Tencent revenue growth slowed to 2 prefix, Ali cloud services and widening gap of nearly 20 billion | Tencent latest earnings Reading
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2020.03.19
Tencent secret "financial expertise" behind.
Wen | Feng Yuan
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"930" after the organizational restructuring, Tencent first annual report in the true sense has finally been published.
March 18, Tencent Holdings release fourth quarter and full year 2019 earnings. Reported revenue of 377.289 billion yuan Tencent 2019 (Unit: RMB), an increase of 20%, of which under GAAP net profit of 93.31 billion yuan, an increase of 19%. The 2019 Q4, Tencent revenue of 105.767 billion yuan, up 25%; net profit of 21.582 billion yuan under GAAP, an increase of 52%.
Tencent main source of income including value-added services, financial technology and corporate services, online advertising and other parts. In order to better illustrate or "930" after a year of positive change, this latest earnings report, Tencent also demonstrated for the first time accounted for revenue of major businesses. From 2019 to see, value-added services accounted for 56% from last year to 53%, financial and business services rose from 23% to 27%, Internet advertising showed a 1% decline.
The earnings performance was called Tencent is "super-expected", not only single-quarter revenue of RMB 100, but industry internet eye-catching on performance, such as in financial technology and business services revenue also exceeded 100 billion, especially Tencent cloud the annual income of over 17 billion yuan, the growth rate has been higher than the market.
But behind a series of "good" data we can still see the challenges of the future Tencent is not small:
First, the gap with competitors such as Tencent cloud although annual revenue exceeded 17 billion yuan, but the gap with Ali cloud fell from $ 12.2 billion to expand to 185 billion; funds through the financial reserves reached 900 billion but No breakthrough trillion, Tencent video membership is still behind iQIYI .
Second, on the external environment, by the macroeconomic and competitive online advertising market is facing the impact continues to decline, and games, video and other business challenges byte line is encountered.
Third, input-output, 2019 Tencent revenue costs continue to rise, Q4 is more a record high of nearly 60 billion yuan, although revenue in the last three quarters to maintain growth, but gross profit was essentially flat.
In addition, Tencent earnings report also showed their performance in the fight against new outbreaks of pneumonia crown, including the establishment of Contagion 1.5 billion fund to provide support for a variety of combating the disease, and to cloud resources and technical support SARS-related research projects and medical research . While providing telecommuting and telemedicine services in the business, driven by Tencent Tencent meeting Nikkatsu more than 10 million, as well as deepen the exchange micro-channel and micro-channel business, and to meet the cause of the epidemic by AI medical imaging technology, medical information and launched Tencent health codes short-term demand.
01
"Two billion" embarrassment, revenue growth has dropped to 2 prefix
2019 Q4, Tencent single-quarter revenue for the first time exceeded 100 billion, reached 105.767 billion yuan, an increase of 25%. "Financial technology and business services," since the first quarter of 2019 disclosed separately, the annual income reached 101.4 billion yuan, an increase of 39%. Two "break billion" appears, might suggest that Tencent's main business grew steadily, while the growth rate and the size of its innovative business also improved.
But if the revenue from the change quarter, Tencent's growth has clearly slipped to a new stage. Since 2019 four quarter, Tencent's revenue grew 16%, respectively, 21%, 21% and 25%, with an average annual growth rate of roughly 21%, and this rate has been less than 30% more than the previous year growth, Tencent revenue growth rate has been reduced to "2" prefix.
In terms of net profit margin, Tencent's performance also continued to decline. After "930", Q4 2018 to 17% of the lowest point, Q1 2019 rose to 33%, but since then but continued to decline, the final performance in 2019 Q4 net profit rate of 21% of the lowest point of the year.
Tencent earnings report also revealed that in the fourth quarter and WeChat micro-channel consolidated monthly number of live accounts of 1.1648 billion, an increase of 6.1%, the chain rose 1.2% over the third quarter. QQ Intelligent Terminal monthly active accounts reached 647 million, down 7.5%, the chain fell 1 percent in the third quarter. The average daily number of transactions grew small program more than doubled, total transactions over 800 billion yuan.
02
Tencent cloud play "financial expertise" to further expand the gap with rivals
Since "930" adjustment, Tencent progress ToB business has been great concern.
Tencent earnings disclosure, "financial technology and business services," the main business including payment, financial management and other financial services, and technology services and other business-oriented activities (such as wisdom and retail) and so on. 2019 Q4 financial technology and business services recorded a revenue of 29.92 billion yuan, an increase of 39%, the increase was mainly due to revenue growth in commercial payments brought, and because of deeper penetration of cloud services in major verticals and revenue promote growth.
Specifically, Tencent science and technology in the fields of finance, has been committed to promoting innovation pay, pay increase usage scenarios, the expansion of financial products portfolio. Financial platform through which the financial asset holdings rose more than 50%, while the number of customers grew more than doubled. While its micro-public banks in the micro-channel micro-credit products "particle loan", the rapid growth of product loans, non-performing loan ratio remained at a low level.
In the cloud and enterprise services, open Tencent focus on customized business solutions that help companies partners to strengthen ties with users, digital help the industry upgrade. Which cloud services revenue more than 17 billion yuan, the growth rate has been higher than the market, and benefit from the continuous optimization of the sales team and to deepen cooperation with the service providers, the number of paying customers to more than one million.
But lay watch, experts see Road, how Tencent cloud revenue in the end? The think tank also dedicated to coffee and Ali cloud were cf. Taking into account two different fiscal year, the calendar year to calculate prevail. In the ten billion revenue side, Ali cloud revenue in 2017 reached 11.2 billion yuan, Tencent cloud in 2018 to reach 9.1 billion yuan; close to each other on the scale of growth, year on year growth Tencent Ali clouds and clouds were 91% and 86%; the latest in terms of revenue, in 2019, Ali cloud has reached 35.5 billion yuan.
In this respect, the gap between Tencent and Ali in the cloud business, and not because the former pursued fierce rush and has narrowed, but has been expanded to 185 billion yuan. The cf growth in different sizes, based on the only show that Tencent better on "financial skills."
03
Main business to break out video games short sea force
For Tencent original value-added services and online advertising business, the proportion of total revenues, although both saw a decline, but still maintained a growth on the scale, but also more challenges in the future.
Tencent reported a 2019 revenue up value-added services business grew 13 percent to 200 billion yuan. Which online game revenues increased 10 percent to 114.7 billion yuan, an increase mainly attributable to the contribution of domestic smart phone games (including the "King of Glory" and "Peace elite") and overseas revenue contribution to the game, while 2019 Q4 revenue overseas game an increase of more than 1 times, accounting for 23% of online revenues; social networking revenue grew 17% to 85.281 billion yuan, mainly due to the revenue growth of digital content and live video streaming service ordering service.
In gaming, with its own huge amounts of traffic, beating byte has launched the attacks to Tencent. Gamma data show that in January 2020, Chinese mobile game market grew 49.5%, growth of 37.5%. In World War II mobile game market, the byte beat for dominance Tencent launched the attacks in the standings before downloading ten, there are six headlines for the product line, and Tencent Department of just three.
In online advertising, Tencent 2019 revenue rose 18 percent to 68.377 billion yuan. Where social and other advertising revenue rose 33 percent to 52.897 billion yuan, an increase primarily reflects the micro-channel inventory and increased exposure brings more advertising revenue, and mobile ad networks and advertising video traffic because of increased revenue contribution. The media advertising revenue fell 15% to 15.48 billion yuan, reducing the time because the row sowing uncertainty, challenging macro environment, and the 2019 World Cup-free drive, leading media platforms including Tencent Tencent video and news, including the advertising revenue fell.
"Short video business development need to invest many years, and we are currently in its infancy." Tencent executives in the interpretation of the earnings report, said Tencent must first build their own vertical industry capabilities in the field of short video, and then use Tencent's platform and capacity development. Tencent's unique advantage lies in innovation and product integration and social media, and social sharing can bring traffic; at the same time, Tencent long-term investment in terms of content, including our investment in long video, IP can bring influence to short video in the future we want to integrate products, also hoping to bring more advertising revenue.
And on the eve of the earnings announcement, WeChat open video application number, reported that the "batches, sub-territoriality" gradual opening, access to video number 'equity users can publish short video in the video window number, to open up a new social channels. But the vibrato Nikkatsu the number of users has exceeded 400 million, in a short video number you want to turn overtaking will be very difficult.
04
Revenue costs continue to rise, Q4 hit a new high
By adjusting the organizational structure, after the transformation of the Internet industry, there have been media comments that Tencent, Tencent previous 20 years doing all typical Internet business, whether it is playing games or selling traffic, all within a "comfort zone": low marginal cost , high profit margins, employee income is much higher than the entity employees. This is from one side, B-side business Tencent contradiction between investment and return, and the earnings also confirmed this point.
During the reporting period, Tencent Holdings cost of revenues also increased. Data show that the year 2019, Tencent Holdings cost of revenues grew 23 percent to 209.8 billion yuan. The increase mainly reflects higher content costs, financial costs and technology services distribution costs. Wherein an increase in value-added services revenue grew 27% to the cost of 94.086 billion yuan, mainly due to the services and products (such as video service, online gaming and video streaming subscription) content costs and increased distribution costs due to the smart phone game; financial technology and corporate services business income cost of 73.831 billion yuan, an increase of 35%, mainly due to the expansion of business scale payment and cloud caused costs to pay and cloud services growth.
If the proportion of view, the proportion of value-added services reached 44.8% of the total cost, financial technology and business services accounted for 35.2%, both in total 80%.
The cost of revenues from the quarter point of view, since in 2018 it showed a continuous upward trend, Q2 2018 has grown from 392 billion in 2019 Q4 increased to 596 billion yuan. It is because of the rising cost, offset by gains from revenue growth, but also since the second quarter of 2019, Tencent has maintained only a 56% gross profit margin.
Epilogue
This year, BAT have gone through 20 years of age, but three on the pace of the performance has been very different. The Tencent earnings announcement, let us see the problems faced by a company in transition, in particular by the impact of the current epidemic, a quarter still has a lot of uncertainty, but also brought opportunities to the digital revolution. When Tencent elephant obsessed with their own pace, perhaps need to guard against the opponent's speed.
This article first appeared in the public micro-channel number: think tank to coffee. Content of the article is a personal opinion, does not represent the position and information networks. Accordingly investors operate at your own risk.