Why Tencent Holdings Was Rallying Today

Core Viewpoint - Tencent Holdings exceeded analyst profit expectations, driven by strong performance in high-margin businesses despite a slight decline in video game revenue [1][2]. Group 1: Financial Performance - Tencent's revenue grew by 6% year-over-year, while gross margin expanded by 8 percentage points from 45% to 53%, leading to a 23% increase in non-GAAP gross profits and a 54% rise in adjusted net income [2]. - The company reported adjusted net profits of $7.1 billion for the last quarter, annualizing to $28.1 billion, with a market cap of $486 billion [5]. Group 2: Business Segments - The online advertising segment saw impressive growth of 26%, with video account usage increasing by 80% over the past year [3]. - Video subscriptions grew by 8% and music subscriptions increased by 20%, marking their best growth figures in a while [3]. - Business services, including cloud computing, experienced mid-teens growth, indicating a recovery in cloud services relative to U.S. peers [3]. Group 3: Gaming Segment Insights - Although value-added services, including gaming revenue, declined by 0.9%, international gaming gross receipts rose by 34%, and domestic gaming gross receipts increased by 3% [4].