Chinese Internet giant Tencent on Wednesday said its net profit jumped 35 per cent in the second quarter, as the company continued to wriggle out of Beijing’s crackdown on online gaming and build mobile game growth.
Shenzhen-based Tencent said net profit was 24.1 billion yuan ($3.5 billion) in the three months ending June 30, beating an average estimate from Bloomberg analysts of 21.1 billion yuan.
Total revenues were up 21 per cent at 88.8 billion yuan, primarily driven by mobile game growth, commercial payment services, and digital content businesses.
Tencent’s smartphone games revenues climbed 26 per cent in the three months.
But Tencent was hammered by a Chinese government crackdown on gaming which launched last year and led to a months-long licence approval freeze.
The tech giant maintained revenue growth from the likes of popular game Honour of Kings, and began charging users for newer title Peacekeeper Elite – a toned-downed version of its now-dropped hit game PlayerUnknown’s Battlegrounds – clocking up more than 50 million daily active users since its launch in May.
Tencent said it has dropped the original title entirely and the new version, which won government approval, was developed in conjunction with China’s air force.
Although it was showing signs of recovery, the gaming crackdown shaved around $250 billion off Tencent’s stock market value by the end of last year and battered profits towards the end of last year.
“We expect gaming revenue to re-accelerate starting from the second quarter onward,” David Dai, a Hong Kong-based analyst at Bernstein told Bloomberg News.
Shares in the Hong Kong-listed company rose 1.80 per cent on Wednesday ahead of the update.
With China’s economy slowing down, major tech giants such as Tencent and Alibaba are increasingly looking overseas for growth, often competing with each other in key areas like cloud computing and FinTech.
The company’s FinTech business revenues soared 37 per cent compared to the second quarter of last year, to reach 22.9 billion yuan as payment methods in China become increasingly digital.
Tencent’s social networks revenues grew by 23 per cent as China’s largest social media platform WeChat’s monthly active user base of more than one billion continued to climb.
Tencent and Alibaba, China’s two largest companies, have lost a combined $140 billion in market value since the escalation of the trade war in May, according to Bloomberg News.