Tencent, the Chinese social media and gaming giant, reported robust third-quarter results on Wednesday, surpassing analysts’ expectations with significant growth in its gaming, cloud services, and advertising divisions. The company’s impressive performance signals its continued dominance in the rapidly evolving digital landscape, with new developments in artificial intelligence (AI) and mini-program e-commerce further driving its expansion.

For the third quarter, Tencent reported a profit attributable to shareholders of 53.23 billion yuan ($7.37 billion), marking a 47% year-on-year surge. This exceeded the LSEG analyst estimate of 46.18 billion yuan for the period. The company’s revenue climbed by 8% year-on-year, reaching 167.19 billion yuan, though it fell slightly short of the forecasted 167.82 billion yuan. Despite the slight revenue miss, the overall results reflected Tencent’s strength in key strategic areas.

Gaming remained the backbone of Tencent’s business, with the company seeing a 14% increase in domestic gaming revenue, which reached 37.3 billion yuan. International gaming revenue also rose, gaining 11% on a constant currency basis to 14.5 billion yuan. Tencent highlighted the “evergreen potential” of its existing games, suggesting that its gaming portfolio is poised to continue performing strongly, thanks to ongoing user engagement and the release of new titles.

Another standout area for Tencent was its advertising services, which now include marketing services within its messaging app, WeChat (known as Weixin in China). Revenue from marketing services surged by 17% year-on-year, reaching 29.99 billion yuan. This growth was attributed to strong advertiser demand for Tencent’s short-video content, mini-programs, and search capabilities within WeChat, which now boasts 1.38 billion global monthly active users, a 3% increase from the same period last year.

Notably, Tencent’s advertising revenue benefited from increased spending by the gaming and e-commerce sectors, more than offsetting declines from industries such as real estate and food and beverage. This reflects the shift in marketing dollars towards digital platforms, where Tencent’s services remain in high demand.

A key highlight of Tencent’s earnings release was its focus on artificial intelligence. The company emphasized its ongoing investment in AI technology, which has already begun to pay off across its products and operations, particularly in marketing services and cloud computing. Tencent noted the success of AI-enhanced features in WeChat, particularly its search and advertising functionalities. A significant upgrade to its advertising capabilities in June, which used AI to assist in creating targeted ads within articles and videos on WeChat, led to a nine-fold increase in the number of accounts using this feature, reaching more than 200,000 accounts.

The company also pointed to its efforts to expand its short-video and e-commerce offerings through mini-programs. These mini-programs, which allow users to order food, access medical services, and charge electric vehicles, saw significant growth, with their gross merchandise value expanding by “high teens” from the previous year, surpassing 2 trillion yuan. This growth in mini-programs and the ongoing competition with ByteDance’s Douyin (the Chinese version of TikTok) positions Tencent as a strong player in the short-video and e-commerce sectors.

Tencent’s strategic push into AI and cloud services has also been key to its growth trajectory. The company reported increasing adoption of its cloud services across a variety of industries, further solidifying its position as a leading tech provider in China. The integration of AI tools into Tencent’s cloud infrastructure is expected to drive further growth as businesses look for advanced solutions to improve their operations.

In conclusion, Tencent’s strong third-quarter results highlight its successful diversification beyond gaming, with substantial gains in advertising, cloud computing, and AI-driven services. As the company continues to innovate in these areas, it is well-positioned to capitalize on the ongoing digital transformation in China and beyond. With a focus on AI, mini-programs, and the integration of emerging technologies, Tencent remains a formidable force in the global tech landscape.

(Adapted from Reuters.com)