Tencent’s social media platform WeChat MAU grew to 1.15 billion and QQ mobile MAU 653.4 million in Q3 2019. WeChat Mini Programs DAU exceeded 300 million. Tencent revenues increased by 21% year-on-year, primarily driven by commercial payment services and other FinTech services, smart phone games, as well as social advertising.
Tencent Social Media
During the third quarter of 2019, monthly active users of WeChat reached 1,151.0 million, up 6% year-on-year according to Tencent’s announced results. Smart device MAU of QQ was 653.4 million, down 6% year-on-year.
Tencent enhanced its security protocol and proactively cleaned up accounts that engaged in spamming, and bots activities.
WeChat has exceeded 300 million DAU for Mini Programs, and now feature vertical Mini Programs via WeChat Pay entry points for healthcare, mobility and smart retail services. Daily commercial transactions in mid-to-long tail Mini Programs more than doubled year-on-year.
Baidu’s mini program platform saw 290 million MAU in Q3 2019.
WeChat launched Growth Program, which provides Mini Programs system integrators with the training and development tools to better support Mini Programs owners.
WeChat team also introduced Industry Assistant, a dashboard tool which enables Mini Programs owners to gain analytical insight into their operations and enhance efficiencies.
Tencent released a feature which recommends ice-breaking topics in 5-minute chatrooms on QQ. Tencent enhanced the core chat experience by enabling users to dedicate songs to their friends and to listen to synchronized music streaming together.
Total online games revenues increased 11% year-on-year to RMB28.6 billion. Total smartphone games revenues (including smart phone games revenues attributable to its social networks business) increased 25% year-on-year to RMB24.3 billion.
The robust performance of key domestic titles and increasing contributions from overseas titles drove the growth. Sequentially, smartphone games revenues grew 9%.
In China, Peacekeeper Elite’s summer content update enhanced user engagement. Peacekeeper Elite contributed to cash receipts for the full quarter, but is still in the early-stage of deferred revenue recognition.
DAU of Honour of Kings remained healthy and more users purchased season passes. New role-playing and strategy games also contributed to the quarterly revenue growth.
Internationally, PUBG MOBILE doubled its MAU year-on-year, and Tencent co-developed the Call of Duty Mobile game with Activision Blizzard, which exceeded 100 million downloads within a month of launch, making it one of the biggest ever smart phone game launches.
Tencent’s PC client games revenues decreased 7% year-on-year and 2% quarter-on-quarter to RMB11.5 billion, due to reduced revenue from DnF, whose recent 11th anniversary content update resulted in fewer paying users than the year-ago update.
League of Legends’ (LoL’s) auto-chess mode Teamfight Tactics (TFT) established global leadership in the emerging auto chess genre by leveraging the core MOBA’s strong IP and engaged user base. TFT enhanced LoL’s user time spent and increased its revenue internationally.
Fee-based VAS subscriptions increased 11% year-on-year to 170.6 million, mainly attributable to video and music subscriptions.
Tencent Video subscriptions grew 22% year-on-year to 100.2 million. Music subscriptions increased 42% year-on-year to 35.4 million as its paid content library expanded.
Daily views of short and mini videos distributed via Tencent’s Penguin Media Content Platform grew rapidly, benefitting from more sophisticated content curation and more targeted distribution to its high DAU platforms including Tencent Video, QQ KanDian and QQ Mobile Browser.
Tencent’s Advertising Revenues
Tencent’s online advertising revenues were RMB18.4 billion, up 13% year-on-year. Strong advertiser demand from the games, education, and eCommerce verticals offset weakness from the automobile sector.
Media advertising revenues were RMB3.7 billion, down 28% year-on-year, and down 17% quarter-on-quarter due to uncertain content scheduling and lower sponsorship advertising revenues.
Social and others advertising revenues growth accelerated in the quarter, up 32% year-on-year and up 23% quarter-on-quarter to RMB14.7 billion. WeChat Moments advertising revenues grew on more inventories and increased impressions.
Tencent’s mobile advertising network revenues increased as it streamlined its advertising formats and rolled out more video advertising inventories. WeChat Mini Programs advertising revenues climbed due to DAU and impressions growth, as well as new formats such as interstitial ads and pre-roll ads.
Tencent FinTech and Business Services
FinTech and Business Services revenues were RMB26.8 billion, up 36% year-on-year. Within FinTech Services, Tencent’s payment ecosystem is becoming more vibrant as user activities and money flows increase.
Tencent experienced robust growth in commercial payment transactions, especially offline, as well as commercial payments volume, due to more daily active consumers, number of transactions per user, and active merchants.
With increased loyalty, users were more willing to retain funds in Tencent ecosystems and increasingly using more FinTech services on Tencent platform, which resulted in improved margin for the business.
For wealth management, in particular, the number of LiCaiTong users more than doubled year-on-year, boosting aggregated customer assets.
Within Business Services, Tencent’s cloud revenues grew 80% year-on-year to RMB4.7 billion due to increased consumption from existing customers and an expanded customer base in the education, financial, municipal services and retail sectors.
Tencent Financial Results in Q3 2019
In Q3 2019, Tencent revenues increased by 21% year-on-year, primarily driven by commercial payment services and other FinTech services, smartphone games, as well as social advertising.
Revenues from VAS increased by 15% to RMB50,629 million for the third quarter of 2019 on a year-on-year basis. Online games revenues grew by 11% to RMB28,604 million.
The increase primarily reflected revenue growth from smartphone games in both domestic and overseas markets, including key titles such as Honour of Kings, PUBG MOBILE and Peacekeeper Elite, partly offset by lower revenues from PC client games such as DnF.
Social networks revenues increased by 21% to RMB22,025 million. The increase was mainly driven by greater contributions from digital content services such as live streaming, video streaming subscriptions and music streaming services.
Revenues from FinTech and Business Services increased by 36% to RMB26,758 million for Q3 2019 on a year-on-year basis.
The increase primarily reflected greater revenues from commercial payments due to both increased daily active consumers and number of transactions per user, as well as revenue growth from cloud services as a result of penetration in key verticals.
Revenues from online advertising increased by 13% to RMB18,366 million for the third quarter of 2019 on a year-on-year basis.
Social and others advertising revenues increased by 32% to RMB14,716 million. The increase was mainly due to advertising revenue growth from WeChat Moments as a result of its increased inventories and impressions, as well as contributions from Tencent mobile advertising network.
Media advertising revenues decreased by 28% to RMB3,650 million. The decrease was primarily driven by lower revenues from Tencent media platforms.
Cost of revenues increased by 21% to RMB54,757 million for the third quarter of 2019 on a year-on-year basis. The increase was mainly due to greater content costs, costs of FinTech services and channel costs. As a percentage of revenues, cost of revenues was 56% for the third quarter of 2019, broadly stable compared to the third quarter of 2018
Operating profit decreased by 7% year-on-year. Non-IFRS operating profit increased by 27% year-on-year. Profit attributable to equity holders of Tencent decreased by 13% year-on-year. Non-IFRS profit attributable to equity holders of the Company increased by 24% year-on-year.
Profit attributable to equity holders of Tencent decreased by 13% to RMB20,382 million for the third quarter of 2019 on a year-on-year basis.
Excluding a fair value gain from Meituan Dianping upon its IPO in Q3 2018, impairment of investments and certain other items, non-IFRS profit attributable to equity holders of the Company increased by 24% to RMB24,412 million.