Another solid quarter for tech giants, thanks to surged online interactions during lockdown.
Tencent has been making headlines as of late, mainly related to rising US-China tensions following President Trump’s executive order for Americans to stop relations with Tencent’s super app, WeChat.
Seems like the latest news hasn’t done much to rock Tencent’s boat. The Chinese tech giant reported its second quarter earnings yesterday and saw revenue boosted by 29%, mainly thanks to the rise of online gaming during the quarter.
Total revenue rose 29% to 14.88 billion yuan ($16.53 billion), its fastest growing quarter since Q2 2018.
• Gaming:
Online game revenue, one of Tencent’s most important businesses, grew 40% year on year to 38.29 billion yuan. Of course, this was due to increased gaming activity during lockdowns and as people stayed home more. Going forward, Tencent expects this to normalise.
Smartphone game revenues came in at 35.99 billion yuan, a 62% year-on-year rise. PC gaming revenue fell 6%, falling right in line with industry trends.
•Media, Fintech & Advertising:
Social network revenues increased by 29% year-on-year to 26.71 billion yuan, another impressive unit for Tencent. Digital content services including live broadcast service Huya, and music streaming contributed to this surge.
Revenue from the fintech and business services division increased to 29.86 billion yuan, a 30% year-on-year rise. This includes cloud services and WeChat pay.
Also in line with broader industry trends was the 29% drop in advertising revenue as businesses halted media advertising budgets during the pandemic.
•The Focus: Trump and the potential WeChat ban
Interestingly, analysts do not think this will have any major impact to Tencent’s business.
“WeChat itself has immaterial business and financial exposure to the US,” analysts at China Renaissance said in a recent note, according to CNBC.
According to Tencent, The US represents less than 2% of the company’s global revenue and less than 1% of total advertising revenue.
