On the afternoon of the 13th, Tencent Holdings released its first-quarter financial results, as one of China’s most powerful companies, the performance under the outbreak, no doubt attracted the attention of the market,
Take a look at the key points of this earnings report.
1. Tencent Q1 Tencent revenue 108.065 billion year-on-year growth 26%
The report showed that Q1 Tencent’s revenue in 2020 was 108.065 billion yuan, up 26% YoY, while net profit (Non-IFRS) was 27.079 billion, up 29% YoY, which was higher than market expectations.
2. Network advertising revenue of 17.71 billion yuan in the first quarter, up 32% YoY
Among them, social and other advertising revenue increased by 47% to RMB14.592 billion. This increase is primarily reflected in our mobile advertising network and WeChat Friends Circle’s increased ad inventory and exposure resulting from ad revenue growth.
In addition, media advertising revenue fell 10% to RMB3.121 billion. The decrease was mainly due to a decrease in advertising revenue from video and news platforms as a result of weak macroeconomic conditions and the suspension of sporting events.
3. Social network revenue increased by 23% to RMB25,131 million.
This growth was mainly due to increased revenue contributions from game virtual prop sales and digital content services such as music/video streaming subscriptions.
4, fintech and corporate services revenue increased 22% year-on-year to RMB26.475 billion.
This growth was mainly due to increased revenue from business payments and wealth management platforms, as well as revenue growth in the cloud business as well as taking advantage of opportunities in the video, education and retail sectors. Revenue declined month-on-month as a result of delays in project delivery and new customer acquisition in the cloud business as a result of the outbreak, the company said. But Tencent’s conference still has a bright spot, with the launch of its international version of VooV Meeting in March 2020, with a sixfold increase in the number of users.
5, user data aspects
WeChat and WeChat combined monthly active accounts to reach 1.2025 billion, up 8.2% YoY, leading to rapid growth of mini program users, daily active accounts of more than 400 million.
QQ Smart Terminal monthly active accounts of 693.5 million, down 1% from the same period last year.
The number of registered accounts services was 197.4 million, up 19.3% YoY, with Tencent’s video subscription accounts increasing to 112 million and the number of music-paying subscribers exceeding 43 million.
6. Game revenue: Online game revenue increased 31% to 37.298 billion yuan
Tencent Holdings reported a 31 percent increase in online gaming revenue to 37.298 billion yuan in the first quarter. The increase was largely reflected in the revenue contribution of domestic smartphone games, including Peace Elite and Arena of Valor as well as increased contributions from overseas games, including PUBGMobile and Clashof Clans, partially offset by lower revenues from PC client games such as Dungeons and Warriors.
In the first quarter of 2020, total smartphone gaming revenue and PC client gaming revenue were RMB34.756 billion and RMB11.795 billion, respectively.
The financial report explains that the game plays an important role in helping users deal with depression and keeping them together, especially during home isolation. In mobile games, our studio has launched engaging game content, and the distribution team has hosted exciting in-game events to increase the number of active accounts daily. For example, the upgraded King’s Glory game engine greatly improves the audio and visual effects of in-game props, and the player-based team play facilitates user interaction.
The collaboration between “Peace Elite” and Rocket Girl 101 (Tencent’s iconic girl combination, from our popular variety show) has been quite successful, bringing user activity to a new high and demonstrating the synergies of cross-IP cooperation within Tencent.
As for personal computer games, domestic business has been affected by the suspension of many Internet cafes in China during the outbreak and the underperformance of The Dungeons and Warriors.
Internationally, PUBGMobile’s two-year celebration was a great success, and we have enhanced our localization capabilities to meet the diverse tastes of users in different regions. Wilderness Fight enhances the user experience by optimizing player matching algorithms. Riot Games launched the “Game of The Cloud” mobile game, driving up the Hero League series user retention and game duration, and in April this year launched another card Mobile game “Legends of the Land” and began testing the new game “Valorant.”
Looking ahead, we expect the game’s user duration and in-game consumption to return to normal levels as the rest of the world resumes, but we also believe that the gaming industry has expanded its long-term audience and appeal from its structure.
7, Tencent shares jumped more than 30%, back to highs
Since the share price fell to a low point on March 19 this year, Tencent Holdings’ share price has soared by more than 30%, and the bottom of the south is already making a lot of money.
Currently 52 analysts gave Tencent a “buy” rating, with four suggested holding, with the latest target price of HK$449. Of these, Goldman Sachs issued a report on May 8 giving a target price of HK$494.
8, Pony Ma supassed Jack ma, return to China’s richest man
Thanks to Tencent’s share price recovery, the company’s fortune has reached $48.2 billion, according to Forbes real-time data.
9, anti-epidemic front-line soldiers highlight the toughness of the giant
Under the impact of the epidemic, Tencent’s C-side matrix products fully penetrate into the areas of people’s livelihood, education, medical care, consumption and other food and clothing, and become an important tool to promote the operation of the national economy.
“No contact” background, small programs to assume the role of enterprises and institutions to “digital transformation” of the social role. From January 24 to February 13, the number of visits to supermarket small programs increased by 115% year-on-year, the number of visits to small programs in fresh fruits and vegetables increased by 168% year-on-year, and the number of visits to small programs in the community e-commerce category increased by 83% year-on-year. At the same time, the number of public small procedures increased significantly, medical epidemic service small procedures added nearly 800, government-type epidemic service small procedures added more than 100.
In order to tap consumer demand for a step forward, small programs in the outbreak period to launch the live-streaming function, driving the “national live broadcast” boom. Small programs and community operations (WeChat Group) and private domain traffic (enterprise WeChat) and live selling, become the most basic war epidemic “combination fist”, effectively help retailers to achieve digital flow of passengers.
For example, during the outbreak, fashion brand Goliath through the enterprise WeChat and WeChat communication capacity, the service to the line, through the purchase of customers to add consumers, with the enterprise WeChat friends circle to publish commodity information, guide to the small program mall three links, to achieve the closed loop of online customer operation. In the first week of February, Goliath’s daily sales at WeChat exceeded 1 million, up to 3 million.
On March 8, nearly a thousand brands made their “festival” live debuts on weChat’s mini-program, with 2,000 anchors participating in the broadcast, which lasted nearly 900 hours. Through the small program live, some brand orders increased nearly 12 times, some brand transactions increased 5 times, and brand sales broke through the 20 million yuan mark a day.
On the other hand, vouchers are becoming a favourable catalyst for consumption. Public information shows that since March, local governments have started to issue a large number of consumer vouchers, with more than 1.2 billion monthly living and WeChat pay high penetration and penetration rate, WeChat has become an important channel for the issuance of consumer vouchers, effectively promoting the recovery of consumption.
Up to now, Hunan, Zhejiang, Guangdong, Wuhan and other more than 50 provinces, cities and districts through the WeChat platform issued more than 10 billion electronic consumer vouchers. From May 1 to 3 alone, WeChat’s electronic vouchers led to consumption of 900 million yuan. Everbright Securities Research notes that consumer vouchers or consumption will rise by an additional 20%.
Compared with the C-side matrix in the outbreak period of the people’s livelihood connectivity and service capacity, B-side products take on the responsibility of helping the community to resume production and return to work, through digital capacity, to ensure the smooth development of the economy.
During the outbreak, Tencent actively opened up its technical resources and research and development capabilities to help ecological partners grow together and join hands with small and medium-sized enterprises to tide over the difficulties. To date, Tencent Cloud has provided massive cloud resources and collaborative office products to more than 100,000 small and medium-sized enterprises free of charge.
In response to the outbreak of online office demand, Tencent launched the cloud office family bucket “package”: enterprise WeChat, Tencent meetings, Tencent documents and other nearly 10 products to work together to quickly penetrate the enterprise telecommuting market.
B-side product matrix quickly became the main anti-epidemic force, among them, Tencent conference since the end of December 2019, two months after the launch of daily active accounts more than 10 million;
As the global epidemic has fermented, Tencent also urgently developed an international version of the application VooVMeeting, which has been launched in more than 100 countries and regions around the world. Tencent Conference International has seen a sixfold increase in users of the popular online office. To meet “contactless” office demand around the world, Tencent Conference has updated more than 20 versions in 100 days.
Data show that after the resumption of work, tens of thousands of enterprises and government-related institutions every week, through Tencent meetings to help business resume production, cloud signing, cloud bidding, cloud interview, cloud training and other collaborative practices on the cloud is becoming a new trend.
In the first quarter of October, employees’ salary was nearly 80,000.
The number of employees and pay policy has always been the focus of Tencent’s financial results.
Tencent had 64,238 employees at the end of the first quarter of 2020, compared with 54,623 in the same period last year.
Tencent’s total quarterly compensation cost in the first quarter of this year was RMB15,143 million, a simple rough calculation, the average per capita salary of employees in the first quarter was about 230,000, almost 80,000 a month. It should be pointed out here that the labor cost of enterprise-level expenditure, including non-wage expenditure such as social security and welfare, will be significantly higher than the income on the employee’s payroll, especially the actual after-tax income.