In May 16th, Tencent announced today's unaudited first quarter consolidated performance as of March 31, 2018. According to the financial report, Tencent's total revenue in the first quarter was 73 billion 528 million yuan (US $11 billion 693 million), an increase of 48% over the same period last year.
Check the complete financial report:Http://img2.gtimg.com/finance/hk/pdf/2018/05/16/003147516-0.PDF
Performance summary of the first quarter of 2018
Total revenue: an increase of 48% over the same period, and the profit attributable to the company's equity holders under non GAAP: an increase of 29% over the same period last year.
The total revenue was 73 billion 528 million yuan (US $11 billion 693 million), an increase of 48% over the same period last year.
- operating profit of 30 billion 692 million yuan (US $4 billion 881 million), an increase of 59% over the same period last year, and operating profit margin increased to 39% from 39% in the same period last year.
The profit for the period was RMB 23 billion 973 million yuan (US $3 billion 812 million), an increase of 65% over the same period last year, and net profit margin increased to 29% from 29% in the same period last year.
The profit of the company's equity holders is 23 billion 290 million yuan (US $3 billion 704 million), an increase of 61% over the same period last year.
- the basic earnings per share were 2.470 yuan, and the diluted earnings per share were RMB 2.435 yuan.
- a number of non cash items and the impact of M & A transactions have been excluded from non GAAP:
- operating profit of 25 billion 272 million yuan (US $4 billion 19 million), an increase of 36% over the same period last year, and operating profit margin decreased to 37% from 37% in the same period last year.
The profit for the period was RMB 19 billion 130 million yuan (US $3 billion 42 million), an increase of 33% over the same period last year, and net profit margin decreased from 29% to 29% in the same period last year.
The profit of the company's equity holders is RMB 18 billion 313 million yuan (US $2 billion 912 million), an increase of 29% over the same period last year.
- the basic earnings per share were 1.942 yuan, and the diluted earnings per share were RMB 1.915 yuan.
Financial analysis in the first quarter of 2018
Value added services grew by 34% in the first quarter of 2018 to 46 billion 877 million yuan. Online game revenue grew 26% to 28 billion 778 million yuan. The growth is largely driven by the growth of our smartphone games, including existing games such as the king's glory, and new games such as the miracle MU: the awakening and the QQ handset. The revenue of PC game is basically stable. Social network revenue increased 47% to 18 billion 99 million yuan. The growth mainly reflects the growth of digital content services (such as live, video streaming, and our national K - song music service) and the sales revenue of virtual props within the game.
Internet advertising revenue grew by 55% in the first quarter of 2018 to 10 billion 689 million yuan. Social and other advertising revenue grew by 69% to 7 billion 390 million yuan, mainly benefiting from the expansion of the advertiser's base, raising the rate of WeChat's circle of friends and our mobile advertising alliance CPC growth. Media advertising revenue increased by 31% to RMB 3 billion 299 million yuan, mainly due to the growth of video playback and the Tencent video revenue growth driven by innovative advertising in self-made content.
Other businesses grew by 111% in the first quarter of 2018 to 15 billion 962 million yuan. This increase is mainly reflected in the contribution of our payment related services and the expansion of cloud services business.
Other major financial information in the first quarter of 2018
In the current quarter, the share premium was 1 billion 632 million yuan, an increase of 22% over the same period last year.
EBITDA was 29 billion 247 million yuan, an increase of 46% over the same period last year. The adjusted EBITDA was 30 billion 856 million yuan, an increase of 45% over the same period last year.
Capital expenditure was 6 billion 318 million yuan, an increase of 200% over the same period last year.
Free cash flow is RMB 13 billion yuan, a decrease of 46% compared with the same period last year.
In March 31, 2018, the net liabilities of the company amounted to RMB 14 billion 533 million yuan. In March 31, 2018, the fair value of our listed investment companies (excluding Affiliated Companies) amounted to 212 billion 600 million yuan.
Business Review and Prospect
The number of active accounts in -QQ reached 805 million, down 6.4% from the same period last year.
-QQ intelligent terminal accounts for 694 million monthly active accounts, an increase of 2.4% over the same period last year.
WeChat and WeChat combined monthly active accounts reached 1 billion 40 million, an increase of 10.9% over the same period last year.
The number of monthly active accounts in -QQ space reached 562 million, down 11% from the same period last year.
The number of monthly active accounts of -QQ space smart terminals reached 550 million, down 9% from the same period last year.
- the number of registered accounts of the value-added services was 147 million, an increase of 23.6% over the same period last year.
Communication and social networking
-QQ: active accounts for smart terminals rose by 2.4% to 694 million 100 thousand year-on-year. With our rich chat and entertainment content to attract young users, intelligent terminal accounts for users aged 21 or below have also increased over the same period. QQ has more than 80 million active daily accounts of our QQ's built-in news and information streaming service. QQ optimizes the recommendation of short videos, thus promoting video viewing growth by 300% over the same period.
Together with our investment companies, we have established the global leading position of tactical competitive games. We have developed two mobile games through the intellectual property rights of the agent PUBG games, with its personal computer version and the Xbox version launched by its developers. The two games were popular in China, but we have not yet been commercialized in China, and overseas markets are just beginning to commercialize. The tactical competitive game "fort night", developed by our investment company Epic Games, is popular around the world, with more than 40 million monthly active accounts at the personal computer end and the game host. The mobile version of the game was launched on the iOS platform in March and became the best-selling game in the iOS app store instantly. In China, we have opened the localization registration version of the night of the fortress. We are going to cooperate with the PUBG Licensor to issue a localized version of the personal computer in China.
Driven by independent research and development of mobile games such as "the glory of the king" and "QQ flying car", the revenue of smart phone games, including smart phone games, which belong to our social network business, is about 21 billion 700 million yuan, up 68% from the same year. Benefiting from quarterly promotional activities and new games, smartphone game revenue grew by 28%. "The glory of the king" is still the best - selling smartphone game in China's best - selling list of iOS, whose daily active accounts maintain double - digit growth over the same period of the same year, with a robust performance. In the first quarter, our new game "QQ flying car tour" became the second largest smartphone game in China's iOS bestseller list. "QQ flying hand tour" attracts existing personal computer players and has gained a large number of new users, showing that we have the ability to extend the game from the personal computer to the mobile terminal and expand the user group in the process. In the near future, our platform is focused on the promotion of the user base of the yet commercialized tactical competitive games, postponing the commercialization of China and increasing the spending on promotion, which is expected to affect our mobile game revenue in the short term.
The personal computer client game revenue is about 14 billion 100 million yuan, unchanged from the same period last year. The number of active users has declined due to the continuous migration of users to mobile terminals, while core user participation has remained stable. Driven by seasonal updates and promotional activities during the Spring Festival, the growth of income was 10%. The Dungeon Fighter Online, which is about to celebrate the national suit 10th anniversary celebrations in June, creates a new high quarterly income in the first quarter, showing our long-term operational capability for the game franchise. Through the new game, including the Chinese personal computer version and a number of sandbox games, which include the launch of the tactical game agent games, we will work to expand the personal computer end game franchise reserve. We will also introduce some upgraded versions of existing football and basketball game series. In order to further enhance user participation, we are stepping up efforts to promote games in fighting platforms such as fighting fish and tiger teeth.
The registered accounts of value-added services increased by 24% to 147 million over the same period, mainly driven by video and music streaming services. Tencent video has consolidated its leading position in the Chinese industry in terms of its active account and order volume. We have increased the user participation of our video platform, and the number of active accounts on mobile terminals and the usage time of each user have increased rapidly over the same period. Driven by our homemade and product quality content, the average daily video playback of mobile terminals increased by more than 60% over the same period last year. Our investment in homemade content has successfully increased user participation in Tencent video, prompting an increase in order conversion rate and subscriber retention rate. Our video order revenue increased by 85% over the same period.
We launched small video sharing applications to meet user demand for fragmentation time entertainment. Micro vision provides the user with rich and high-quality content, including the content produced by professional users from the industry, and our own positive digital content library, including music, games, sports and variety shows. Micro content can also be distributed through QQ viewing and mobile phone QQ browsers and other vertical streams of information flow.
Our online advertising business achieved 55% revenue growth over the same period. As far as media advertising is concerned, revenue has increased by 31% over the same period. Video advertising revenue has increased by 64% over the same period, benefiting from the increase in video playback and more pre patch ads and the ability to improve the form of innovative advertising in the self-made content. Compared with the previous quarter, the first quarter was the low season for advertisers, so video and News advertising revenue decreased reasonably during the first quarter.
In terms of social and other advertising, revenue increased by 69% year-on-year, benefiting from the expanding cardinal number of advertisers to increase the advertising rate of WeChat's circle of friends and the CPC growth of our mobile advertising alliance. The decrease in income is mainly due to the low season in the first quarter. Under the off-season factor, QQ's revenue grew rapidly due to the rapid growth of traffic volume. To meet the advertisers' strong demand for social advertising on our platform, WeChat's circle of friends showed the amount of advertising at the end of March, up from one day to two per day. We believe that social and other advertising will maintain sustained growth over the long term due to the fact that our social and information flow products are much less loaded than the industry.
Thanks to the payment solution business, related financial services and cloud services business, our other business revenue increased by 111% over the same period last year. The growth of our payment solution business is mainly due to the rapid growth of the commercial payment volume and the consumer's handling charges.
Driven by the growth of games, video, e-commerce and O2O industry, our cloud revenue increased by more than 100% over the same period last year. We launch new customized cloud products for the needs of financial, municipal and retail customers. We use advanced data analysis and artificial intelligence technology to provide customized cloud solutions for large financial institutions, supermarkets, chain stores and fashion retailers, which contribute to the rapid growth of sales and security. We will strengthen the core competencies of games and video cloud services and enhance our strength in finance, municipal and retail services. We will expand the global cloud infrastructure to support the expansion of internal businesses such as external customers and games.
About the Tencent
The Tencent provides technology to enrich the life of Internet users. The company's social networking and communications platform WeChat and QQ connect users to diverse digital content, including games, videos, music and literature. Tencent aims to help advertisers reach hundreds of millions of Chinese consumers. In infrastructure services, Tencent provides different products in the areas of mobile payment, network security, cloud services and artificial intelligence, and promotes the growth of partners. Tencent vigorously invests in talents and promotes technological innovation in order to develop together with the Internet industry.
The Tencent was established in Shenzhen, China, in 1998. Tencent Holdings (00700.HK) is listed on the main board of the stock exchange of Hongkong.