Chinese social media and gaming giant Tencent Holdings ADR TCEHY reported slower-than-expected revenue growth in the second quarter, affected by a sluggish economy and competition in the gaming industry.
Despite a 12% increase in international gaming revenue, domestic gaming revenue remained nearly unchanged at 31.8 billion yuan (approximately $4.38 billion), as reported by Reuters.
See Also: China's Video Game Market Experiences First Slump In 18 Years With 10.3% Decrease
This deceleration was partly attributed to a decision by James Mitchell, the chief strategy officer, to "temporarily release less commercially impactful content," as he explained in a discussion with analysts. Tencent also faced competition from robust industry rivals such as NetEase Inc NTES and miHoYo.
Overall revenue rose by 11% to 149.20 billion yuan (about $20.54 billion), falling short of the average analyst projection of 151.73 billion yuan. Nevertheless, net profit surged by 41% to 26.17 billion yuan (around $3.60 billion) compared to the previous year.
Revenue from online advertisements grew by 34%, propelled by heightened demand for video accounts, Tencent's short video service similar to TikTok. Additionally, revenue from fintech and business services experienced a 15% expansion, reaching 48.6 billion yuan (approximately $6.69 billion).
Regarding Beijing's regulatory position, the company stated that the government has now shown a supportive stance towards platform companies such as Tencent, and played down the potential consequences of suggested regulations restricting children's smartphone usage.
Tencent President Martin Lau emphasized Tencent's dedication to artificial intelligence (AI) and revealed intentions to introduce a self-developed foundational AI model later in the year.
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