Chinese internet giant Tencent registered a second consecutive quarter of double-digit profit and revenue growth in Q2, with gains across most business units and a continued recovery in online advertising.
On an earnings call, president Martin Lau stated consumption in China is recovering from the Covid-19 (coronavirus) period, albeit potentially not as quickly as expected or desired.
He argued Tencent is “already delivering a strong and solid set of revenue growth and even faster profit growth under the current environment”, given many businesses are in waiting mode for a faster recovery.
Lau said Tencent is internally testing a proprietary generative AI model across different use cases, claiming the trials show the set-up is “among the top foundation models produced in China”.
Tencent is preparing for a launch later this year.
Net profit attributable to equity holders grew 41 per cent year-on-year to CNY26.2 billion ($3.6 billion).
Revenue increased 11 per cent to CNY149.2 billion, fuelled by a 34 per cent increase in online advertising to CNY25 billion driven by rising demand for video accounts adverts.
Social networks turnover grew 2 per cent to CNY29.7 billion.
Fintech and business services revenue grew 15 per cent to CNY48.6 billion.
Chief strategy officer James Mitchell said business service gross margin increased due to cost optimisation and new fee-based revenue streams.
International games revenues increased 19 per cent to CNY12.7 billion, aided by forex movements, while domestic games sales were flat at CNY31.8 billion.
Combined monthly active users (MAUs) of messaging service WeChat and Chinese version Weixin rose 2 per cent to 1.3 billion.
QQ mobile messaging platform MAUs were flat at 571 million.
Capex rose 31 per cent to CNY4 billion, driven by increased investment in GPUs and servers.