Business Description

Tencent Holdings Ltd., an investment company, provides value-added services as well as online advertising services. The company was founded in 1998 by Yi Dan Chen and Hua Teng Ma. It is headquartered in Shenzhen in China. It operates in the following segments: Online Advertising and Value-Added Services.

Online Advertising includes both performance-based and display-based advertisements.  The Value-added Service segment includes online and mobile games, community-value-added services, as well as applications across multiple Internet and mobile platforms. The Other segment includes software sales, trademark licensing, software development, as well as other services.

Key Financials

Revenue (US$ Mn)

• US$ 83,234 Mn was the annual revenue generated by Tencent Holdings Limited in 2021
• Tencent Holdings Limited’s annual revenue for 2020 was US$ 71,635 Mn, a 27.77% increase from 2019
• From 2018’s annual revenues, Tencent Holdings Limited registered a 14.76% increase in 2019, amounting to US$ 56,065 Mn
• Total revenue of US$ 48,856 Mn was generated in 2018 by Tencent Holdings Limited

Operating Income (US$ Mn)

• Tencent Holdings Limited’s operating income for 2021 was US$ 23,708 Mn, a 6.78% increase from 2020
• The operating income generated by Tencent Holdings Limited in 2020 was US$ 22,201 Mn
• At a 39.72% increase from, Tencent Holdings Limited’s operating income of US$ 17,030 Mn was indexed in 2019
• Tencent Holdings Limited generated an operating income of US$ 12,189 Mn in 2018

Net Income (US$ Mn)

• US$ 33,853 Mn was the net income generated by Tencent Holdings Limited in 2021
• Tencent Holdings Limited’s net income for 2020 was US$ 23,795 Mn, a 66.99% increase from 2019
• From 2018’s net incomes, Tencent Holdings Limited registered a 15.85% increase in 2019, amounting to US$ 14,249 Mn
• A net income of US$ 12,299 Mn was generated in 2018 by Tencent Holdings Limited

Operating Margin %

• Tencent Holdings Limited’s operating margin for 2021 was 28%, a -8.09% decrease from 2020
• The operating margin generated by Tencent Holdings Limited in 2020 was 31%
• At a 21.69% increase, Tencent Holdings Limited’s operating margin of 30% was indexed in 2019
• Tencent Holdings Limited generated an operating margin of 25% in 2018

Gross Margin %

• Tencent Holdings Limited’s gross margin for 2021 was 44%, a -4.36% decrease from 2020
• The gross margin generated by Tencent Holdings Limited in 2020 was 46%
• At a -2.42% decrease, Tencent Holdings Limited’s gross margin of 44% was indexed in 2019
• Tencent Holdings Limited generated a gross margin of 46% in 2018

SWOT Analysis

Strengths

The robust business model supported by an integrated user experience

The company’s business model is solid and supported by its integrated user experience through its range of solutions and platforms. Online advertising, value-added services (VAS), and other sources generate revenues for the company. Traffic-based revenue is generated by the brand display and performance displays on its online properties. Tencent also makes a fee-based income through online social networks and games, such as monthly subscriptions and item purchases.

Tencent also generates substantial transaction-based revenues from commissions on online payments. The company’s online properties offer integrated user expertise and consumer engagement, which are the main sources of revenue. The company’s Social Network business offers a variety of IM platforms including Tencent QQ, Weixin/WeChat, and Qzone. Tencent QQ provides IM platforms for mobile and personal computers (PCs).It allows users to communicate via text, video, and pictures, as well as through stickers and personalized avatars. Chat bubbles can also be used. Profile photo widgets are also available. The platform also allows users to access the QQ wallet, and make mobile payments, including online shopping, top-ups, and bank transfers. Weixin/WeChat combines instant messaging with social entertainment via an app (app).

These features include free text and multimedia messaging, video calling, photo sharing, and recreational features such as stickers gallery, games, and friend-adding services like Shake and People Nearby. Weixin/WeChat also offers official accounts for enterprises to create unique consumer experiences via its open platform and extended services like Weixin/WeChatPay for a mobile digital life. Qzone is a social networking platform that provides peer interaction and entertainment. Tencent’s Payment business line comprises various payment platforms which include Tenpay, Weixin/WeChat Pay, and QQ Wallet. Tenpay is an online Chinese payment platform. It allows individuals to make online payments. Weixin/WeChat Pay allows users to make quick payments on their smartphones using a payment platform called Weixin/WeChat Pay.

QQ Wallet is a mobile payment solution that supports multiple payment methods including QR code payment, bank card payment, and NFC payment. QQ Wallet is an open platform that allows for payment, life, financial, and other services. The entertainment business line includes Tencent Games and China Reading Limited. Tencent Pictures, Tencent Comics, Tencent Comics, Tencent Pictures, and QQ Music. Tencent classroom and Nextradio NOW Live are also included. Tencent Games, an online gaming community in China, is an operator and developer of online games. Tencent classroom offers online education. It offers an instructional management system, Customer relation management (CRM), financial settlement, and other services.

Next Radio, an internet radio station app. China Reading Limited (Tencent Literature), is an online literature reading platform for Internet users. It offers mobile and PC-friendly reading experience. Tencent Comic is an animation platform. Tencent Pictures lets celebrities share their own IP with the community. It’s an open platform service that promotes cross-border collaboration and connects artists and IP to local and international production and distribution businesses. QQ Music, an online music platform that provides digital music services in China, is QQ Music. Penguin e-Sports provides live streaming for mobile e-sports. Penguin e-Sports allows users to view live streaming videos from game hosts, participate in e-sports competitions and gain e-sports knowledge.

NOW Live, a mobile streaming app that allows users to broadcast and capture live from their mobile devices anywhere and anytime, is called NOW Live. Interest Tribe, a social networking platform based on interests in China, is called Interest Tribe. Pitu is a professional and fashionable image processing program that offers many functions, including self-timer, photo editing, beauty retouch, and photo collage. Tencent Questionnaire allows users to create free online questionnaires in a variety of ways. TUCAO.QQ.COM, a platform for user feedback, supports WEB, WeChat official account, APP, and WeChat mini program. It provides a seamless user experience through multiple channels, which supports the company’s business model. This helps to increase consumer engagement and brand loyalty. It allows it to improve its operating and financial performance.

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