Shulou(Shulou.com)11/24 Report--

March 22 news, Tencent Holdings today released the fourth quarter of 2022 and full-year results. Over the past year, Tencent's overall performance was poor, but the effectiveness of "reducing costs and increasing efficiency" in the fourth quarter was prominent, with varying degrees of growth in the core data.

For the whole of 2022, Tencent's revenue and net profit declined. Of this total, revenue was 554.552 billion yuan, down 1% from the same period last year; net profit was 188.243 billion yuan, down 16% from the same period last year; and non-IFRS net profit was 115.649 billion yuan, down 7% from the same period last year.

Q4 in 2022, Tencent reduced its cost and efficiency to some extent, with revenue rising 1% to 144.954 billion yuan, net profit up 12% to 106.268 billion yuan, and non-IFRS net profit 29.711 billion yuan, up 19% from the same period last year.

Over the past year, Tencent's theme is to reduce costs and increase efficiency, focus on the main business, and reduce non-core peripheral businesses that are not profitable. Marketing expenses are also decreasing quarter by quarter. Q4 sales and marketing expenditure decreased by 47% year-on-year to 6.115 billion yuan, while sales and marketing expenditure for the whole of 2022 was about 29.23 billion yuan, down 28% from the same period last year.

In terms of business, the game business grew negatively for three consecutive quarters compared with the same period last year, the financial technology and corporate services sector firmly ranked as the largest source of revenue, video numbers, social advertising and other counter-trend growth, and led the online advertising business back to the growth track.

Tencent Games had three consecutive quarters of negative growth in the fourth quarter. Tencent Games's total business revenue was 41.8 billion yuan, down 2.3% from the same period last year. This is Tencent Games's third consecutive quarter of negative growth compared with the same period last year.

Tencent Games's income decline is mainly dragged down by the local game business. In the fourth quarter, game revenue in the local market totaled 27.9 billion yuan, down 6% from the same period last year, the fourth consecutive quarter of decline. The financial report shows that this is mainly due to the decline in the flow of water in the previous quarter compared with the same period last year.

For the whole of 2022, the total revenue of games in Tencent's local market was 123.9 billion yuan, down 4% from the same period last year. Mainly due to the implementation of protection measures for minors and the release of fewer new games, the industry has experienced a period of adjustment.

Earlier, Tencent disclosed in its financial results for the third quarter of 2022 that the number of hours played by minors dropped sharply by 92% in July 2022 compared with the same period last year, accounting for only 0.7% of the total game hours in the local market.

By contrast, Tencent's overseas game business has maintained growth, but the growth rate has slowed significantly. In the fourth quarter, revenue from Tencent's overseas business reached a record high of 13.9 billion yuan, up 5% from a year earlier (11% after excluding exchange rate and 2021 Q4 Supercell-related adjustments), accounting for 33% of the overall revenue of the game business and nearly 10% of the total revenue.

Tencent's overseas game revenue growth is mainly driven by the head game series "VALORANT" and "League of Legends", as well as the successful releases of "Goddess of Victory: Nikki" and "Warhammer 40K: dark Tide". According to Sensor Tower, the flow of "Goddess of Victory: Nikki" exceeded 100 million US dollars in the first month.

TO B business has become the largest revenue segment Tencent TO B business performance in the fourth quarter is eye-catching, has become the largest revenue segment.

According to the financial report, revenue from financial technology and corporate services in the fourth quarter was 47.244 billion yuan, down 1% from the same period last year and accounting for 33% of total revenue. Since the first quarter of 2021, revenue from financial technology and corporate services has accounted for more than 30% of total revenue for seven consecutive quarters.

As for the slowdown, Tencent explained in the financial report that the growth rate of financial technology services revenue slowed year-on-year compared with the previous quarter as the outbreak briefly curbed payment activities. In addition, revenue from the corporate services business fell year-on-year as a result of reducing loss-making activities.

It is understood that Tencent is investing heavily in artificial intelligence capabilities and cloud infrastructure to embrace the trend of basic models.

At present, Tencent's AI capabilities can be applied to industrial scenarios such as industrial quality inspection and intelligent manufacturing, as well as medical care, helping the elderly, biodiversity conservation, agriculture and other social fields.

In the field of AI model (pre-training model), Tencent mixed-element AI model covers basic models such as NLP (natural language processing), CV (computer vision), multimodal and many industry and domain models. Trillions of Chinese NLP pre-training models have also been launched.

Tencent said that in the future, Tencent will continue to invest in large model technology to promote product innovation and operational efficiency.

According to the financial report, Tencent continued to increase its R & D investment, increasing its R & D expenditure by 13.5% in the fourth quarter compared with the same period last year, and the annual R & D expenditure reached 61.4 billion yuan. Since 2019, Tencent's cumulative R & D expenditure has exceeded 182.6 billion yuan.

Video account is expected to become a new growth point in the past year, Tencent's core business focused on innovation and efficiency, while video number, Mini Program and other sectors bucked the trend, driving performance growth back to growth.

According to the financial report, the total use of Wechat continued to grow in 2022. Mini Program and video accounts have been used for twice and three times as long as in the same period in 2021 respectively, both longer than in WeChat moments. Among them, Mini Program's transaction volume reached trillions of yuan in 2022.

Driven by digital ecological innovations such as Video account and Mini Program, the online advertising business is back on track, with Q4 revenue rising 15 per cent year-on-year to 24.66 billion yuan, ending four consecutive quarters of negative growth.

Specifically, Tencent has released more advertising inventory, including video stream ads, while advertisers' demand has improved. In addition, Tencent has strengthened its ability to drive transactions through the advertising ecosystem. In the fourth quarter, ads diverted to merchants WeCom and Mini Program accounted for more than 1/3 of Wechat's advertising revenue.

After three years of maintenance, the commercialization of the video number is accelerating. In Q1 in 2022, Tencent mentioned the related revenue of video number for the first time in its financial report, saying that the revenue from video number live broadcast service has become one of the core factors in the growth of Tencent's value-added business. Video will be commercialized in the form of short-term video stream advertising, live broadcast reward and live broadcast e-commerce.

Q2 financial report data show that the total number of users of the video account has been used for 80% longer than that of WeChat moments, the total number of video playback has increased by 200% compared with the same period last year, and the number of daily active users and the number of daily video uploads have increased by 100%. It is also proposed that the information flow advertisement of the video number is a key measure to improve profitability.

Q3 financial report said that advertisers have a strong demand for video information stream advertising. Liu Chiping, president of Tencent, revealed at the earnings call that video advertising revenue has been growing rapidly, and revenue in a single quarter is expected to exceed 1 billion yuan in Q4, which "will be a conservative estimate and not too high."

In the Q4 financial report, the video number has been used for longer than the moments. Ma Huateng called the video number "the hope of the whole company" in his internal speech at the end of last year, which is presumably based on the growth of the video number.

China Merchants Securities predicts that video accounts will contribute tens of billions of revenue growth to Tencent in 2023.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.