Tencent Profit Defeats Estimates on Huge Games Demand

The world's largest gaming company by revenue booked a 33.1 billion yuan ($4.8 billion) profit for the 3 months through June

The Chinese gaming and social media giant Tencent Holdings Ltd mentioned that the second-quarter net profit increase 37 percent, defeating the market estimates, on higher demand for the video games as coronavirus or COVID-19 put a halt in other entertainment options.

The revenue from the online games that accounts for around one-third of the total sales, rose to 40 percent in the quarter, primarily due to the smartphone games including Peacekeeper Elite and Honour of Kings. That offset a continued fall in the desktop games.

Tencent Net Profit Increasing

tencent, alibaba new music rights deal
(Kim Kyung-Hoon/Reuters)

Social networks, fintech and business services, and social advertising revenues all grew by nearly 30 percent. Media advertising revenues fell by 25 percent however, "as a result of weak brand advertising demand amid the challenging macro environment", and delayed content production and releases.

The world's largest gaming firm by revenue booked a 33.1 billion yuan ($4.8 billion) profit for the three months through June. That was ahead of an average analysts' estimate of 27.56 billion yuan, according to data from Refinitiv. Revenue rose 29 percent to 114.88 billion yuan, versus market expectations of 112.76 billion yuan.

The results come a few days after the United States said it would ban WeChat-related transactions in the country. Tencent, which owns the Chinese messaging app, is under pressure to address concerns about the impact of the ban and outline its plans to mitigate any fallout. The company has also postponed a blockbuster release of "Dungeon and Fighter Mobile" game, planned for August 12, citing upgrades needed to the game's addiction prevention system.

(With agency inputs)

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