Tencent Releases Lackluster Q3 Results
On November 13, Tencent Holdings released its financial report for the third quarter ended on September 30. According to the report, Tencent’s revenue in the third quarter was 97.2 billion yuan, up 21% from 80.6 billion yuan in the same period last year. It failed to reach the market expectation of 99.044 billion yuan.
Tencent‘s net profit was 20.4 billion yuan, down 13% year-on-year and 16% quarter-on-quarter. It is also far behind the market expectation of 23.5 billion yuan.
Tencent‘s failure to meet expectations is related to its sluggish performance in gaming and advertising sectors. With the ongoing adjustment of its revenue structure, the company has been putting off initiatives on advertising and fintech. Previously, its gaming revenue was once close to 60% of the total revenue generated. In this quarter, Tencent‘s game revenue was 28.6 billion yuan, accounting for only 30% of total revenue.
SEE ALSO: 2019 Third Quarter China Gaming Industry Report: Tencent Accounts for over Half of the Market Share
In terms of products, “Honor of Kings” is still one of the major moneymakers. The “2019 Third Quarter Report of China Gaming Industry” released by Gamma Data shows that “Honor of Kings” generated over 5 billion yuan, with the second being “PUBG Mobile Lite”. It is also noteworthy that games published by Tencent account for over half of the entire Chinese gaming market.
Another highlight of its gaming business is the “going global” strategy. In the international market, the number of monthly active accounts of “PUBG Mobile” have doubled year-on-year. The new game “Call of Duty Mobile” garnered over 100 million downloads in just one month following its release. In this quarter, Tencent‘s revenue from overseas gaming sales has exceeded 10% of total revenue.
In terms of advertising, the financial report shows that the growth rate of social and other advertising revenues accelerated, up 32% year-on-year and 23% quarter-on-quarter, reaching 14.7 billion yuan, mainly benefiting from advertising on Tencent’s social media platform WeChat. On the other hand, the weakness of media advertising is also dragging down the overall growth rate of the advertising business. According to the financial report, media advertising revenue in the third quarter was only 3.7 billion yuan, marking a 28% year-on-year decline. Its newsfeed business faces fierce competition from ByteDance and Baidu.
SEE ALSO: Overseas Users Can Now Connect International Cards to WeChat Pay
The number of monthly active accounts on WeChat reached 1.15 billion, marking an increase of 6.3% year-on-year. The daily active users of WeChat miniprograms reached 300 million for the first time. During the Singles’ Day shopping festival this year, the total visits to self-operated miniprograms reached over 100 million, and 56% of those transactions increased in value by more than 50% year-on-year.
