This year, Tencent's Q1 performance has increased steadily.
On May 14, Tencent announced its Q1 2024 financial report. According to the financial report, Tencent's total revenue in Q1 was 159.5 billion yuan, a year-on-year increase of 6% compared with Q1 2023. Profit attributable to shareholders of the company was 41.9 billion yuan, an increase of 62% year-on-year.
The significant increase in profit attributable to Tencent shareholders in Q1 this year was, on the one hand, the growth of revenue from its various business lines; On the other hand, it is also related to the "cost reduction and efficiency increase" measures implemented by it.
In the past two years, in order to cope with the problem of net profit growth, game companies have usually adopted the level of "reducing costs and increasing efficiency" by cutting marketing expenses, slowing down R&D investment, or laying off non-core peripheral businesses and employees, focusing on the R&D and operation of high-turnover games or expanding new tracks.
In this regard, Tencent is no exception, and Tencent adjusted its expenses in Q1 this year. According to the financial report, the company's employee benefit expenses, including share-based remuneration expenses, were about 4.694 billion yuan, a year-on-year decrease of 19.67%. Tencent currently has 104787 employees, a decrease of 1,434 compared to the same period last year. The total remuneration cost was 26 billion yuan, a year-on-year decrease of 4.76%. Based on this calculation, the average monthly remuneration of Tencent employees in the first quarter of 2024 is 82,707 yuan, compared with 85,670 yuan in the same period last year, and the average monthly remuneration per capita has decreased by nearly 3,000.
The total revenue of games is 48.1 billion yuan, and the turnover of mini games has increased by 30% year-on-year, and 100 billion yuan of repurchase will be implemented
Focusing on the game business, Tencent's total game revenue in the quarter was 48.1 billion yuan, a slight decrease from the same period last year in Q1 2022. In terms of the proportion of revenue, the revenue of Tencent's game business in Q1 is still maintained at about 30%.
From the perspective of regional markets, Tencent's game revenue in the domestic market in the quarter was 34.5 billion yuan, a year-on-year decrease of 2%; The game revenue in the international market was 13.6 billion yuan, a year-on-year increase of 3%.
Judging from the financial report, Tencent's game business at the beginning of the year was basically good, with the total game turnover in the domestic market recovering year-on-year, with an increase of 3%, and the total game turnover in the international market increasing by 34% year-on-year. In addition, Tencent disclosed in its financial report that the turnover of mini games increased by 30% year-on-year.
In the financial report, Tencent mentioned that "in Q1 2024, we will achieve growth in both domestic and international game revenue, laying the foundation for the recovery of game revenue growth in the next few 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. ”
At the same time, Tencent said that in 2024, the company will increase its repurchase efforts, and will execute more than 100 billion Hong Kong dollars of share repurchase this year as planned, increase dividends, and continue to invest in AI technology, improve the platform and produce high-value content.
The total turnover of local games returned to growth, and Valorant and Golden Shovel performed strongly
Judging from the disclosure of the financial report, the performance of the local market during the Q1 period of Tencent Games was relatively stable. This was mainly due to the solid performance of "Honor of Kings" and "Peace Elite", as well as the strong growth of revenue from "Valorant", "Ark of Destiny" and "Battle of the Golden Shovel".
In Q1 last year, the revenue of many products such as "Honor of Kings" and "Crossfire" grew strongly, making Tencent's domestic market revenue (35.1 billion yuan) hit a new quarterly high since Q3 2021 when it first announced its domestic market revenue. Therefore, there is a high base impact on Tencent's local revenue in Q1 this year, but boosted by seasonal factors and the outstanding performance of a number of new games, Tencent's game domestic market turnover still achieved a year-on-year increase of 3%.
During the financial reporting period, the turnover of "Glory of Kings" and "Peace Elite" in March 2024 achieved a year-on-year increase; Local games such as "Battle of the Golden Shovel", "CrossFire Mobile Game" and "Dark Zone Breakout" hit a record high. According to Sensor tower data, the revenue of "Golden Shovel Battle" in the first quarter of this year increased by 96% year-on-year, achieving double-digit growth for four consecutive quarters.
In addition to "The Battle of the Golden Shovel", Tencent Games' other new games maintained a strong performance in the first quarter. Sensor tower estimates that Dark Zone Breakout's revenue surged 90% month-over-month in February, the highest revenue recorded since the game's open beta in July 2022. The performance of the two terminal games "Ark of Destiny" and "Valorant" is also remarkable, and the hot list of Internet café games released by Shunwang Technology shows that "Valorant" has ranked in the top five in the hot list for 10 consecutive months, second only to "League of Legends" and "Crossfire" in Tencent games.
The international market turnover grew by 34%, Supercell rebounded strongly, and the turnover of Brawl Stars doubled year-on-year
The domestic game market is developing steadily, and the international game business is performing well. In Q1 this year, Tencent's game revenue in the international market was 13.6 billion yuan, a year-on-year increase of 3%. In terms of turnover, the international market turnover increased by 34% year-on-year. This was mainly due to the strong recovery of Supercell and the growth contribution of PUBG MOBILE.
In Q1 of this year, a number of Supercell's evergreen products have achieved recovery since the second half of last year, and the number of daily active users and turnover of the game have continued to rise, especially "Brawl Stars", the number of daily active users of the game in the international market has exceeded twice that of the same period last year, and the turnover has exceeded four times that of the same period last year.
In addition, Supercell's Clash Royale and Clash of Clans have also made a significant comeback. According to Sensor Tower, revenue from the two companies increased by 104% and 20% year-on-year respectively in the first quarter of this year, and together with Brawl Stars, Supercell's Q1 revenue increased by 82% year-on-year. PUBG MOBILE also continued last year's upward momentum, with revenue in the first quarter increasing by more than 30% year-on-year.
It should be noted that in the international market, Supercel's new game "Squad busters" is expected to launch globally on May 29, which has exceeded 20 million pre-orders as of May 2, and has been soft-launched in Canada, Denmark and Norway. The launch of this game may bring a certain increase in Tencent's international market revenue.
A number of new games are ready to launch, DNF mobile games are set for May, and "Dawn of the Stars" may be launched in Q2
At present, Tencent still has a number of new products in stock, the most important of which is Dungeons & Warriors: Origins ("DNF Mobile Game"), which is set for May 21. Dungeons & Warriors: Origins is a new game based on the classic DNF IP, which was first announced in 2015, conducted its first closed beta in 2016, and has more than 60 million pre-orders as of August 2020.
At present, the number of reservations for "DNF Mobile Game" on the TapTap platform has exceeded 1.8 million, and the number of reservations on the Haoyou Kuaibang platform has exceeded 1.2 million. Some investment institutions expect that the game's revenue in the first year is expected to reach 5.8 billion yuan, equivalent to 4% of the revenue of Tencent Games' local market, and is expected to become another "key popular game" of Tencent.
In addition to "DNF Mobile Games", Tencent's reserve games also include "Dawn of the Stars", "King of Chess", "Operation Delta", "Counter War: Future", "The Division: Dawn", "World of Taris", "Need for Speed: Gathering", "Pokémon Gathering", "Calabichu", etc., of which "Dawn of the Stars" may be launched in Q2 this year, and "Operation Delta" is also in the pre-order stage.
In addition, although many games such as "Glory of Kings World", "Under the Inhuman", "Codename: Dawn" and "Rock Kingdom Mobile Game" have not obtained version numbers, they are all high-cost and large-scale production products, and the market expectations are quite high. Among them, Tencent's number one IP "Glory of Kings" derivative new game "Glory of Kings World" is said to be supported by Tencent's massive R&D resources. In the future, the launch of these new games will bring new growth momentum to Tencent's game revenue.
Judging from Tencent's Q1 financial report and subsequent new product reserves, we believe that Tencent's game revenue indicators will rise steadily this year. On the one hand, its Q1 new tour revenue has not yet been reflected in the financial report, and there is a certain room for value-added; On the other hand, it has more than 20 new products in reserve, and most of these new products will be launched or new in the second half of this year.