Chinese technology titan Tencent Holdings reported revenues of $16.2bn for the second quarter, as executives sought to reassure investors that its exposure to the US WeChat ban was limited.

Tencent beat analyst estimates for the quarter ended 30 June, with revenues up 29% year on year. Operating profit was up 38% year on year at $5.3bn.

Overall revenues for the past six months were up 28% year-on-year at $31bn.

During an earnings conference call, Tencent executives stressed that Donald Trump’s executive order, which gives US companies 45 days to cease business dealings with its messaging app WeChat, would not affect its much larger Chinese counterpart, Weixin.

“The executive order is focused on WeChat in the United States and not other businesses in the US,” said Tencent Chief Financial Officer John Lo. “We are in the process of seeking further clarification from bipartisan parties in the US.”

Last week Trump created confusion when announcing executive orders banning WeChat and ByteDance-owned video-sharing app TikTok. However, the loose wording in the executive order has made it unclear whether it could yet be applied to Weixin.

This would prevent US companies from using it to advertise to a Chinese market, ranging from Nike to Coca Cola. It could also damage Chinese demand for iPhones if Apple were barred from listing Weixin on its App Store – such is the popularity of the app in China.

Tencent said it now had a combined 1.2 billion monthly active users on WeChat and Weixin, up 6.5% year on year. The majority of users are based in mainland China. Tencent executives said that the US represents less than 2% of Tencent’s global revenue.

Tencent gaming revenues soar

The Trump administration was forced to clarify that the executive order against Tencent did not affect Tencent’s gaming businesses, which includes popular games PUBG and Fortnite.

Tencent’s gaming segment grew 40% year on year to $5.5bn, with new titles such as Brawl Stars a key revenue driver.

“Since the beginning of this year, the Covid-19 pandemic has swept the world, disrupting our daily work and life routines,” said Ma Huateng, chairman and CEO of Tencent.

“During this challenging time, we utilised our platforms and technologies to help users adapt to the new normal via online tools, to support enterprises in conducting digital upgrades, and to broadly contribute to economic recovery.

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“We achieved generally robust operating and financial results in the second quarter, testifying to the diligence of our teams and resilience of our business model. We are committed to investing in talents, technology and platforms in a disciplined manner to embrace the emerging structural opportunities and challenges ahead.”

Tencent’s share price was up by nearly 2% after releasing its Q2 results but has since lost those gains. Last week the executive order saw $66bn wiped from its share price.


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