Tencent 2022 Second Quarter

JC Project Freedom Why I am buying Tencent

Tencent is a leading provider of Internet services in China and they are the VC arm behind many tech startups.

In summary, in 2Q 2022, the revenues decrease by 3% YoY from RMB138,259 million to RMB134,034 million. VAS dropped 1.3% from RMB 72,013 million in Q2 2021 to RMB 71,683 million in Q2 2022. Online Advertising dropped 18.4% from RMB 22,833 million in Q2 2021 to RMB 18,638 million in Q2 2022. FinTech and Business Services has slight growth from RMB 41,892 million in Q2 2021 to RMB 42,208 million in Q2 2022. The Gross Margin is well maintained at around 43%.

The CEO mentioned that they are focusing their business strategy to tighten marketing expenditure and exit non-core businesses. Tencent will roll out new businesses, including in-feed advertisements in Video Accounts, and continue to invest in R&D.


International Games revenues decreased post-pandemic, and people spend lesser time on gaming as more people return back to work in the office. There’s a decrease in revenue from PUBG Mobile and Brawl Stars. VALORANT performs very well. V Rising sees incremental revenue. Domestic Games revenues decrease by 1% to RMB 31.8 billion. There are fewer game releases, lower user spending, and implementation of minor protection. Tencent’s games are not approved by authorities in the most recent round, we see Netease and others got approval.

Online Advertising

There is weakness in the internet services, education, and finance sectors. There is subdued bidding density and lower CPMs.


For Weixin, Video Accounts’ total video views grew over 200% year on year. Video views based on AI increased by over 400% year on year, and daily active creators and daily video uploads rose by 100% year on year. These are stellar growth in terms of engagement.

Digital Content

The fee-based VAS subscriptions increased by 2% year on year to 235 million. The new drama series A Dream of Splendor ranked first in June 2022. Tencent Video’s mobile DAU is 20% more than its competitors. Tencent Music subscriptions increased to 83 million.

Cloud and Business Services

Business Services’ gross margin expanded quarter-on-quarter as improved revenue mix. For PaaS, TDSQL database revenue grew over 30% year-on-year and represented over 5% of cloud revenue in the second quarter of 2022. TDSQL is the leading distributed database product in China. For SaaS, Tencent Meeting launched a marketplace with plug-ins to improve meeting experiences.

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