Tencent’s revenues in the last quarter of 2019 reached US$15,161 million, an increase of 25% YoY. Monthly active users (MAU) of WeChat grew to 1,164.8 million, up 6.1% YoY. Smart device MAU of QQ was 647 million, down 7.5% YoY.
Tencent’s Social Media
Tencent’s strategic focus in social media is strengthening connections between users via digital content, online services, and offline services, as well as enhancing connections with enterprises leveraging Mini Programs,WeChat Pay, and WeChat Work.
In 2019, Tencent provided WeChat users with convenient access to public services and healthcare content. Tencent enriched content in Mini Programs and news feeds services in video format and enabled users to share short videos via Weishi within Moments.
WeChat engagement metrics stayed high as their active userbase and user time spent increased. Daily messages sent were up 15% year-on-year for Q4 2019.
Tencent rejuvenated QQ with enhanced chat features and friend recommendations, and Tencent expanded entertainment use cases via Mini Games, increasing QQ’s popularity among younger generations.
Since the coronavirus outbreak, QQ School-plus-Home groups have served more than 120 million users, with optimized features such as live streaming, online tutoring programs, and online administrative tools for school routines to facilitate online and offline education.
To strengthen Tencent’s connections with enterprises, Tencent facilitated the discovery of merchants’ Mini Programs and sales conversion by enhancing WeChat in-app search and live broadcast functions.
The number of daily transactions generated within Mini Programs more than doubled year-on-year, and their transaction value exceeded RMB800 billion in 2019.
Tencent Online Games
In Tencent’s online games business, Tencent’s strategic focus was on enhancing Tencent’s internal R&D capability and external partnerships, and expanding Tencent’s overseas business.
During 2019, Tencent extended Tencent’s China leadership and made notable progress in Tencent’s overseas business, largely due to the success of Tencent’s games PUBG Mobile and Call of Duty Mobile, as well as the new mode Teamfight Tactics within League of Legends.
Tencent’s international games revenues more than doubled year-on-year, constituting 23% of Tencent’s online game revenue in the fourth quarter of 2019.As of the end of 2019, five out of the top ten most-popular smartphone games by DAU internationally were developed by Tencent.Click To Tweet
In addition to establishing Tencent’s original IP franchises, Tencent developed external partnerships via a number of new investments in best-in-genre studios.
Key studios such as Timi and Lightspeed & Quantum under Tencent, as well as Riot Games and Supercell, have enhanced their R&D capability, and each has several promising games in its pipeline.
Tencent believes Tencent’s studios are industry leaders on PC and smartphone games, and in genres such as multi-player battle arena and tactical tournament, but still have room to enhance Tencent’s capabilities in other genres such as role-playing games.
Leveraging Tencent’s flagship games franchises, Tencent strengthened its eSports global leadership with League of Legend’s World Championship and Hnour of Kings’ KPL, which were the most-watched events for PC and smartphone games, respectively.
In digital content, Tencent focuses on investing in digital content and growing its subscription business and extending Tencent’s franchise in long-form video to the short video.
In 2019, Tencent’s fee-based VAS subscriptions increased 12% year-on-year to 180 million. Tencent experienced slower subscriber and revenue growth for Tencent’s video subscription service in 2019 than 2018, reflecting delays in broadcasting key content.
Tencent Video subscriptions reached 106 million, and Tencent remained the clear industry leader in terms of content, users, and financial metrics, reducing Tencent’s 2019 operating loss to below RMB3 billion, substantially lower than the loss rates of industry peers.
Tencent has extended Tencent’s owned IP, such as Joy of Life, from online novels into successful TV drama series.
Tencent accelerated Tencent’s music subscriber growth (QQ Music) in the second half of 2019, benefitting from the pay-for-streaming model.
Tencent’s literature subscriber growth was weak for much of 2019 due to competition from free reading services, but Tencent are seeing signs of improvement, as Tencent’s WeChat Reading app becomes more popular, and as readers differentiate the generally higher quality of paid content.
Tencent’s short video app Weishi increased its DAU by 80% and daily uploads 70% sequentially in Q4 2019.
Find out how China’s short video app Kuaishou grew its DAU by 40M in 5 months here.
Tencent added innovative features such as video red packets to boost social video uploads and leveraged in-house IPs to support content creation by key opinion leaders (KOLs) and multi-channel networks (MCNs).
Tencent is in the early stages of what it expects to be a multi-year investment in short videos while the market is currently led by TikTok (Douyin) and Kwai (Kuaishou).
Tencent extended the maximum number of ad impressions per user day in WeChat Moments from two to three in early 2019, and successfully tested a fourth impression in late 2019.
Tencent’s media advertising business was hurt by delays in broadcasting certain drama series and less advertising activities around NBA basketball games.
In the fourth quarter of 2019, Tencent exceeded 1 billion daily average transactions for its commercial payments, covered over 800 million monthly active users, and worked with over 50 million
monthly active merchants.
Tencent launched WeChat Pay Scores which enhanced users’ purchase propensity and loyalty to merchants through features such as waiving creditworthy users their deposits on some rental use cases.
Tencent’s wealth management platform, LiCaiTong, increased its aggregate customer assets over 50% year-on-year, while its number of customers more than doubled year-on-year as it expanded into the mass market.
Tencent affiliated WeBank rapidly grew the loan balances of its micro-loan product, WeiLiDai, within WeChat, while maintaining a healthy non-performing loan ratio.
Tencent’s cloud services revenues exceeded RMB17 billion in 2019, as Tencent consistently outgrew the market. Tencent’s number of paying customers exceeded 1 million, benefitting from the enhanced sales team and deeper partnerships with system integrators.
Gross margins improved as Tencent optimized supply chains and expanded business scale. Tencent increased its market share and gained a presence in verticals such as Internet services, tourism, municipal services and industrial sectors.
The COVID-19 pandemic is delaying customers’ implementation of cloud-related initiatives and will thus negatively impact Tencent’s near-term cloud services revenues.
Tencent Meeting exceeded 10 million DAUs within two months since its launch in late December 2019, by far the most-used dedicated video conferencing app in China.
Tencent deepened the integration between WeChat and WeChat Work to facilitate customer management and sales conversion, and millions of enterprises used WeChat Work to resume work in the wake of the coronavirus outbreak.
Over 300 million WeChat users have utilized Tencent Health as important access to real-time pandemic data, online consultation, and AI-powered self-diagnosis services.
Tencent also offered reliable and professional medical information through Tencent Medipedia, and distributed pandemic-related content via multiple high-traffic platforms, such as WeChat and Tencent News, attracting over 600 million page views.
Tencent Health Code becomes the most used ePass for verifying health and travel history during the outbreak. 900 million users across more than 300 cities and counties have used its Health Code since it was available in this February, with a total of 8 billion visits.
Tencent Highlights for Q4 2019
Total revenues were RMB105,767 million (USD15,161 million), an increase of 25% over Q4 2018.
On a non-IFRS basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items:
- Operating profit was RMB30,306 million (USD4,344 million), an increase of 35% YoY.
- Operating margin increased to 29% from 26% last year.
- Profit for the quarter was RMB26,639 million (USD3,819 million), an increase of 32% YoY. Net margin increased to 25% from 24% last year.
- Profit attributable to equity holders for the quarter was RMB25,484 million (USD3,653 million), an increase of 29% YoY.
- Basic earnings per share were RMB2.690. Diluted earnings per share were RMB2.643.
On an IFRS basis:
- Operating profit was RMB28,604 million (USD4,100 million), an increase of 65% YoY.
- Operating margin increased to 27% from 20% last year.
- Profit for the period was RMB22,372 million (USD3,207 million), an increase of 60% YoY.
- Net margin increased to 21% from 17% last year.
- Profit attributable to equity holders of the Company for the quarter was RMB21,582 million (USD3,094 million), an increase of 52% YoY.
- Basic earnings per share were RMB2.278. Diluted earnings per share were RMB2.248
Tencent Highlights for Full Year 2019
Total revenues were RMB377,289 million (USD54,082 million), an increase of 21% over the year ended December 31, 2018. On a non-IFRS basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items:
- Operating profit was RMB114,601 million (USD16,427 million), an increase of 24% YoY.
- The operating margin was 30%, broadly stable from last year.
- Profit for the year was RMB97,589 million (USD13,989 million), an increase of 22% YoY.
- The net margin remained stable at 26%.
- Profit attributable to equity holders for the year was RMB94,351 million (USD13,525 million), an increase of 22% YoY
- Basic earnings per share were RMB9.966. Diluted earnings per share were RMB9.729
On an IFRS basis:
- Operating profit was RMB118,694 million (USD17,014 million), an increase of 22% YoY.
- The operating margin was 31%, broadly stable from last year.
- Profit for the year was RMB95,888 million (USD13,745 million), an increase of 20% YoY.
- Net margin decreased to 25% from 26% last year.
- Profit attributable to equity holders of the Company for the year was RMB93,310 million (USD13,375 million), an increase of 19% YoY.
- Basic earnings per share were RMB9.856. Diluted earnings per share were RMB9.643.
- The Board has recommended a final dividend of HKD1.20 per share for FY2019 (2018: HKD1.00 per share), subject to the approval of the shareholders at the Annual General Meeting