HONG KONG — Profit growth for Chinese internet group Tencent Holdings beat analyst expectations thanks to thriving advertising and financial services revenues despite mounting regulatory pressure on issues ranging from data privacy to protection of minors.
Total revenues for the Shenzhen-based company rose 20% in the April-June quarter to 138.3 billion yuan ($21.33 billion) from a year ago, largely in line with the average estimate of 15 analysts surveyed by Refinitiv. Net income rose 29% to 42.6 billion yuan year-on-year.
The company said high demand from other internet service companies and consumer industries helped drive a 23% gain in online ad revenues, which reached 22.8 billion yuan.
Revenues from its financial technology and business services division, which includes WeChat Pay, jumped 40% in the quarter from a year ago to 41.9 billion yuan, driven by increased online payment transactions and growing digitalization of public services and traditional industries.
However, Tencent’s gaming business — its biggest revenue source — showed signs of weakness. Games revenue grew 12% to 43 billion yuan. The figure marked a slight decline from the first quarter and a much slower pace of growth than last year’s 36% annual gain.
The slowdown comes as Chinese authorities take a sterner stance toward gaming and its impact on youths.
“We have sought to pioneer a healthy game-playing environment in the game industry,” the company said. Earlier this month, it tightened playing time and spending limits for Chinese minors.