Tencent: Goose "changed"

On the afternoon of March 23rd, Tencent Holdings released the fourth quarter and annual financial report of 20021.

The financial report shows that in 20021year, Tencent's revenue reached 560 1. 2 billion yuan, up 1.6% year-on-year. The company achieved a profit of 2278. 1 billion yuan, up 42% year-on-year. Under non-international financial reporting standards, the profit attributable to equity holders of the company was 654.38+023.788 billion yuan, a slight increase of 654.38+0% year-on-year, which was the lowest increase in net profit in the last decade. In the fourth quarter, Tencent's non-IFRS was 24.88 billion yuan, down 25% year-on-year, and its net profit has declined for two consecutive quarters.

Among them, the income from games and social networking services still accounts for a relatively large proportion. As of 20021,65438+February, 3 1, Tencent's social network revenue in 20021year was1/73 billion yuan, up 8% year-on-year.

The annual revenue of Tencent's value-added service business was 291600 million yuan, a year-on-year increase of 10%. Among them, the local market's annual game revenue was 65.438+0288 billion yuan, a year-on-year increase of 6%. The annual game revenue in the international market was 45.5 billion yuan, a year-on-year increase of 3 1%.

In the fourth quarter, Tencent's revenue was 65.438+0442 billion yuan, and the market expectation was 65.438+0453 billion yuan, an increase of 8% year-on-year; The net profit was 94.96 billion yuan, a year-on-year increase of 60%. Among them, the online advertising revenue is 210.50 billion yuan, which is estimated to be 23.46 billion yuan; The income from value-added services is 765.438+09 billion yuan, with an estimated 72.73 billion yuan; Personal computer client game revenue is 654.38+006 billion yuan, and it is expected to be 654.38+004 billion yuan. The revenue from financial technology and corporate services was 47.958 billion yuan, a year-on-year increase of 25%.

In the fourth quarter of 20021,the total duration of Tencent's minor games decreased by 88% year-on-year, accounting for 0.9% of the total duration of games in the local market. The total traffic of minors decreased by 73% year-on-year, accounting for 1.5% of the total traffic of games in the local market.

In terms of the number of users, as of 202 1, 65438+February, 3 1, the total monthly active account of WeChat and WeChat was12.68 million, up by 3.5% year-on-year. The number of monthly active accounts on QQ mobile terminal was 552 million, down 7.2% year-on-year. The number of paid video members of Tencent increased by 1% to124 million, and the number of paid music members increased by 36% to 76 million.

The financial report also revealed that Tencent has112,3 1 employees, up 3 1.3% year-on-year. The total salary in 20021year was 95.523 billion yuan, up 37. 1% year-on-year. Based on this calculation, the average monthly salary of Tencent employees is 70,500.

At the performance conference after the release of the financial report, Ma, Chairman and CEO of Tencent, said: "202 1 is a challenging year. We actively embrace change and implement measures to strengthen the company's long-term sustainable development, but this has affected the slowdown in revenue growth. Despite the financial impact, we continue to make strategic progress in our business, including popularizing the use of our enterprise software and efficient office tools, increasing the content creation and viewing of video numbers, and expanding the game business in the international market. We believe that the Internet industry in China is moving towards a healthier mode from the structure and returning to the origin centered on user value, technological innovation and social responsibility. We are actively adapting to the new environment, reducing costs, improving efficiency, focusing on key strategic areas and striving to achieve long-term sustainable growth. "

The growth rate of local game revenue is slower than overseas.

Tencent's game revenue includes local and international parts. 202 1 These two incomes are128.8 billion yuan and 45.5 billion yuan respectively. Compared with last year, it increased by 6% and 365,438+0% respectively, and the overall game business growth rate was about 65,438+02%. In the fourth quarter, Tencent's local game revenue only increased by 65,438+0%, while its overseas game revenue increased by 34%. Overseas games have a stronger growth momentum, while domestic games are relatively weak.

According to the financial report, the revenue growth of local games is mainly driven by the revenue growth of the glory of the king, Call of Duty Mobile Games and Tianya Yueming Knife, but partially offset by the revenue decrease of DnF and Peace Elite. The growth of overseas games is driven by games such as PUBG Mobile, Valorant, Wild Fighting and Clash of Tribes.

In terms of restrictions on underage games, the financial report said that in the fourth quarter of 20021,the total duration of underage games decreased by 88% year-on-year, accounting for 0.9% of the total duration of local games, and the total traffic of underage games decreased by 73% year-on-year, accounting for 1.5% of the total traffic of local games.

Liu Chiping, president of Tencent, said in the earnings conference call that the impact of minor protection on income growth will be digested in 2022, and the new game version number will also generate corresponding new income.

Since July last year, the approval list of domestic online game version numbers has not been updated, which also has obvious restrictions on Tencent's new game launch.

Liu Chiping also said that at present, because the new version number has not been announced, the revenue of domestic game business is not very predictable. However, Tencent will accelerate the pace of international game investment and distribution, increase the penetration of existing IP and continue to release new games.

It is worth noting that the high growth rate of international games is one of the highlights of Tencent's financial report. According to App Annie's "China Game Manufacturers' Offshore Revenue Ranking" in June and February last year, Tencent ranked third in the list.

Tencent games has made frequent overseas investments, including Klei Entertainment, the developer of Famine and Hypoxia, Sumo Group, the parent company of the developer of The Adventures of Cannabis Boys, and Slamfire, the parent company of Turtle Rock Studios, a studio that has developed famous games such as Revenge of wyndell dichinson and Road to Survival.

In addition, Tencent also established an overseas game brand Level Infinite at the end of last year, and announced a number of game products such as the glory of the king International Edition, Famine: New Home, Blade of Rebirth, GTFO, etc. Level Infinite will release game works produced by tencent games's studios and other third-party studios, and provide technical and R&D support for overseas cooperative studios.

Incorporate real economic income into the new growth engine

Due to stricter supervision and weak macro-economy and some advertiser industries, the growth rate of Tencent's advertising business revenue in 202 1 year dropped to single digits of 7.8%, while the growth rate in 2020 was 20%.

Among them, social media and other advertising revenue increased by 1 1% to 75.3 billion yuan, while media advertising revenue decreased by 7% to 3.3 billion yuan. The financial report shows that the former is driven by the growth of small program advertisers in WeChat circle of friends, while the latter is delayed by macro environment and content release.

Online education is the main customer of Tencent advertising, and the double reduction policy has greatly affected this part of income. James Mitchell, chief strategy officer of Tencent, said in a conference call: "In the past few quarters, compared with the whole industry, Tencent's advertising business has been more affected, mainly because the composition of our advertisers, especially the online education industry, accounted for 65,438+00%-65,438+05% of Tencent's advertising revenue a year ago, but it was only 65,438+05% in the fourth quarter of last year. However, he predicted that the advertising business will resume growth in the second half of 2022 as it adapts to the new regulatory environment.

Tencent's financial technology and corporate services have become Tencent's main sources of income for the first time. In the fourth quarter of 200212002, the revenue of Tencent's financial technology and enterprise services sector increased by 25% year-on-year, reaching 47.958 billion yuan. The revenue of the real economy (To B) surpassed the online game segment for the first time and became the business segment with the largest contribution to Tencent's revenue. This means that the real economic income based on service B has become Tencent's new growth engine.

The growth of financial technology service income is mainly reflected in the growth of commercial payment. Corporate service revenue grew rapidly year-on-year, thanks to the digitalization of traditional industries and the video trend of the Internet industry, as well as the contribution of corporate service revenue brought about by the merger of Easy Car in June 2020.

Ma previously said that Tencent started the integration of Internet and industry from 20 15. 20 18, after the restructuring of "930", the company formally embraced the industrial internet. In this process, Tencent is positioned as a digital assistant to provide digital services for all walks of life.

In the first quarter of 20 19, Tencent Holdings separately disclosed the revenue data of the financial technology and enterprise services sectors for the first time. In this quarter, the revenue of this sector was 217.89 million yuan, accounting for 25.5% of the total revenue, and the online game sector accounted for 33.4%. In recent years, Tencent has increased its embrace of the industrial Internet, and has formed industrial digital solutions in many fields such as government affairs, finance, education, transportation, medical care, smart retail, industry and energy.

The financial report shows that in 20021year, the revenue cost of Tencent's financial technology and enterprise services sector was120.8 billion yuan, a year-on-year increase of 32%. This sector is also the fastest growing business sector of Tencent's cost investment. At this stage, Tencent is actively participating in the construction of "East Computing and West Computing" and investing in the construction of large data centers in Guiyang, Chongqing, Guangdong and Jiangsu.

In the past year, Tencent Cloud has successively opened its services in international data centers in Indonesia, Thailand, Germany, Japan, China and Hongkong, with 70 global operational available areas covering 27 geographical regions and operating more than 1 10,000 servers, providing technical support for the digital transformation of domestic and foreign enterprises.

R&D investment has doubled in three years.

In 20021year, Tencent's R&D investment reached a new high, with a year-on-year increase of 33%, reaching 51800 million yuan. In 20 18, the company's R&D investment was only 22.936 billion yuan. This means that Tencent's investment in R&D has doubled in three years.

In 20021year, Tencent continued to independently research and develop core technologies and achieved many breakthroughs in the technical fields of chips, operating systems, databases and servers.

In terms of chips, Tencent independently developed an AI reasoning chip Zixiao, a video codec chip Canghai and an intelligent network card chip Ling Xuan for AI computing, video processing and high-performance network, which led the industry in product performance.

At the same time, Tencent cooperated deeply with many chip companies and developed its own Xinghai server. Combined with the rich scenes of cloud computing, the performance of the whole machine is the strongest in the industry, and the reliability is doubled. Over the past year, Xinghai has been rapidly iterating, supporting all platforms and multiple scenarios, and its scale has increased by 400 times, making it the fastest growing server product in the industry.

In 20021year, Tencent also released the sixth generation 100G cloud server, adopting a comprehensive self-developed technical architecture, which improved the computing performance by 220% and the network forwarding performance by 300%. It has been widely used in e-commerce, social networks, games and other business scenarios.

On top of hardware and software infrastructure, Tencent has built ubiquitous cloud services through public clouds, private clouds and customers' local clusters. Last June, 1 1, Tencent Cloud officially released Aochi, the industry's first global governance distributed cloud operating system. Aochi single cluster supports 65438+ 10,000 servers and millions of containers, and manages more than 65438+ 100 million CPU cores.

In the field of database, Tencent Cloud database TDSQL released a brand-new Oracle compatible engine to meet the core requirements of fast online finance; And TDSQL financial-grade self-developed new sensitive engine, which can realize unlimited expansion and online change and adapt to financial sensitive business.

At present, TDSQL, a Tencent Cloud database, has successfully served more than 500,000 customers, covering the fields of finance, government affairs, e-commerce and games, helping financial institutions to localize their core systems and serving nearly half of the top 20 banks in China.

In the field of audio and video, Tencent Cloud audio and video covers 90% of domestic audio and video customers, and owns 100+ new generation international codec patents. 202 1, TRTC background architecture technology won the "China Patent Gold Award", and the ultra-low delay live broadcast product "Fast Live Broadcast" reduced the live broadcast delay by more than 90%, and the comprehensive quality of service (QoS) far exceeded the standard live broadcast.

The latest "202 1 R&D Big Data Report" released by Tencent Holdings shows that the number of R&D personnel in Tencent increased by 4 1% in 20021year. More than 6,000 R&D projects were added, an increase of 5 1% compared with 2020. In the past three years, the R&D investment of Tencent Holdings has exceeded 654.38+0.20 billion yuan.

The number will still increase in 2022.

Earlier, it was reported that Tencent's external recruitment plan was tightened and some business groups began to "optimize".

In April of 20021year, Tencent established "online video BU" based on Tencent video, micro-vision and application treasure. Through the integration of content production, distribution and application channels, it continues to deepen the video track while reducing resource consumption.

In February 2022, the main part of Tencent Pictures will be transferred from Platform and Content Business Group (PCG) to Enterprise Development Business Group (CDG), and the original IP film and television development with strong commercial attributes will be handed over to Xinli Media, Reading Film and Television under the Reading Group and Tencent Animation under PCG. This is also a kind of resource integration for the latter, fully tapping the value of reading group IP.

These business adjustments do not necessarily mean the overall reduction of personnel, but the growth will be relatively limited. According to the financial report, as of 202 1, 65438+February, 3 1, Tencent had12700 employees, an increase of 3 1.3% year-on-year.

"This year's employee growth will drop sharply, much lower than the previous two years." Liu Chiping said that Tencent's layoff plan is related to organizational adjustment. "Organizational optimization (does not mean reducing investment), core businesses with advantages will continue to increase investment, and marginal and loss-making and contractible businesses will reduce recruitment." He said that Tencent continues to introduce core scientific and technological talents and outstanding fresh graduates, and it is expected that the number of personnel will still increase in 2022.

Since the beginning of this year, many internet companies and technology companies have been promoting stock repurchase. Ali announced yesterday that it would increase the repurchase scale to $25 billion, which is its largest repurchase plan in history. Tencent conducted a wave of intensive buybacks on June 5438+1October this year, and repurchased 1 1 times from June 5438+1October 20 *, totaling 4,834,338+040,000 shares.

Reducing JD.COM is another aspect of Tencent's "proactive" strategy. At the end of last year, Tencent distributed its nearly 460 million Class A common shares of JD.COM Group to eligible shareholders in the form of interim dividends, and its shareholding ratio in JD.COM will be reduced from 16.9% to 2.2%. Liu Chiping, director of JD.COM, also resigned.

James Mitchell said that Tencent has invested tens of billions in different directions in the past few years, and "divestment is not a big deal". He said that Tencent investment will be more inclined to choose unlisted private companies to help them expand their listing.

According to the financial report, as of 2002165438+February 3 1, the fair value of Tencent's equity in listed investment companies (excluding subsidiaries) was 982.8 billion yuan, close to the trillion scale.

In this regard, Liu Chiping said that 2020 and 20021year were the turning points of Tencent, and the industry competition was fierce. Tencent has adopted "radical marketing measures to deal with competition", but with the fundamental changes such as the paradigm shift of the Internet industry, Tencent will optimize the overall cost, and he predicts that the profit margin will improve in 2023.

As of the close of March 23rd, Tencent's share price rose slightly to HK$ 389, and the market value of Hong Kong stocks was RMB 3739 1 100 million. In terms of US stocks, Tencent's share price opened lower at $46.88 and rose to $47.70 as of press time.