Tencent Reported Results for the Second Quarter

This week, Tencent released information for the second quarter of 2020. As a reminder, the Chinese tech giant is the owner of WeChat. It is worth mentioning that, U.S. President Donald Trump signed an executive order that prohibits any transaction related to WeChat. The executive order comes into effect in September. However, analysts don’t think an executive order will have a major impact on Tencent.

According to Tencent’s executives, Trump’s executive order is focused on WeChat in the U.S. and not its other businesses in the country.

Notably, revenue surpassed expectations and reached 114.88 billion yuan ($16.53 billion) vs the expected 112.72 billion yuan. Consequently, it is the fastest growth since the second quarter of 2018. People should take into account, profit attributable to equity holders of the company reaching 33.1 billion yuan.

Tencent and Main Findings

It is no secret that online games represent one of the most important businesses for Tencent. Importantly, online game revenue grew 40% year on year to 38.9 billion yuan.

The online gaming division benefited from mobile games such as “Peacekeeper Elite” as well as “Honor of Kings”. Consequently, mobile games helped to offset a decrease in PC game sales. Interestingly, PC game revenue dropped more than 6% year-on-year.

Furthermore, smartphone game revenue reached 35.99 billion yuan.

Online games accounted for around one-third of revenue. Nevertheless, Tencent has other fast-growing businesses as well. Notably, social network revenues increased by 29% year-on-year to 26.71 billion yuan, thanks to digital content services such as Huya as well as Tencent’s music subscription service.

Additionally, revenue from the fintech and business services division grew to 29.86 billion yuan. It is worth noting that, this business includes some of the company’s financial technology products like WeChat Pay and the cloud computing segment. Also, online and revenue increased by 13% year-on-year to 18.55 billion yuan.

Tencent is the owner of a wildly popular messaging app. However, it has to deal with restrictions imposed by the U.S. and India. As a reminder, India banned WeChat and several dozen other China-based apps.