Tencent's quarterly profit surges by 82% due to the growth of its crucial gaming division.

• Tencent surpassed second-quarter earnings expectations as its gaming division experienced increased growth.
• The company's shares have increased by approximately 27% this year, largely due to the anticipation surrounding the release of Dungeon & Fighter Mobile (DnF Mobile).
• In the second quarter, Tencent's online advertising business generated 29.9 billion yuan in revenue, representing a 19% increase compared to the previous year, contributing to its overall financial performance.

The gaming division of the company experienced accelerated growth, causing it to beat its second-quarter top and bottom line estimates.

Here's how Tencent did in the June quarter against LSEG consensus estimates:

• 161.12 billion yuan ($22.5 billion) in revenue versus the anticipated 160.77 billion yuan.
• The company's profit exceeded expectations by 7.68 billion yuan.

Revenue was up 8% year-on-year while profit rose 82%.

Tencent aims to revive growth in its core gaming business after experiencing its first annual revenue decline in 2022.

The company's shares have increased by approximately 27% this year, in part due to the anticipation surrounding the release of Dungeon & Fighter Mobile (DnF Mobile), a game produced by Nexon and distributed in China by Tencent.

In China, Tencent is hoping to benefit from the popularity of DnF Mobile, which has been topping the top grossing game charts, for years to come, as it did with Honor of Kings.

In the second quarter, Tencent's China games business generated revenue of 34.6 billion yuan, representing a 9% year-on-year increase. This growth rate was faster than the 3% increase seen in the first quarter of the year. Tencent attributed the strong performance to the success of Valorant and the successful launch of DnF Mobile.

Tencent's newly launched game, DnF Mobile, has rekindled the interest of millions of IP (intellectual property) fans and is keeping players engaged, making it a strong contender to become our next evergreen major hit, according to the company's earnings report.

The revenue from international games increased by 9% compared to the previous year, reaching 13.9 billion yuan.

Tencent's online advertising business generated 29.9 billion yuan in revenue in the second quarter, representing a 19% increase from the previous year. The tech giant attributed this growth to the rise in revenue from video advertising on WeChat, which is owned by Tencent and is China's largest messaging app.

The potential for Tencent to generate revenue from video content on the WeChat app, with its over 1.3 billion users, has long captivated investors.

Tencent's fintech and business services division, including cloud computing and WeChat Pay, experienced a 4% increase in revenue year-over-year to 50.4 billion. However, this growth was hindered by a "further moderation in commercial payment revenue growth that reflected slow consumption spending," Tencent stated.