B End Business Revenue And Game Level Tencent "Pillar" Is Expected To Change Hands

In March 18th, Tencent Inc released its fourth quarter and full year earnings for 2019. For Tencent, this is a very "ideal" financial report, especially in 2018, due to the slump in the game and other reasons, resulting in a sharp decline in revenue growth, Tencent finally found the pace of growth in this earnings report.

In the fourth quarter of 2019, Tencent's revenue was 105 billion 767 million yuan, up 25% over the same period last year. This is also the first time Tencent's single quarterly revenue has exceeded 100 billion yuan. At the same time, Tencent realized net profit of 21 billion 582 million yuan, an increase of 52% over the same period, and the net profit of non international accounting standards was 25 billion 484 million yuan, an increase of 29% over the same period last year.

At present, Tencent's revenue mainly consists of five sectors, namely, online games, social networking, online advertising, financial technology and enterprise services and others. In the Q4 earnings report, the performance of the two businesses of online games, financial technology and enterprise services is the most noteworthy.

During the reporting period, Tencent's online game business revenue was 30 billion 286 million yuan, an increase of 25% over the same period. In the first three quarters of 2019, the revenue growth of the business was -1%, 8% and 11%, respectively. It can be seen that Tencent's game business is returning to the fast lane with the release of the game number and the strength of overseas markets.

At the same time, Tencent is also getting rid of over reliance on gaming business. In the fourth quarter, Tencent game business accounted for 28.6% of total revenue, while financial technology and enterprise services accounted for 28.2% of the revenue, almost equal to the game business.

Since the completion of the organizational restructuring in September 2018, Tencent has been making great progress in the field of industrial Internet in the whole 2019. In the fourth quarter, the income of financial technology and enterprise services was 29 billion 920 million yuan, an increase of 39% over the same period last year.

A brokerage analyst told the twenty-first Century economic news reporter that the diversified revenue structure is also what Tencent most expects to see. In the past, the revenue of gaming revenue was overweight and the risk was higher. But now, the revenue capability of B terminal business is gradually emerging, and it is expected to become a pillar business of Tencent in the future.

The game hits the sea and achieves results.

Although the proportion of revenue is declining, so far, the game business is still an important factor determining the fundamentals of Tencent earnings.

During the reporting period, the revenue of Tencent PC game continued to decline and offset the growth of some mobile end games. Even so, the overall revenue growth of Tencent gaming business is still up to 25%, which is mainly attributed to the growth of mobile gaming revenue in domestic and overseas markets and the contribution from Supercell's gaming revenues, the financial report said.

From the first quarter of 2019, Tencent management began to emphasize the importance of going out to sea when it talked about the future development of game business. According to the data of App Annie, Tencent ranked the top 4 in the list of revenue issuers in the whole year of 2019.

Earnings report also pointed out that, thanks to the success of "PUBG Mobile", "Call of Duty Mobile" and "hero League" new model "Yun Ding Yi", the overseas business of Tencent Games has made significant progress last year. In the fourth quarter of 2019, Tencent's overseas game revenue grew more than doubled, accounting for 23% of online game revenue.

By the end of 2019, 5 of the world's top ten most popular mobile games (daily active users) were developed by Tencent. Tencent said that in addition to creating original IP, the company also invested in the top game studios of all major game categories to expand external cooperation. Meanwhile, Tencent's main game studios, such as Tian Mei and photon studios, as well as Riot Games and Supercell, have further strengthened their R & D capabilities, and have reserved several games.

In the earnings report, Tencent also admitted the lack of game business in category layout. It said that at present, Tencent's game studios play a leading role in multi player combat arena, tactical competition and other game categories, but there is still room for further improvement in role-playing games and other categories.

Annual revenue of cloud services exceeds 17 billion

In 2019, the revenue of Tencent was 377 billion 289 million yuan, an increase of 21% over the same period last year, of which the income of financial technology and enterprise services was 101 billion 355 million yuan, accounting for 27%. This is also a performance answer for Tencent's Internet related business.

Financial reports said that this increase was mainly driven by the increase in income generated by the increase in the number of active users and the number of transactions per capita. Meanwhile, the income growth of cloud services also contributed to the annual revenue growth.

In terms of financial technology, Tencent strengthened the penetration of offline merchants in 2019. In the fourth quarter, the average number of business transactions paid by Tencent was more than 1 billion, and the monthly active accounts exceeded 800 million, with more than 50 million active merchants in the month.

Societe Generale Securities in a research report pointed out that financial technology will be Tencent's mid and long-term valuation drive, especially the recovery of reserve payments, will bring 2 billion dividends to Tencent, profit margins are also expected to increase.

In terms of cloud and enterprise services, Tencent cloud achieved revenue of 17 billion yuan in 2019, up by 86.8% over the same period last year, while paying more than 1 million users. According to the financial report, in 2019, Tencent cloud successfully expanded its market share and continued to expand its business in the vertical field of Internet services, tourism, people's livelihood services and industry.

In addition, Tencent also mentioned the impact of new crown pneumonia on cloud services. The Tencent said that the new crown pneumonia epidemic had delayed the implementation of the cloud related services, which would have a negative impact on short-term revenue. But at the same time, the epidemic situation further reflects the utility of telecommuting and telemedicine services.

For example, Tencent launched the Tencent conference in December 2019. In two months, the number of active accounts has exceeded 10 million, making it the most popular video conference application in China.

WeChat's position is further consolidated

According to the financial report, as of the end of 2019, the number of combined monthly active accounts of WeChat and WeChat still maintained an increase of 1 billion 164 million, an increase of 6.1% over the same period last year, a 1.2% increase in the ring ratio, and a 647 million decrease in the number of mobile accounts on the mobile end of QQ, a decrease of 7.5% over the same period last year, and a decrease of 1% in the annulus.

WeChat's user volume is still growing, and its importance in the Tencent is also increasing. In the fourth quarter of 2019, Tencent's online advertising revenue was 20 billion 225 million yuan, up 19% over the same period last year. Among them, social and other advertising revenue increased by 37% to 16 billion 274 million, mainly due to the increase in advertising revenue of WeChat friends circle and mobile advertising alliance.

Meanwhile, Tencent's media advertising revenue was 3 billion 951 million yuan, down 24% from the same period last year. The decrease in revenue reflects mainly the decrease of advertising revenue of Tencent's media platforms such as video and Tencent news.

It can be seen that in the case of the continuous shrinking of the advertising market, WeChat is constantly releasing advertising value. A Tencent employee told reporters that in 2019, WeChat acted frequently in the advertising business, such as the launch of the "gravity plan" for the low frequency and high consumption industry, the opening of the circle of commentaries to the brand owners, the first commentary function, and so on, which helped to make advertising more accurate.

At the same time, the commercialization capability of WeChat applet was also demonstrated in 2019. In 2019, more than 300 million active users of small programs were daily, and the number of daily average transactions increased by more than doubled compared with that of the previous year. More than 800 billion of the total volume of transactions was created over the same period, an increase of 160% over the same period.

Guoxin Securities analyzed that WeChat platform has developed a variety of advertising forms to meet the needs of the traffic side, the advertising infrastructure has also been completed. The small program already has the commercial ecological basis and user base, and the user retention time is also rising. In the short term, advertising will be the main way to realize small programs. According to its estimate, the advertising revenue of small programs in 2019 is about 2 billion yuan, and in the long run the commercial value will exceed 10 billion yuan.

?