TMTPOST -- Thanks to strength of online gaming business, Tencent Holdings Ltd. maintained strong momentum of top line during the quarter ended September 30 despite China’s economic slowdown. The Chinese social media and entertainment giant even easily beat estimates of the bottom line that quarter.

Credit：Tencent

Tencent said its revenue rose 8% year-over-year (YoY) to RMB167.2 billion (US$23.14 billion) for the third quarter, roughly in line with Wall Street expectation. The top line remained firm for the second quarter. On an IFRS basis, the profit attributable to equity holders of the company, or net income, surged 47% YoY to RMB53.2 billion, exceeding the average projection by about 17%, according to Bloomberg data. Diluted earnings per share (EPS) were RMB5.64 with a 50.4% YoY increase after a 85% surge three months earlier. Operating profit was RMB53.3billion, up 20% YoY, down from a 40% YoY increase in the previous quarter. On a non-IFRS basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items, the net income rose 33% YoY to RMB59.8 billion, compared with the projection of RMB54.37 billion.

Tencent, the world’s largest video game company, accelerated growth of its core gaming business after resuming positive growth from April to June. For the September quarter,VAS (value-added services), including game and social network business, brought Tencent RMB82.7 billion with a 9% YoY rise, compared with an increase of 6% three months ago. Tencent said the growth of VAS was due to robust performances from games including PUBG Mobile and Brawl Stars.

Revenue from International Games grew 9% YoY to RMB14.5 billion for the third quarter. Revenue growth for International Games substantially lagged gross receipts growth, as improved retention rates for certain titles led to us elongating revenue deferral periods. Domestic Games generated RMB37.3 billion. The revenue growth accelerated to 14% after a 9% YoY increase for the June quarter. Games including Valorant, Honour of Kings, Peacekeeper Elite and DnF Mobile drove the sales.

Social Networks revenues rose by 4% year-on-year to RMB30.9 billion, supported by growth in app-based game virtual item sales, music subion revenues and Mini Games platform service fees, partially offset by a decline in music-related and games-related live streaming revenues.

“During the third quarter of 2024, we delivered robust revenue growth in our games business, underpinned by consistent performance of evergreen games globally and contributions from new games with evergreen potential,” said Tencent CEO Ma Huateng, or Pony Ma, in a statement Wednesday. Ma also emphasized the growing advantages of artificial intelligence (AI) integration across Tencent’s products and operations, including marketing services and the cloud. He said the company will continue investing in AI technologies and solutions to benefit users and partners.

Tencent is set to gain traction from upcoming titles. The company has a rich pipeline of 78 mobile games entering the market next year, 46 of which have already been approved by China’s videogame regulator, according to Citi.

However, Tencent’s two other major divisions continued decelerating. Revenues from Marketing Services were RMB30.0 billion for the third quarter, up 17% YoY, following a 19% YoY increase three months ago. The division was buyoed by robust advertiser demand for Video Accounts, Mini Programs and Weixin Search inventories and, to a lesser extent, contributions from Paris Olympics-related brand advertising. Advertising spending from the games and eCommerce categories increased YoY, which outweighed reduced spending from the real estate and food & beverage categories.

Revenues from FinTech and Business Services rose 2% YoY to RMB53.1 billion, compared with a 4% YoY increase for the second quarter.Tencent said FinTech Services revenues in aggregate remained largely stable compared to the same quarter last year, within which wealth management services revenues increased year-on-year due to more users and higher aggregated customer assets while payment services revenues declined due to subdued consumption spending. The YoY increase in revenue from Business Services was driven by growth in cloud services revenues and eCommerce technology service fees.