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Tencent's third quarter earnings report: Winter Games and payment support

via:博客园     time:2018/11/16 0:03:05     readed:219


Overall, Tencent's communications and social networking business performed smoothly in the third quarter, its advertising business continued to improve, its game revenue remained under pressure, and its payment and cloud computing business improved significantly.

Original title: Games Winter, cloud and payment support for Tencent

Cui Peng, Chinese entrepreneur

Editor Frankie Lam

History of photography

In the afternoon of November 14, Tencent announced its third quarter earnings as of September 30. Under the pressure of its main game business, the earnings and net profits of Tencent's earnings basically met the expectations of major investment banks.

Tencent's revenue in the three quarter was 80 billion 595 million yuan, up 23.6% from the same period last year, but the growth rate decreased by 6.6%. Net profit of 19 billion 710 million yuan, an increase of 15.5% over the previous quarter, compared with the previous quarter.

As Tencent's current financial report is from July 1 to September 30, the impact of the restructuring of Tencent's structure at the end of September will be gradually released in future financial reports.

Wechat and WeChat merged, with a monthly active account of 1,082.5 billion (as of September 30), up 10.5% year-on-year. The popularity of Wechat widgets and Wechat payment provides users with more usage scenarios and increases the number of times users use Wechat. Small program penetration in traffic and medical industry deepened, and user activity increased.

The average daily transaction volume of Tencent Mobile Payment increased by more than 50% over the same period of last year, and the average offline daily commercial payment transaction volume increased by 200% over the same period of last year. However, Tencent mentioned the wisdom retail business in the first two quarterly reports, but the three quarter financial report was not mentioned.

In addition, Tencent also released revenue data for the first three quarters of this year: Tencent's cloud revenue of 6 billion yuan in the first three quarters of this year, this quarter's revenue growth more than doubled year-on-year, ring-on-ring growth rate of double digits, cloud service payment customers increased by three digits year-on-year.

Tencent video payment users reached 82 million, an increase of 79% over the same period, an increase of 10%. Iqiyi's three quarter paid users were 80 million 700 thousand, an increase of 89% over the same period last year. Tencent, IQI and Youku are still competing in the field of long-term video, and they still need to invest a lot of money in content and continue to lose money in the future.

It is worth noting that in the first nine months, Tencent partially sold a number of listed investments and sold financial assets measured at fair value with changes recorded in other comprehensive returns, with a total return of about 9.381 billion yuan (more than 1.3 billion US dollars), which is a (or more) large-volume equity sale transaction.

The game is ready for winter.

Tencent's revenue cost of value-added services grew at a new high in the past four quarters, rising nearly 2 billion yuan in a single quarter. Considering that Tencent did not spend a lot on video purchasing and live broadcasting in the third quarter, the growth was mainly due to the adjustment of the game business under pressure, and Tencent's game revenue structure was changing to proxy game.

Tencent game business continued to suffer heavy losses in the second half of this year. Monster Hunter: The World, a six-day online game masterpiece, was ordered to stop selling the game on August 13. This has hit Tencent's ambition for WeGame platform, indirectly affecting the third quarter of Tencent's end-to-end travel business performance.

Tencent has been trying to cut its market share from Steam, the world's largest single-player gaming platform. The banning of this 3A-level masterpiece directly led to WeGame's failure to compete with competitors in the second half of the year. The end of this year's tourism market has been warmer, but Tencent has missed the bonus period.

In the three quarter, Tencent end travel revenue fell 15%, down 4% to 12 billion 400 million yuan. The main reason for the decline in revenue over the same period last year was the higher base and the transfer of users to mobile terminals. However, the ring-to-ring data did not increase but declined. The main reason was that the pace of promotion of WeGame was disrupted.

In addition, over the past year Tencent has invested heavily in operating and promoting two models

However, after the suspension of the approval of the new game version number, the two games can not be commercially realized, and have begun to become products that devour Tencent's funds. Moreover, the heat of the original Jedi Survival has declined significantly on the platform of Team, with the number of active users dropping by more than 70% from the peak period, and the short life cycle characteristics of FPS games remain unchanged.

Tencent IEG insiders told China Entrepreneur that Tencent's game could be reduced by two models

Although the external environment is bad, there are many good news about Tencent games. Two new games, "My name is MT4" and "Saint Warrior Star Vector" launched in the second half of the year had good revenue performance. Tencent's smartphone game revenue rose 11% year-on-year this quarter, reversing the downward trend of mobile game revenue in the second quarter. However, whether we can recover to the high level in the first quarter depends on whether the new games listed later can achieve good cash flow results.


Mobile gaming revenues are beginning to pick up. Charting: Cui Peng

Working with Blue Cave.

Tencent also has 15 commercially approved games

Functional game "Nissan Shaman" won a good reputation, pushed the "League of Heroes" competition project for many years to win the first international championship, the commercial sponsorship scale of "Glory of the King" has approached the level of top sports events and so on.

Advertising revenue

According to the report released by App Growing, in the first half of 2018, mobile advertising was launched in hand games, accounting for 72.1% of all application promotion advertisements. More than 35% of the advertisers chose three Tencent social advertising, today's headlines and Baidu information flows. The game industry continues to slump, indirectly affecting the advertising revenue of the three major platforms.

However, as the third quarter is approaching the end of recent years, the major e-commerce platforms have also contributed a lot of advertising revenue to Tencent. According to the prediction model of App Growing algorithm, the amount of e-commerce App advertisements accounted for 19.3% of the total amount of App advertisements (non-game applications) in the three months ending September 30. Of them, 44.9% of the App providers were put into the Tencent, and the total amount was 65.1%.

In terms of revenue, Tencent's social and other advertising revenue increased 61% to 11.157 billion yuan from a year ago, mainly driven by Wechat Friends Circle, small programs, mobile advertising alliances and QQ perspectives. Tencent has also expanded the base of long tail advertisers in Weixin Friends Circle by working with local agents to transform Weixin Payment Merchants into advertisers.

Facebook, another giant in social networking, generated more than 98% of its revenue from advertising in the second quarter of this year, while Tencent accounted for only about 20%. And most of the advertising revenue comes from friends circle, Wechat public numbers and small programs, rather than news, video and QQ viewing business.

On the contrary, the majority of the revenue of byte bounce (today's headline parent company) exceeding 40 billion yuan this year is information flow advertising revenue. These shares can be fully won by Tencent's newly established PCG (platform and content business group).


Advertising revenue still has room for growth. Charting: Cui Peng

So Tencent's advertising revenue still has a lot of room to tap, and the lack of a unified advertising platform is an important reason. After the restructuring, Tencent unified the advertising business into AMS (new advertising marketing service line), and its positive impact can be reflected in the next few financial reports.

Cloud and payment progress is obvious.

Zhang Zhidong, a former Tencent CTO, said that in the era of ABC (AI BigData Cloud), Tencent had more absenteeism in data construction, which would lead to the phenomenon of reinventing the wheel in technology, and would cause serious problems with data walls and organizational walls in the use of big data.

Tencent cloud is the basis of the whole CSIG business. It is urgent to catch up with Aliyun's market share on the premise that the gap between Tencent cloud and Aliyun can not be widened at the technical level.

In the field of game and video entertainment, Tencent Cloud has obvious advantages of first-mover. In the early days, most customers of Tencent Cloud came from game companies and video websites. The report also points out that Tencent Cloud still leads the game and live broadcasting industry, while expanding its market share in other industries such as finance and retail.

Tencent cloud's main driving force in the past two years is the government cloud, the group's main Internet business has given Tencent cloud the opportunity to negotiate business with local government agencies to win regional shares that have not yet been won by Ali cloud.

Third quarter Tencent

Among them, the revenue of cloud computing business in the first three quarters exceeded 6 billion yuan, which is the first time that Tencent announced the revenue data of cloud business in its financial report. In the three quarter, the revenue of competing cloud was 5 billion 667 million yuan, an increase of 90% over the same period.

At present, Tencent cloud's single-quarter income is 1/3 of Aliyun's. Considering that the absolute value of both is not huge, the income gap between the two sides may pull in in the short term, which is a pressure for Aliyun.

The daily average transaction volume of Tencent Mobile Payment increased by more than 50% compared with the same period last year, and the growth rate was faster than that in the second quarter. Among them, the daily average transaction volume of offline commercial payment increased by 200% compared with the same period last year. In addition, Tencent has previously announced that commercial payments account for more than half of the total transactions, and the payment business has brought many surprises to Tencent this year.

In terms of small programs, the main business is still game small programs, but Liu Chiping said at the earnings conference that many retailers are eager to use their small programs as a sales channel.

In this earnings report, Tencent also announced detailed progress in other financial businesses, which did not appear in previous quarterly reports.

Tencent has expanded its financial technology services to wealth management, micro-loans and insurance. Finance Management has also joined pension funds in its fund product line. By the end of this quarter, its assets had exceeded 500 billion yuan. At the same time, the loan amount of micro-credit management, the fist product of Weizhong Bank, has maintained a rapid growth, and the non-performing loan rate has remained below the industry level.

However, as the proportion of game revenue with high profit margin continues to decline, the profit margin performance of value-added services declines, while the revenue growth of video, payment and cloud services business is relatively fast, but the overall profit margin is low, and Tencent's profit margin performance will continue to decline in the short term.

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