قالب وردپرس درنا توس
Home / Business / Revenue from WeChat owner Tencent Q2 shatters expectations for gaming strength

Revenue from WeChat owner Tencent Q2 shatters expectations for gaming strength



The Tencent Holdings Ltd WeChat app appears in the App Store on a smartphone in a photo taken in Arlington, Virginia, on Friday, August 7, 2020.

Andrew Harrer | Bloomberg | Getty Images

Tencent on Wednesday reported results for the three months to the end of June that beat analyst expectations in one of the fastest-growing earnings quarters in two years.

However, the earnings report may be overshadowed by an executive order signed by President Donald Trump last week banning any transaction related to WeChat, Tencent̵

7;s hugely popular messaging app. The executive order enters into force in September.

Here is how the company performed against the consensus assessments by Refinitiv by analysts:

  • Income: 114.88 billion yuan ($ 16.53 billion) versus the expected 112.72 billion yuan. This is a 29% year-on-year increase, the fastest growth since the second quarter of 2018.
  • Profit attributable to company equity holders: 33.1 billion yuan vs. 27.56 billion yuan expected. This is a 37% increase from year to year.

Promotion of games

Revenue from online gaming, one of Tencent’s most important businesses, rose 40% year-on-year to 38.29 billion yuan. This was faster growth than was seen in the first quarter of 2020. Analysts in China Insurance Traders expect Tencent to withdraw 41.6 billion yuan in online gaming revenue.

Tencent’s game division took off in the first quarter as people turned to its mobile titles as they got stuck at home during coronavirus outbreaks in China and elsewhere. Tencent then warned that it expected in-game consumption to normalize as it moved forward.

The sharing of online games got stronger thanks to mobile games like “Elite Peacemaker” and “Honor of Kings” helping to offset a decline in PC gaming sales. Intelligence game revenue came in at 35.99 billion yuan, an increase of 62% year-on-year. Revenue from PC games fell over 6% year-on-year.

“In China, the time spent by users on our smartphone games increased year after year, but decreased quarter by quarter due to seasonality and back office behavior,” Tencent said in the earnings release.

“Internationally, our MAU (monthly active users) increased significantly from year to year and quarter due to new game releases and more user time spent during the home stay period.”

WeChat in focus

Last week, Trump issued an executive order banning US transactions related to WeChat. The scope of this ruling is unclear as of now.

Investors will hope that Tencent management addresses some of these concerns.

However, analysts do not think that Washington’s move will have a major impact on Tencent.

“WeChat itself has business and financial exposure in the US,” analysts at China’s Renaissance said in a recent note.

“We estimate that Tencent’s current revenue exposure in the US is less than 3%, with revenue exposure less than 5%,” analysts said.

This is essential news. Please check back for updates.


Source link