Following the release of higher-than-expected results in the first quarter, Tencent's second-quarter performance exceeded expectations again!

The financial report shows that:

Tencent's revenue in the second quarter of 2020 was 114.883 billion yuan ($16.228 billion), up 29% from the second quarter of 2019.

The adjusted profit was 30.2 billion, an increase of 28% over the same period last year.

The main points are as follows:

First, the main help to exceed expectations-- games.

Tencent's game revenue in the second quarter of 2020 was 38.288 billion, an increase of 40%, accounting for 33% of total revenue, the highest growth rate in nearly two years.

Game growth is mainly driven by increased revenue from domestic games, including "Game for Peace" and "Arena of Valor", as well as from smartphone games in overseas markets. Tencent's total smartphone game revenue (including revenue from smartphone games belonging to the social network business) and PC client game revenue in the second quarter of 2020 were 35.98 billion yuan and 10.9 billion yuan respectively.

In fact, Tencent game business in the second quarter of the big increase, has long been expected. Because at the end of the first quarter, deferred revenue (mainly games with unrecognized revenue) reached an all-time high of 83.7 billion yuan, an increase of 22.8 billion yuan month-on-month.

In addition, with the COVID-19 epidemic in the world, the Q2 of the game industry in overseas markets has broken out. Data show that Tencent's "PUBG Mobile" and "Game for Peace" have become the most profitable games in the world, attracting a total of US $1.3 billion in the first half of 2020 (excluding third-party Android channels in China and other regions).

Second, HUYA Inc. shows that social network revenue has increased by 30%.

Tencent's income from social networks in the second quarter of 2020 was 26.714 billion yuan, an increase of 29%. The growth is mainly driven by the contribution of digital content services, including the live broadcast service of HUYA Inc. (merged as a subsidiary since April 2020), the increase in the number of music members and the increase in revenue from game virtual props sales.

JOYY Inc Group recently announced the transfer of 30 million shares of HUYA Inc. Class B common shares to Tencent, with a total price of US $810 million in cash. After this transaction, Tencent's shareholding in HUYA Inc. reached 51%, realizing the holding. Tencent will also buy 1 million Class B shares from HUYA Inc. CEO Dong Rongjie. At present, Tencent has thrown a privatization plan to DouYu International Holdings Limited and is promoting the merger of DouYu International Holdings Limited and HUYA Inc..

III. The growth rate of advertising business is slowing down.

Tencent's revenue from online advertising business in the second quarter of 2020 was 18.552 billion yuan, up 13% from the same period last year, and the growth rate slowed significantly compared with the previous quarter.

Tencent's media advertising revenue fell 25 per cent to 3.29 billion yuan in the second quarter of 2020. The decrease mainly reflects the weak demand for brand advertising in a challenging macro environment, as well as a decline in advertising revenue for Tencent video due to delays in content production and launch. Social and other advertising revenue increased 27% to 15.262 billion yuan.

Q1 is mainly driven by increased demand from the games and education industries, while social advertising slowed down because Tencent officially opened the fourth ad space on moments in February this year, while the third ad space opened in May 2019, which means that this year, Q1 has 4 vs and 2 vs3, while Q2 has 4 vs3.

IV. Financial technology and enterprise service business increased by 30% over the same period last year.

Tencent's income from financial technology and enterprise services business in the second quarter of 2020 was 29.862 billion yuan, an increase of 30% over the same period last year. This growth mainly reflects the growth of business payment income driven by the increase in average daily transaction volume and the amount of individual transactions, the growth of revenue from financial management platforms, and the increase in cloud service revenue due to the increase in public cloud consumption (especially Internet services and livelihood services).

Similarly, this quarter has rebounded compared with the previous quarter. Due to the Q1 epidemic, the project delivery of Tencent's cloud business and the acquisition of new customers have been delayed. The main source of income for the financial technology business is the transaction commission paid by online and offline merchants, and Q1 is also affected by the epidemic.

As a result, financial technology and corporate services business grew by 30% year-on-year this quarter, returning to normal levels.

Summary

Carrying the banner of the game, coupled with the development and growth of the younger brother promoted by Tencent for many years, Tencent shows the value of "China's Internet new economy ETF".

Therefore, for the whole year of 2020, Tencent's attitude towards high growth is relatively certain.

In the long run, relying on exclusive social traffic, the company will continue to tap the growth potential of consumer Internet, and rely on industrial operation experience to help third-party customers complete the digital transformation, and eventually become a leader in the field of industrial Internet.