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.