Tencent Has Outgrown China Now Comes The Next Phase of Growth
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The 20,000 Foot View: Following the release of its fourth quarter earnings, Tencent is the first Chinese company to achieve a market capitalisation of over billion, displacing Facebook as fifth most valuable global company. This growth has been highlighted by the year-on-year (YoY) increase in revenue from billion in 2016 to billion in 2017. However, Tencent missed analyst revenue estimates for 2017. This combined with the concerns for rising ecosystem investments, rising overall costs, and a slowdown in monthly active user (MAU) growth and biggest shareholder Naspers selling off of its stake in March 2018, paints a mixed picture.
Key Findings
- Annual revenue increased by from billion in 2016 to billion in 2017
- Mobile video daily active users (DAU) increased by YoY from million in 2016 to million in 2017
- Value added services subscriptions grew by from million in 2014 to million in 2017, mainly driven by video and music
- VAS revenue increased YoY from billion in 2016 to billion in 2017
- Tencent is the first Chinese company to achieve a market capitalisation of over billion
- Total operating costs increased from billion in 2016 to billion in 2017, up
- Revenues increased by from 2016 to 2017, but margins slipped from to and have been steadily decreasing quarterly since 2015
- Other revenues increased by from billion in 2016 to billion in 2017, driven largely by payment services
- Majority shareholder Naspers, made a ROI from an initial million investment for in 2001
- Naspers current stake is worth billion
Companies and brands mentioned in this report: Alibaba, Amazon, Baidu, Facebook, Gaana, Google, iMessage, Naspers, Netflix, QQ, Spotify, Tencent, WeChat