Tencent Business Showed A Diversified Pattern. In The Third Quarter, Cloud Business Revenue Increased By 80% Over The Same Period.

In November 13th, Tencent released its third quarter 2019 earnings report. It is disclosed that Tencent achieved 97 billion 236 million yuan in revenue in the third quarter, an increase of 21% over the same period last year, a net profit of 20 billion 382 million yuan, a decrease of 13% over the same period last year, and a net profit of 24 billion 412 million yuan under the non general accounting standards, an increase of 24% over the same period last year.

The net profit of general accounting standards decreased year by year, which in fact reflected the decline of Tencent's investment income in the three quarter. According to the financial report, the profit of Tencent from the investment company in the third quarter of 2019 was 2 billion 444 million yuan, compared with 20 billion 694 million yuan in the same period last year.

This is mainly due to the three quarter of last year, IPO, a Tencent invested by the US group, has brought higher investment returns to Tencent. Therefore, Tencent also emphasized in the earnings report that after excluding the fair value income, investment impairment and some other items after the US group's comment on IPO last year, the net profit of the company increased year by year.

If we focus on Tencent's main business, Tencent's value-added services revenue will reach 50 billion 629 million yuan during the reporting period, an increase of 15% over the same period. The income of online games increased by 11% to 28 billion 604 million yuan over the same period, and the social network revenue increased by 21% to 22 billion 25 million yuan. In addition, Tencent's financial technology and enterprise services revenue was 26 billion 758 million yuan, an increase of 36% over the same period, and the income of online advertising business was 18 billion 366 million yuan, an increase of 13% over the same period last year.

In terms of user data, the number of combined monthly live users of WeChat and WeChat continued to grow in the third quarter, reaching 1 billion 151 million, an increase of 6.3% over the same period last year, while the number of monthly active users of QQ decreased by 8.9% to 731 million over the same period last year.

From the perspective of revenue contribution, gaming business still contributes the most revenue, but it is no longer a pillar role. According to the financial report, Tencent's online game revenue accounts for about 29% of total revenue, accounting for about 28% of financial technology and enterprise services, about 23% of social networking, and about 19% of online advertising.

A brokerage analyst who pays close attention to the Internet field told the twenty-first Century economic news reporter that Tencent has shown a diversified income structure, which is also a healthier revenue structure from the perspective of long-term development of enterprises. And from the perspective of business growth, financial technology and enterprise services and social networking are all higher than online games. In the future, Tencent may be able to get rid of its dependence on the game business.

In November 13th, Tencent released its third quarter 2019 earnings report. - Song Wenhui photo

Gaming revenues in the international market exceed 10%

Compared to Q3's year-on-year decline of 4% in 2018 and a year-on-year growth of 8% in 2019, Tencent's online game revenue could return to two digit growth in the three quarter, indicating that after several quarters of slump, Tencent's gaming business is getting warmer and warmer than before in 2018.

During the reporting period, Tencent's smartphone game revenue, including smartphone revenue attributable to social networking services, increased by 25% to 24 billion 300 million yuan, an increase of 9% over the previous year. However, the revenue of PC games continued to decline, down 7% from the same period last year, and the ratio fell to 2% yuan to 11 billion 500 million yuan, which also offset the growth of a large part of hand travel business.

For the "double drop" of revenue from end trips, Tencent said in its earnings report that the number of paid users after Dungeon Fighter Online's 11th anniversary celebration content was less than that of last year. However, Tencent also said that the active user level revenue of the League of heroes in China has increased year by year, and international income has also expanded.

However, the continued decline of the market share of terminal travel is already the trend of the times. For Tencent, it is estimated that every quarter of the next quarter will have to prepare for the revenue decline of the terminal tour, especially under the tight market regulation environment, the growth pressure of Tencent gaming business will also be huge.

When it comes to hand travel business, Tencent has mainly mentioned four games in its earnings report, namely "peace elite", "King glory", "PUBG MOBILE" (Jedi survival hand tour) and "Call of Duty Mobile" (call of duty tour).

Tencent said that in China, the "elite of peace" contributed to the whole season's revenue, but it is still the initial stage of recognition of delayed revenue. The number of active accounts in the "King glory" has been steady, and the number of users buying season tickets has increased. The number of monthly active accounts in PUBG MOBILE doubled over the same period abroad. The Call of Duty Mobile launched more than 100 million downloads within one month, becoming one of the most popular hand tours.

A veteran gaming industry told reporters that in the domestic market, "the glory of the king" still contributed the main income of hand travel, but the status quo is that the "King glory" users have entered the bottleneck period, there will be no significant growth in the future, and in terms of commercialization, although the "King glory" is also seeking innovation, there is little room for growth in the future.

This person believes that next, the income of the "peace elite" will bring some help to Tencent's earnings report. What's more noteworthy is the tour of the League of heroes, announced in October this year. After the launch of the product, it may take over the glory of the king and bring about a wave of growth.

In addition, the overseas market is also the next important development position of Tencent game business. In the earnings report, Tencent also disclosed for the first time that the international market contributed more than 10% to Tencent's game revenue in the third quarter.

The "2019 global mobile game market competitiveness report of China" released recently by Gamma data also shows that in 2019, Tencent's competitiveness in the global mobile gaming market remained the top. In addition to stabilizing domestic market performance, the biggest breakthrough in Tencent Games was the expansion of overseas markets. "PUBG MOBILE" and "Call of Duty Mobile" showed high performance in many overseas markets.

The gap with ALI cloud is shrinking.

In addition to the game business, another important business in Tencent's three quarterly report is financial technology and enterprise service business. During the reporting period, the business maintained a 36% growth rate in the overall revenue contribution compared to the game business, much higher than other businesses.

Although Tencent did not disclose data on financial technology services alone, the financial report said that with the increase of user access and cash flow, the payment ecosystem of Tencent has become increasingly vigorous. The number of daily active accounts, the volume of transactions per user, and the number of active businesses in various industries have increased, making the number of commercial payment transactions (especially offline scenes) and transaction volume recorded strong growth.

In terms of enterprise services, Tencent first disclosed the income of cloud services for the first time. In the third quarter, Tencent cloud revenue increased 80% to 4 billion 700 million yuan over the same period, and the single quarter revenue has exceeded half of the total annual revenue of 2018. Last year, Tencent cloud's annual revenue was 9 billion 100 million yuan.

As for the growth of cloud revenue, Tencent said in its earnings report that it is mainly due to the increased usage of existing customers, as well as the expansion of customer base in the areas of education, finance, livelihood services and retailing.

In September 30, 2018, Tencent announced that it started the strategic upgrading and set up a new cloud and intelligent industry group (CSIG). This is the starting point. Tencent's reintegration has been re launched into the B terminal market in a completely new way.

According to IDC's tracking of China's public cloud service market (the first half of 2019), in the first half of 2019, the total market scale of public cloud services in China (IaaS/PaaS/SaaS) reached US $5 billion 420 million. From the IaaS market, Alibaba, Tencent, China Telecom, AWS and HUAWEI rank the top five, occupying an overall 75.3% market share.

According to the latest Alibaba released earnings report, the third quarter, Ali cloud business revenue of 9 billion 291 million yuan, an increase of 64% over the same period. From the perspective of the volume of revenue, Tencent cloud and its nearly doubled gap, but on the growth rate, Tencent cloud has surpassed Ali cloud. If Tencent cloud can continue to maintain this state, the gap between Ali and Ali will continue to shrink.