Tencent Holdings to Report Q3 Results: What to Expect

Tencent Holdings is set to release its third-quarter financial results on Wednesday. Analysts anticipate a 19% decline in net profit, reaching 32.47 billion yuan ($4.45 billion) for the period ending September 30. This compares to a net profit of CNY39.94 billion in the same period last year. Revenue for the third quarter is estimated to have increased by 9.9% year-on-year, totaling CNY153.97 billion.

Key Highlights to Watch Out For

Advertising Performance

Tencent's online advertising business saw a significant boost in gross profit during the second quarter, with a 62% increase to CNY12.24 billion. This growth was primarily driven by strong demand for video ads and a low base from the previous year due to pandemic-related restrictions. Investors will be closely monitoring any further advancements in Tencent's advertising business.

Game and Social-Network Segment

The game and social-network segment also witnessed positive results in the second quarter, with gross profit rising by 10% to CNY40.045 billion. Segment revenue increased by 3.5% to CNY74.21 billion, mainly driven by growth in the international games business. Given that this is Tencent's largest segment, investors will be paying close attention to its performance.

Collaboration with Meta Platforms

There are reports of a preliminary agreement between Meta Platforms (formerly known as Facebook) and Tencent regarding the sale of a new, lower-priced version of Meta's virtual-reality headset in China. Details of the agreement and any further collaboration between Tencent and the U.S. tech giant are of great interest to investors.