Tencent profit beats expectations as Wechat ban looms
Tencent today said it has smashed expectations for second-quarter revenue and profit as the Chinese tech giant enjoyed higher demand for its video games during the Covid-19 lockdown.
The world’s largest video game company posted revenue of 114.9bn yuan (£12.7bn) in the three months to the end of June — an increase of 29 per cent on the same period last year.
Profit attributable to equity holders also jumped 28 per cent to 33.1bn yuan.
But the results will be overshadowed by an impending US ban on Wechat, Tencent’s popular messaging service.
President Donald Trump last week signed an executive order banning US companies from doing business with Wechat and fellow Chinese app Tiktok. The order is set to come into effect next month.
The announcement sparked panic among investors and Tencent’s market value dropped $66bn after a two-day sell-off.
Despite this, the company has benefited from the coronavirus lockdown as millions of homebound consumers look for sources of entertainment.
Tencent’s biggest boost came from its gaming division, where revenue grew 40 per cent to 38.3bn yuan.
The firm said smartphone game use in China had decreased from the first quarter due to the easing of lockdown, though internationally revenue continued to rise thanks to new game launches and ongoing stay-at-home orders.
Tencent also reported a 30 per cent increase in its fintech and business services, which includes payments through Wechat, and a 13 per cent rise in online advertising revenue.
“During this challenging time, we utilised our platforms and technologies to help users adapt to the new normal via online tools, to support enterprises in conducting digital upgrades, and to broadly contribute to economic recovery,” said Tencent chairman and chief executive Ma Huateng.
“We achieved generally robust operating and financial results in the second quarter, testifying to the diligence of our teams and resilience of our business model.”