Tencent Holdings on August 12 reported second-quarter revenue of 204.8 billion yuan, up 11 percent year over year and ahead of the consensus estimate of roughly 202.2 billion yuan. IFRS net profit attributable to shareholders rose just 0.7 percent from a year earlier, to 56.0 billion yuan (about 8.31 billion US dollars, per MarketScreener), well below analyst projections of 61.8 billion yuan: a miss of roughly 9.4 percent on the bottom line, even as the top line outperformed, according to CryptoBriefing.
The market's focus, however, was on capital expenditure, which exploded to 52.8 billion yuan in the quarter against 31.9 billion yuan in the first three months — a 65.5 percent sequential jump and a 176 percent increase year over year — with the outlay concentrated on AI compute capacity and data center buildout, as reported by Yahoo Finance (GuruFocus). The spending pushed free cash flow into negative territory, at minus 13.8 billion yuan; management said operating profit could have increased by 19 percent without the costs tied to new AI products.
By segment, marketing services revenue rose 22 percent to 43.6 billion yuan, helped by AI-powered advertising and stronger monetization within the Weixin ecosystem, according to CryptoBriefing and MarketScreener. Domestic games revenue increased 17 percent to 47.3 billion yuan, while international games were broadly flat, down 0.8 percent to 18.6 billion yuan in nominal terms on foreign-exchange movements. Fintech and business services gained 9 percent to 60.3 billion yuan, with cloud demand for AI-related services a key driver, MarketScreener reported. On a non-IFRS basis, net profit came in at 68.4 billion yuan, up 9 percent year over year, and Tencent repurchased approximately 37.4 million shares for 16.9 billion Hong Kong dollars during the quarter, per CryptoBriefing.