On the evening of the 23rd, Tencent Holdings (00700) released its 2021 fourth quarter report and annual report. Tencent’s net profit (non IFRS) in Q4 in 2021 was 24.88 billion yuan, a year-on-year decrease of 25%, which was the second consecutive quarter of negative growth in Tencent’s single quarter net profit after the net profit fell by 2% in the third quarter.
in the whole year of 2021, Tencent achieved a revenue of 560118 billion yuan, a year-on-year increase of 16%, and a net profit (non IFRS) of 123788 billion yuan, a year-on-year increase of 1%, which is also the lowest increase in net profit in recent ten years
Among the business segments, the digital real economy and the game business are the highlights. In the fourth quarter of last year, the revenue of the financial and enterprise services sector increased by 25% year-on-year, surpassing the game business.
In addition, the number of monthly active households of wechat and wechat reached 1.268 billion, a year-on-year increase of 3.5%, and there is still an increase in such a high base. However, the monthly activity of QQ intelligent terminals decreased to 552 million, down 7.2%.
digital real economy
In the fourth quarter of 2021, the revenue of financial technology and enterprise service sector increased by 25% year-on-year to 47.958 billion yuan, surpassing the online game sector for the first time and becoming the business sector with the largest contribution to Tencent’s revenue.
2019 in the first quarter, Tencent separately disclosed the revenue data of the technology and enterprise service sector for the first time. In that quarter, the revenue of this sector was 21.789 billion yuan, accounting for 25.5% of the overall revenue, while the online game sector accounted for 33.4%
In recent years, Tencent has increased its embrace of the industrial Internet, vigorously invested in new digital infrastructure, and formed industrial digitization schemes in many fields such as government affairs, finance, education, transportation, medical treatment, smart retail, industry and energy, helping all walks of life to reduce costs and increase efficiency.
According to the research of China information and Communication Research Institute, the penetration rate of digital economy in agriculture, industry and service industry in 2020 is 8.9%, 21% and 40.7% respectively. The application of digital economy in many fields has just begun, such as Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) , smart manufacturing, smart city, etc., which has always been the challenge and difficulty of the integration of digital economy and real economy. In these “deep-water areas” of digital economy, Tencent actively fought, relying on big data and AI algorithms to help the manufacturing industry accelerate digital intelligence.
Tencent and Foxconn Industrial Internet Co.Ltd(601138) cooperated to replace human eye recognition with an integrated industrial quality inspection machine, which has increased the production efficiency by 10 times. The two sides also cooperated to build an industrial Internet platform, which has served more than 1000 industrial enterprises; Tencent also joined hands with Sany Heavy Industry Co.Ltd(600031) to build the first intelligent service center in the construction machinery industry, introducing a new generation of customer service AI Siasun Robot&Automation Co.Ltd(300024) ; In the medical industry, Tencent helps doctors through imaging AI imaging technology, making large-scale glaucoma, covid-19 pneumonia and cancer screening possible
In 2021, the revenue cost of Tencent’s financial technology and enterprise service sector was 120.8 billion yuan, with a year-on-year increase of 32%. This sector is also the business sector with the fastest growth rate of Tencent’s cost investment. According to the latest report of IDC, an international authoritative market research institution, Tencent cloud ranks the top 2 in the market share of public cloud services, with a year-on-year growth rate of 53%, ranking the leading level in the industry.
At this stage, Tencent is actively participating in the construction of “counting from the east to the west”. Tencent cloud has invested in the construction of large-scale data centers in Guiyang, Chongqing, Guangdong, Jiangsu and other places.
Over the past year, Tencent cloud has successively opened services in international data centers in Indonesia, Thailand, Germany, Japan, Hong Kong and other places. The overall global operation has reached 70 availability areas, covering 27 geographical regions, and operates more than 1 million servers, providing technical support for the digital transformation of enterprises outside China.
increase R & D investment
in 2021, Tencent’s R & D investment increased by 33% to 51.8 billion yuan, which has doubled compared with 2018 The number of R & D personnel of Tencent has been growing year-on-year, and the latest R & D report released in 2021 shows that the number of R & D personnel of Tencent has also increased year-on-year. More than 6000 new R & D projects were added, with an increase of 51% year-on-year in 2020. Over the past three years, Tencent has invested more than 120 billion yuan in R & D and gradually established a complete self-research system including servers, operating systems, chips and SaaS. The perfect self-research ecology has also become a solid base for the company to serve the real economy.
In the field of self-developed hardware, Tencent has established the first hardware laboratory in history – Xinghai laboratory, which is oriented to the self-development of industrial Internet acceleration technology, and has released a variety of self-developed hardware products including Xinghai server. Tencent cloud 100g cloud server is the first cloud server product series in China to apply 100g super large network on a large scale.
As the cornerstone of network security, the operating system has always been the key area of Tencent’s R & D investment. In 2021, Tencent released the industry’s first distributed cloud operating system with global governance. A single cluster supports 100000 servers and millions of containers, and manages more than 100 million CPU cores. Computing has officially entered the era of 100 million, helping the digital transformation of various physical industries. In addition, Tencent has developed the domestic operating system release tencentos for more than ten years.
In 2021, Tencent cloud distributed database tdsql released a new financial level self-developed sensitive engine, which has helped more than 20 financial institutions realize the localization of core systems.
In terms of audio and video technology, Tencent’s independently developed codec technology is the world’s leading. It has more than 100 new generation international codec patents and won the first place in many mainstream tracks in the 2021msu world video codec competition.
Based on the underlying technical support, a series of SaaS products, including Tencent conference, Tencent documents and enterprise wechat, have also become an important part of Tencent’s self-research ecology, building a full link self-research technology system from the infrastructure layer to the application layer, widely reaching enterprise customers and gradually building and improving the ability to serve the real economy.
Tencent’s R & D expenditure has risen all the way, from 22.9 billion yuan in 2018 to 30.3 billion yuan in 2019 and 38.9 billion yuan in 2020, with an annual growth rate of about 30%. By 2021, it has reached 51.8 billion yuan at one fell swoop, doubling its growth in three years.
In fact, many of Tencent’s investments in the field of scientific and technological innovation cannot produce results quickly in the short term, but Tencent still has long-term R & D planning and investment to make reserves for strengthening the national strategic scientific and technological strength.
In 2021, Tencent robotics x laboratory released two mobile Siasun Robot&Automation Co.Ltd(300024) (max, Ollie) and IDC operation and maintenance Siasun Robot&Automation Co.Ltd(300024) three products in total. As Tencent’s enterprise Siasun Robot&Automation Co.Ltd(300024) laboratory, Tencent robotics x will continue to explore the research and application of three general Siasun Robot&Automation Co.Ltd(300024) technologies in the future, and gradually realize from the basic level.Breakthrough from ability to self-study ability to landing ability, Let Siasun Robot&Automation Co.Ltd(300024) help mankind better production and life.
game sailing
In the game business segment, Tencent disclosed that the game revenue in the international market in the fourth quarter of last year was 13.2 billion yuan, a year-on-year increase of 34%, and the international market revenue accounted for 30.8%. Tencent separately disclosed the game revenue in the international market from the third quarter of 2021.
In terms of international mobile games, five of the top ten Mobile Games ranked by the number of daily active accounts are developed and operated by Tencent. “The battle of two cities”, the animation of “League of heroes”, topped the list of watching hours of Netflix English TV programs a week after its release. At the same time of the “League of heroes” global finals, the number of online viewers reached a new high of about 74 million, consolidating it as the world’s most popular E-sports competition.
Leading position. Royal war released one of its largest updates in history, with a significant increase in the number of daily active accounts and running water. Tencent launched a new game distribution brand level infinite to support studios and partners to provide games to players in the international market.
Tencent said that looking forward to the future, it is committed to further developing existing games by deepening market penetration, improving products and optimizing operations, and will continue to launch new games, which are expected to help the growth in 2023 and beyond.
Tencent said in its financial report that the growth of game revenue in the international market in the fourth quarter of last year was mainly due to the strong performance of games such as “pubg mobile”, “valorant”, “Royal war” and “wild fighting”.
Tencent said that it will launch a variety of games in the international market in the future, including tower of fantasy, apex legends mobile and so on.
In terms of juvenile protection, Tencent’s game duration and running water of Chinese Minors continue to be at a very low level. According to the financial report, during the fourth quarter of 2021, the proportion of Tencent China’s minors’ game duration decreased to 0.9%, the total duration decreased by 88% year-on-year, the proportion of game running water decreased to 1.5%, and the total running water decreased by 73% year-on-year.
Tencent continues to optimize its technical control means and upgrade its face recognition technology. Since December last year, Tencent game has adopted a stricter face scheme for larger head games. For example, for real name users over 55, face recognition is required every time they log in at night to prevent minors from using their parents’ accounts or devices; If the same account is frequently used on multiple devices, it will also trigger face recognition and reduce the utilization of third-party rental numbers.
As the technology and function of juvenile protection become more and more mature, Tencent’s relevant effect in juvenile protection is also improving. According to the latest data, during this year’s winter vacation (January 17 – February 15), an average of 7.92 million game accounts that have been certified as minors by their real names are blocked when they try to log in to Tencent games during non playable periods.
In order to prevent minors from using adult accounts such as parents to bypass the anti addiction restrictions, Tencent game face recognition system launched a full day cruise. During the winter vacation, an average of 9.4 million game accounts certified as adults were in the login link and 43000 accounts triggered face recognition in the payment link every day; Due to refusal or failure to pass the verification, about 74.17% of the accounts in the login link were included in the anti addiction supervision, and about 77% of the accounts in the payment link were blocked from recharge.
The protection of minors is a work that needs “combination of dredging and blocking”. In addition to technical means of prevention and control, Tencent also provides more services and support outside the game to “dredge” children’s game behavior. In September last year, Tencent growth guardian, Tencent games and Tencent Foundation launched the “smart and physical double hundred” public welfare plan, which provided 100 “future classrooms” and 100 “future sports fields” for urban and rural children in the first phase. At present, 8 “future classrooms” and 3 future sports fields have been completed, and more than 11140 students have entered the “future classroom” to study.
In February this year, with the support of Tencent foundation, China Soong Ching Ling Foundation established Tencent growth protection special fund, which aims to implement the relevant deployment of national juvenile protection, improve teenagers’ scientific and technological literacy and protect their healthy growth. It is reported that the special fund will build 12 “future classrooms” nationwide this year. At the same time, within the framework of “Soong Ching Ling children’s Invention Award”, Tencent Keding will provide technical support for the event, carry out youth artificial intelligence (programming) events, and add a “public welfare performance competition of Tencent Keding virtual simulation platform” during the finals.
In addition, in the online advertising business section, continue to improve differentiated advertising solutions, while adapting to regulatory changes and the evolving macroeconomic environment. In the fourth quarter of last year, wechat daily active advertisers increased by more than 30% year-on-year. More than one-third of the advertising revenue of the circle of friends comes from advertisements with small programs as landing pages and advertisements connecting users and customer service representatives through enterprise wechat. With adapting to the new environment and further upgrading advertising solutions, Tencent expects the advertising business to resume growth in late 2022.
“micro” service entity industry
Going deep into the industry and the real economy is engraved into Tencent’s businesses. It is not only cloud business and big data business that are connected with the real economy. The increasingly active and mature wechat ecosystem has also become an important link for companies to serve the real economy, accelerating the integration and development process of China’s digital economy and real economy.
relying on the innovative links of ecological products such as video number, wechat payment, applet, search and enterprise wechat, wechat is evolving from a simple social platform to a toolbox in all walks of life, widely reaching and serving all kinds of entity enterprises
Hunan Miaoxiang sold the unsalable rock sugar orange based on the rural group purchase applet; Huawei, Xiaomi and many other brands broadcast new product launches and sell goods on wechat video numbers Sany Heavy Industry Co.Ltd(600031) based on the openness of enterprise wechat, Sany SCRM system is developed to directly connect dealers and end customers.
As the core link of WeChat ecosystem, small programs connect WeChat tools, WeChat payment, WeChat search and WeChat official account to accelerate the integration of digital economy and real economy. Data show that more than 100 million users use government services on small programs every day, and enterprise becomes an important tool for organization management, industrial production and business marketing. In 2021, the daily activity of small programs exceeded 450 million, and the transaction volume of catering, tourism, retail and other industries increased by 100% year-on-year.
The number of real enterprises and organizations on enterprise wechat has exceeded 10 million, the number of active users has exceeded 180 million, and the number of active users connected to wechat has exceeded 500 million. As an important tool of Tencent’s industrial Internet, the three major products of enterprise wechat, Tencent documents and Tencent conference have been integrated and opened up, jointly launching a new efficiency cooperation function to better serve enterprise customers.
In 2021, wechat payment continued to launch a number of fee reduction and profit sharing measures, benefiting tens of millions of small and micro businesses. It will continue to comprehensively reduce the operating costs of small and micro businesses by providing free QR code collection security, business material concessions and other measures. A number of measures are expected to invest more than 10 billion.
In 2021, Tencent clearly regarded “boosting the real economy” as Tencent’s new brand proposition. Ma Huateng also said that “digital real integration” should “prosper industry, do practical things and rely on practical work”. Tencent is widely releasing its ability to serve users, improving energy and efficiency for all walks of life with its scientific and technological strength, helping individuals and small and micro enterprises in the real economy, accelerating their integration into the real economy and realizing the transformation of the company’s “real” growth.
Ma Huateng, chairman of the board of directors and CEO of Tencent, said that in the face of industry challenges, the company actively embraced changes, reduced costs and increased efficiency, focused on key strategic areas and strengthened long-term sustainable development measures. Despite the slowdown in revenue growth, the company continues to make strategic progress in business. It is believed that China’s Internet industry is structurally moving towards a healthier model and returning to the origin centered on user value, scientific and technological innovation and social responsibility
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