Tencent Holdings, China’s tech giant and the world’s largest video game company, reported an 8 percent increase in third-quarter revenue on Wednesday, driven by a strong rebound in its gaming business. However, the company’s fintech sector faced headwinds, reflecting broader economic challenges in China.
For the quarter ending September 30, Tencent posted revenue of 167.19 billion yuan ($23.14 billion), slightly below analyst expectations of 167.8 billion yuan, according to LSEG data.
Gaming sector becomes cash cow
Gaming revenue was a key driver, with domestic gaming revenue rising by 14 percent to 37.3 billion yuan, continuing a positive trend after a 9 percent increase in the previous quarter. This marked two consecutive quarters of growth following earlier declines. International gaming revenue also saw a solid 9 percent increase, reaching 14.5 billion yuan.
The strong performance was fueled by the success of Tencent’s popular titles, including the mobile game Dungeon & Fighter Mobile, launched in May, and Delta Force, a new shooting game released in September. Additionally, the August release of Black Myth: Wukong, a game inspired by the Chinese classic Journey to the West, boosted Tencent’s portfolio. Tencent holds a stake in the game’s developer, contributing to its overall growth.
Fintech slows down
However, Tencent’s fintech and cloud services division, which includes its payments business, reported only modest growth of 2 percent, reaching 53.1 billion yuan. The slowdown in the payments sector was attributed to weak consumer spending in China, a challenge for many companies in the country amid broader economic uncertainties.
In contrast, revenue from Tencent’s marketing services unit, which includes its online advertising business, grew by 17 percent, reaching 30 billion yuan.
Tencent’s bottom line saw significant improvement, with net income rising 47 percent to 53.23 billion yuan, surpassing analyst expectations of 52.89 billion yuan, according to LSEG data.
Overall, Tencent’s strong gaming results helped offset weaknesses in its fintech sector, positioning the company well as it navigates China’s economic challenges. The performance of key titles and continued success in gaming highlights the growing importance of the sector to Tencent’s broader business.
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