TENCENT(00700)2021-08-31 10:30Financial Performance - Tencent's revenue for the second quarter of 2021 was RMB 138.26 billion, representing a 20% year-over-year increase[4]. - The company's net profit attributable to equity holders for the second quarter of 2021 was RMB 42.59 billion, a 29% increase compared to the same period last year[6]. - Tencent's operating profit for the first half of 2021 was RMB 108.76 billion, a 42% increase compared to the first half of 2020[5]. - Basic earnings per share for the first half of 2021 were RMB 9.492, reflecting a 45% year-over-year increase[5]. - Tencent's non-IFRS net profit attributable to equity holders for the first half of 2021 was RMB 67.16 billion, a 17% increase year-over-year[6]. - The operating profit for Q2 2021 was RMB 52.487 billion, up from RMB 39.311 billion in Q2 2020, representing a year-on-year increase of 33%[17]. - The total revenue for Q2 2021 reached RMB 138.259 billion, compared to RMB 114.883 billion in Q2 2020, marking a year-on-year growth of 20%[17]. - Net profit attributable to equity holders for Q2 2021 grew by 29% year-on-year to RMB 42.6 billion, with non-IFRS profit increasing by 13% to RMB 34.0 billion[23]. - The company reported a net profit of RMB 90,354 million for the six months ended June 30, 2021, compared to the previous period, contributing to the overall comprehensive income of RMB 151,267 million[52]. User Engagement and Growth - Monthly active accounts for WeChat and Weixin reached 1.2514 billion, up 3.8% year-over-year[7]. - The number of registered paying subscribers for value-added services increased to 229.4 million, a 12.8% year-over-year growth[7]. - Active user numbers and engagement on WeChat have further increased, with transaction volume from mini-programs growing over 100% year-on-year[9]. - The number of paid members for value-added services increased by 13% year-on-year to 229 million, while music paid members grew by 41% to 66 million[10]. - The number of monthly active accounts for Valorant reached 14 million within a week of its launch[11]. Revenue Segments - Revenue for Q2 2021 increased by 20% year-on-year to RMB 138.3 billion, with value-added services contributing RMB 72.0 billion (52% of total revenue) and financial technology and enterprise services contributing RMB 41.9 billion (30% of total revenue)[18]. - Value-added services revenue grew 11% year-on-year to RMB 72.0 billion, driven by a 12% increase in gaming revenue to RMB 43.0 billion, primarily from titles like "Honor of Kings" and "PUBG Mobile"[18]. - Online advertising revenue rose 23% year-on-year to RMB 22.8 billion, supported by increased demand from internet services and consumer staples, despite weak demand from the education sector[19]. - Financial technology and enterprise services revenue surged 40% year-on-year to RMB 41.9 billion, reflecting growth in digital payment transactions and contributions from the merger with Yiche[19]. Expenses and Costs - Total cost of revenue for Q2 2021 increased by 22% year-on-year to RMB 75.5 billion, maintaining a stable cost-to-revenue ratio of 55%[20]. - Sales and marketing expenses rose 29% year-on-year to RMB 10.0 billion, reflecting increased promotional spending in enterprise services and digital content[23]. - General and administrative expenses increased by 37% year-on-year to RMB 22.6 billion, primarily due to rising employee costs[23]. - The company reported a net other income of RMB 20.8 billion, mainly from fair value gains on investments[23]. Investments and Financial Position - As of June 30, 2021, the group's investment portfolio reached RMB 844.262 billion, an increase of 22.4% from RMB 690.886 billion on December 31, 2020[38]. - The fair value of equity in listed companies (excluding subsidiaries) was RMB 1,445.978 billion as of June 30, 2021, up from RMB 1,362.324 billion on March 31, 2021[41]. - The group recorded an investment return of RMB 31.16 billion for the six months ended June 30, 2021, representing a year-on-year growth of 196%[39]. - The net fair value gain from investments was RMB 29.147 billion for the six months ended June 30, 2021, compared to RMB 7.972 billion in the same period of 2020[40]. - The group held approximately 243 million shares in Snap Inc., valued at approximately RMB 107 billion, accounting for 7% of the group's total assets as of June 30, 2021[38]. Cash Flow and Debt - The group's net cash flow from operating activities was RMB 32 billion, resulting in a free cash flow of RMB 17.3 billion for the second quarter of 2021[42]. - As of June 30, 2021, the group's net debt was RMB 20.972 billion, a decrease from a net cash position of RMB 5.581 billion on March 31, 2021[41]. - The total debt as of June 30, 2021, was RMB 276.174 billion, an increase from RMB 248.444 billion as of December 31, 2020, reflecting a debt-to-adjusted EBITDA ratio of 1.40 compared to 1.36 in the previous year[68]. - The company reported a total cash outflow related to leases of approximately RMB 2.346 billion for the six months ended June 30, 2021, compared to RMB 1.777 billion for the same period in 2020, representing a year-over-year increase of 32%[107]. Employee and Executive Compensation - The total employee compensation cost for the six months ended June 30, 2021, was RMB 44.388 billion, an increase from RMB 31.964 billion for the same period in 2020[188]. - The company had 94,182 employees as of June 30, 2021, compared to 70,756 employees as of June 30, 2020[188]. - The annual base salary for the CEO, Ma Huateng, in 2021 was RMB 8,478,210[179]. - The annual base salary for the President, Liu Chiping, in 2021 was USD 1,270,080[180]. - The company’s incentive share program reflects its commitment to aligning executive compensation with performance[177]. Governance and Compliance - The audit committee reviewed the unaudited interim financial information for the three and six months ended June 30, 2021[189]. - The company has adopted a code regarding directors' securities transactions and has complied with it during the reporting period[190]. - The company will continue to review its existing governance structure and make necessary changes as appropriate[191]. - The company has been adapting to regulatory changes under the Securities and Futures Ordinance in Hong Kong, ensuring compliance and operational integrity[200].