Wenzhuo Wu
Aug 17, 2020

Tencent scores a big Q2 before Trump’s WeChat ban plan

Gaming and social advertising revenue surged during Tencent's second quarter, but media ad revenue took a hit.

Tencent scores a big Q2 before Trump’s WeChat ban plan

Tencent's total revenue surged nearly 30% year-on-year to US$16.5 billion in the second quarter, with a net profit boost of 28.2% to $4.35 billion, topping analyst estimates.

The impressive performance during Q2 (ending June 30) is being attributed to the tech giant’s value-added services (VAS), such as social networks and online games.

Online advertising—despite only accounting for 16% of Tencent’s total revenue—saw promising growth during the second quarter. Social ad revenue was particularly strong, reporting a 27% increase year-on-year. Much of this rise is due to how advertisers can now channel public online or offline traffic to their private domains through Weixin and WeChat apps like Mini Program and Official Accounts. However, media ad revenue did decline by 25% because of a weak advertising demand from brands and delayed content production and release times during COVID-19.

Online games, one of the most significant business categories for the tech powerhouse, continued its strong growth on the heels of a solid first-quarter performance. Driven by smartphone games, the revenue of the sector grew by 40% versus the same period last year. Tencent’s online gaming business aligned with overall user activity during the pandemic. According to Tencent, user activity stayed normal locally while increasing internationally. “In China, user time spent on our smartphone games increased year-on-year but decreased quarter-on-quarter due to seasonality and back-to-office behavior,” the report stated.

Tencent’s multi-purpose social platforms, WeChat and Weixin (微信), have hit 1.21 billion monthly active users in total as of June 30. The duo, said chairman and CEO Ma Huateng (also known as Pony Ma) in the earnings call, are two very different products. “Weixin is a chat [app] to serve the users in the Mainland of China, whereas WeChat is a sister product which serves users outside of the mainland of China.”

The group also highlighted the revitalisation of its content consumption in WeChat’s Official Accounts feature, reporting a rise in page reviews after three years of decline. Meanwhile, Tencent launched its Mini Stores feature, which backs small and mid-size enterprises by optimising their digital storefront operations by supporting functions like livestreaming, order management, and after-sales services.

Yet Tencent’s stock tanked by 10.5% after a potential WeChat ban order from President Trump was released on August 6. Chief financial officer, Shek Hon Lo, responded to concerns over the potential ban on WeChat by explaining that the order was focused on WeChat’s US service, which won’t affect the company’s other businesses. “We are in the process of seeking further clarification from relevant parties in the US,” he noted.

Source:
  

Related Articles

Just Published

6 hours ago

Performance marketing, is it really effective?

Following Airbnb's move to shift spend out of performance, five performance-marketing experts from across Asia-Pacific discuss where the brand may have gone wrong and argue the value of balancing performance with brand.

7 hours ago

DDB's hard-driving culture delivers wins, but at ...

AGENCY REPORT CARD: A dogged pursuit of pitches pays off in terms of new business, but our concerns about a lack of innovation and the network’s employee churn remain.

7 hours ago

Let’s call time on the masculinity of beer

It's no wonder many women don't feel beer is a drink for them when much of the sector's most famous advertising—including for AB InBev's brands—has been so geared towards men.

7 hours ago

Standard Chartered to use Dentsu Curate to drive ...

This win follows a pilot project across 30 markets using a made-in-APAC programmatic solution, which resulted in a more than twofold improvement in both campaign efficiency and video completion rate, according to the agency.