net profit also rose 33 percent year-on-year to over 37.5 billion yuan.

Ma Huateng, chairman and CEO of Tencent, said in a statement that the company sustained a solid revenue growth rate, along with a gravitation toward high quality revenue streams with better margins, during the second quarter.

“This transition, combined with careful cost discipline developed in the previous year, resulted in profit growth exceeding revenue growth,” he said.

Last year, the world's largest video game company and operator of the WeChat messaging platform embarked on a drive to cut costs when it exited some non-core businesses and tightened spending on marketing.

Notably, in the second quarter, revenue from Tencent’s online advertisement saw robust growth with a 34 percent year-on-year rise to 25 billion yuan, and it claimed that ads spent on its short-video platform grew at a “double-digit year-on-year rate from every major advertiser category, except transportation”.

For Tencent's core gaming business, domestic gaming revenue stayed mostly flat at 31.8 billion yuan, while international gaming revenue rose 12 percent to 12.7 billion yuan.

As ChatGPT takes the tech world by storm, Tencent President Martin Lau said in an earnings call on Wednesday that the company plans to launch its proprietary foundational AI model later this year.

Tencent has already been testing this model internally across different parts of the business, including advertising and fintech.

Lau said that it is in good progress and the performance could make it into the top foundation models produced in the country.