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Tencent Q2 revenue of 88.8 billion year-on-year increase of 21%, net profit of 24.1 billion year-on-year increase of 35%

via:博客园     time:2019/8/14 22:33:16     readed:62

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Netease Technology News August 14th news Tencent today announced the second quarter of 2019 financial report. According to the financial report, Tencent Q2's revenue was 88.821 billion, up 21% year-on-year, and net profit was 24.14 billion yuan, up 35% year-on-year.

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Summary of Results for the First Half of 2019

Total revenue: 18% year-on-year, profit attributable to equity holders of the Company in accordance with non-GAAP: a year-on-year increase of 17%

Total revenue was RMB 172.286 billion (US$ 25.352 billion), an increase of 18% from the first half of 2017 (& quo 同比 同比 同比 。).

Operating profit was RMB 64.263 billion (US$9.348 billion), an increase of 22% year-on-year; operating profit margin increased from 36% last year to 37%.

Profit for the period was RMB 52.54 billion (US$7.643 billion), a year-on-year increase of 23%. The net profit margin increased from 29% last year to 30%.

During the period, the profit attributable to equity holders of the Company was RMB 51.346 billion (USD 7.469 billion), representing a year-on-year increase of 25%.

The basic earnings per share was RMB 5.427. Diluted earnings per share were RMB 5.362.

According to non-GAAP, certain effects of certain non-cash items and M&A transactions have been excluded:

  • Operating profit was RMB 55.751 billion (US$8.11 billion), a year-on-year increase of 17%; operating profit margin remained stable, consistent with 32% in the same period last year.
  • During the period, the profit was RMB 45.864 billion (US$6.671 billion), a year-on-year increase of 16%; the net profit margin decreased slightly from 27% in the same period last year to 26%.
  • During the period, the profit attributable to equity holders of the Company was RMB 44.455 billion (US$6.466 billion), representing a year-on-year increase of 17%.
  • The basic earnings per share was RMB 4.699. Diluted earnings per share were RMB 4.643.

Summary of Results for the Second Quarter of 2019

Total Revenue: 21% YoY, Profit attributable to equity holders of the Company in accordance with non-GAAP: 19% YoY

Total revenue was RMB 88.821 billion (US$12.92 billion), a 21% increase from the second quarter of 2017 ( Yoan”).

Operating profit was RMB 27.521 billion (US$4.003 billion), up 26% year-on-year; operating profit margin rose to 31% from 30% in the same period last year.

Profit for the period was RMB 24.68 billion (US$3.591 billion), an increase of 33% year-on-year. The net profit margin increased from 25% in the same period last year to 28%.

During the period, the profit attributable to equity holders of the Company was RMB 24.136 billion (US$ 3.511 billion), representing a year-on-year increase of 35%.

The basic earnings per share was RMB 2.550. Diluted earnings per share was RMB 2.520.

According to non-GAAP, certain effects of certain non-cash items and M&A transactions have been excluded:

  • Operating profit was RMB 27.281 billion (US$3.968 billion), up 23% year-on-year; operating profit margin rose to 31% from 30% in the same period last year.
  • Profit for the period was RMB 24.19 billion (US$3.519 billion), an increase of 18% year-on-year. Net profit margin fell to 27% from 28% in the same period last year.
  • During the period, the profit attributable to equity holders of the Company was RMB 23.525 billion (US$ 3.422 billion), representing a year-on-year increase of 19%.
  • The basic earnings per share was RMB 2.486 and the diluted earnings per share was RMB 2.456.

Ma Huateng, Chairman and CEO of Tencent, said: “In the second quarter, we maintained steady growth in terms of users, revenue and profitability, and implemented a number of major initiatives in a challenging business environment. In recent months, we have accelerated the pace of innovation in the game business, successfully launching a variety of new games of different categories, launching new models for some flagship games, and further expanding the season ticket service. At the same time, we continue to strengthen the health game system and encourage young users to develop healthy game habits. Our mobile payment services have become more popular among merchants, which has helped the average transaction volume and total payment amount to grow rapidly, and the number of commercial payment users has also increased. We have continued and deepened our exclusive partnership with the National Basketball League (NBA). The NBA has become the most professional sports league in China, and our collaboration with the NBA has strengthened our position as the leading digital entertainment platform. In the ever-evolving macroeconomic environment and competitive challenges, we will continue to invest in upgrading our platforms, services and technologies to provide better support to our users and corporate customers. ”

Financial Analysis for the Second Quarter of 2019

In the second quarter of 2019, Tencent's value-added services revenue increased by 14% year-on-year to RMB 48.08 billion. Online game revenue increased by 8% to RMB 27.307 billion. The increase was mainly due to smartphone games, including existing games such as "Glory of the Kings", "PUBG MOBILE" and "Red Alert OL", and the recent increase in revenues from games such as "Perfect World Mobile Games", but The decline in personal computer client game revenue offset some of its increase. Social network revenue increased 23% to RMB 20.773 billion. This increase primarily reflects increased revenue from digital content services such as live streaming services and video streaming subscriptions.

Revenue from financial technology and corporate services increased by 37% year-on-year to RMB228.88 billion. The increase was mainly driven by commercial payments and cloud service revenue growth, but some of the growth was offset by the fact that the balance of the reserve fund was transferred to the People's Bank of China and no longer generated interest income.

Tencent's online advertising revenue increased 16% year-on-year to RMB 16.409 billion. Social and other advertising revenues increased by 28% to RMB 120.09 billion, mainly due to the increase in advertising revenue contribution from WeChat friends and QQ. Media advertising revenue decreased by 7% to RMB 4,400 million, mainly due to the FIFA World Cup held in the same period last year, and there was no similar event in this period, so the contribution of the media platform decreased.

Other key financial data for the second quarter of 2019

The share-based compensation expense was RMB 2.453 billion, a year-on-year increase of 36%.

EBITDA was RMB 32.649 billion, an increase of 24% year-on-year. Adjusted EBITDA was RMB 35.102 billion, an increase of 25% year-on-year.

Capital expenditure was RMB 4.362 billion, down 38% year-on-year.

Free cash flow* was RMB 20.698 billion, an increase of 27% year-on-year.

As at 30 June 2019, the Company's net debt was RMB 15.766 billion. As at 30 June 2019, the fair value of Tencent's equity in listed investment companies (excluding subsidiaries) was RMB 329.912 billion.

* Since the first quarter of 2019, the Group has reclassified the interest paid for the cash flow from operating activities to financing activities to reflect the nature of the business. The comparative results have been restated to meet the current presentation.

Business review and outlook

1. Company strategy summary

In the second quarter, Tencent maintained steady growth in terms of users, revenue and profitability, and implemented a number of major initiatives in a challenging business environment. In recent months,<#comment>Tencent<#comment>Optimize product performance, expand your main platform, and deepen relationships with large and small partners. E.g:

Tencent has accelerated the pace of innovation in the game business, successfully released a variety of new games of different categories, launched a new model for some flagship games, and further expanded the season ticket service. at the same time,<#comment>Tencent<#comment>Continue to strengthen the health game system and encourage young users to develop healthy game habits.

Tencent's mobile payment service has become more popular among merchants, which has helped the average transaction amount and total payment amount to grow rapidly, and the number of commercial payment users has also increased.

Tencent has continued and deepened its exclusive partnership with the American Professional Basketball League (NBA), and the NBA has become the most professional sports league in China.<#comment>Tencent<#comment>Cooperation with the NBA has consolidated<#comment>Tencent<#comment>As the leading digital entertainment platform.

In the evolving macroeconomic environment and competitive challenges,<#comment>Tencent<#comment>Will continue to invest in upgrading platforms, services and technology,<#comment>Tencent<#comment>Users and corporate customers provide better support.

2. Company financial performance

Second quarter of 2019

Revenue increased by 21% year-on-year, mainly driven by commercial payment services and other financial technology services, smartphone games and other digital content sales.

Operating profit increased by 26% year-on-year. Non-GAAP operating profit increased by 23% year-on-year.

Earnings attributable to equity holders of the Company increased by 35% year-on-year. Non-GAAP earnings attributable to equity holders of the Company increased by 19% year-on-year.

3. Company business summary

Communication and social

In the second quarter of 2019, the combined monthly active accounts of WeChat and WeChat reached 1.133 billion, an increase of 7% year-on-year. The number of monthly active accounts of QQ's smart terminals was 707 million, which was generally stable compared with the same period last year.

The WeChat applet attracts more developers and service providers to participate. The number of medium and long tail small programs has more than doubled year-on-year, and the categories of small programs have also diversified. For example, content applets make it easier for users to create, upload, and share interesting videos, music, and messages on WeChat. The number of daily active accounts of more than a dozen content applets has exceeded 1 million. In the second quarter, the main user metrics included the usage duration of each user, the amount of daily information sent, and the amount of video uploads maintained steady year-on-year growth.

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Tencent has updated the important version of the mobile phone QQ to improve the daily information transmission and improve user activity. To enrich the core chat experience,<#comment>Tencent<#comment>Enhanced the functionality of different forms of information such as voice and video. In order to expand the user connection,<#comment>Tencent<#comment>Upgraded the algorithm to recommend new friends based on common interests and common contacts.<#comment>Tencent<#comment>The QQ applet has been launched, and the entertainment and game applets are especially popular among QQ users.

Online game

Total online game revenue increased by 8% year-on-year to RMB 27.3 billion.

Smartphone game revenue (including attribution to<#comment>Tencent<#comment>The revenue from smartphone games for the social networking business increased by 26% year-on-year to RMB 22.2 billion, benefiting from the popularity of existing major games and the recent launch of games. Smartphone game revenue increased by 5% quarter-on-quarter, after the game version was reinstated,<#comment>Tencent<#comment>The increase in the number of game releases offset the impact of the off-season factors.

in spite of<#comment>Tencent<#comment>The revenue of PC-based client games increased, but its revenue fell 9% year-on-year to RMB11.7 billion, while its revenue fell 15% from the previous quarter. The "League of Legends" stream revenue recorded a year-on-year increase as it benefited from the sale of skin props on the theme of e-sports.

Digital content

The number of subscriptions for value-added services increased by 10% year-on-year to RMB 168.9 million, mainly driven by the increase in the number of subscriptions to video and music services. The number of Tencent video subscription accounts increased by 30% year-on-year to 96.9 million, mainly due to<#comment>Tencent<#comment>Jointly with the strategic partners to launch joint membership offers, as well as the popularity of the self-made national series "Douro" (second season). However, due to the delayed broadcast of some popular dramas, the number of video subscription accounts has slowed down.

In the NBA's 2018-2019 season, a total of 490 million Chinese Internet users watched the event through the Tencent platform, nearly three times the 2014-2015 season.<#comment>Tencent<#comment>The partnership not only helps the NBA improve its fan activity, brand recognition and commercialization capabilities, but also strengthens Tencent Sports' position as the preferred Internet platform for Chinese sports enthusiasts.<#comment>Tencent<#comment>Advertising and subscription account income. recent,<#comment>Tencent<#comment>Announced a five-year partnership with the NBA.<#comment>Tencent<#comment>Will work with the NBA to develop basketball-related smartphone games and e-sports activities.

Online Advertising

In a challenging macro environment and an increase in the supply of short video ad inventory across the industry,<#comment>Tencent<#comment>Online advertising revenue was RMB 16.4 billion, a year-on-year increase of 16%.<#comment>Tencent<#comment>The negative impact of the current business environment is expected to continue in the second half of 2017. Revenue from business in this area recorded a sequential increase due to the peak season for advertising in the e-commerce and online education industries. Social and other advertising revenues were RMB 12 billion, up 28% year-on-year, mainly due to increased advertising inventory and exposure, such as WeChat friends and QQ.

Media advertising revenue was RMB 4.4 billion, down 7% year-on-year. The reason was that some popular dramas were unexpectedly delayed, and the lack of FIFA World Cup led to a decrease in advertising investment income. The number of live active video accounts on the mobile end is stable, which has led to a significant year-on-year and quarter-on-quarter growth in information flow in Tencent's video applications. April,<#comment>Tencent<#comment>Launched the popular homemade variety show "Creation Camp 2019" (the second season of "Creation 101"), setting a record for the investment of Tencent video single program.

Financial technology and corporate services

Revenue from financial technology and corporate services was RMB 22.9 billion, a year-on-year increase of 37%. Excluding interest income from reserve balances, financial technology and corporate services revenue increased by 57% year-on-year. In terms of financial technology services, the number of commercial payment users, the number of merchants, the transaction volume and revenues all increased rapidly, driving the revenue growth of this segment. As of the end of the second quarter,<#comment>Tencent<#comment>The wealth management platform of “Wealth Management” has a total client asset of RMB 800 million, indicating that users are increasingly retaining funds.<#comment>Tencent<#comment>Trends within the payment system. This trend reduces user use<#comment>Tencent<#comment>The cost of transferring funds for the payment system has been reduced<#comment>Tencent<#comment>Withdrawal income and bank fees.

In terms of corporate services, with<#comment>Tencent<#comment>Expanding the sales team and product types to obtain more major customers and large contracts, the revenue of cloud business grew steadily year-on-year.<#comment>Tencent<#comment>Deepening through close partnerships with independent software developers and agents<#comment>Tencent<#comment>Infiltration of small and medium-sized business customers.<#comment>Tencent<#comment>Further strengthen the cloud-based development toolkit to help small program developers achieve more efficient development and operation and maintenance.<#comment>Tencent<#comment>Key contracts for insurance companies, banks and securities companies in the financial industry, including People's Insurance Group, Bank of Communications and Haitong Securities. In July,<#comment>Tencent<#comment>Launched the cloud-based "WeCity Future City" solution to provide smart industry solution support for public services in a number of cities including Changsha, such as healthcare, transportation and education. According to the International Data Corporation, in 2018,<#comment>Tencent<#comment>It ranks second in the public cloud IaaS market in China and ranks in the top ten in the global market.

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