Tencent profit beats estimates on strong games demand

Chinese gaming and social media giant Tencent Holdings Ltd said second-quarter net profit rose 37%, beating market estimates, on higher demand for its video games as coronavirus put a dent in other entertainment options.

Revenue from online games, which accounts for one-third of total sales, jumped 40% in the quarter, primarily driven by smartphone games including Peacekeeper Elite and Honour of Kings. That offset a continued decline in desktop games.

Social networks, fintech and business services, and social advertising revenues all grew by nearly 30%.

Media advertising revenues fell by 25% however, "as a result of weak brand advertising demand amid the challenging macro environment", and delayed content production and releases.

The world's largest gaming firm by revenue booked a 33.1 billion yuan ($4.8 billion) profit for the three months through June. That was ahead of an average analysts' estimate of 27.56 billion yuan, according to data from Refinitiv.

Revenue rose 29% to 114.88 billion yuan, versus market expectations of 112.76 billion yuan.

The results come a few days after the United States said it would ban WeChat-related transactions in the country.

Tencent, which owns the Chinese messaging app, is under pressure to address concerns about the impact of the ban and outline its plans to mitigate any fallout.

The company has also postponed a blockbuster release of "Dungeon and Fighter Mobile" game, planned for Aug. 12, citing upgrades needed to the game's addiction prevention system.