HONG KONG—Chinese Internet giant Tencent Holdings Ltd.’s latest quarterly results revealed a slowdown in its core online-games business, highlighting the need for the company to turn online advertising into a bigger engine for growth.
Tencent has built a lucrative business by offering online games to users of its popular messaging and social-networking services. But the market for games played on personal computers is becoming increasingly saturated, while
competition is
intensifying in smartphone games. Numbers released Wednesday showed the rate of growth in online games slowing to 17% in the second quarter from 28% in the first quarter.
Growth in smartphone-games revenue also slowed to 11% in the second quarter from 82% in the first quarter.
Still, Tencent’s net-profit growth in the second quarter beat analysts’ expectations, helped in part by lower marketing expenses. Net profit for the three months ended June 30 rose 25% to 7.31 billion yuan ($1.16 billion) from 5.84 billion yuan a year earlier, while revenue rose 19% to 23.43 billion yuan.
