Lei Jianping on May 14
Tencent Holdings Limited (HKEX: 00700 (HKD counter) and 80700 (RMB counter)) today announced its unaudited consolidated results for the first quarter ended 31 March 2024. According to the financial report, Tencent's revenue in the first quarter of 2024 will be 159.5 billion yuan, a year-on-year increase of 6%.
According to IFRS: Tencent's operating profit in the first quarter of 2024 was 52.6 billion yuan (US$7.4 billion), up 38% year-on-year; On a non-IFRS basis, Tencent's operating profit was 58.6 billion yuan (US$8.3 billion), up 30% year-on-year.
In the first quarter, Tencent repurchased approximately 51.04 million shares for a total consideration of approximately HK$14.8 billion.
Pony Ma, Chairman and Chief Executive Officer, said, "In the first quarter of 2024, we saw initial results in team adjustments in several of our top games in both domestic and international markets, with total game revenue growth, laying the foundation for a return to game revenue growth in the coming quarters. We continued to cultivate high-quality revenue streams, including WeChat Channels and Soyisou advertising, Mini Game Platform Service Fees and Channels Merchant Technical Service Fees, which drove our gross profit and operating profit growth to outpace revenue growth. ”
"Tencent is committed to returning surplus capital to shareholders, and we are stepping up our buybacks, executing share buybacks of over HK$100 billion in 2024 as planned, increasing dividends, and continuing to invest in AI technology, platform enhancement and production of high-value content," Ma added. ”
Tencent's Q1 revenue was 159.5 billion, an increase of 6% year-on-year
Tencent's revenue in the first quarter of 2024 was 159.5 billion yuan, up 6% from 149.986 billion yuan in the same period last year and up 3% from 155.2 billion yuan in the previous quarter.
Tencent's Q1 game revenue was 48.1 billion, which was basically the same as the same period last year
Tencent's value-added service business revenue in the first quarter of 2024 was 78.6 billion yuan, down 0.9% year-on-year, of which Tencent's game revenue was 48.1 billion yuan, an increase of 18% from 40.9 billion yuan in the previous quarter, and basically the same as the same period last year.
Tencent's total game turnover from the international market in the first quarter of 2024 increased by 34% year-on-year, benefiting from the resurgence in popularity of Supercell games (especially Brawl Stars) and the growth of users and turnover of PUBG MOBILE.
Due to Supercell's long game revenue deferral period, game revenue in the international market increased by 3% year-on-year to RMB13.6 billion (stable year-on-year at constant exchange rates).
In the first quarter of 2024, Tencent's total game turnover in the domestic market returned to a year-on-year growth of 3%, and the game revenue in the domestic market was 34.5 billion yuan, a year-on-year decrease of 2%, due to revenue deferral.
In terms of individual games, "Honor of Kings" decreased year-on-year due to the high base during the Spring Festival in 2023, and "Peace Elite" revenue decreased year-on-year due to weak commercial content in the second half of 2023. Much of this was offset by revenue contributions from recently released games, including Valorant and Ark of Destiny, as well as the growth of Golden Shovel.
Tencent's social network revenue in the first quarter of 2024 was 30.5 billion yuan, down 2% year-on-year, reflecting the growth of paid music and long-form video memberships, video account live streaming services and mini game platform service fee revenue, while music live streaming and game live streaming service revenue declined.
Tencent's Q1 online advertising revenue was 26.5 billion, an increase of 26% year-on-year
Tencent's online advertising revenue in the first quarter of 2024 was RMB26.5 billion, up 26% year-on-year, driven by growth in WeChat Channels, Mini Programs, Official Accounts and Soyisou, benefiting from increased user engagement and our evolving AI-driven advertising technology platform.
Advertising spending increased in all major sectors except the automotive industry, with significant growth in gaming, internet services and consumer goods.
In the first quarter of 2024, Tencent Video released a number of popular self-made TV series and animation series, such as "Flowers", "Ice Hunting" and "Perfect World Season 4", which drove the number of paid members of Long Video to increase by 8% year-on-year to 116 million. Tencent Music strengthened its cooperation with Tencent Video and released the soundtrack of the popular drama series "Walking with the Phoenix". The number of paid music memberships increased 20% year-on-year to 114 million.
Tencent's fintech and enterprise services revenue in the first quarter of 2024 was RMB52.3 billion, up 7% year-on-year. Fintech services revenue grew by a single-digit percentage year-on-year, mainly due to the slowdown in offline consumer spending growth and lower cash withdrawal revenue, while wealth management services revenue increased. The revenue of enterprise service business achieved a year-on-year growth rate of more than 10 points, benefiting from the growth of cloud service revenue and technical service fees of Channels merchants.
Tencent's Q1 cost was 75.6 billion, down 3% year-on-year
Tencent's costs for the first quarter of 2024 were RMB75.6 billion, down 3% year-on-year, mainly due to lower content costs and cloud project deployment costs, partially offset by higher channel and distribution costs.
Tencent's Q1 gross profit was 83.9 billion yuan, with a gross profit margin of 53%
Tencent's gross profit for the first quarter of 2024 was 83.9 billion yuan, up 8% quarter-on-quarter and 23% year-on-year, mainly due to the increased contribution of game revenue from the domestic market with high gross margins. Gross margin increased to 53% from 50% in Q4 2023.
Tencent's sales and marketing expenses for the first quarter of 2024 were RMB7.5 billion, up 7% year-on-year, mainly due to increased promotion and advertising efforts to support new content launches. In terms of revenue percentage, sales and marketing expenses remained broadly stable at 5% compared to the same period in 2023.
Tencent's general and administrative expenses for the first quarter of 2024 were RMB24.8 billion, up 1% year-on-year; Interest income was RMB4.2 billion, up 43% year-on-year, mainly due to the increase in cash reserves and interest yield. Finance costs increased 7% year-on-year to $2.8 billion, mainly due to higher interest expense.
Tencent's Q1 operating profit was 52.6 billion yuan, with an operating profit margin of 33%
Tencent's operating profit in the first quarter of 2024 was 52.6 billion yuan (US$7.4 billion) on a IFRS basis, up 38% year-on-year. Operating margin increased to 33% from 25% in the year-ago quarter.
On a non-IFRS basis, Tencent's operating profit for the first quarter of 2024 was 58.6 billion yuan (US$8.3 billion), up 30% year-on-year. Operating margin increased to 37% from 30% in the year-ago quarter.
Tencent's profit during the Q1 period was 42.7 billion, an increase of 62% year-on-year
Under IFRS, Tencent's profit for the first quarter of 2024 was 42.7 billion yuan (US$6 billion), up 62% year-on-year. Net profit margin increased to 27% from 18% in the same period last year. Profit attributable to equity holders of the Company for the period was RMB41.9 billion (US$5.9 billion), up 62% year-on-year.
On a non-IFRS basis, Tencent's profit for the first quarter of 2024 was 51.3 billion yuan (US$7.2 billion), up 54% year-on-year. Net profit margin increased to 32% from 22% in the same period last year. Profit attributable to equity holders of the Company during the period was RMB50.27 billion (US$7.1 billion), up 54% year-on-year.
As of March 31, 2024, Tencent held total cash of 445.2 billion yuan ($62.8 billion). Free cash flow was RMB51.9 billion (US$7.3 billion), up 0.4% year-on-year. Net cash was RMB92.5 billion (US$13.0 billion).
As of March 31, 2024, the fair value of Tencent's interests in listed investment companies (excluding subsidiaries) was RMB522.4 billion (US$73.6 billion) and the carrying value of Tencent's unlisted investments was RMB328.8 billion (US$46.3 billion).
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