Tencent reports 29% revenue growth on online games boost

Chinese internet giant sees its revenue climb 29% year-on-year to hit 125.45 billion yuan ($18.42 billion) for the third quarter of 2020, fuelled by a 45% revenue growth in online games.

Tencent's revenue has climbed 29% year-on-year to hit 125.45 billion yuan ($18.42 billion) for the third quarter of 2020, ended September 30, with profit growing 33% to 33.33 billion yuan ($5.03 billion). The Chinese internet giant attributes the boost to strong showings in online games and advertising, which saw revenue growth of 45% and 16%, respectively. 

Online games generated 41.42 billion yuan ($6.26 billion) in revenue, said Tencent in its earnings report on Thursday, pointing to robust growth of its smartphone games that included local titles such as Peacekeeper Elite and Honour of Kings. Mobile games clocked 39.17 billion yuan ($5.92 billion) in revenue, while desktop titles generated 11.63 billion yuan ($1.76 billion). 

Revenue from its social networks, which included WeChat, grew 29% to 28.38 billion yuan ($4.29 billion).  

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Online advertising revenue also climbed 16% to 21.35 billion yuan ($3.23 billion), which Tencent attributed to higher adoption of its data-driven ad tools and an increase in demand from sectors such as education, e-commerce, and online services. It added that demand from other industries such as real estate and automobiles had recovered from an earlier slump due to the COVID-19 outbreak. 

It said China's overall advertising landscape appeared to have largely returned to "normal conditions" following the initial phase of the pandemic, though, some industries such as travel still were sluggish. It further noted that advertisers had pivoted towards retargeting and video ads. 

Tencent also saw increased revenue from fintech and business services, which climbed 24% to 33.26 billion yuan ($5.03 billion). In addition, its fee-based value-added service subscriptions grew 25% to 213 million, fuelled largely by video and music content subscriptions, which grew 20% and 46%, respectively.  

Its workplace communication tool WeCom saw a 100% increase in daily active user. Another 100 million users had registered for its video conferencing tool, Tencent Meeting, of which an international version was released across more than 100 markets in March, including Singapore, India, Japan, and Thailand.

The "lingering impact" of the pandemic, however, had affected its cloud revenue, according to Tencent. It cited delays in project deployment and new customer signups as well as "non-recurring adjustments" to some IaaS contracts. It noted that revenue growth from its cloud and other business revenue was "lower than previous quarters", adding that it expected this to be temporary. 

Tencent CEO and Chairman Ma Huateng said: "In the face of public health, macroeconomic, and geopolitical challenges, we will seek to sharpen our focus, innovate, and collaborate with our partners in order to better serve our users, customers, and the society at large. " 

The US government in August had sought to ban Tiktok and WeChat, which outgoing American president Donald Trump described as national security threats. A US district judge, though, issued a nationwide injunction against the ban, citing the lack of evidence in that blocking the apps would address national security concerns.

In September, Tencent said it was bolstering its business presence in Singapore to drive its expansion in Southeast Asia. It added that the new Singapore office would be a "strategic addition" to its current offices in Malaysia, Indonesia, and Thailand. 

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