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.

Financial Highlights: A Glimpse into Growth

Tencent’s fiscal narrative for 2023 is one of notable achievements, underscored by a 10% year-over-year growth in total revenues, reaching an impressive RMB609.0 billion (USD86.0 billion).

This expansion is further emphasized by a 23% increase in gross profit, showcasing the company’s enhanced profitability in a fiercely competitive digital marketplace. Furthermore, the non-IFRS profit attributable to equity holders witnessed a substantial 36% increase from the previous year, indicating strong core earnings performance .

The final quarter of 2023 continued this trend, with revenues escalating by 7% year-over-year to RMB155.2 billion (USD21.9 billion), and gross profit and non-IFRS profit attributable to equity holders of the company experiencing significant increases of 25% and 44% respectively.

In 2023, Tencent’s revenue breakdown highlighted the diversity of its business portfolio, with significant contributions from various segments.

The FinTech and Business Services sector emerged as the largest revenue source, representing 31% of the total revenue and amounting to RMB189.0 billion. This segment’s leading position underscores Tencent’s stronghold in the FinTech industry and its successful foray into comprehensive business services.

Following the FinTech and Business Services sector, the Online Games segment was the second-largest contributor to Tencent’s revenue, accounting for 29% and totaling RMB177.0 billion. This demonstrates the continued vitality of online gaming within Tencent’s business model.

The fastest-growing segment in 2023 was Tencent’s Cloud Computing business, which experienced a remarkable 30% year-over-year revenue increase, reaching RMB109.0 billion. This growth outpaced the other segments, notably the Social Networks segment, and underscored Tencent’s effective strategy and execution in the competitive cloud services market.

Overall, Tencent’s 2023 financial performance showcased the strength of its FinTech and Business Services as the leading revenue generator, with the Cloud Computing segment leading in growth, reflecting the company’s adaptability and strategic positioning in China’s evolving digital landscape.

Strategic Endeavors and Innovation

2023 saw Tencent advance through strategic milestones:

Enhancing User Experience: Tencent’s WeChat Video Accounts doubled in user time spent, thanks to improved algorithms and creator support. Additionally, the Mini Games platform’s gross receipts soared by over 50%, reinforcing Tencent’s leadership in China’s casual gaming sphere .

Pioneering in AI: The launch of Tencent Hunyuan, an AI model of a trillion-parameter scale, marks a leap in Tencent’s technological prowess, solidifying its commitment to spearheading digital innovation .

Commitment to Society and Environment: Tencent’s digital philanthropy platform set a new record with RMB3.8 billion raised during the 99 Giving Day campaign, while its New Cornerstone Investigator Program supported 104 scientists, promoting scientific research .

As of the end of 2023, Tencent Music Entertainment Group (TME) reported a notable increase in its music subscribers. The total number of online music paying subscribers reached 90 million, marking an 18% year-over-year growth.

Market Engagement and User Dynamics

Tencent’s operational statistics reveal evolving trends in user engagement:

• The MAUs of Weixin and WeChat stood at 1,343 million by December 2023, a 2% increase year-over-year, highlighting the platforms’ expanding influence in social media .
• Despite a marginal decline in VAS revenues, Tencent’s strategic emphasis on content diversity and innovative services positions it for sustained growth amidst market challenges .

Tencent’s 2023 saga is one of strategic brilliance and financial vigor, positioning it at the forefront of China’s digital transformation. With its commitment to innovation, user-centricity, and societal impact, Tencent is poised to continue shaping the contours of China’s digital future.

Mobile reach in China: Tencent, Alibaba, Baidu, ByteDance, vs. Kuaishou

CIW Dossier China Digital Insights (DCDI) is compiled to provide statistical information about China digital insights on the internet economy, digital trends, online users, mobile apps, and e-commerce. Click here to download.

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CIW Dossier “China E-Commerce” is compiled to provide statistical information about China’s e-commerce market including online retail, cross-border e-commerce, e-commerce users, and mobile shopping apps. If you need an overall insight into China’s e-commerce market, this is what you should read.

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China’s mobile apps market, including mobile internet overview, mobile apps market, top mobile apps, select mobile apps, and mini programs.

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Statistical information about China’s outbound travel market.

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CIW Dossier China Online Travel Market is compiled to provide statistical information about China’s online travel market including market overview, online air ticket booking, online accommodation booking, online vacation booking, outbound travel, and high-end travel.

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China’s overall media advertising market growth and the top advertisers in China in 2018.

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Luckin

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Statistical overview of China’s female shoppers purchasing overseas consumers goods.

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China Advertising Market

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Statistical information about China’s advertising market on traditional advertising market, online advertising market, invalid traffic of digital ads, and mobile e-commerce ads. If you need an overall insight on China’s advertising market, this is what you should read.

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CIW Dossier China Online Videos is compiled to provide statistical information about China’s online video market including online video apps, mobile video users, paid video users, short video apps, and live streaming apps. If you need an overall insight on China’s online video market, this is what you should read.

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A recent unveiling at the “2024 WeChat Open Class PRO” has shone a light on its video account e-commerce business, demonstrating a nearly threefold increase in Gross Merchandise Value (GMV) in 2023. This growth is complemented by a more than 244% rise in order volume and an approximately 300% increase in product offerings.

Industry insiders estimate that live commerce via WeChat’s video accounts generated a GMV between 40 to 50 billion yuan in 2022. Following the reported threefold growth, the 2023 figures are projected to hit between 120 and 150 billion yuan.

Li Chengdong, an e-commerce analyst and founder of Dolphin Think Tank, acknowledges the impressive growth rates of video account e-commerce in 2023. However, he notes the sector’s scale remains modest compared to giants like Alibaba, JD.com, and Pinduoduo, whose GMVs have breached the trillion yuan mark, alongside emerging live commerce platforms like Douyin and Kuaishou.

A significant development is Tencent’s integration of video account e-commerce with its WeChat advertising system, allowing for video account livestreams to be promoted within Moments. This new feature opens up fresh avenues for traffic acquisition, potentially boosting conversion rates by shortening the consumer journey from ad click to purchase.

The integration extends beyond advertising, as various e-commerce formats within the WeChat ecosystem, such as social commerce and mini-program commerce, are linking up with video account e-commerce. This strategic move positions video accounts as a foundational infrastructure within WeChat e-commerce, facilitating a seamless flow of both public and private domain traffic within the social network.

WeChat’s new social e-commerce platform integrates Shopping Accounts

Launched in 2020 as a counter to Douyin and Kuaishou, WeChat’s video accounts rapidly developed a comprehensive suite of short video functionalities. By integrating with other WeChat services like Official Accounts, Search, and Mini Programs, video accounts have become a crucial part of the ecosystem.

The platform’s commercial exploration, especially in live commerce, started in earnest around the first half of 2021. According to Yu Haijun, founder and general manager of Guangzhou Zhi Ling Network Science and Technology Co., Ltd., early adopters included notable brands drawn by the platform’s promise of a refined operational framework focusing on user experience.

Tencent’s Q3 2023 earnings report highlighted a more than 50% year-on-year increase in total video account views, with WeChat’s video account content ecosystem and creator base continuing to expand. Partnering platforms like Weimob reported a 47.6% increase in video account merchants and a 50.5% increase in their GMV in the first half of 2023, further underscoring the growing importance of video accounts in the e-commerce landscape.

Despite these advances, some insiders express dissatisfaction with the growth rate, pointing to a relatively low ad load rate in video content compared to other platforms. This limitation suggests a need for increased user engagement and refined recommendation algorithms to boost traffic and conversion rates.

The integration of WeChat Moments ads with video account commerce represents a deepening of video accounts’ role within Tencent’s ecosystem, offering merchants enhanced promotional opportunities and streamlined customer purchase pathways. However, achieving a significant uplift in conversion rates through this integration will require meticulous data alignment and robust cross-departmental collaboration.

As Tencent doubles down on its investment in video account and live commerce, the future of WeChat e-commerce hinges on the harmonious fusion of advertising and transactional capabilities, underscoring the platform’s commitment to enriching its commercial ecosystem.

WeChat expanding e-commerce reach with mini program integration on JD, Xiaohongshu

In 2022, the total views of the original content on WeChat Channel (video account) increased by 350% year on year, and the scale of live broadcast increased by 300%, according to WeChat’s data released on 10 January 2023.

The commercial potential of live video broadcasting continues to be released, and the corresponding e-commerce sales increased by more than eight times year on year.

In 2022, the number of daily active creators and the average number of videos uploaded by the video account increased by more than 100% year on year, the number of creators with at least 10,000 fans increased by 308%.

The number of video account earners increased by 101%, and the total income of live video anchors increased by 447%.

Live video GMV increased by more than 8 times year on year in 2022, and the average selling price exceeded 200 yuan. Among them, the top three categories of consumption are covered by clothing, food, and beauty.

The monthly active users of WeChat Search have increased to 800 million, and the total search volume increased by 54%. Mini Programs are widely used in scenic spots, hotels, airports, and other fields, and the number of WeChat Mini Programs has increased by 183%.

WeChat Search contributed to 27% of Official Account follower growth and 20% of Mini Program’s new daily active users. Its contribution to WeChat Channel follower growth has increased by 120%.

WeChat MAU

Over 330 million of WeChat’s (known as Weixin in China) 1.2883 billion monthly active users use video calling. 780 million users are on the social networking section WeChat Moments and 120 million publish updates. The content network WeChat Official Account has 360 million users.

WeChat has evolved from an instant messaging app to a service meeting the digital needs of over 1.27 billion MAU in Q4 2021. Each day, more than 120 million active users post in social networking Moments, 360 million users read Official Accounts articles, and 500 million users access Mini Programs (Q1 2022) daily.

For Q4 2021, WeChat daily active advertisers expanded by over 30% year-on-year. Over one-third of Moments’ advertising revenue was generated from advertisements using Mini Programs as landing pages and advertisements connecting users to customer service representatives via WeCom.

WeChat Video Accounts’ time spent per user and total video views more than doubled year-on-year as Tencent enriched content diversity and enhanced the product experience.

WeChat Mini Programs

The daily active users on WeChat Mini Programs reached 450 million according to WeChat official data in January 2022. The transaction volume of catering, tourism, and retail increased by 100% year-on-year. Mini Program DAU reached 500 million (Q1 2022).

The number of Mini Program developers has exceeded 3 million.

In 2020, the daily active users of WeChat Mini Programs exceeded 400 million, according to its official data shared at its annual event WeChat Public Lecture.

The number of mini programs used per user increased by 25%, the average transaction value per user grew by 67%, the number of programs with transactions increased by 68%, and the annual transaction volume of more than doubled in 2020.

In 2020, more than 100 million people purchased in shopping malls and department stores on WeChat Mini Programs. With the help of mini program pre-sale + offline self pick-up mode, more than 300 million users purchased fresh fruits and vegetables.

WeChat Mini Programs overview

WeChat Games

In 2020, the commercial realization of WeChat mini games increased by 20%.

Last year, the proportion of male and female users in the distribution of mini games accounted for 50% respectively. 40% of the users in the first and second-tier cities, and 65% of the users aged 30 and above.

Compared with 2019, the per capita game duration of mini games increased by 50%, and the average number of games played increased by 20% in 2020.

China game live streaming revenues to double by 2021

WeChat Search

The number of monthly active users of WeChat search has reached 700 million according to WeChat official data released in January 2022.

WeChat search staff said that in the mobile Internet era, search should not be limited by the search box, but need to be accessible by the touch. Users can search while chatting.

WeChat search will screen out the high-quality content of WeChat and produce a more accurate connection with users.

In the future, it can expand the search scope to the whole internet-based the needs of users. The search results are currently mostly provided by WeChat Official Account and Sogou.

Top search trends in China

WeChat Pay

In January 2022, WeChat shared the latest progress on WeChat Pay:

• 23 thousand monthly service providers
• Over 10 million merchants
• More than 1800 banks and Payment institutions
• 23 thousand monthly merchants
• In the next three years, WeChat Pay will continue to carry out digital upgrading of WeStore, with a planned investment of more than 10 billion yuan

In 2020, Zhifufen, a credit score on WeChat Pay, saw more than 240 million users. It boosted the conversion rate of e-commerce orders by 14% and the repurchase rate of retail merchants by 73%.

In 2021, WeChat mini stores and Zhuanzhuan (a secondhand-goods marketplace) will integrate Zhifufen.

In the e-commerce industry, WeChat Pay’s Zhifufen enables post-payment after receiving the delivery and faster refund. Users can quickly receive a refund after submitting return logistics information.

As of January 2022, more than 50% of users have activated Zhifufen, whose solutions cover more than 3000 industries. WeChat Pay unit cooperates with the e-commerce industry on “buy first and pay later”, which has been used by more than 100 million users.

Zhifufen also announced the launch of audio and video members’ services such as “watch first and pay later”, which helped solve the problems that bothered audio/music and video users to deduct fees in advance and forget to terminate their contracts.

China’s online payment users penetration reaching 86%

Enterprise version of WeChat: WeCom

In 2020, there were 80,000 enterprise WeChat partners, with a year-on-year growth of 400%. 

Acquire, convert, and retain customers through WeChat Ads + WeChat Work (WeCom)

According to WeChat, search ads will support six promotion goals, including WeChat Official Account promotion, sales lead collection, products promotion, branding events promotion, app promotion, and WeChat Mini Games promotion.

It supports three landing page types, namely, native promotion page, WeChat Mini Program, and custom link. And, based on the search ability of WeChat, WeChat search advertising can support the sale of brand keywords, keywords words, generic keywords, and generic keywords.

At present, Tencent’s mobile search advertising scenarios mainly include WeChat Search and QQ Browser search. In these scenarios, advertisers can do brand and performance marketing.

Since the launch of search feature on WeChat in 2017, it has been at the top of the main interface.

However, after five years of iteration, it has now become a “global search” that includes WeChat Moments, Official Account, and Mini Programs from the early days when it could only search local chat records and contacts.

At the same time, the search scope has also expanded to all content and services related to search queries in WeChat.

WeChat Mini Programs Insights

UnionPay Flash supports the top-up payment of QCoin, QQ Music, and Tencent Videos. WeChat Mini Programs will gradually support Flash Pay, being in beta test since 22 September.

On October 2nd, Alipay announced the progress in promoting interconnection with China UnionPay. it has opened online payment scenes to the UnionPay Flash app, covering the first batch of 85% Taobao merchants.

For offline, it has also implemented QR code scanning and mutual recognition with UnionPay Flash payment in multiple cities and plans to cover all cities in China by March 2022.

UnionPay, also known as China UnionPay or by its abbreviation, CUP or UPI internationally, is a Chinese financial services corporation headquartered in Shanghai, China. It provides bank card services and a major card scheme in mainland China.

Founded on 26 March 2002, China UnionPay is an association for China’s banking card industry, operating under the approval of the People’s Bank of China (PBOC, central bank of China).

It is also an electronic funds transfer at point of sale (EFTPOS) network, and the only interbank network in China that links all the automatic teller machine (ATMs) of all banks throughout the country.

In 2015, UnionPay overtook Visa and Mastercard in a total amount of value of payment transactions made by customers and became the largest card payment processing organization (debit and credit cards combined) in the world after the two.

China’s 3rd-party payment market 2021-2025e: mobile vs. internet

The launch of Mini-Game “Jump” (Tiaoyitiao)  made WeChat Mini-Programs (or WeChat Apps) an instant hit in early 2018. On average, 230 million users used WeChat Mini-Programs daily, 60 million more than 2017. It is estimated to exceed 350 million by the end of 2019.

Read the latest insights on WeChat apps and mini programs here.

WeChat’s Mini-Programs has covered over more than 200 industries and provided over 100 billion times of requests. The sector of public services has been available among 362 prefecture-level cities and created over 500 billion commercial value. The total transactions were 600% more than a year ago.

At the end of 2018, over 2.3 million WeChat Mini-Programs has gone online since its launch in January 2017, which increased by nearly 300% from early 580 thousand.

In terms of the total number of applications, WeChat took less than two years to surpass Apple’s App Store, which held 2.1 million apps with ten years. Aldwx.com’s Mini-Programs data statistics platform forecasts the total mini-apps on WeChat will surpass 5 million by the end of 2019.

It is becoming more and more difficult for a mini-programs to get enlisted in the top 100 ranking on WeChat.

Tongcheng-eLong and Pinduoduo took the first two spots in December 2018. 34% of the top 100 mini-programs turned out to be newcomers. On average, 30% of the top 100 would be replaced by new ones every month in 2018.

All WeChat mini-programs attracted more than 8 billion yuan (US$1.19 billion) from 110 funding rounds led by 120 investment agencies. The figure was eight times higher than it was in 2017.

Offline retail and online shopping mini-programs were the two most popular areas, which together accounted for nearly 70% of total funding.

9 Brands see great results from WeChat Mini Program live streaming campaigns

The advertising market of WeChat Mini-Programs is projected to grow from 5 billion yuan in 2018 to 20 billion yuan by 2019. The retail transactions made with WeChat ecosystem is to exceed 3 trillion yuan by 2019.

Following the launch of Nearby Mini-Programs feature, some leading retailers have successfully connected online marketing scenarios with offline. For example, IKEA WeChat Mini-Program saw 2.26 million visits in 24 hours on the day it went online.

On average, each user accesses WeChat Mini-Programs 4.25 times a day and spends 8.7 minutes on it. WeChat Mini-Programs has seen 600 million users as of the end of 2018. 72% of WeChat users have used WeChat Mini-Programs; 34% of whom used it frequently.

Business guide to WeChat Mini Program live streaming

WeChat Apps Usage Scenarios

53% of users use WeChat Mini-Programs mainly for temporary usage, 40% didn’t want to download mobile apps, 33% are automatically redirected to it after scanning QR code or clicking, and 31% just want to give a try.

User profile & usage preference

Among WeChat Mini-Programs users, 58% were men, 70% under 40 years old, 76% college educated or above, and 52% lived in tier-3 or lower tier cities.

42% of users played Mini-Games on WeChat, 39% used lifestyle services mini-programs, and 28% viewed news.

Specifically, those aged 17 years or younger mainly used WeChat Mini-Games. Users between 18 and 49 years old like to use Mini-Games and lifestyle service mini-programs. And, older users over 50 years old prefer news mini-programs, such as People’s Daily, and lifestyle service mini-programs.

Out of the 69 entry paths to access WeChat Mini-Programs, chatting, sharing, search, QR code, and shortcuts are most frequently used.

44% of users chose shortcuts from My Mini-Program in the main chat interface, 40% accessed from friends’ sharing (especially preferred by older users), and 35% entered through Official Account redirection.

Usage scenarios

53% of users use WeChat Mini-Programs mainly for temporary usage, 40% didn’t want to download mobile apps, 33% are automatically redirected to it after scanning QR code or clicking, and 31% just want to give a try.

Mini Program platforms in China: WeChat vs. Alibaba vs. Baidu

In the eyes of users, what makes WeChat Mini-Programs attractive is its ease to use (60%), no need to download apps (57%), no RAM usage (31%), and convenience to share with friends (28%).

71% of users have shared Mini-Programs to others because they deem it valuable (57%), they were asked by friends (22%), or attracted by rewards (15%).

56% shared practical tools for office collaboration, 48% shared interesting contents to create topics and enhance interactions, and 32% shared Mini-Games to show gaming advancement, earn red envelops, or invite someone to compete against themselves, etc.

30% of WeChat users have used Mini-Programs to shop. 43% of them are willing to download apps, 40% found the product offer was cheaper, and 34% were redirected from posts on WeChat Moments.

However, some program designs affect users’ experience while shopping, such as profit-provoking shares and useless vouchers.

Users’ impressions on WeChat Mini-Programs

For those not using WeChat Mini-Programs, 30% found it not easy to find the one they want as many users mainly get access from friends’ sharing. 25% found the interface choppy especially when they played Mini-Games. And, 23% are worried about a specific function because it seems only useful for temporary usage.

Overall, users hold positive impressions toward WeChat Mini-Programs. 44% of users thought Mini-Programs could replace apps for occasional usage, 36% believed it could help save the smartphone storage, and 32% only viewed it as a tool.

40% of users expect WeChat Mini-Programs to improve the interface switching fluency between chat and mini-programs. 37% expect more useful mini-programs. And, 37% wish it more active in interactions.

One-third of users are willing to download the app after they have a try with a mini-programs. However, most of the users are primarily provoked by profits to download the app.

WeChat’s new social e-commerce platform integrates Shopping Accounts