DoNews reported on May 14 that Tencent Holdings Limited (HKEX code: 00700 (HKD counter) and 80700 (RMB counter), "Tencent" or "the Company") today announced its unaudited consolidated results for the first quarter ended March 31, 2024.
First Quarter 2024 Results Highlights
Total revenue: 6% year-over-year; Gross profit: 23% year-on-year; Non-IFRS operating profit: up 30% year-on-year; Earnings attributable to equity holders of the Company on a non-IFRS basis: up 54% year-on-year
Total revenue was RMB159.5 billion (US$22.5 billion), an increase of 6% from the first quarter of 2023 ("YoY").
Gross profit was RMB83.9 billion (US$11.8 billion), up 23% year-on-year.
On a non-IFRS basis, the impact of certain one-off and/or non-cash items is excluded to reflect the performance of the core business:
Operating profit* was RMB58.6 billion (US$8.3 billion), up 30% year-on-year; Operating margin* increased to 37% from 30% in the year-ago quarter.
Profit for the period was RMB51.3 billion (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 for the period was RMB50.3 billion (US$7.1 billion), representing a year-on-year increase of 54%.
Basic earnings per share were RMB5.375 and diluted earnings per share were RMB5.263.
In accordance with IFRS:
Operating profit was RMB52.6 billion (US$7.4 billion), up 38% year-on-year; Operating margin increased to 33% from 25% in the year-ago quarter.
Profit for the period was RMB42.7 billion (US$6.0 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 during the period was RMB41.9 billion (US$5.9 billion), representing a year-on-year increase of 62%.
Basic earnings per share were RMB4.479 and diluted earnings per share were RMB4.386.
Total cash was RMB445.2 billion (US$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).
The fair value of our interests in listed investment companies (excluding subsidiaries)[3] was RMB522.4 billion (US$73.6 billion) and the carrying value of our unlisted investments was RMB328.8 billion (US$46.3 billion).
During the first quarter, the Company repurchased approximately 51.04 million shares on the Hong Kong Stock Exchange at a total consideration of approximately HK$14.8 billion.
Business review and outlook for the first quarter of 2024
The total user time spent on Channels increased by more than 80% year-on-year. The Group has strengthened the live streaming ecosystem of Channels by expanding product categories and encouraging more content creators to participate in live streaming.
The total user time spent by Mini Programs increased by more than 20% year-on-year. Among them, the average daily usage of non-game Mini Programs achieved a double-digit percentage increase year-on-year, and the turnover of Mini Games increased by 30% year-on-year.
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-form 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.
The two flagship games in the local market, Honor of Kings and Peace Elite, began to benefit from the new pace of commercialization and the improvement of game content design, and achieved year-on-year growth in revenue in March 2024.
A number of games in the local market, such as "Golden Shovel Battle", "CrossFire Mobile" and "Dark Zone Breakout", hit record highs this season.
Supercell's games have seen user growth and turnover; Brawl Stars has more than twice the number of daily active accounts and four times the turnover in the international market.
The Group upgraded its ad tech platform to help advertisers deliver ads more effectively, and rolled out generative AI-powered creative tools to all advertisers.
Benefiting from the distribution of low-risk money market funds, the number of users and per capita investment scale of the Group's wealth management business have achieved rapid growth.
The Group's Tencent Cloud audio and video solutions have attracted more local and international customers, especially in the media, entertainment and live streaming industries. For the sixth year in a row, the International Data Corporation (IDC) has ranked Tencent Cloud as the leader in the Chinese market for audio and video solutions.
Operational data
Management Discussion and Analysis for the First Quarter of 2024
Revenue from value-added services business decreased by 0.9% year-on-year to RMB78.6 billion in the first quarter of 2024. Total game turnover in the international market increased by 34% year-over-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, gaming revenue in international markets increased 3% year-over-year to RMB13.6 billion (stable year-on-year at constant exchange rates).
The total revenue of games in the domestic market returned to a year-on-year growth of 3%, while the revenue of games in the domestic market decreased by 2% year-on-year to RMB34.5 billion, due to the deferred revenue.
In terms of individual games, the revenue of "Honor of Kings" decreased year-on-year due to the high base during the Spring Festival in 2023, and the revenue of "Peace Elite" decreased year-on-year due to the weaker commercial content in the second half of 2023.
Much of this was offset by revenue contributions from the Group's recently released games, including Valorant and Ark of Destiny, as well as strong growth in Golden Shovel Wars.
Social network revenue decreased by 2% to RMB30.5 billion, reflecting an increase in revenue from paid music and long-form video memberships, live streaming services on Channels and service fees for Mini Game platforms, while revenue from live streaming music and live game streaming services declined.
Revenue from the online advertising business in the first quarter of 2024 increased by 26% year-on-year to RMB26.5 billion, driven by the growth of WeChat Channels, Mini Programs, Official Accounts and Soyisou, benefiting from the increase in user engagement and the Group's continuously upgraded 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.
Revenue from the fintech and corporate services business in the first quarter of 2024 increased by 7% year-on-year to RMB52.3 billion. 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 grew strongly.
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.