On the evening of March 23, Tencent Holdings (HK.00700) released its 2021 four-quarter report and annual report. Tencent's net profit (Non-IFRS) in Q4 2021 was 24.88 billion yuan, down 25% year-on-year, which is the second consecutive quarter of tencent's negative net profit growth after a 2% decline in net profit in the third quarter.
For the whole year of 2021, Tencent achieved revenue of 560.118 billion yuan, an increase of 16% year-on-year, and net profit (Non-IFRS) of 123.788 billion yuan, a slight increase of 1% year-on-year, which is the lowest increase in the company's net profit in the past decade.
Behind the pressure on short-term performance, Tencent is still actively switching the development engine, increasing digital investment, and consolidating the underlying capabilities of digital technology. In 2021, Tencent's R&D investment increased by 33% to 51.8 billion yuan, which has doubled compared with 2018. The company's latest 2021 R&D big data report also shows that the number of Tencent R&D personnel in 2021 increased by 41% year-on-year, and the R&D team continued to grow. More than 6,000 new R&D projects were added, an increase of 51% over 2020. In the past three years, Tencent's R&D investment has exceeded 120 billion yuan, and it has gradually established a complete self-research system including servers, operating systems, chips, SaaS, etc., and the perfect self-research ecology has also become a solid foundation for the company to serve the real economy.
Ma Huateng, chairman of the board of directors and CEO of Tencent, said that in the face of industry challenges, the company has actively embraced changes, reduced costs and increased efficiency, focused on key strategic areas, and strengthened long-term sustainable development initiatives. Although revenue growth has slowed, the company continues to make strategic progress in its business, believing that China's Internet industry is structurally moving towards a healthier model, returning to its roots centered on user value, technological innovation and social responsibility.
R&D investment doubled in three years Self-research system attracted attention
In 2021, Tencent's R&D investment reached a new high, an increase of 33% year-on-year to 51.8 billion yuan. In recent years, Tencent has been increasing investment in the field of independent innovation, and has invested in the underlying capabilities such as servers, operating systems, and databases for a long time, striving to achieve domestic substitution and gradually improve the self-developed ecology.
In the field of self-developed hardware, Tencent has established the first hardware laboratory in history, Xingxinghai Lab, which is self-developed for industrial Internet acceleration technology and has released a number of self-developed hardware products, including Xinghai server. Tencent Cloud 100G Cloud Server is the first cloud server product series in China to apply 100G super-large network on a large scale.
As the cornerstone of network security, the operating system has always been the focus of Tencent's R&D investment, in 2021, Tencent released the industry's first distributed cloud operating system with global governance, which supports 100,000-level servers and million-level containers in a single cluster, and manages more than 100 million CPU cores. Computing has officially entered the era of billions of dollars, helping the digital transformation of various real industries. In addition, Tencent has been developing a domestic operating system distribution version of TencentOS for more than ten years.
In 2021, Tencent Cloud distributed database TDSQL released a new financial-grade fully self-developed sensitive engine, which has helped more than 20 financial institutions to achieve the localization of core systems.
In terms of audio and video technology, Tencent's self-developed codec technology is the world's leading, with more than 100 new generation international codec patents, and won the first place in many mainstream tracks at the 2021 MSU World Video Codec Competition.
Based on the strong underlying technical support, a series of Saas products, including Tencent Conference, Tencent Documents, and Enterprise WeChat, have also become an important part of Tencent's self-developed ecosystem, building a full-link self-developed technology system from the infrastructure layer to the application layer, widely reaching enterprise customers, and gradually building and improving the ability to serve the real economy.
It can also be seen from the financial reports of the past years that since the beginning of 2019, Tencent's research and development expenditure has gone all the way up, 22.9 billion yuan in 2018, 30.3 billion yuan in 2019, 38.9 billion yuan in 2020, with an annual growth rate of about 30%, and by 2021, it has reached 51.8 billion yuan in one fell swoop, achieving a high growth rate of three years.
In fact, Tencent's many investments in the field of scientific and technological innovation, there are still many can not quickly produce results in the short term, but Tencent still has long-term R & D planning and investment, to enhance the national strategic scientific and technological strength to make reserves.
In 2021, Tencent Robotics X Lab released a total of two mobile robots (Max, Ollie) and IDC operation and maintenance robots a total of three products, as Tencent's enterprise robot lab, Tencent Robotics X will continue to explore the research and application of three general robot technologies in the future, and gradually achieve breakthroughs from basic capabilities to self-research capabilities to landing capabilities, so that robots can help human beings better production and life.
For the first time, the economic income of doing real work, doing heavy work, and counting real has surpassed online games
Relying on the ability of scientific and technological innovation and long-term investment in the field of digital new infrastructure, the company's digital and real integration continues to accelerate, and the economic income of digital real, which is mainly based on the service B-side, has also become Tencent's new growth engine, accelerating the company's virtual-real integration and low-speed gear shift.
In the fourth quarter of 2021, the revenue of the fintech and enterprise services segments increased by 25% year-on-year to 47.958 billion yuan, surpassing the online game sector for the first time and becoming the business segment with the largest contribution to Tencent's revenue.
In the first quarter of 2019, Tencent separately disclosed the revenue data of the technology and enterprise services sector for the first time, and the revenue of the sector in the quarter was 21.789 billion yuan, accounting for 25.5% of the overall revenue, and the online game sector accounted for 33.4%. In recent years, Tencent has increased its embrace of the industrial Internet, vigorously invested in new digital infrastructure, and formed industrial digitalization solutions in many fields such as government affairs, finance, education, transportation and travel, medical care, smart retail, industry, and energy, helping all walks of life to reduce costs and increase efficiency.
According to the China Academy of Information and Communications Technology, the penetration rate of the digital economy in agriculture, industry and service industry in 2020 is 8.9%, 21% and 40.7%, respectively. The application of digital economy in many fields has just begun, such as smart agriculture, smart manufacturing, smart city, etc., which has always been a challenge and difficulty in the integration of digital economy and real economy. In these "deep water areas" of the digital economy, Tencent actively faces the battle, relying on big data and AI algorithms to help the manufacturing industry accelerate digital intelligence, reflecting the spirit of digital craftsmanship in the new era.
Tencent and Industrial Fulian cooperated to replace human eye recognition with industrial quality inspection integrated machines, the production efficiency increased by 10 times, the two sides also cooperated to build an industrial Internet platform, has served more than a thousand industrial enterprises; Tencent also joined hands with Sany Heavy Industry to create the first intelligent service middle platform in the construction machinery industry, introducing a new generation of customer service AI robots; in the medical industry, Tencent helps doctors through Miying AI imaging technology, making large-scale glaucoma, new crown pneumonia, cancer screening possible...
In recent years, Tencent has invested firmly in the field of new digital infrastructure. According to the financial report, in 2021, the revenue cost of Tencent's financial technology and enterprise services sector was 120.8 billion yuan, an increase of 32% year-on-year, which is also the fastest growing business segment of Tencent's cost input. According to the latest report of IDC, an international authoritative market research institution, Tencent Cloud ranked top 2 in the market share of public cloud services, with a year-on-year growth rate of 53%, ranking the leading level in the industry.
At this stage, Tencent is actively participating in the construction of "Counting East and Counting West". Tencent Cloud has invested in the construction of large-scale data centers in Guiyang, Chongqing, Guangdong, Jiangsu and other places.
In the past year, Tencent Cloud has opened international data centers in Indonesia, Thailand, Germany, Japan, Hong Kong and other places, with an overall global operation of 70 availability zones, covering 27 geographical regions, operating more than 1 million servers, providing technical support for the digital transformation of domestic and foreign enterprises.
WeChat accelerates the "real" and "micro" full-service entity industry
Going deep into the industry and the real economy is being carved into Tencent's various businesses. It is not only cloud business and big data business that are connected to the real economy, but also the increasingly active and mature WeChat ecosystem has become an important link for companies to serve the real economy, accelerating the integration and development of China's digital economy and the real economy.
Relying on innovative links to ecological products such as video number, WeChat pay, mini program, search, and enterprise WeChat, WeChat is evolving from a simple social platform to a toolbox that penetrates into all walks of life, widely reaching and serving all kinds of entity enterprises.
Based on the rural group buying mini program, Hunan Miaoxiang sold the unsalable ice candy orange; Huawei, Xiaomi and many other brands broadcast new product launches and sold goods on WeChat video accounts; Sany Heavy Industry developed the Sany SCRM system based on the open ability of the enterprise WeChat, directly connecting dealers and end customers.
As the core link of WeChat ecology, Mini Program connects WeChat tools such as WeChat, WeChat Pay, WeChat Search, WeChat Public Account, etc., accelerating the integration and development of the digital economy and the real economy, data show that more than 100 million users use government services on Mini Programs every day, and Enterprise WeChat has become an important tool for organizational management, industrial production and commercial marketing. In 2021, the daily active life of Mini Programs exceeded 450 million, and the transaction volume of catering, tourism, retail and other industries increased by 100% year-on-year.
The number of real enterprises and organizations on Enterprise WeChat has exceeded 10 million, the number of active users has exceeded 180 million, and the number of active users connected to WeChat has exceeded 500 million. As an important tool of Tencent's industrial Internet, the three major products of Enterprise WeChat, Tencent Documents and Tencent Conference have been integrated and connected, and new efficiency collaboration functions have been jointly launched to better serve enterprise customers.
In 2021, WeChat Pay will continue to launch a number of fee reduction and profit reduction measures, benefiting tens of millions of small and micro merchants, and will continue to comprehensively reduce the operating costs of small and micro merchants by providing free QR code collection security guarantees, operating material concessions and other measures, and a number of measures are expected to invest more than 10 billion.
In 2021, Tencent clearly regarded "helping the real economy" as Tencent's new brand proposition, and Ma Huateng also said that "digital-real integration" should "revitalize industry, do practical things, and rely on hard work". Tencent is widely releasing its ability to serve users, using scientific and technological strength to improve energy and efficiency for all walks of life, helping individuals and small and micro enterprises in the real economy, accelerating integration into the real economy, and realizing the transformation of the company's "real" growth.