Tencent releases Q4 2016 and annual results

TechNode

Tencent reported a net profit of RMB41.45 billion (US$6 billion) for 2016, up 42 per cent from the previous year

Chinese online internet giant Tencent delivered another year of robust revenue growth in 2016, benefiting from gains in its online games, social networks and online advertising, our sister site Technode Chinese is reporting.

Tencent yesterday announced the unaudited consolidated results for Q4 2016 and audited consolidated results for the year ended December 31, 2016.

The company reported a net profit of RMB41.45 billion (US$6 billion) for 2016, up 42 per cent from the previous year, on revenue of RMB151.94 billion (US$22 billion), up 48 per cent, according to the financial report.

Tencent’s revenue structure is composed of value-added services (VAS), online advertising and others.

Image Credit: Sina Tech

VAS revenue refers to revenue generated from online games and social networks, encompassing that from digital content service and game-related virtual props as well as outright revenue of online games. Online advertising revenue mainly comes from WeChat Moments, WeChat official accounts and the company’s mobile media advertising. Others mainly include payment-related services and cloud services.

To be specific, the revenue growth can be attributed to its stunning performance of smartphone games, paid digital content, social and performance advertising, as well payment-related services.

Also Read: VIDEO: Tencent’s Ma Huateng proposes to build South China’s own version of Bay Area

It’s worth noting that online game segment revenue rose 25 per cent to hit RMB70.84 billion (US$10 billion), representing 47 per cent of the internet behemoth’s 2016 revenue. This makes Tencent the largest online game publisher in China, dwarfing its rival NetEase, which grossed RMB28 billion (US$4 billion) in gaming revenue last year (in Chinese).

Much of the gaming revenue growth can be credited to mobile MOBA Honor of Kings (王者荣耀), which has amassed 50 million active daily users as of the end of 2016.

Online advertising revenue soared by 54 per cent year on year to RMB26.97 billion (US$3.9 billion), propelled by a growth in advertising from its mobile news app, WeChat Moments, and WeChat official accounts.

Weixin (微信 in Chinese) and WeChat saw combine monthly active users (MAU) rise 27.6 per cent year on year to 88 million. (Weixin is targeting Chinese users while WeChat refers to international version  of the messaging service). The figure is higher than the company’s other instant messaging service QQ, whose MAU reached 868 million, a slight rise of two per cent year on year.

As internet population growth has slowed, WeChat has been trying new means to generate more revenue from individual users or explore more revenue models such the launch of WChat Moments advertising.

In addition, Tencent introduced the “mini program” (小程序 in Chinese) feature on its WeChat last year, enabling users to access mobile services directly in-app, in its renewed effort to attract and retain users and service providers.

Also Read: Tencent extends “double-hundred plan” to cover legal services platform, Kuaifawu

Mobile payment and cloud services, despite being the least lucrative segment last year, are a strategy that Tencent pursues to position itself in the front of the new technology arena. This segment contributed RMB17 billion (US$2.4 billion) or roughly 11.2 per cent of the company’s 2016 revenue.

Thanks to a substantial rise in the number of corporate customers as well as the increased amount of usage among its existing customers, cloud service revenue nearly doubled from 2015.

In the 2016 financial report, Tencent pointed out that they are “investing in forefront technologies such as artificial intelligence and machine learning to position their ‘Connection’ strategy for the future”.

At the market close today, Tencent’s market cap was worth HK$2.11 trillion (US$271 billion), remaining the country’s most valuable company.

The article Tencent releases Q4 2016 and annual results first appeared in TechNode.

Want to be part of the ecosystem?

Register for your Echelon Asia Summit access pass now! Enjoy +10% off Echelon Asia Summit Startup, Investor and Corporate passes just for being our favourite e27 reader

The post Tencent releases Q4 2016 and annual results appeared first on e27.