Tencent generated 149.2 billion yuan ($20.6 billion) in the second quarter of 2023, representing an 11% increase from the same period of 2022, according to its latest financial report.
Operating profit stood at 50.1 billion yuan ($6.9 billion), representing a year-on-year increase of 37%. Operating margin also rose from 22% to 26% over the same period. Likewise, profit for the period rose 33% to 38.6 billion yuan ($5.3 billion) while net margin increased from 22% in Q2 2022 to 26% in Q2 2023.
“During the second quarter of 2023, we sustained a solid revenue growth rate, along with a gravitation toward high quality revenue streams with better margins,” said Tencent chairman and CEO Ma Huateng. “This transition, combined with careful cost discipline developed in the previous year, resulted in profit growth exceeding revenue growth.
“We achieved notably rapid growth in our advertising business, benefitting from deploying machine learning on our advertising platform and from Video Accounts monetisation. We will continue to drive innovation, including through generative AI, where we are providing a library of models to our partners via our Tencent Cloud Model-as-a-Service (MaaS) offering, as well as refining our proprietary foundation model.”
Success in China
Revenue from international games increased by 19% to 12.7 billion yuan over the quarter, supported by contributions from the likes of Valorant, Goddess of Victory: Nikke, and PUBG Mobile. Domestic game revenue remained stable at $31.8 billion, which Tencent attributes to the release of “less-commercial content in our biggest games following a strong first quarter, while revenues from emerging competitive esports titles such as Arena Breakout and Fight of the Golden Spatula increased year-on-year.”
Tencent’s success in Q2 follows a successful Q1. Revenue for the first half of 2023 stood at 299.2 billion yuan ($41.4 billion), a year-on-year increase of 11%. Operating profit increased 35% to 98.5 billion yuan ($13.6 billion), while the company’s operating margin likewise rose from 27% to 33%.
Taken together, this data suggests that Tencent has successfully navigated a difficult 2022 for the Chinese market, having previously lost its title as China’s biggest company. However, it should be noted that China has recently announced new restrictions on mobile phone use, which may lead to further turbulence.
We listed Tencent as one of the top 50 mobile game makers of 2022. We’ll be unveiling our list for 2023 at our event at Gamescom on August 2022.
