Tencent’s second quarter profit rises as more users sign up to streaming services

The Shenzhen-based company's fee-based subscriptions rose by 20%, generating 57% of total revenue

Internet giant Tencent's revenue rose to 114.9bn yuan in the second quarter. Reuters

Tencent’s year-on-year profit grew by 37 per cent in the second quarter as new subscribers to its music and video-streaming services helped boost revenue.

Profit attributable to equity holders in the three months to June 30 surged to 33.1 billion Chinese yuan (Dh17.48bn) while revenue grew by 29 per cent year on year to 114.9bn yuan, the company said.

As the Covid-19 pandemic disrupted economies, the Shenzhen-based company used it as an opportunity to expand its services.

“During this challenging time, we utilised our platforms and technologies to help users adapt to the new normal via online tools, to support enterprises in conducting digital upgrades and to broadly contribute to economic recovery,” the company said in a statement on Wednesday.

The number of fee-based subscriptions increased 20 per cent year-on-year to 203 million, primarily due to the growth in video and music content subscriptions, the company added.

Video subscriptions increased 18 per cent annually to 114 million, whereas music subscriptions rose 52 per cent to 47 million as Tencent Music increased the scope of its paid music library in recent months.

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Subscription income contributed 65bn yuan (57 per cent) of quarterly revenue. This was followed by 29.9bn yuan (26 per cent) of FinTech and business services revenue and 18.6bn yuan (16 per cent) from online advertising.

FinTech and business services revenue increased 30 per cent year-on-year, which "mainly reflected revenue growth from commercial payment due to increased average daily transactions and value per transaction”, the company said.

Online revenue increased by 13 per cent, which the company said was due to a growth in mobile advertising, increased traffic and a greater mix of higher-priced video content.

Tencent – a leading investment corporation and a rival of Chinese e-commerce giant Alibaba – runs WeChat, the messaging and payment platform that constitutes the core of China’s internet, and is China's largest technology company by market capitalisation.

Last month, Tencent launched an integrated advertising platform, which the company said allows advertisers to more efficiently place ads across its various platforms, including its mobile advertising network.

“This new platform will enhance bidding efficiency and provide smarter targeting for advertisers,” the firm said.

Last week, the US administration passed an executive order, signed by President Donald Trump, to ban US residents from doing business with Tencent’s WeChat. It erased $30bn from the internet giant’s market value that time and sent the yuan to its biggest slump in two weeks.

The executive order is due to come into effect next month.