Despite economic challenges such as a crumbling property market and rising youth unemployment, Tencent believes its main businesses, including gaming and payments, are less vulnerable as consumers continue to spend on low-ticket items. The company is also exploring the potential of generative AI, with its in-house large language model, Hunyuan, now integrated with over 180 services.
Key takeaways:
- Tencent Holdings Ltd. reported a 10% gain in revenue to 154.6 billion yuan ($21.4 billion) for the September quarter, beating estimates and showing growth across divisions including gaming, advertising, and fintech.
- Despite a 9% slide in net income due to increased spending on content, the results exceeded expectations and may help alleviate concerns about the Chinese economy entering a deflationary spiral.
- Tencent's online advertising division was its fastest-growing, with a 20% gain in revenue driven by increased user engagement in video, where total views climbed 50% during the quarter.
- Despite the success, shares of Tencent have dropped about 25% since January, and its largest shareholder, Prosus, has been gradually selling its Tencent stake to fund its own buybacks.