Tencent, China’s biggest online entertainment and social network company, has reported a 47% jump in second-quarter profits, reports The Wall Street Journal. Tencent is best known globally for WeChat, the messaging app that dominates the local Chinese market.

Net income for the quarter stood at $1.6 billion (10.9 billion yuan), which beat analysts’ expectations. Revenue for Tencent grew at its fastest rate in more than three years.

The company’s revenue from mobile games more than doubled, contributing to a large boost in revenue growth.

Tencent is in the midst of completing its acquisition of Finlanad’s Supercell Oy, the maker of the popular ‘Clash of Clans’ mobile game, with the goal of increasing the company’s presence in the global market.

In June, Tencent announced that the deal with Supercell is structured in a way that Supercell wouldn’t be consolidated in Tencent’s earnings. The Chinese company would instead reap any financial gains as a stakeholder through the consortium that owns Supercell.

Tencent Q2 Report Highlights 

Tencent generates roughly half its revenue from games distributed through its two major social platforms and its own app store. Tencent’s revenue from smartphone games also more than doubled. 80% revenue was generated on a mobile platform in the Chinese market where Tencent dominates.

  • Capital expenditure was RMB1,505 million, down 47% YoY
  • Free cash flow was RMB9,748 million, up 80% YoY
  • Share-based compensation was RMB862 million, up 31% YoY

Out of China’s three internet titans, the online gaming and social media company Tencent is the biggest, but also the least known in the West. However, it has not attracted the same global attention as Jack Ma’s Alibaba, and Baidu, the Chinese equivalent of Google.

A version of this appeared in The Wall Street Journal on August 17. Read the full version here or download the Q2 results here

JD.com, Alibaba’s ecommerce rival in China, is targeting profitability after reporting its Q2 2016 earnings, reports Tech Crunch. The earnings were on target with expectations, but saw revenue growth continue to flatten.

JD.com was made a Fortune 500 company in June, and is posting rising revenues. According to Tech Crunch, JD.com’s growth rate is slowing in line with recent media headlines that suggests China’s economy is slowing down.

 The company’s rate of growth is slowing in line with reports in the media that Chinese consumers are spending less as the economy slows, but more consumers are moving online.

This is impacting companies across the board and placing a larger emphasis on overseas growth. JD.com is currently courting global brands with intentions to reach Chinese consumers through its online platform.

JD.com announced net revenue of $9.8 bn for the three-month period, down to 42% y-o-y from 47.3% last quarter.

The company is predicting that the next quarter will continue to see slowing growth.

JD.com, which has over 100,000 merchants on its platform, and a 79% order rate from mobile, has stated that it was making a push to become profitable. It posted a net loss of $19.9 million for Q2, which is a big improvement from the $76.8 million loss in the previous year.

GMV, the total amount of sales on its platform grew 47% to reach $24.1 bn in Q2 2016.

JD Q2 Earnings, JD.com Q2 Report 2016

Source: JD.com

Although up from $19 billion in the previous quarter, the rate of growth is slowing. GMV in Q1 was up 55% annually, compared to the reported 47% growth for this quarter.

“With our reputation for high-quality online shopping and same-day delivery already cemented with Chinese consumers, we are taking steps to further extend that advantage through efforts like our new strategic alliance with Walmart and Chinese online supermarket Yihaodian,” said Richard Liu, JD.com CEO.

JD.com’s move to acquire Yihaodian (Walmart’s Chinese ecommerce business) in June will boost the company’s grocery and delivery business.

A version of this appeared in Tech Crunch on Aug 10. Read the full version here or find the official JD report here.

Alibaba saw record growth in Q2 2016 as the company’s Chinese retail marketplaces surged and revenue from its users on mobile overtook that of desktops for the first time.

The ecommerce giant reported revenue of $4.8 billion (RMB 32.2 billion), which is a 59% increase year-on-year — the highest growth since Alibaba went public in September 2014 in the largest US IPO in history.

While revenue growth was undoubtedly the highlight for Alibaba executives, the company’s net income dropped 76% year-on-year to $1.1 billion. Alibaba did note that non-GAAP net income increased 28% over the same period, while operating profit rose 71%.

Alibaba broke out increased financial data — including revenue and profit/loss — for business units like such as digital media, cloud computing, food delivery and more for the first time in response to recent FCC investigation of its accounting of affiliates like logistics firm Cainao, and Youku, Tudou.

Highlights of Alibaba Q2 results

The company’s China marketplaces pulled in total sales of $3.5 billion (RMB 23.4 billion), 49% higher than the same time last year.

75% of revenue came from mobile devices — $2.6 billion (RMB 17.5 billion) — up 119% year-over-year.

Alibaba-financial-summary-results-2016
From the official press release,

China retail marketplaces had 434 million annual active buyers in the 12 months ended June 30, 2016, compared to 423 million in the 12 months ended March 31, 2016.

Alibaba’s affiliates are burning cash — per the chart below — but Alibaba is betting that they will supplement its core business in the future.

alibaba revenue q2 2016

“We’re starting to serve local consumers in Southeast Asia, a market with over 500 million potential consumers,”Alibaba Vice President Joe Tsai said. “That’s going to be a very important potential market for us.”


A version of this appeared in TechCrunch on Aug 11. Read the full article here or the full press release here.

A Singapore-based startup, Funding Society raised $7.5 million of Series A round, reported Tech Crunch. The company allows SMEs to access loans from individual or institutional lenders. The fund will be used to expand the operations in Malaysia, in addition to Singapore and Indonesia under the name ‘Modalku‘. Sequoia India led this investment round, along with several angel investors. 

The company claimed it has paid out $8.7 million across 96 loans to date and has 94% repayment rate. Fund Societies CEO, Kelvin Teo said the data shows the company’s reliability.

Funding Societies is primarily focused on working capital loans, to finance the day-to-day operations in a company. In Singapore, the average loan size is $67,000 ($90,000 SGD) while the number falls lower to $18,500 (SG$25,000) in Indonesia. It charges an origination fee to the borrower (3-4% in Singapore, 5-6% in Indonesia) and 1% monthly fee to the lender. It claims to have an approval rate of between 15-25% for loan applicants.

The fund will be used to expand its SME loans operations in Malaysia, in addition to Singapore and Indonesia under the name ‘Modalku‘. Sequoia India led this investment round, along with several angel investors. 

In addition to the expansion, the fund will also be used to comply with myriad of regulatory variations in the three countries where it currently operates. It prided itself on being compliant with regulations and ensuring the safety of investors money.

“Industry regulation has been announced in Singapore, but it will still take some investment to reach that level of compliance,” Teo added. Likewise, in Indonesia, he said the company is working with regulators to introduce a framework to regulate peer-based lending.

Outside of compliance and expansion — including expansion beyond capital city Jakarta in Indonesia — Funding Societies is planning to invest in its product to streamline its services for borrowers and lenders, add more services to make the investment options more tailored to the investor needs. The company target to reach breakeven in two-to-three-years.

A version of this appeared in Techcrunch on August 9.  Read the full article here

Adjusted earnings per share came in at $1.78, when Wall Street was forecasting $1.11, reports Tech Crunch. Amazon shattered expectations when it reported second quarter earnings after the bell on Thursday.

The company saw a significant increase in sales and profit from the same period last year. Net sales were up 31%  and net income was $857 million, a very large jump from last year’s $92 million.

Amazon stock is also up 43% in the past year.

The company has also been aggressively expanding in India, touting it as a key emerging market, most recently with the launch of Amazon Prime there:

The team in India is inventing at a torrid pace, and we’re very grateful to our Indian customers for their welcoming response. – Jeff Bezos, Amazon CEO.

The company announced that it expects its revenue for Q3 to be between $31 billion and $33.5 billion.

Amazon has built up a successful ‘Prime’ business, where users pay annual subscriptions to get faster shipping and access to content like movies and music. It also created its own discount holiday last year called Prime Day. The sales day generated significant traction this year and will be included in Q3’s earnings.

Going forward, the company is betting that drone deliveries will cut down on costs and improve efficiency. Amazon is also expanding its grocery business.

Amazon’s earnings this quarter, coupled with various innovative push into markets from the US to India further cements its position as an industry mainstay.

A version of this appeared in Tech Crunch on July 28. Read the full version here.