-The operating profit was 73.204 billion yuan (US $10.34 billion), an increase of 31% over the same period last year; the operating profit margin increased from 32% in the same period of last year to 33%.
-During the period, the profit was 59.204 billion yuan (US $8.363 billion), up 29% year-on-year; the net profit margin increased from 26% in the same period of last year to 27%.
-The basic profit per share is 6.038 yuan, and the diluted earnings per share is 5.945 yuan.
According to international financial reporting standards:
-The operating profit was 76.571 billion yuan (US $10.816 billion), a year-on-year increase of 19%; the operating profit margin dropped to 34% from 37% in the same period last year.
-During the period, the profit was 61.857 billion yuan (US $8.737 billion), an increase of 18% over the same period of last year; the net profit margin decreased to 28% from 30% in the same period last year.
-During the period, the profit attributable to equity holders of the company was RMB 62.003 billion (US $8.758 billion), with a year-on-year increase of 21%.
-The basic earnings per share was 6.541 yuan. The diluted earnings per share was 6.440 yuan.
-The total cash at the end of the period was 281.086 billion yuan (US $39.704 billion)
Summary of results for the second quarter of 2002
Total revenue: 29% year-on-year increase; profit attributable to equity holders of the company under non International Financial Reporting Standards: a year-on-year increase of 28%
The total revenue was 114 billion 883 million yuan (US $16 billion 228 million), an increase of 29% over the second quarter of 2019 (year-on-year).
In accordance with non IFRSs, the impact of certain one-time and / or non cash items is excluded to reflect the performance of the core business:
-The operating profit was 37.629 billion yuan (US $5.315 billion), a year-on-year increase of 38%; and the operating profit margin rose to 33% from 31% in the same period last year.
-During the period, the profit was 31.22 billion yuan (US $4.41 billion), a year-on-year increase of 29%; the net profit margin was 27%, which was the same as the same period last year.
-During the period, the profit attributable to equity holders of the company was RMB 30.153 billion (US $4.259 billion), with a year-on-year increase of 28%.
According to international financial reporting standards:
-The operating profit was 39.311 billion yuan (US $5553 billion), a year-on-year increase of 43%; the operating profit margin increased from 31% in the same period of last year to 34%.
-In the same period of last year, the net profit rate was RMB 324.4 billion, which was equal to that of the same period of last year.
-During the period, the profit attributable to equity holders of the company was RMB 33.107 billion (US $4.676 billion), with a year-on-year increase of 37%.
-The basic profit per share was 3.491 yuan. The diluted profit per share was 3.437 yuan.
Novel coronavirus epidemic has swept the world since the beginning of the year, affecting the daily work and life of people, said Ma Huateng, chairman and chief executive officer of the board. At this time of challenge, Tencent uses its own platform and technology to help users adapt to the new normal through online tools, support the digital upgrading of enterprises, and widely help the economic recovery. In the second quarter, Tencents operating and financial performance remained strong on the whole, reflecting Tencents team persistence and the resilience of its business model. Tencent will continue to invest efficiently in talent, technology and platform, embrace emerging structural opportunities and meet future challenges.
Financial analysis for the second quarter of 2002
Revenue from fintech and corporate services increased by 30% year-on-year to 29.862 billion yuan. This growth mainly reflects the growth of business payment income driven by the increase of daily average transaction volume and single transaction amount, the growth of revenue from financial management platform, and the increase of cloud service income due to the increase of public cloud consumption (especially Internet services and livelihood services).
Revenue from online advertising increased by 13% to 18.552 billion yuan. Social and other advertising revenue increased by 27% to RMB 15.262 billion. The increase was mainly due to the increase in traffic and the proportion of higher priced video ads, which promoted the revenue growth of mobile advertising alliance, and also benefited from the increase of wechat friend circles revenue driven by the increase of advertising inventory and exposure. Media advertising revenue fell 25% to 3.290 billion yuan. The decrease mainly reflects the weak demand for brand advertising in the challenging macro environment, as well as the decline in advertising revenue of Tencent video due to the delay of some content production and online time.
Capital expenditure was RMB 9.466 billion, up 117% year on year.
Free cash flow * was 28.451 billion yuan, up 127% year on year.
As at June 30, 2002, the net cash of the company was RMB 7.212 billion. The fair value of Tencents equity in listed investment companies (excluding subsidiaries) totaled 726.244 billion yuan.
Business Review and Prospect
Communication and social networking
In China, the length of users of smartphone games increased year on year, but declined month on month due to seasonal and return to work factors. Glory of the king released a number of top-level skin types during its annual activity May 5 Kai Hei Festival, which enhanced user activity. Peace elite is celebrating its first anniversary with a new content and game mode to enhance the players competitive game experience. In addition, Tencent cooperated with Tesla to launch the skin of Tesla car in the game of peace elite in July, which is widely welcomed by players. In the second quarter, Tencent launched the strategic game battle song arena, the action game under one man based on popular Chinese cartoon IP, and fighting in the wild developed by supercell. Fighting in the wild topped the list of IOS downloads in China in June this year, further extending its global leadership in fast-paced 3v3 MoBa games.
In the international market, with the launch of new games and the increase of users use time during the home order period, Tencents monthly active accounts increased significantly year-on-year and month on month. Tencent has released a personal computer game valorant, an immersive team action PC game, a card game Legend of Rune earth across personal computers and smart phones, as well as the agents role-playing mobile gameu300a CODE:DBlood u300bu3002 Valorant has become the worlds most watched game on twitter in the second season, reflecting its immediate appeal to immersive action gamers.
Tencents charge value-added service accounts increased by 20% to 203 million, mainly due to the increase in the number of video and music content service members. The number of video service members increased by 18% year-on-year to 114 million, benefiting from home-made Guoman and TV series, such as Douluo mainland Season 3, Longling Grottoes and rumored Chen Qianqian. Traffic to Chinas long video sites (including Tencent video) fell month on month as people returned to work and delayed the broadcast of some famous variety shows and TV series. Thanks to the promotion of popular dramas such as 30, Tencents video traffic has increased after the end of the second quarter, reflecting the resilience of Tencents video platform. Tencent music expanded the content of paid music library, and the number of music service members increased by 52% to 47 million.
Social networking and other advertising business continued to be strong, driving the growth of online advertising revenue year-on-year. The month on month growth rate of online advertising revenue has slowed down compared with the same period in the past. The reason is that in the first quarter of 2002, the game and Internet service industries benefited from home office and increased their advertising spending significantly. However, in the second quarter, the advertising expenditure fell back to a more normal level. However, in the second quarter of 2002, Tencents advertising industry became more diversified. Advertisers in the e-commerce and education industries heavily promoted 618 promotional activities and summer courses. Advertisers such as automobile and consumer electronics brands also increased their advertising expenses with the rise in consumption.
In order to enhance its long-term competitiveness in the field of effect advertising, Tencent launched an integrated advertising delivery management platform in July. Through this platform, advertisers can put advertisements in all resources of Tencent more efficiently, including Tencents mobile advertising alliance. The new platform will also enhance the efficiency of competition and provide more accurate targeted delivery services for advertisers.
In terms of social interaction and other advertising, WeChat advertising resources (especially friends circle) have promoted the rapid growth of advertising exposure, and the eCPM of mobile advertising alliance has also increased. The reason is that the proportion of video ads in mobile advertising alliance income has increased from the percentage of the number of units in the second quarter of 2019 to more than 40% of the second quarter of 2020. Tencent believes that WeChats ecosystem is redefining Chinas online advertising, so that advertisers can build relationships with users in their private domains, such as official account and small program, so that they can effectively maintain long-term and loyal customer relationships, rather than just single transaction advertising.
In terms of media advertising, revenue fell sharply year-on-year due to weak demand from brand advertisers and delayed production and broadcasting of some variety shows and TV series. Tencent expects that some variety shows and TV series will be broadcast in the second half of 2000.
In terms of financing platform business, with more and more users recognizing the convenience of Tencents security and carefully aggregated financial management platform, the number of assets and active customers increased year on year.
Cloud and other enterprise services
The service revenue of cloud and other enterprises recorded year-on-year and month on month growth, mainly driven by the increase of cloud service consumption of Internet companies and customers in the public service field. Under the continuous influence novel coronavirus epidemic situation, the delivery of offline projects has not yet fully recovered in the second quarter, but Tencent has signed major contracts with financial institutions and public service customers, and expanded the business in emerging vertical fields such as medical, education, conferences and exhibitions to help customers achieve digital transformation. In terms of technology and infrastructure, Tencents adoption of customized equipment and the establishment and expansion of its own super large data center will help to improve the performance of Tencent cloud services and optimize the cost in the long run.
Source: Qiao JunJing, editor in charge of Netease science and Technology Report_ NBJ11279