Tencent Holdings Limited, the Shenzhen-based internet and technology giant, showcased a robust performance for the third quarter of 2024, with revenues reaching RMB 167.2 billion (USD 23.9 billion), an 8% year-on-year (YoY) growth. The company’s results reflect strong execution across key business sectors—gaming, social media, cloud services, and financial technology—alongside strategic initiatives to leverage artificial intelligence (AI) and strengthen its ecosystem.
Gaming Dominance Solidifies Tencent’s Leadership
Gaming remains Tencent’s most dominant segment, with revenues from its Value-Added Services (VAS) business—comprising gaming and social networks—rising 9% YoY to RMB 82.7 billion.
Domestically, hit titles like Honor of Kings and Peacekeeper Elite continued to deliver solid growth, supported by Valorant and the newly launched Delta Force. In the international market, Tencent expanded Valorant to consoles, boosting gross receipts by over 30% YoY.
This success underscores Tencent’s ability to maintain engagement in a competitive gaming landscape. The company’s investments in AI-driven personalized experiences and enhanced live-service elements further strengthen its position globally.
Social Media: Expanding Beyond Communication
Tencent’s social media platforms, Weixin (WeChat) and QQ, remain integral to its ecosystem. WeChat’s combined Monthly Active Users (MAUs) grew to 1.382 billion, while QQ saw a modest increase in MAUs.
WeChat Mini Programs achieved a Gross Merchandise Value (GMV) exceeding RMB 2 trillion, driven by expanded use cases like food ordering and electric vehicle charging. These initiatives reflect Tencent’s strategy of embedding commerce and services directly into its social platforms, enhancing user convenience and stickiness.
Leveraging AI, Tencent improved WeChat Search’s ability to handle complex queries, significantly increasing commercial click-through rates. QQ also saw innovation with upgraded infrastructure and new features, marking a return to YoY MAU growth.
Marketing Services and Advertising Resurgence
Tencent’s Marketing Services revenue, which rose 17% YoY to RMB 30 billion, demonstrates strong demand for its advertising solutions. Key contributors included Video Accounts, Mini Programs, and WeChat Search.
The Paris Olympics provided an additional boost, as advertisers sought to capitalize on high-profile events. Notably, eCommerce and gaming advertisers increased spending, offsetting weakness in categories like real estate and food and beverage.
FinTech and Business Services: Mixed Growth Amid Economic Headwinds
Revenue from FinTech and Business Services rose by 2% YoY to RMB 53.1 billion. FinTech services, encompassing payment and wealth management, showed stability, with the latter benefiting from increased user activity and assets under management.
Payment services, however, faced subdued consumption. In Business Services, growth in cloud services revenue was a highlight, aligning with Tencent’s broader focus on supporting digital transformation.
Tencent’s ongoing partnerships, such as the integration of JD Logistics with Taobao and Tmall, reflect its strategy of extending its influence across China’s digital ecosystem.
AI-Driven Innovations: A Key Pillar of Future Growth
Tencent’s AI investments came to the forefront with the launch of Hunyuan Turbo, an upgraded foundation model leveraging a heterogeneous Mixture-of-Experts (MoE) architecture. This model delivers double the training and inference efficiency at half the cost compared to its predecessor, underscoring Tencent’s commitment to deploying cutting-edge AI across its businesses.
The company has integrated AI capabilities into various offerings, from personalized gaming experiences to Weixin’s search algorithms and targeted marketing services. These initiatives aim to enhance operational efficiency and deliver value to users and advertisers.
Financial Strength and Shareholder Returns
Tencent continues to demonstrate financial resilience, with gross profit rising 16% YoY to RMB 88.8 billion and non-IFRS profit for equity holders increasing 33% YoY to RMB 59.8 billion. Free cash flow stood at RMB 58.5 billion, reflecting strong operational performance.
The company’s share repurchase program, totaling HKD 35.9 billion during the quarter, underscores its commitment to delivering shareholder value. With net cash of RMB 95.5 billion, Tencent is well-positioned to pursue strategic investments and initiatives.
Challenges and Strategic Focus
While Tencent’s diverse portfolio shields it from sector-specific risks, challenges such as fluctuating consumer spending in FinTech services and intensified competition in the cloud space remain. However, its strategic investments in AI, content, and ecosystem integration signal a clear focus on long-term growth.
Tencent’s third-quarter performance highlights its ability to adapt and thrive in a rapidly evolving market. By aligning its core businesses with emerging trends in AI, digital transformation, and consumer engagement, Tencent is not just navigating challenges but setting a course for sustainable growth.
Tencent’s Q2 2024 Results
Tencent Holdings announced its unaudited consolidated results for the second quarter of 2024, showcasing robust growth and strategic advancements across its diverse business segments. The company’s performance underscores its commitment to leveraging its platform plus content strategy, with notable successes in both domestic and international markets.
WeChat Video Accounts and Mini Programs:
Video Accounts: Tencent reported a substantial year-on-year increase in total user time spent on Video Accounts, driven by enhanced recommendation algorithms and an expanded array of local content. The company is systematically strengthening transaction capabilities within this platform to deliver seamless shopping experiences, thereby driving sales for merchants.
Mini Programs: The total user time spent on Mini Programs also grew by over 20% year-on-year, benefiting from the platform’s robust commerce and content ecosystem. Notably, the gross merchandise value (GMV) facilitated by Mini Programs experienced double-digit percentage growth, and total gross receipts from Mini Games increased by over 30% year-on-year.
Tencent Channels and Long-form Video
Tencent Channels: This community-based platform, which evolved from QQ, was rebranded and upgraded to enable moderators to manage channels with customizable tools. Users can now interact through text, image, and live streaming features, accessible from Weixin/WeChat, game apps, and QQ.
Tencent Video: The release of popular drama series fueled a 13% year-on-year growth in long-form video subscriptions, reaching 117 million subscribers. Notable titles like “Joy of Life 2” and “The Legend of Shen Li,” based on IPs from China Literature and produced by New Classics Media, were significant contributors to this growth.
Gaming
Domestic Games: Tencent’s flagship domestic games, such as “Honour of Kings” and “Peacekeeper Elite,” resumed year-on-year growth in gross receipts. Additionally, “Naruto Mobile” achieved a new milestone with 10 million monthly average daily active users (DAU) in May 2024, while the newly launched “DnF Mobile” showed promising retention rates.
International Games: International Games revenues reached RMB13.9 billion, marking a 9% year-on-year increase. “Brawl Stars,” with frequent content updates and social features, achieved a historical high in quarterly average DAU and saw gross receipts grow more than tenfold year-on-year.
Advertising and AI Initiatives:
Online Advertising: Revenues from online advertising increased by 19% year-on-year, primarily due to the strong performance of Video Accounts and long-form video advertising. The company upgraded its advertising technology platform to analyze user interests more effectively, resulting in deeper insights and more relevant ad recommendations.
AI Initiatives: Leveraging its top-tier foundation model, Tencent Hunyuan, the company released its AI assistant application, Yuanbao, to the public. Yuanbao is noted for its competitive strengths, including accurate image understanding, advanced natural language processing, and enhanced AI search capabilities.
Financial Highlights
Tencent’s financial performance in Q2 2024 was marked by significant growth across key metrics, reflecting the company’s successful execution of its strategic initiatives.
- Total Revenues: Tencent’s total revenues for the second quarter reached RMB161.1 billion (USD22.6 billion), representing an 8% increase year-on-year.
- Gross Profit: The company reported a gross profit of RMB85.9 billion (USD12.1 billion), a 21% increase compared to the same period last year, with a gross margin of 53%.
- Non-IFRS Operating Profit: On a non-IFRS basis, operating profit grew by 27% year-on-year to RMB58.4 billion (USD8.2 billion), with an operating margin of 36%.
- Net Profit: Profit attributable to equity holders of the company increased by 53% year-on-year to RMB57.3 billion (USD8.0 billion), highlighting strong profitability.
- Free Cash Flow: Tencent generated RMB40.4 billion (USD5.7 billion) in free cash flow during the quarter, up 35% year-on-year, contributing to a total cash position of RMB415.2 billion (USD58.3 billion).
- Shareholder Returns: The company repurchased approximately 103.7 million shares on the Hong Kong Stock Exchange for a consideration of HKD37.5 billion and paid a final dividend of HKD31.7 billion for the year ended December 31, 2023.
Tencent’s Q2 2024 results underscore the company’s resilience and adaptability in a competitive market, with its diverse business segments continuing to deliver strong growth and profitability.
Tencent’s Impressive Q1 2024 Financial Performance Sets Strong Foundation for Future Growth
Tencent Holdings Limited has announced its unaudited consolidated results for the first quarter of 2024, showcasing robust growth across various sectors despite challenging market conditions.
The company, a leading internet and technology conglomerate in China, has reported substantial improvements in gross profit and net profit, reflecting its strategic focus on high-quality revenue streams and innovative technological advancements.
Strategic Initiatives and Business Review
Tencent’s latest quarterly results highlight the company’s dynamic approach to growth and innovation. The tech giant has focused on enhancing its core business segments while venturing into new revenue streams, leveraging its technological prowess and market leadership.
In the gaming sector, Tencent continues to solidify its dominance both domestically and internationally. Several flagship titles, including “Fight of the Golden Spatula” and “CrossFire Mobile,” achieved record-high gross receipts. Meanwhile, international hits like “PUBG Mobile” and Supercell’s “Brawl Stars” reported impressive gains in user engagement and revenue, underscoring Tencent’s global appeal in the gaming industry.
The company has also made significant strides in digital content. WeChat Video Accounts saw a dramatic increase in user engagement, with total user time spent rising by over 80% year-over-year.
Similarly, Mini Programs, a staple feature of WeChat, reported a 20% increase in user engagement, reflecting Tencent’s ability to continuously innovate and expand its ecosystem.
Tencent’s advertising sector has benefited greatly from its advancements in AI technology. The introduction of generative AI-powered tools has revolutionized its advertising platform, resulting in higher engagement and more effective ad campaigns. This innovation has been particularly impactful for Video Accounts and Mini Programs, driving substantial growth in advertising revenue.
In the FinTech arena, Tencent’s wealth management business has shown robust growth, marked by a surge in user numbers and average fund investments. Tencent Cloud Media Services, a leader in the media and entertainment sectors, has maintained its strong market position, further demonstrating the company’s diverse and resilient business model.
Operating Metrics
- Combined MAU of Weixin and WeChat: 1,359 million, a 3% YoY increase.
- Mobile Device MAU of QQ: 553 million, a 7% YoY decrease.
- Fee-based VAS Registered Subscriptions: 260 million, a 12% YoY increase.
- Video Accounts Total User Time Spent: Increased over 80% YoY.
- Mini Programs Total User Time Spent: Increased over 20% YoY.
Financial Highlights
Tencent’s financial performance in Q1 2024 reflects its strategic focus and operational efficiency:
- Total Revenues: RMB 159.5 billion ($22.5 billion), a 6% year-over-year (YoY) increase.
- Gross Profit: RMB 83.9 billion ($11.8 billion), up 23% YoY.
- Non-IFRS Operating Profit: RMB 58.6 billion ($8.3 billion), a 30% YoY increase.
- Net Profit Attributable to Equity Holders: RMB 50.3 billion ($7.1 billion), up 54% YoY.
Segment Performance
- Value-Added Services (VAS): Revenue slightly decreased by 0.9% YoY to RMB 78.6 billion, with social networks and domestic games experiencing minor declines, while international games revenue grew by 3%.
- Online Advertising: Revenue surged by 26% YoY to RMB 26.5 billion, driven by increased engagement and enhanced AI-powered ad targeting.
- FinTech and Business Services: Revenue increased by 7% YoY to RMB 52.3 billion, with solid growth in cloud services and wealth management.
Tencent’s first-quarter results highlight its resilient business model and strategic adaptability. The company’s revenue growth, though moderate, is accompanied by a substantial increase in gross profit and operating margin, indicating improved operational efficiency.
Comparing these results with previous quarters and industry peers, Tencent stands out for its balanced growth across diverse revenue streams. The company’s focus on high-margin businesses, such as cloud services and digital content, is a strategic move that is paying off well.