Tencent Holdings Reports $4.6B Profits for Q2 2020, Looks to Merge DouYu with its Subsidiary Huya

 Chinese conglomerate Tencent Holdings reported its financial results for the second quarter of 2020. The company generated total revenues of ¥114.9B RMB ($16.56B USD) for the period, which marks an increase of 29.3% year-over-year (YoY) compared to ¥88.8B ($12.8B) in Q2 2019.

In total, Tencent Holdings ended the second quarter of 2020 with a net profit of ¥32.5B ($4.6B), marking a 31% increase compared to ¥24.7B ($3.6B) in Q2 2019..

Tencent’s primary source of income was its value-added services (VAS) segment, which includes all gaming products and services. The company recorded total game revenues of ¥46.9B ($6.8B), representing 40.8% of Tencent’s total revenues. Online game revenues grew 40% year-over-year primarily driven by higher mobile games revenues from titles such as Peacekeeper Elite and Honor of Kings. PC games revenues for Q2 2020 were ¥10.9B ($1.57B), while mobile games revenues were ¥36B ($5.18B). 

In its social networks segment, Tencent generated revenues of ¥26.7B ($3.85B), representing an increase of 29% YoY. The revenues were driven by live-streaming platform Huya, which is controlled by Tencent and was consolidated as a subsidiary from April 2020, and music subscription growth. 

In its fintech and business services segment, Tencent reported an increase in revenue of 30% YoY to ¥29.9B ($4.3B) for Q2 2020. According to Tencent, this increase was driven by wealth management platforms and cloud services. In addition, Tencent generated revenues of ¥18.5B ($2.67B) on online advertising, ¥15.2B ($2.2B) of which came from social media advertising.

On Monday, Tencent wrote a preliminary non-binding merger proposal letter to the boards of directors of its subsidiary Huya and DouYu, of which it is the largest shareholder. The letter proposes a stock-for-stock merger between the two Chinese live-streaming platforms with Huya being the surviving entity of the business combination. As of the end of Q2 2020, both live-streaming platforms have a combined enterprise value of $8.9B and 333.8M monthly active users distributed over both platforms.

Tobias Seck contributed to this article.

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