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On the evening of August 17, Tencent Holdings released its financial report for the second quarter of 2022, and Tencent released its financial report for the second quarter of 2022. The financial report shows that the company’s revenue in the second quarter was 134 billion yuan, down 3% year-on-year. Profits were 28.1 billion yuan, down 17% year-on-year. The financial report shows that as of June 30, WeChat and WeChat had 1.299 billion monthly active users, a year-on-year increase of 3.8%. In addition, the average monthly salary of Tencent employees is 85,473 yuan.
It is worth noting that this is the first time in Tencent’s history that quarterly revenue has declined year-on-year, while net profit has declined for four consecutive quarters.
Ma Huateng, chairman and chief executive of Tencent, said the company will focus on improving business efficiency and adding new revenue streams, including the launch of in-feed ads on popular video accounts, while continuing to drive innovation through research and development. He also emphasized that about half of the company’s revenue comes from financial technology and corporate services and online advertising, which directly contribute to and benefit from overall economic activity, and the growth of China’s economy will bring revenue growth opportunities for the company.
The average monthly salary of employees is 85,473 yuan
According to Tencent’s financial report data, Tencent’s total remuneration cost in the first half of 2022 was 56.779 billion yuan, a year-on-year increase of 27.91%. As of June 30, Tencent had 110,715 employees, a year-on-year increase of 17.55%.
Based on this estimate, the average monthly salary of Tencent employees in the first half of the year was 85,473 yuan, compared with 78,550 yuan in the same period in 2021, a year-on-year increase of 8.8%.
However, data from the first quarter showed that as of March 31, 2022, Tencent had 116,213 employees. This means that in the three months of the second quarter, Tencent employees decreased by 5,498.
In the conference call after Tencent’s second-quarter financial report was released, Tencent executives said that Tencent is currently implementing cost control measures, and there is still room for further reduction in follow-up costs, and the number and salary will be further optimized in the future. The company expects that the cost control effect will be further reflected in the second half of this year, and believes that revenue growth will resume in the next few quarters, even if the game revenue remains the same.
WeChat monthly active users increased to 1.299 billion
In the second quarter, the monthly active users of WeChat continued to grow to 1.299 billion, approaching 1.3 billion, and the social fundamentals remained stable.
The digital tools in the WeChat ecosystem have driven a large number of jobs and entrepreneurship. In 2021, the employment opportunities derived from the WeChat ecosystem will reach 46.18 million, a year-on-year increase of 25.4%.
In order to alleviate the operating pressure of small and micro businesses and individual merchants under the epidemic, WeChat Pay has continuously enriched measures to reduce fees and give profits. Data shows that from September 2021 to June 2022, WeChat Pay has accumulated about 3 billion in payment service fees, benefiting more than 20 million small and micro merchants.
Tencent made a key mention of the video account: the user participation of the video account has been very considerable, and the total user usage time exceeds 80% of the total user usage time in the Moments. The total video playback volume of the video account increased by more than 200% year-on-year, the video playback volume based on artificial intelligence recommendation increased by more than 400% year-on-year, and the number of daily active creators and the average daily video upload volume increased by more than 100% year-on-year.
However, despite having a considerable number of users, the video account has not effectively filled the gap in the advertising business. Revenue from Tencent’s online advertising business fell 18% year-on-year to 18.6 billion yuan in the quarter, mainly due to significantly weaker demand from internet services, education and finance.
Industry insiders pointed out that part of the investment in video accounts is included in advertising, but the formal commercialization has not yet started, which also dragged down the profit margin of Tencent’s advertising business.
The game does not have a version number
According to the financial report, as the international game industry began to digest the impact of the post-epidemic era, Tencent’s game revenue in the international market fell by 1% to 10.7 billion yuan.
The domestic market went through a similar period of adjustment. Facing a series of transitional challenges, including a decline in the number of large-scale game releases and a decrease in user consumption, game revenue in the local market fell by 1% to 31.8 billion yuan. In terms of individual games, “Honor of Kings”, “Tianya Mingyue Sword Mobile Game” and “League of Legends” saw their revenue decline, while recently launched games such as “League of Legends Mobile”, “Return to Empire” and “Golden Shovel” pay increment.
The slowdown in Tencent’s game growth is related to its current reliance on several games that have been online for many years. CICC (43.920, 0.52, 1.20%) observed that from April to May, the turnover of “Honor of Kings” recovered compared to the first quarter; but the turnover of “Peace Elite” was relatively weak; “League of Legends Mobile Games” contributed certain increment. Overseas games also faced the pressure of slowdown against the background of high base and stable epidemic prevention and control in the same period last year.
For incremental sources, Tencent’s game version number acquisition is facing embarrassment. Since the restart of the domestic game version number review in April this year, the version number has been issued 4 times in succession, and a total of 241 game products have passed the review and obtained the version number. However, Tencent has not yet obtained a game version number.
Reports of sale of Meituan stake are inaccurate
In a conference call after Tencent’s second-quarter earnings report, Tencent executives said the news of Tencent’s sale of shares in Meituan was incorrect. For the investment portfolio, Tencent has been optimizing, and we attach great importance to the return to shareholders.
In addition, Tencent executives stated that Tencent’s current share price is severely undervalued, and our investment portfolio is also severely undervalued. Tencent paid shareholders about $17-18 billion, essentially hoping to provide shareholders with adequate returns. Before Tencent reduced its holdings of JD.com and other stocks, it also returned these funds to shareholders. At the same time, it also did some repurchases to distribute the investment reasonably. In the future, Tencent’s rebates and repurchases to shareholders will continue.
Source: China Fund News, China Securities Journal, China Times, public information
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