Growth in fintech, business services pushes Tencent’s H1 profits to $10.4b

Chinese tech giant Tencent recorded a total revenue of 273.6 billion yuan (US$42.3 billion) for the first half of 2021, a 23% increase from H1 2020’s revenue of 222.9 billion yuan (US$34.5 billion).

The company also raked in 67.2 billion yuan (US$10.4 billion) in profit during the same period on a non-IFRS (International Financial Reporting Standards) basis – a 17% year-on-year increase.

Photo credit: Tencent

The company’s value-added services (VAS) segment continues to bring in the most revenue, contributing 72 billion yuan (US$11.15 billion) for the quarter. That figure is lower by around 400 million yuan (US$61 million) compared to Q1 2021 but higher by 7 billion yuan (US$1.1 billion) compared to Q2 2020.

Results from the company’s digital content offerings, which is part of its VAS segment, also improved: Fee-based subscriptions rose 13% year on year to 229 million yuan (US$35.4 million), video subscriptions increased by 9% to 125 million yuan (US$19.3 million), and music by 41% to 66 million yuan (US$10.2 million).

Tencent’s gaming segment remains strong as well. Its Clash of Clans game hit its ninth anniversary in August, PUBG Mobile has begun collaborations with brands for crossover content, and Valorant reached 14 million in monthly active users on its first anniversary. Meanwhile, Honour of Kings was also adapted into a drama series and went on to become one of the most-watched shows on Tencent Video.

In Q2 2021, the Chinese firm’s fintech and business services revenue saw a significant uptick, with the segment generating 41.9 billion yuan (US$6.5 billion) in revenue. This is a roughly 40% increase compared to the 29.9 billion yuan (US$4.6 billion) it pulled in the same period a year ago.

The company said that growth from this segment was driven by increasing digital payment transactions. The rise in business services revenue can also be attributed to the accelerated digitalization of public services and traditional industries.

Online advertising revenue also climbed to 22.8 billion yuan (US$3.5 billion), which is 1 billion yuan more than the previous quarter and 4.3 billion yuan higher compared to Q2 2020. Tencent claims to have outperformed its competitors in the segment in terms of video views and user shares.

The company recently mulled delaying its IPO plans in Hong Kong following China’s crackdown on tech giants. The country’s antitrust regulator also reportedly planned on asking Tencent’s music arm to give up its exclusivity rights.

Currency converted from US dollar to Chinese yuan: US$1 = 6.46 yuan.

Correction: an earlier version of the story mentioned Q2 instead of H1