Tencent’s Profits Surge 47% in Q2 Report, Gets Boost From Mobile Gaming

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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