Chinese Tech Giant Tencent and its Second-Quarter Earnings

Tencent Holdings Ltd. is a famous company based in Shenzhen, China. On Wednesday, the Chinese tech giant reported results for the second quarter of this year. Notably, results surpassed expectations.

Tencent is the owner of WeChat, a very popular messaging app. Last week, U.S. President Donald Trump signed an executive order that prohibits any transaction related to WeChat. Importantly, the executive order comes into effect in September.

Let’s get back to the results. In the second quarter, revenue exceeded expectations and reached 114.88 billion yuan ($16.53 billion) vs 112.72 billion yuan expected. As a result, it is the fastest growth since the second quarter of 2018. Moreover, profit attributable to equity holders of the company reached 33.1 billion yuan.

Online games and Tencent

Online games represent one of the most important businesses for the Chinese tech giant. It is worth noting that, online game revenue grew 40% year on year to 38.9 billion yuan.

Interestingly, as people across the world started to spend more time at home, some of them started to play games. Notably, the online gaming division got a boost thanks to mobile games such as “Peacekeeper Elite” and “Honor of Kings”. As a result, mobile games helped to offset a decrease in PC game sales.

Moreover, smartphone game revenue reached 35.99 billion yuan. As stated above, PC game revenue dropped more than 6% year-on-year.

Notably, online games accounted for around one-third of revenue. However, the company has other fast-growing businesses as well. For example, social network revenues grew by 29% year-on-year to 26.71 billion yuan, thanks to digital content services such as Huya and Tencent’s music subscription service.

Also, revenue from the fintech and business services division grew to 29.86 billion yuan. Interestingly, this business includes some of the company’s financial technology products like WeChat Pay as well as the cloud computing segment.

Moreover, online and revenue increased by 13% year-on-year to 18.55 billion yuan.