Tencent reported surging profits on Wednesday as its executives scramble to understand a new US ban targeting its messaging app WeChat and the impact it will have on its business.
The Chinese tech company topped analyst estimates by reporting profit of more than 30 billion yuan ($4.3 billion) for the three months ending in June, up 28% compared to the same period last year. Revenue rose 29% to 114.9 billion yuan ($16.5 billion).
During a call with investors, executives addressed President Donald Trump’s broad executive order issued last week against WeChat, highlighting several times that the action does not appear to target Weixin, the much bigger Chinese version of the app.
“They are two different products,” said chairman and CEO Ma Huateng, also known as Pony Ma. “Weixin is a chat [app] to serve the users in the mainland of China, while WeChat is a sister product which serves users outside of the mainland of China.”
WeChat and Weixin have more than 1.2 billion monthly active users, according to Tencent (TCEHY). The company does not break down those users by app, but analysts say the vast majority are on Weixin in China.
Industry analysts are concerned that Trump’s executive order could hit the company’s online games operations in the United States. But the company suggested that business is safe.
“Based on our initial reading and subsequent press reports, the executive order is focused on WeChat in the United States and not our other businesses in the United States,” said Tencent chief financial officer Shek Hon Lo.
“We are in the process of seeking further clarification,” he added.
Tencent is the world’s largest gaming company by revenue. It has published several popular mobile and video games, such as PlayerUnknown’s Battlegrounds, or PUBG. US-based players spend a lot of money in PUBG — it ranked 10th in the United States by consumer spend last year, according to analytics company App Annie.
But Tencent sought to reassure investors that the company makes very little money in the United States. James Mitchell, a senior executive, said the United States accounts for less than 2% of global revenue.
Tencent reported that more than half of its revenue last quarter came from so-called Value Added Services, which include the company’s lucrative games portfolio. Financial services and payment apps such as WeChat Pay contributed about 25% of revenue, and 16% came from online advertising.
The company’s stock has been under pressure since the US executive order was announced on Friday. But shares traded in New York increased 2.5% after the earnings release on Wednesday.