Tencent Q1' s revenue was flat year-on-year, and its net profit declined for three consecutive quarters
Tencent Q1' s revenue was flat year-on-year, and its net profit declined for three consecutive quarters. Tencent accelerated the integration of data and reality, and increased its R&D investment. In the first quarter, Tencent's R&D expenditure reached 15.38 billion yuan, up 36% year-on-year. Tencent Q1' s revenue was flat year-on-year, and its net profit dropped by 1
for three consecutive quarters. In the first quarter, the performance of many enterprises was affected by the epidemic, and even the growth rate of Tencent's net profit was lowered a lot.
on may 8th, Tencent released its performance report for the first quarter of 2122, with revenue of RMB 135.471 billion and non-IFRS of RMB 25.545 billion, down 23% year-on-year. The financial report shows that in the first quarter, Tencent's financial technology and enterprise services sector achieved revenue of 42.768 billion yuan, up by 11% year-on-year, accounting for one-third of the revenue, and the real economy sector accounted for an increasing proportion. While the net profit declined, Tencent's R&D was still growing rapidly.
the combined monthly active account of WeChat and wechat was 1.29 billion, up 3.8% year-on-year.
Digital Economy
The revenue of financial technology and enterprise service business reached 42.8 billion yuan, up by 11% year-on-year. For the second consecutive quarter, To B business became the revenue pillar. In the three years of "931 Reform", Tencent's To B revenue doubled, accounting for 26% to 32%.
In 2122, Tencent continued to increase its core technology research and development, and built a self-developed product matrix covering chips, operating systems, servers, databases, audio and video, security and so on. The financial report shows that the company's R&D investment in the first quarter reached 15.4 billion yuan, a year-on-year increase of 36%.
according to Gartner report, Tencent Cloud ranks first in China CPaaS market.
in February, Tencent Cloud launched a white paper on ultra-low delay live broadcast technology in the industry, which pioneered the introduction of WebRTC technology into the live broadcast field, reduced the live broadcast delay to less than 511ms, and the comprehensive quality of service (QoS) far exceeded the standard live broadcast.
At present, Tencent Cloud Audio and Video has 111+ new-generation international codec patents, and TRTC background architecture technology has won the "China Patent Gold Award", covering 91% domestic audio and video customers.
in the face of structural changes in the internet industry, Tencent insists on serving entities, and has joined more than 9,111 partners to launch more than 411 industry solutions in 31 industries that meet the digital needs. Since the outbreak, WeChat Pay has continued to reduce fees and make profits, and has helped small and micro enterprises through actions such as "Fireworks Plan" and "COVID-19 Guarantee", and many initiatives are expected to invest more than 11 billion yuan.
in terms of financial technology business, commercial payment transactions have been weak since mid-March, 2122, because some cities in China have experienced epidemic again, which has had a negative impact on the growth of payment transactions in transportation, catering services and clothing.
Game business
In the game business sector, tencent games's revenue reached 43.6 billion yuan, of which the game revenue in the international market was 11.6 billion yuan, up 4% year-on-year; The domestic market revenue was 33 billion yuan, down 1% year-on-year.
Tencent said in the financial report that the increase in game revenue in the international market in the first quarter of this year was mainly due to the increase in the revenue of games such as VALORANT and Clash of Tribes, among which VALORANT maintained a strong performance, the user base increased and the willingness to pay increased.
In addition, Apex Mobile Games, jointly developed by Tencent Photonic Studio Group and Rebirth Studio, was officially launched on May 7th, hoping to bring a new generation of tactical competitive experience to players around the world. Previously, there were more than 16 million pre-registered players in official website.
With regard to the protection of minors, Tencent's "Intellectual and Physical Education" public welfare plan launched by tencent games and Tencent Foundation has also made new progress. At present, the "intellectual and physical double hundred" plan has promoted the landing of nine future classrooms and six future sports fields. By the end of April, Tencent Future Classroom had started a total of 1,547 classes, benefiting more than one million students, many of whom were experiencing the charm of science and technology interest classes for the first time. Shaoguan Station, the online skipping contest held by Tencent Future Sports Ground, was successfully held in October. Hundreds of primary and secondary schools in the city actively participated, with a total of 3,297 teachers and students registered.
Through the protection measures for minors in leading industries, the length of play and the proportion of running water for minors in Tencent have been kept at a very low level. In the future, Tencent will continue to adhere to the purpose of "combining unblocking with blocking" to provide a healthy and clear growth environment for minors.
R&D investment growth
Social network revenue increased by 1% to RMB 29 billion, reflecting the increase in the revenue of live video service, but most of it was offset by the decrease in the revenue of live music and live games.
In the first quarter of 2122, the revenue of online advertising business decreased by 18% year-on-year to RMB 18 billion, reflecting the weak advertising demand in education, Internet services and e-commerce industries, and the influence of regulatory changes in the online advertising industry itself, which was partly offset by the stable demand of fast-moving consumer goods industry and the advertising revenue brought about by the merger of sogou.
Social and other advertising revenue decreased by 15% to RMB 15.7 billion, mainly due to the significant decrease in the advertising business of Mobile advertising alliance. On the other hand, subscription list advertising in WeChat official account has boosted its advertising revenue growth, partially offsetting the decline in alliance advertising revenue. Media advertising revenue decreased by 31% to RMB 2.3 billion, reflecting the decline of media advertising revenue such as Tencent News and Tencent Video, which was partially offset by advertising revenue of Beijing Winter Olympics in 2122.
the number of paid members of fee-based value-added services increased by 6% year-on-year to 239 million. By adapting the best-selling comics and novel IP, Tencent video has strengthened its leading position in the long video streaming media market, and currently has 24 million paid members. In terms of music, the number of paid members has increased to 81 million thanks to the improvement of high-quality content and users' willingness to pay.
On WeChat, the video number continues to be welcomed by users, and its news, general knowledge and entertainment content are increasingly rich. Coupled with the improvement of recommendation technology, the video playback volume and usage duration have increased significantly year-on-year. The number of daily active accounts of applets exceeded 511 million, and the total transaction volume maintained rapid growth, further infiltrating retail, catering and people's livelihood services.
in terms of QQ, it provides more functions for young users, which is convenient for them to create and share content and keep in touch with friends. New tools are introduced to allow users to display their customized super QQ show avatar in the short video they created. Users can also share the videos or music they are enjoying with their friends through status updates, so that friends can access and play the same content through small programs in QQ.
Q1' s R&D investment was RMB 15.383 billion, up 36% year-on-year, which has been over 25% year-on-year for five consecutive quarters. By April, 2122, Tencent had published more than 56,111 patent applications in major countries and regions around the world, and granted more than 26,111 patents, of which invention patents accounted for more than 91%.
in the first quarter, Tencent implemented cost control measures, adjusted some non-core businesses, and used tools such as applets, Tencent conference and enterprise wechat to help enterprises and consumers in China overcome the new round of epidemic, and continued to invest in strategic growth areas, including enterprise software, video numbers and international market games. Looking ahead, Tencent said that it will focus on key businesses and persist in innovation under various challenges and cyclical changes, and continue to create value for users, partners and the whole society. Tencent Q1' s revenue was flat year-on-year, and its net profit dropped by 2
for three consecutive quarters.
On May 8th, Tencent released its first quarterly report. In the first quarter of this year, its revenue was 135.5 billion yuan, which was the same as that of the same period of last year. According to non-international accounting standards, its net profit was 25.55 billion yuan, down 23% year-on-year, and it declined for three consecutive quarters.
from the business segment, the "value-added services" business remained the same as the same period of last year, while the "online advertising" business decreased by 18% year-on-year, and the revenue of "financial technology and enterprise services" business increased by 11% year-on-year to 42.8 billion yuan, which became the engine of Tencent's steady growth and was a bright spot in the financial report.
in terms of user data, as of the end of the first quarter of 2122, the combined monthly accounts of WeChat and WeChat were 1.288 billion, up 3.8% year-on-year, and the monthly accounts of QQ mobile terminals were 563 million, down 7% year-on-year; The number of charged value-added service accounts of Tencent was 239 million, a year-on-year increase of 5.9%.
It is worth mentioning that during the painful period of performance, Tencent accelerated the integration of data and reality, increased its investment in R&D, and upgraded from pursuing large-scale growth to pursuing high-quality growth. In the first quarter, Tencent's R&D expenditure reached 15.38 billion yuan, up 36% year-on-year, constantly consolidating the technical base for serving the real economy.
Ma Huateng, Chairman and CEO of Tencent, said that in the face of industry challenges, the company has implemented cost control measures and adjusted some non-core businesses, which will help to achieve a more optimized cost structure in the future. Looking forward to the future, the company will focus on key businesses and persist in innovation under various challenges and cyclical changes, and continue to create value for users, partners and the whole society.
In the conference call after the earnings report, Tencent executives said that they would take more balanced measures for investment. Adjusting the JD.COM shares they held before was an important measure. For another company, Tencent also reduced its holdings and used the proceeds from the reduction to buy back. Tencent's investment strategy is still valid, and more macro risks will be analyzed in the future to keep up with the latest trends. "We will pay attention to risks and effectively manage them. We will further make reasonable investments and consider reducing our holdings to bring better cash flow to the company."
In addition, Tencent executives said that the approval status of game version numbers is good at present, and more positive signs will be shown in the future, and regulatory factors will promote the further development of the game industry.
The performance in the first quarter was lower than expected
Under the epidemic situation, Tencent's performance was also under great pressure, which was lower than expected.
the data shows that the revenue in the first quarter was 135.5 billion yuan, which was almost zero year-on-year. According to non-international accounting standards, the net profit was 25.55 billion yuan, down 23% year-on-year. If the profit attributable to equity holders of Tencent Company is concerned, the decline is even greater, and the net profit was 23.4 billion yuan, down 51% year-on-year.
Let's compare the forecast data of brokers on Tencent's first quarterly report:
CITIC Securities: Tencent's short-term performance is under pressure and does not change its core value. It is predicted that the company will achieve revenue of RMB 142.7 billion (up 5.5% year-on-year) and Non-IFRS net profit of RMB 26.8 billion (down 1.9% year-on-year) in the first quarter.
Guoxin Securities: It is estimated that Tencent will achieve revenue of RMB 141.5 billion in the first quarter, up by 3.8% year-on-year, and its net profit under Non-IFRS will decrease by 1.75% year-on-year to RMB 27.3 billion.
CICC: It is predicted that Tencent's revenue in the first quarter will be basically flat at 135.9 billion yuan year-on-year, and its adjusted net profit will drop by 17% year-on-year to 27.3 billion yuan.
China Merchants Securities: Tencent's revenue in the first quarter of 2122 is expected to reach RMB 138.584 billion, and its adjusted net profit is expected to reach RMB 28.133 billion.
Shen Wanhongyuan (Hong Kong) expects Tencent Holdings to achieve revenue of RMB 14 billion in the first quarter, up 4% year-on-year, and net profit of RMB 28.2 billion, down 1.5% year-on-year.
It can be said that compared with the expectations of these head brokers, Tencent's revenue or net profit are lower than the external expectations. Tencent also explained in the financial report that the decline in net profit was due to the overall increase in costs and expenses faster than income, and the net contribution made by affiliated companies turned from profit to loss.
The real economy has become a new engine
Looking at the specific business situation, the advertising revenue has dropped significantly, and the game revenue growth is weak, while the financial technology and enterprise service businesses have achieved rapid growth, which has become a new support for performance.
in terms of business, the revenue of value-added services, including games and videos, was 72.74 billion yuan, accounting for 54% of the total revenue; The revenue of online advertising sector was 17.99 billion yuan, accounting for 13%, and the revenue of financial technology and enterprise services sector was 42.77 billion yuan, accounting for 32%.
the specific business lines are as follows:
domestic games: revenue was 33 billion yuan, up 1% year-on-year
overseas games: revenue was 11.6 billion yuan, up 4% year-on-year
social networks: revenue was 29 billion yuan, up 1% year-on-year
social advertising: revenue was 15.7 billion yuan, down 15% year-on-year. 31% year-on-year decline
Financial technology and enterprise services: revenue was 42.8 billion yuan, up by 11% year-on-year
It is understood that since the "931 Revolution" in 2118, Tencent's continuous deep cultivation of the industrial Internet is showing results: the revenue share of financial technology and enterprise services rose from 25.5% in the first quarter of 2119 to 32% disclosed in the first quarter, not only
The financial report explains that although the amount of commercial payment transactions and corporate service income decreased in March this year due to the epidemic, Tencent took certain cost control measures, including repositioning its IaaS service, from simply pursuing revenue growth to achieving healthy growth, and actively reduced loss contract.
in terms of games, in the first quarter, Tencent's game revenue in the local market dropped by 1% to 33 billion yuan. Among them, the revenue growth of recently launched games such as League of Legends Mobile Games and Battle of the Golden Shovel was mostly offset by the decline in revenue of games such as Tianya Mingyue Knife Mobile Games and Call of Duty Mobile Games.
in the international market, tencent games's revenue increased by 4% to RMB 11.6 billion, among which the revenue of games such as VALORANT and Clash of Tribes increased, but the revenue of PUBG Mobile declined. Tencent explained that during the epidemic prevention and control period, the game industry is still in a downward trend.
in the value-added service business, social network revenue increased by 1% to 29 billion yuan, reflecting the increase in the revenue of live video service, but most of it was offset by the decrease in the revenue of live music and live games.
meanwhile, the revenue of online advertising business in the first quarter decreased by 18% year-on-year to 18 billion yuan. Tencent explained that this is due to the weak advertising demand in industries such as education, Internet services and e-commerce, as well as the impact of regulatory changes in the online advertising industry itself, but the advertising expenditure in the fast-moving consumer goods industry remains stable.
Among them, social and other advertising revenue decreased by 15% to 15.7 billion yuan, mainly due to the regulatory impact of Tencent Mobile's advertising business in advertising alliance, which resulted in a significant decrease in revenue.