Table of Contents

Financial Highlights

1Q2019
Total Revenue
85.5 billion RMB, +16% YoY
Net Profit attr. to Shareholders
Non-GAAP
20.9 billion RMB, +14% YoY
GAAP
27.2 billion RMB, +17% YoY
Diluted EPS
Non-GAAP
2.187 RMB, +14% YoY
GAAP
2.844 RMB, +17% YoY

Key Platforms Update

Weixin & WeChat
1,112 m, +7% YoY
QQ
Total:
823 m, +2% YoY
Smart Devices:
700 m, +1% YoY
Monthly Active Users as of 31 Mar 2019

Strategic Highlights

FinTech and Business Services
New revenue segment marks the milestone for new business development
  • Rapidly-emerging demand for digital payments, financial services and enterprise solutions
  • Synergies with our existing consumer services
  • Robust scale and operational expertise built up via substantial organic investments
  • Expand Tencent capabilities and broaden revenue base
  FinTech Services Business Services
Revenue Streams Payments:

Take-rate on commercial transactions collected from merchants

Cash withdrawal fee and credit card repayment charges collected from users

Other FinTech services: fees and commissions from financial institution partners

Cloud: charges enterprise customers for IaaS, PaaS and SaaS products, and technology solutions

Smart Industry solutions: service fees from partners

Business Dynamics

Social payment fees recover costs; seasonally lower in 1Q due to less cash withdrawals

Commercial payment generates reasonable gross margin, bears marketing costs

Micro-loans and wealth management products contribute additional profit

Operating in a highly regulated environment

IaaS and PaaS have low margins, and capital-intensive

SaaS and technology solutions generate healthy margins, currently at small scale

Smart industry solutions at nascent stage, but carry long-term potential

Strategic Highlights

FinTech Services
Long term investment and risk-conscious growth
Tenpay
Weixin Pay
LiCaiTong
Red Envelope
WeiLiDai
F2F QR Code
WeSure
F2F Scanning
for merchant
  • Over 800mn MAU
  • Over 1 billion daily transactions
LingQianTong
  • Payments technology: launched Tenpay on PC in 2005; Weixin expedited transition to mobile payment and expanded user adoption
  • Consumer adoption: massive user activation via social payment, e.g., red envelope gifting, then extended to consumer payment in commercial transactions; strengthening stickiness via more use cases
  • Merchant adoption: expand ecosystem via strategic business partnerships and channel cooperation; additional benefit from investee companies’ merchant networks; deepen penetration in multiple verticals
  • Innovative tools: QR codes and Mini Programs enable online and offline convergence
  • Other FinTech services: upsell consumer finance products, e.g., personal wealth management and insurance, and provide micro-loan products; complete transaction using Weixin Pay
  • Risk management: strong focus on risk management, growing business at measured pace

Strategic Highlights

Business Services
Supporting enterprises to upgrade to Industrial Internet
Provide cloud infrastructure to web-game developers
Officially launched
Market leader in Games and Video verticals; deepening penetration to other Internet verticals
A showcase in Tourism vertical in Yunnan Province
  • Expanded to Retail and Healthcare
  • Digital Guangdong supporting Municipal Services
Expanded to Smart Industries: partnering with key Financial institutions
  • WeChat Work integrates with Weixin
  • Establish CSIG
  • Infrastructure: Internal cloud requirement already at substantial scale, even before serving external customers

  • Technology: integrated our own capabilities such as security, AI, LBS, etc., into our external cloud-based solutions to assist the digital transformation of enterprises

  • Differentiation: connect developers and enterprises to the vast and active user bases on Weixin, QQ, Official Accounts, Mini Programs, payment, WeChat Work

     
  • Competitive offerings: Over 200 IaaS, PaaS and SaaS products, more than 90 industry-specific solutions

    53 availability zones from 25 geographic regions worldwide

    Secure, stable and scalable services maximize value for enterprise IT budget

  • Breakthrough in verticals:
    Internet: games, video, eCommerce, other internet services

    Smart industries: finance, retail, municipal services, tourism, healthcare and other industries

Revenue Mix

1Q2019
1Q2018
Social Networks
Online Games
Online Advertising
FinTech and
Business Services
Others

Value Added Services Revenue

in billions, RMB
Online
Games
Social
Networks

Online Advertising Revenue

in billions, RMB
Media
Social and
Others

FinTech and Business Services Revenue

in billions, RMB
FinTech and Business Services Revenue

Segment Gross Margin

VAS (%)
Online
Advertising (%)
FinTech and
Business Services (%)

Operating Expenses

S&M
in billions, RMB
G&A
in billions, RMB
R&D (within G&A)
in billions, RMB

Margin Ratios

GAAP
Gross Margin (%)
Non-GAAP
Operating Margin (%)
Non-GAAP
Net Margin (%)

CAPEX, Cash Flow
and Credit Metrics

1Q2019
Total CAPEX
4.5billion RMB,
-29% YoY
Total Debt
184.3billion RMB,
+17% YoY
Debt to (adj.)
EBITDA ratio
1.5x(annualized)
Free Cash Flow
23.9billion RMB,
+72% YoY
Net Debt
9.6billion RMB
Improved
34% YoY
Fair Market Value of
our listed investee companies*
310.7billion RMB

*Excluding subsidiaries

For More Information

HKEx Announcement

Investor Relations