Tencent Holdings Ltd. posted a better-than-expected 35% rise in quarterly earnings after Peacekeeper Elite became the gaming giant’s first break-out hit since it won regulatory approval to make money off new titles.
Net income rose to 24.1 billion yuan ($3.4 billion) in the three months ended June, the Shenzhen-based company said on Wednesday, beating the average estimate of 21.1 billion yuan compiled by Bloomberg. Adjusted earnings per share were 2.46 yuan, compared with the 2.39 yuan average projection.
Tencent is on track for accelerating growth in the second half thanks to hits like Peacekeeper Elite and durable titles like Honour of Kings.
To fend off challenges from short video operator ByteDance Inc., Tencent’s adding content and services to its super-app WeChat, partnering with China’s largest Q&A platform Zhihu, and linking more users to its mini-programs — lite apps that allow access to services from other companies, including ride-hailing, food delivery and bike sharing.
“We expect gaming revenue to re-accelerate starting from the second quarter onward,” said David Dai, a Hong Kong-based analyst at Bernstein, adding this would also drive an acceleration of overall revenue.
Revenue rose 21% to 88.8 billion yuan, compared with analysts’ estimates for 93.4 billion yuan. Shares of Tencent rose 1.8% in Hong Kong before earnings were announced.