Author | First Financial Liu Jia

  "What happened in the two years stolen by the epidemic?"

  In Tencent's internal Q&A community "Le Question", this question made Ma Huateng, chairman and CEO of Tencent's board of directors, deeply moved.

  The reporter of Yicai News exclusively learned that in an online communication in 2020, Ma Huateng once teased with his employees about his old problem with a bad lumbar spine. After a year of training, he took a film of the waist. The results of the film were similar to Tencent's performance in 2020 is just as "outstanding"; at the staff meeting a year later, Ma Huateng once again used his "waist" as a joke: he swam for a year and took pictures, but found that his lumbar intervertebral disc was the same as Tencent's. 2021 is about the same — less prominent, even a little less.

  On March 23, 2022, Tencent handed over the transcripts for the fourth quarter and full year of 2021.

Among them, Tencent's Q4 net profit (Non-IFRS) in 2021 was 24.88 billion yuan, a year-on-year decrease of 25%. This is the second consecutive quarter of Tencent's negative single-quarter net profit growth after the third quarter's net profit fell 2%.

For the whole year of 2021, Tencent achieved revenue of 560.118 billion yuan, a year-on-year increase of 16%, and net profit (Non-IFRS) of 123.788 billion yuan, a slight increase of 1% year-on-year, which was the lowest growth rate of Tencent's net profit in the past ten years.

  If you go back to 2020, Tencent's annual revenue was 482.064 billion yuan, a year-on-year increase of 28%, and its net profit (Non-IFRS) was 122.742 billion yuan, a year-on-year increase of 30%.

It can be said that in the special year of full investment in digital anti-epidemic, Tencent's fundamentals have performed well.

  Compared with 2020, behind the "less outstanding" performance in 2021, Tencent faces many challenges.

One is anti-monopoly, and the other is new regulations in the game industry.

The former will continue for a long time, requiring Tencent to respond calmly and do a good job of compliance. The latter involves the suspension of version number issuance and the supervision of minors, and the industry chain needs to work together to fill the loopholes.

  In addition, in the past year, the merger of Douyu and Huya led by Tencent has not been approved; the giant began to dismantle the walls and gradually move towards interconnection; all its APPs were temporarily suspended to cooperate with compliance testing; it also sold most of the JD.com The shareholding also brings 78 billion income.

In terms of performance, in addition to the 10-year low in net profit growth, the growth rate of value-added services and advertising revenue has dropped significantly; in the C-end business, the combined MAU growth of WeChat and WeChat slowed down, and the MAU of QQ’s smart terminals slowed down. The number of accounts declined year-on-year.

  From the perspective of the external environment, the trend of the Internet has changed: the model of community group buying and burning money is unsustainable, online education is facing huge transformation challenges under the double reduction policy, and the contraction of the industry has affected Tencent's revenue to a certain extent; in the capital market, the global The market is going on a roller coaster trend, funds are becoming more cautious, and Chinese technology stocks are also facing the most difficult time. Tencent's share price once fell below the HK$300 mark.

  China Business News exclusively learned that Ma Huateng mentioned "overwintering" at the meeting.

He said that there are two points to consider when it comes to winter. One is to adjust the posture, reduce costs and increase efficiency due to changes in the external environment, and use bullets in key battles. "If there is no one on the battlefield, it is meaningless to shoot bullets. ." He mentioned that at this time, it is necessary to "reduce weight and gain muscle" again, and brew the next outlet or battle.

The second is to strengthen internal collaboration instead of fighting alone. A typical example is the integration of the three SaaS products of Enterprise WeChat, Tencent Meeting and Tencent Documents.

  Where is the next key battle that Tencent is brewing?

  The starting point is the "930" revolution in 2018, when Tencent announced the official launch of a new round of overall strategic upgrade: rooting in the consumer Internet and embracing the industrial Internet.

This year, Ma Huateng wrote in an open letter to Tencent's partners: "The consumer Internet without the support of the industrial Internet will only be a castle in the air."

  Previously, Tencent was seen as one of the biggest beneficiaries of China's consumer internet over the past decade.

In recent years, Tencent has made frequent moves in embracing the industrial Internet, investing heavily in new digital infrastructure, and forming industrial digital solutions in many fields such as government affairs, finance, education, transportation, medical care, smart retail, industry, and energy.

In the new "battlefield", Ma Huateng's positioning for Tencent is that a tree on the soil of society is not absent at critical times and must be in place.

Taking Tencent's important window business CSIG (Cloud and Smart Industry Business Group) for the industrial Internet as an example, it is positioned as an assistant, responsible for moving water and working, and "can be replaced at any time".

  In the fourth quarter of 2020 financial report, Tencent mentioned that the revenue of financial technology and enterprise services business increased by 29% year-on-year to RMB 38.5 billion, second only to the online game revenue of 39.1 billion, which means that Tencent's transformation of the industrial Internet has paid off. .

Since then, Tencent has also released a new brand advertisement of "Tencent Helps the Real Economy" on CCTV.

  During the two sessions this year, one of the written proposals that Ma Huateng intends to submit involves the deep integration of digital technology and the real economy.

He also suggested that resource elements such as technology and capital should be guided to truly flow into the real field.

  From Tencent's financial report released yesterday, it is not difficult to see that behind the pressure on short-term performance, Tencent is actively switching development engines.

In the fourth quarter of 2021, the revenue of the financial technology and enterprise services segment increased by 25% year-on-year to 47.958 billion yuan, surpassing the online game segment for the first time and becoming the business segment with the largest revenue contribution of Tencent. The fastest business segment.

In other words, the digital and real economic income mainly serving the B-side has become Tencent's new growth curve, accelerating the integration of Tencent's virtual reality and low-speed shifting.

  However, it is worth noting that although the financial technology and enterprise services sector has surpassed the game business in terms of revenue, it will take time to catch up in profit.

Taking Tencent Cloud as an example, it has invested a lot in product research and development, but it still suffers a considerable loss. Especially, the price war in the industry is becoming more and more fierce. Alibaba Cloud, which has the largest market share in China, has just announced that it has achieved breakeven for the first time not long ago.

In the financial technology sector, for example, Ant Financial and JD Digits, which have previously disclosed their performance, are still in the loss-making stage.

  At the same time, Tencent has carried out different levels of personnel optimization in the two business groups of CSIG and PCG. According to the first financial reporter, Tencent's social recruitment is also tightening.

  Whether it is Ma Huateng or Tencent President Liu Chiping, they all mentioned the topic of "cost reduction and efficiency increase" yesterday.

  "The Internet industry is encountering structural challenges and changes, and Tencent, as a participant in it, will also take the initiative to make adjustments." In the conference call, Tencent President Liu Chiping said, "In the past, the industry was competition-driven and invested heavily. Now, it is relatively People are more concerned about long-term business development than short-term gains, and invest more healthily, especially the optimization of marketing costs, operating costs and labor costs. We have also carried out cost optimization actions for loss-making businesses in order to maintain healthier growth.”

  Ma Huateng also said that in the face of industry challenges, Tencent actively embraces changes, reduces costs and increases efficiency, focuses on key strategic areas, and strengthens long-term sustainable development measures.

While Tencent's revenue growth has slowed, the company continues to make strategic progress in its business.

He said that he believes that China's Internet industry is structurally moving towards a healthier model, returning to its origins centered on user value, technological innovation and social responsibility.