Tencent’s profit in the opening quarter rose by more than 50 per cent year-on-year, credited to a focus on high-quality revenue streams and potentially indicating early signs of a recovery in China’s tech sector.

Chair and CEO Pony Ma explained on an earnings call earlier this week that operating profit was driven by gains in advertising in video accounts and WeChat search, wealth management services, mini games, platform service fees and e-commerce technology service charges.

Net profit grew 54 per cent to CNY58.3 billion ($8.1 billion) and revenue 6 per cent to CNY159.5 billion.

Online advertising grew 26 per cent to CNY26.5 billion, aided by increased engagement in AI-powered ad targeting, the company stated.

Fintech and business services revenue rose 7 per cent to CNY52.4 billion.

Chief strategy officer James Mitchell noted because the economy is diverse, “advertiser sentiment is also quite mixed”.

He expects advertising growth to be less rapid in subsequent quarters: “But that said, we think we are in a good position to continue taking share of the market at a rapid rate.”

Value-added services revenue was flat, with domestic game sales down 2 per cent to CNY34.5 billion, social networks 2 per cent less at CNY30.5 billion and international games up 3 per cent to CNY13.6 billion. 

Combined monthly active users (MAUs) of messaging service WeChat and Chinese version Weixin increased 7 per cent to 1.4 billion.

MAUs on its QQ mobile messaging platform dropped 7 per cent to 553 million, a third consecutive quarterly decline.

Capex increased 226 per cent to CNY14.4 billion, which the company noted was up from a low base in Q1 2023, and mainly driven by investment in GPUs and servers to support its AI app recommendation algorithms.