MoonFox Analysis | How WeChat Channels Burdens of Tencent's Hopes for the Future Amidst Rapid Commercialization

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MoonFox Analysis reports on the significant role of WeChat Channels in Tencent's recent financial growth. For Q1 2024, Tencent's revenue increased 6% YoY to RMB 159.501 billion, and net profit soared by 54% YoY to RMB 50.265 billion. WeChat Channels contributed notably to this growth, with user engagement up by over 80% YoY. The platform has expanded its offerings, including e-commerce and local life services, driving increased user activity and commercial value.

WeChat's monthly active users reached 1.02 billion, a YoY increase. The gross merchandise volume (GMV) for WeChat Channels grew nearly threefold in 2023, with increased product supply and brand participation. WeChat Channels is also testing new features to enhance e-commerce and local life services. As Tencent continues to develop WeChat Channels, it aims to attract more advertisers and brands, leveraging its vast user base and integrated platform features.

  • Net profit increased by 54% YoY to RMB 50.265 billion in Q1 2024.
  • Revenue rose 6% YoY to RMB 159.501 billion in Q1 2024.
  • WeChat Channels user engagement up by 80% YoY in Q1 2024.
  • Gross merchandise volume (GMV) for WeChat Channels nearly tripled in 2023.
  • WeChat's monthly active users reached 1.02 billion, a YoY increase.
  • Operating profit increased by 38% YoY to RMB 52.6 billion.
  • WeChat Channels contributed significantly to Tencent's gross profit increase of 23% YoY.
  • Tencent Games business continues to show YoY negative revenue growth.
  • Potential challenges for WeChat Channels include competition from TikTok and Meituan.
  • Increasing reliance on WeChat Channels for revenue growth may pose risk if performance falters.

Tencent's financial performance in Q1 2024 is quite impressive, with the company reporting notable increases in both revenue and net profit. Specifically, a 54% YoY increase in net profit and 6% YoY revenue growth are significant achievements. While Tencent Games continues to struggle with negative YoY growth, the company's efforts in online advertising, financial technology and enterprise services have contributed substantially to overall growth.

The major takeaway for investors is the impact of WeChat Channels on Tencent's financials. The platform has driven the company's profitability, contributing to a 23% YoY increase in gross profit. The gross profit margin also improved from 45% to 53%. These metrics indicate that WeChat Channels are not only boosting revenue but also enhancing efficiency and profitability.

For retail investors, it's important to note that while the growth in digital and financial services is promising, the persistent decline in gaming revenue could signal a need for diversification. Investors should monitor how Tencent balances its various segments and continues leveraging WeChat Channels to sustain profitability.

WeChat Channels’ rapid user growth and increased activity are pivotal. The 80% YoY increase in user engagement on the platform highlights its rising importance within the WeChat ecosystem. With Tencent recognizing WeChat Channels as the 'Hope of the Tencent,' it underscores the strategic importance of this platform in driving future growth.

From a market perspective, the aggressive commercialization of WeChat Channels, especially the integration of e-commerce and local life services, positions Tencent to capture significant market share. The reported 300%+ growth in GDP and the extensive expansion of e-commerce functionalities provide a diversified revenue stream, enhancing Tencent's competitive edge against rivals like Meituan and TikTok in the local life services sector.

Investors should consider the long-term potential of WeChat Channels as it continues to expand its ecosystem. The platform's ability to attract small and medium-sized brands and its competitive service fees could lead to sustained user and revenue growth, making it a critical asset for Tencent's future market positioning.

From a technological standpoint, WeChat Channels' continuous optimization and feature expansion are crucial. Introducing capabilities like direct access to WeChat Channels Shop from Moments and Ads is a strategic move to enhance user experience and drive commercial engagement. This feature integration leverages WeChat's extensive user base, facilitating seamless transitions between social interactions and commercial transactions.

Furthermore, the platform's focus on privacy, as seen with the introduction of virtual accounts, is likely to build user trust and compliance, essential for long-term success in e-commerce. The emphasis on paid live streaming and content marketing functionalities also adds value for content creators and advertisers, fostering a robust and diverse ecosystem.

For retail investors, the technological advancements on WeChat Channels suggest a forward-thinking approach by Tencent. These innovations not only enhance user engagement but also provide new monetization avenues, reinforcing Tencent's market position and driving future revenue growth.

About us: Aurora Mobile (NASDAQ: JG) established in 2011, is a leading customer engagement and marketing technology service provider in China. Its business includes notification services, marketing growth, development tools, and data products. As its sub-brand, MoonFox Data is a leading expert in data insights and analysis services across all scenarios, aiming to help companies gain market insights and empower precise decision-making.

SHENZHEN, China, May 31, 2024 /PRNewswire/ -- I. Net Profit Soars by 50%, WeChat Channels Lead Tencent's Growth

On May 14th, Tencent Holdings released its Financial Report for the First Quarter of 2024. The report shows that Tencent's revenue in the first quarter was RMB 159.501 billion, increased by 6% YoY and 3% QoQ; While net profit was RMB 50.265 billion, increased by 54% YoY and 18% QoQ. Among its three major business segments, the Tencent Games business has not fully recovered, with revenue continuing to record a YoY negative growth in the fourth quarter. The businesses of Online Advertising, Tencent Financial Technology, and Enterprise Services maintained growth momentum, with the segment of integration of digital technologies and the real economy accounting for more than 30% of Tencent's revenue for three consecutive years and becoming the largest contribution to Tencent's revenue since 2022. Behind the growth of these segments lies the same contributor: WeChat Channels.

Having been launched for four years, WeChat Channels has now grown into the "Hope of the Tencent". In its latest financial report, Tencent stated that services including WeChat Channels and Search Ads, Game Applet platform service fees, and Channels merchant technology service fees contributed to an increase in Tencent's gross profit & operating profit that exceeded its revenue growth. Tencent's Q1 gross profit increased by 23% YoY, with gross profit margin rising from 45% in the same period last year to 53%; operating profit reached RMB 52.6 billion, increased by 38% YoY.

In the first quarter of 2024, the total user' usage duration of WeChat Channels increased by over 80% YoY. By expanding product categories and encouraging more KOLs to participate in live streaming, Tencent strengthened the retail streaming ecosystem on WeChat Channels. WeChat Channels is bearing greater commercial value, and its future potential should not be underestimated.

II. Four-Year Transformation for WeChat Channels: Commercialization Exploration and User Value Enhancement within WeChat

The growth of WeChat Channels is inseparable from the strong support of WeChat. According to MoonFox iApp data, in the first quarter of 2024, WeChat's monthly active user(MAU) base reached 1.02 billion, an YoY increase of 4.122 million. In terms of user stickiness, WeChat's average daily launches per user in the first quarter was 21.9 times, an YoY increase of 2.1 times.

Changes in WeChat MAU and Average Daily Launches per User in Q1 2024


Average Daily Launches per User

January 2023 - March 2023

1.014 billion

19.8 times

January 2024 - March 2024

1.018 billion

21.9 times

Data Source: MoonFox iApp;

Data Period: January 2023 - March 2023, January 2024 - March 2024

As a member of the WeChat ecosystem, WeChat Channels has been constantly drawing on WeChat's strong vitality over the past four years, inheriting and expanding WeChat's massive and deep user base. The continuous enrichment and optimization of WeChat Channels' commercial functions have also brought about an increase in user engagement and interaction frequency, which in turn has contributed to the growth of WeChat's user base and activity levels.

Regarding the exploration and expansion of WeChat Channels' commercial functions, it initially facilitated private connections by integrating with WeCom, building a convenient communication bridge between users and enterprises. Later, with the addition of the "Products" tab, WeChat Channels introduced a brand-new shopping experience for users. Subsequently, the launch of content marketing functions transformed WeChat Channels into an efficient advertising platform for advertisers, while also providing users with more diverse content choices.

Timeline for WeChat Channel Launching Key Commercial Functions

Private Connection

  • January 2021: WeChat Channels integrated with WeCom (WeChat Work)
  • November 2021: New version of WeCom enabled sending/receiving and
    watching live streaming on WeChat Channels


  • May 2021: "Products" tab added to WeChat Channels homepage
  • November 2021: WeChat launched "11.11" WeChat Channels Live Streaming
    Shopping Festival

Content Marketing

  • June 2021: WeChat Channels Advertising Platform launched
  • May 2023: Tencent Advertising's full UV(Unique Visitor) bidding platform
    upgraded, Auction Ads mechanism launched on WeChat Channels


  • January 2022: Paid live streaming allowed replay viewing on WeChat Channels
  • April 2022: It launched a knowledge live streaming column on WeChat

Local Life

  • May 2023: It tested local life services on a small scale on WeChat Channels,
    while adding the function of group purchase, voucher redemption in live
    streaming rooms

Source: Public information, compiled by MoonFox Research Institute 

In 2022, WeChat Channels took a step further into knowledge monetization by introducing paid live streaming, allowing creators to monetize their premium content while satisfying users' demand for high-quality content. In 2023, WeChat Channels set its sights on the local life services sector, testing local life services and providing users with a more convenient and practical living experience.

III. Initial E-commerce Dividends, Multiple Operational Initiatives Accelerate WeChat Channels' Commercialization Process

In 2024, the commercialization layout of WeChat Channels is accelerating, and the e-commerce business, as its important component, is unleashing enormous dividends. Previously, WeChat officially disclosed that in 2023, the GMV (Gross Merchandise Volume) of WeChat Channels achieved nearly a threefold increase, its number of orders grew by over 244%, and the product supply increased by approximately 300%. Among these, the proportion of brand GMV on WeChat Channels reached 15%, with brand GMV growing by 226% and the number of brands increasing by 281%; The growth of service providers scale was also very rapid, with over 3,000 ecosystem partners, and their GMV grew by more than 4.5 times within a year, contributing to over 35% of the overall GMV share. Compared to numerous competitors, WeChat Channels is currently in a period of UV dividends, with relatively low UV costs, which easily attracts a large number of small and medium-sized generic brand merchants to join the platform.

E-commerce Performance of WeChat Channels in 2023

GDP Growth


Order Growth


Product Supply Growth


Brand GMV Growth


Brand Number Growth


Number of Service Providers


Source: Public information, compiled by MoonFox Research Institute

WeChat Channels continuously roll out and refine various commercialization functions, gradually building a diversified e-commerce ecosystem and releasing more and more dividends for content creators, merchants, and users. The e-commerce business of WeChat Channels not only provides merchants with a new sales channel but also offers users a more diverse and convenient shopping experience. With the launch and optimization of more innovative functions in the future, WeChat Channels is expected to become an important platform connecting users, merchants, and content creators, further promoting the development and prosperity of the e-commerce business. It is reported that WeChat Advertising is currently testing a new capability that allows direct access to WeChat Channels Shop from Moments and Ads, bringing new UV growth paths for merchants operating the Shop.

Key Stages in the E-commerce Development of WeChat Channels

Function Updates - Building E-
commerce Infrastructure

Regulation and Governance -
Governing the Ecosystem

KOLs Operations - Resource

  • May 2021: Added "One-
    click to open the store"
    function on WeChat
    Channels, streamlining the e-
    commerce process;
  • November 2021: Optimized
    user experience, allowing
    WeChat Channels users to
    view their "Orders";
  • December 2021: WeChat
    Channels e-commerce
    updated basic functions,
    tested the "short video
    shopping cart" through gray
    box testing.

  • July 2022: Introduced
    optimized rules for using
    WeChat Channels
    Storefronts, updating the
    ecosystem rules for WeChat
    Channels e-commerce;
  • February 2022: Released a
    new batch of Storefront
    product quality inspection
    standards, conducting
    product quality inspections;
  • March 2023: To rectify
    irregularities in the WeChat
    Channels ecosystem, non-
    core products were removed
    from WeChat Channels

  • June 2023: To enhance
    privacy protection, Tencent
    initiated testing of virtual
    account for WeChat
    Channels Shop;
  • July 2023: Launched the
    Basic Tutorial for WeChat
    Channels Merchant to
    Increase Sales
    official guide
    and upgraded the KOLs
    incentive plan, entering the
    resource support stage;
  • January 2024: Tencent
    Advertising released the
    Guide for WeChat Channels
    Merchant to Create Best-
    selling Products and
    Generate Massive Orders

Source: Public information, compiled by MoonFox Research Institute

IV. Venturing into Local Life Services, New Blue Ocean Battle with Meituan and TikTok

On April 29th, WeChat Channels released policies for local life service merchants to join the platform, including two top-level categories of dining, tourism & hotel, with nine second-level categories such as full-service restaurants, fast food, bakeries & snacks, accommodation, and scenic spots. Currently, only chain restaurant brands are allowed to join the dining category, and there are also restrictions for the tourism & hotel category, such as the scenic spots in only AAAA-level and above to be permitted to join. In terms of fees, local life service merchants joining WeChat Channels in 2024 can enjoy a preferential 0.6% technological service fee for the entire year, which will later be restored to 2.5%, relatively lower than the 2% to 5% fee range for most e-commerce categories. The security deposit for categories is RMB 20,000, and the floating security deposit is charged based on a certain percentage of the total transaction amount within 30 days.

As the engine driving WeChat's commercialization and Tencent's revenue growth today, WeChat Channels shoulders the critical task of expanding its reach. The reason why the local life services sector has re-entered the sights of internet giants after the "thousand-team battle" and the "food delivery battle" have quieted down is quite simple: it is almost the last "blue ocean" in the domestic consumer internet market.

The appearance of WeChat Channels has intensified competition in the local life service sector. The advantages of WeChat Channels lie in its massive user base and the convenience of WeChat Pay. WeChat Channels can leverage WeChat's social network to provide local life service merchants with more exposure opportunities. At the same time, the widespread adoption of WeChat Pay also makes it more convenient for users to consume on WeChat Channels. However, WeChat Channels also faces challenges. First, it need to find its positioning between TikTok and Meituan to avoid being caught in the middle of the competition. Second, it needs to figure out how to transition users from WeChat's social scenarios to local life consumption scenarios. Finding its advantages in the competition and providing better services will be the main challenges that WeChat Channels is facing.

V. How Rapidly Growing UV Leads Brand Advertisers to Tap into Opportunities? 

Fundamentally, all internet businesses are ultimately UV businesses. Especially as mobile internet dividends peak and UV costs continue to soar, finding new "blue ocean" has become a consideration for many brands, and WeChat Channels is precisely that rapidly growing market.

In the first quarter of 2024, the UV dividends of WeChat Channels allowed advertisers to see a new "blue ocean". Previously, Tencent had mentioned that advertisers had a strong demand for WeChat Channels Ads, and it would gradually increase the advertising share of WeChat Channels in the future. According to the data released by Tencent, advertisers seem to favor WeChat Channels as well. In 2023, Tencent's advertising business revenue reached RMB 101.5 billion, a YoY increase of 23%. Tencent stated in its financial report that the growth in advertising revenue was driven by new ads inventories from WeChat Channels and WeChat Search, as well as the continuous upgrades of its advertising platform. Among these, advertising revenue from consumer goods, internet services, and the healthcare industry increased significantly. Apart from WeChat Channels Ads, its live streaming is another potential arena, and compared to platforms like Kwai and Douyin, WeChat Channels is still in the early stage of development and has yet to produce its own top-tier KOLs. However, in the early stage, this also presents an opportunity for many small and medium-sized advertisers to overtake others, attracting a large number of mid-tier KOLs and brands to cash in on WeChat Channels.

At the same time, the official WeChat Channels team continues to roll out various incentive policies like introducing more UV. With a series of actions, the development of WeChat Channels will be further accelerated. For advertisers, this may present an opportunity to overtake others in live streaming e-commerce. With the upcoming 618 Shopping Festival, all parties are competing to layout their strategies, and it is expected that WeChat Channels will also introduce various incentive policies in succession, which will also be an opportunity for it to further flex its muscles and demonstrate its capabilities. This battle may attract more brands to join the platform. For the future, let's wait and see what kind of results WeChat Channels will deliver in the next quarterly financial report.

Cision View original content:

SOURCE Aurora Mobile Ltd


What was Tencent's net profit in Q1 2024?

Tencent's net profit in Q1 2024 was RMB 50.265 billion, a 54% YoY increase.

How much did Tencent's revenue grow in Q1 2024?

Tencent's revenue in Q1 2024 grew by 6% YoY to RMB 159.501 billion.

What role did WeChat Channels play in Tencent's Q1 2024 growth?

WeChat Channels significantly contributed to Tencent's Q1 2024 growth by increasing user engagement over 80% YoY and boosting gross profit.

How has WeChat Channels' gross merchandise volume (GMV) changed?

In 2023, WeChat Channels' GMV nearly tripled, with substantial increases in product supply and brand participation.

What are the challenges facing WeChat Channels?

WeChat Channels faces competition from TikTok and Meituan and challenges in transitioning users from social scenarios to local life consumption scenarios.

How many monthly active users does WeChat have?

WeChat had 1.02 billion monthly active users in Q1 2024, a YoY increase.

What growth did Tencent's operating profit see in Q1 2024?

Tencent's operating profit increased by 38% YoY to RMB 52.6 billion in Q1 2024.

Aurora Mobile Limited


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