HONG KONG, May 14, 2024 /PRNewswire/ — Tencent Holdings Limited (HKEX: 00700 (HKD Counter) and 80700 (RMB Counter), "Tencent" or the "Company"), a world-leading Internet and technology company in China, today announced the unaudited consolidated results for the first quarter ("1Q2024") ended Mar 31, 2024.
Mr. Ma Huateng, Chairman and CEO of Tencent, said, "During the first quarter of 2024, several of our leading games in China and internationally started to benefit from team reorganisations we put in place, resulting in an increase in games gross receipts and creating a foundation for our games revenue to resume growth in future quarters. We continue to cultivate high quality revenue streams including advertising in Video Accounts and Weixin Search, Mini Games platform service fees, and eCommerce technology service fees, contributing to our gross and operating profit growth outpacing our revenue growth. Executing on our commitment to return excess capital to shareholders, we stepped up our buyback plan, and are on track to repurchase over HKD100 billion of our shares in 2024, as well as paying an increased dividend, while investing in AI technology, platform enhancements and high production value content."
1Q2024 Financial Highlights
Revenues: +6% YoY; gross profit: +23% YoY; non-IFRS[1] operating profit*: +30% YoY; non-IFRS profit attributable to equity holders of the Company: +54% YoY
Total revenues were RMB159.5 billion (USD22.5 billion[2]), up 6% over the first quarter of 2023 ("YoY"). Gross profit was RMB83.9 billion (USD11.8 billion), up 23% YoY. On a non-IFRS basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items: Operating profit* was RMB58.6 billion (USD8.3 billion), up 30% YoY. Operating margin* increased to 37% from 30% last year. Profit for the period was RMB51.3 billion (USD7.2 billion), up 54% YoY. Net margin increased to 32% from 22% last year. Profit attributable to equity holders of the Company for the quarter was RMB50.3 billion (USD7.1 billion), up 54% YoY. Basic earnings per share were RMB5.375. Diluted earnings per share were RMB5.263. On an IFRS basis: Operating profit* was RMB52.6 billion (USD7.4 billion), up 38% YoY. Operating margin* increased to 33% from 25% last year. Profit for the period was RMB42.7 billion (USD6.0 billion), up 62% YoY. Net margin increased to 27% from 18% last year. Profit attributable to equity holders of the Company for the quarter was RMB41.9 billion (USD5.9 billion), up 62% YoY. Basic earnings per share were RMB4.479. Diluted earnings per share were RMB4.386. Total cash was RMB445.2 billion (USD62.8 billion) and free cash flow was RMB51.9 billion (USD7.3 billion), +0.4% YoY. Net cash position totalled RMB92.5 billion (USD13.0 billion). Fair value of our shareholdings[3] in listed investee companies (excluding subsidiaries) totalled RMB522.4 billion (USD73.6 billion) and the carrying book value of our unlisted investee companies was RMB328.8 billion (USD46.3 billion). During the first quarter, the Company repurchased approximately 51.0 million shares on the Hong Kong Stock Exchange for a consideration of approximately HKD14.8 billion.
1Q24 Business Review and Outlook
Video Accounts’ total user time spent increased over 80% year-on-year. We strengthened Video Accounts’ live streaming eCommerce ecosystem by diversifying merchandise categories and enabling more content creators to monetise through eCommerce activities. Mini Programs’ total user time spent increased over 20% year-on-year. Daily activations for non-game Mini Programs grew at a double-digit rate year-on-year while gross receipts for Mini Games grew 30% year-on-year. Tencent Video released several popular self-commissioned drama series and animated series, such as Blossoms Shanghai, The Hunter and Perfect World Season 4, driving an 8% year-on-year increase in our long-form video subscriptions to 116 million[4]. Tencent Music strengthened collaboration with Tencent Video and released an original soundtrack of a popular drama series, The Legend of Shen Li. Music subscriptions increased 20% year-on-year to 114 million[5]. Our two flagship domestic games, Honour of Kings and Peacekeeper Elite, registered year-on-year growth in gross receipts in March 2024, as our new monetisation cadence and enhanced content design started to yield results. Several domestic games attained record high gross receipts during the quarter, including Fight of the Golden Spatula, CrossFire Mobile and Arena Breakout. Supercell’s games achieved increases in usage and gross receipts; Brawl Stars DAU more than doubled year-on-year and gross receipts more than quadrupled year-on-year internationally. We upgraded our advertising technology platform to help advertisers establish advertising campaigns more effectively, and made generative AI-powered advertising creation tools available to all advertisers. We achieved rapid increases in number of users and average fund investments per user for our wealth management business, which is primarily engaged in distribution of low-risk money market funds. Domestic and international clients, especially from the media, entertainment and live streaming industries, increasingly adopted our integrated audio and video cloud solution, Tencent Cloud Media Services. IDC recognised Tencent Cloud Media Services as the market leader in China for the sixth consecutive year[6].
[1] Non-IFRS adjustments excludes share-based compensation, M&A related impact such as net (gains)/losses from investee companies, amortisation of intangible assets, impairment provisions/(reversals), SSV & CPP, income tax effects and others
[2] Figures stated in USD are based on USD1 to RMB7.0950
[3] Including those held via special purpose vehicles, on an attributable basis
[4] The average daily number of subscriptions for 1Q2024
[5] The average number of subscriptions as of the last day of each month during 1Q2024
[6] Measured by Media Services revenue per IDC, 2018-2023
Operating Metrics
As at
31 March2024
As at
31 March
2023
Year-
on-year
change
As at
31 December
2023
Quarter-on-quarter
change
(in millions, unless specified)
Combined MAU of
Weixin and WeChat
1,359
1,319
3 %
1,343
1 %
Mobile device MAU of QQ
553
597
-7 %
554
-0.2 %
Fee-based VAS registered
subscriptions#
260
233
12 %
244
7 %
# Adjusted as the average daily number of subscriptions during the quarter
1Q24 Management Discussion and Analysis
Revenues from VAS decreased by 0.9% year-on-year to RMB78.6 billion for the first quarter of 2024. International Games gross receipts rose 34% year-on-year, due to resurgent popularity for Supercell’s games, in particular Brawl Stars, and user and gross receipts growth from PUBG Mobile. International Games revenues were up a lesser 3% year-on-year to RMB13.6 billion (stable year-on-year on a constant currency basis) due to the lengthy revenue deferral cycle for Supercell’s games. Domestic Games gross receipts returned to year-on-year growth, increasing by 3%, but Domestic Games revenues declined by 2% year-on-year to RMB34.5 billion due to revenue deferral. By title, revenue from Honour of Kings declined year-on-year against a high base from the Chinese New Year period last year, and revenue from Peacekeeper Elite declined year-on-year due to weak monetisable content in the second half of 2023. These declines were largely offset by contributions from recently launched games, including VALORANT and Lost Ark, alongside robust growth from Fight of the Golden Spatula. Social Networks revenues declined by 2% to RMB30.5 billion, reflecting increased revenues from music and long-form video subscriptions, Video Accounts live streaming services, and Mini Games platform service fees, versus decreased revenues from music-related and games-related live streaming services.
Revenues from Online Advertising were RMB26.5 billion for the first quarter of 2024, up 26% year-on-year, driven by Video Accounts, Mini Programs, Official Accounts and Weixin Search, due to increased engagement and ongoing enhancement of our AI-powered advertising infrastructure. Advertising spending rose across all major categories except automotive, with notable growth from games, Internet services and consumer goods categories.
Revenues from FinTech and Business Services increased by 7% year-on-year to RMB52.3 billion for the first quarter of 2024. FinTech Services revenues grew at a single-digit rate, primarily due to moderated growth in offline consumption spending and a decrease in withdrawal fee revenue, while wealth management services revenues experienced robust growth. Business Services achieved a teens year-on-year revenue growth rate, driven by higher cloud services revenues and increased eCommerce technology service fees within Video Accounts.
For other detailed disclosure, please refer to our website https://www.tencent.com/en-us/investors.html, or follow us via Weixin Official Account (Weixin ID: Tencent_IR)
About Tencent
Tencent uses technology to enrich the lives of Internet users.
Our communication and social services, Weixin and QQ, connect users with each other and with digital content and services, both online and offline, making their lives more convenient. Our targeted advertising service helps advertisers reach out to hundreds of millions of consumers in China. Our FinTech and business services support our partners’ business growth and assist their digital upgrade.
Tencent invests heavily in talent and technological innovation, actively promoting the development of the Internet industry. Tencent was founded in Shenzhen, China, in 1998. Tencent has been listed on the Main Board of the Stock Exchange of Hong Kong since 2004.
Investor contact: IR@tencent.comMedia contact: GC@tencent.com
Non-IFRS Financial Measures
To supplement the consolidated results of the Group prepared in accordance with IFRS, certain additional non-IFRS financial measures (in terms of operating profit, operating margin, profit for the period, net margin, profit attributable to equity holders of the Company, basic EPS and diluted EPS) have been presented in this press release. These unaudited non-IFRS financial measures should be considered in addition to, not as a substitute for, measures of the Group’s financial performance prepared in accordance with IFRS. In addition, these non-IFRS financial measures may be defined differently from similar terms used by other companies.
The Company’s management believes that the non-IFRS financial measures provide investors with useful supplementary information to assess the performance of the Group’s core operations by excluding certain non-cash items and certain impact of investment-related transactions. In addition, non-IFRS adjustments include relevant non-IFRS adjustments for the Group’s major associates based on available published financials of the relevant major associates, or estimates made by the Company’s management based on available information, certain expectations, assumptions and premises.
Forward-Looking Statements
This press release contains forward-looking statements relating to the business outlook, estimates of financial performance, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realised in the future. Underlying these forward-looking statements are a lot of risks and uncertainties. In light of the risks and uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as representations by the Board or the Company that the plans and objectives will be achieved, and investors should not place undue reliance on such statements.
CONDENSED CONSOLIDATED INCOME STATEMENTRMB in millions, unless specified
Unaudited
Unaudited
1Q2024
1Q2023
Restated*
1Q2024
4Q2023
Revenues
159,501
149,986
159,501
155,196
VAS
78,629
79,337
78,629
69,079
Online Advertising
26,506
20,964
26,506
29,794
FinTech and Business Services
52,302
48,701
52,302
54,379
Others
2,064
984
2,064
1,944
Cost of revenues
(75,631)
(81,804)
(75,631)
(77,632)
Gross profit
83,870
68,182
83,870
77,564
Gross margin
53 %
45 %
53 %
50 %
Selling and marketing expenses
(7,536)
(7,018)
(7,536)
(10,971)
General and administrative expenses
(24,809)
(24,642)
(24,809)
(27,175)
Other gains/(losses), net
1,031
1,520*
1,031
1,983
Operating profit
52,556
38,042*
52,556
41,401
Operating margin
33 %
25%*
33 %
27 %
Net gains/(losses) from investments and others
656
(576)*
656
(6,730)
Interest income
4,248
2,963*
4,248
3,917
Finance costs
(2,826)
(2,650)
(2,826)
(3,543)
Share of profit/(loss) of associates and joint ventures, net
2,186
80
2,186
2,463
Profit before income tax
56,820
37,859
56,820
37,508
Income tax expense
(14,169)
(11,465)
(14,169)
(9,658)
Profit for the period
42,651
26,394
42,651
27,850
Net margin
27 %
18 %
27 %
18 %
Attributable to:
Equity holders of the Company
41,889
25,838
41,889
27,025
Non-controlling interests
762
556
762
825
Non-IFRS operating profit
58,619
45,028*
58,619
49,135
Non-IFRS profit attributable to equity holders of the Company
50,265
32,538
50,265
42,681
Earnings per share for profit attributable to equity holders of the Company
(in RMB per share)
– basic
4.479
2.725
4.479
2.873
– diluted
4.386
2.639
4.386
2.807
* Since the fourth quarter of 2023, certain items have been reclassified from above to below the operating profit line. Historical comparative figures have been restated accordingly. Please refer to the earnings announcement for details.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMERMB in millions, unless specified
Unaudited
1Q2024
1Q2023
Profit for the period
42,651
26,394
Other comprehensive income, net of tax:
Items that may be subsequently reclassified to profit or loss
Share of other comprehensive income of associates and joint ventures
(337)
(662)
Transfer of share of other comprehensive income to profit or loss upon disposal and deemed disposal of associates and joint ventures
(30)
14
Transfer to profit or loss upon disposal of financial assets at fair value through other comprehensive income
1
1
Net gains from changes in fair value of financial assets at fair value through other comprehensive income
10
22
Currency translation differences
(3,929)
(1,200)
Net movement in reserves for cash flow hedges
(782)
(1,151)
Items that will not be subsequently reclassified to profit or loss
Share of other comprehensive income of associates and joint ventures
(120)
(154)
Loss from changes in fair value of assets held for distribution
–
(29,991)
Net gains from changes in fair value of financial assets at fair value through other comprehensive income
15,918
34,362
Currency translation differences
(463)
(2,846)
10,268
(1,605)
Total comprehensive income for the period
52,919
24,789
Attributable to:
Equity holders of the Company
51,673
23,612
Non-controlling interests
1,246
1,177
OTHER FINANCIAL INFORMATION RMB in millions, unless specified
Unaudited
1Q2024
4Q2023
1Q2023
EBITDA (a)
65,094
53,983
52,656
Adjusted EBITDA (a)
69,259
59,494
57,811
Adjusted EBITDA margin (b)
43 %
38 %
39 %
Interest and related expenses
3,044
3,015
2,800
Net cash/(debt) (c)
92,534
54,740
31,508
Capital expenditures (d)
14,359
7,524
4,411
Note:
(a) EBITDA is calculated as operating profit minus other gains/(losses), net, and adding back depreciation of property, plant and equipment, investment properties as well as right-of-use assets, and amortisation of intangible assets and land use rights. Adjusted EBITDA is calculated as EBITDA plus equity-settled share-based compensation expenses.
(b) Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues.
(c) Net cash/(debt) represents period end balance and is calculated as cash and cash equivalents, plus term deposits and others, minus borrowings and notes payable.
(d) Capital expenditures consist of additions (excluding business combinations) to property, plant and equipment, construction in progress, investment properties, land use rights and intangible assets (excluding long-form video and music content, game licences and other content).
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITIONRMB in millions, unless specified
Unaudited
Audited
As at
March 31, 2024
As at
December 31, 2023
ASSETS
Non-current assets
Property, plant and equipment
54,627
53,232
Land use rights
23,644
17,179
Right-of-use assets
19,077
20,464
Construction in progress
12,528
13,583
Investment properties
582
570
Intangible assets
177,946
177,727
Investments in associates
250,954
253,696
Investments in joint ventures
8,017
7,969
Financial assets at fair value through profit or loss
215,660
211,145
Financial assets at fair value through other
comprehensive income
229,747
213,951
Prepayments, deposits and other assets
27,800
28,439
Other financial assets
1,241
2,527
Deferred income tax assets
30,536
29,017
Term deposits
30,613
29,301
1,082,972
1,058,800
Current assets
Inventories
1,055
456
Accounts receivable
52,412
46,606
Prepayments, deposits and other assets
87,761
88,411
Other financial assets
5,942
5,949
Financial assets at fair value through profit or loss
10,568
14,903
Term deposits
241,510
185,983
Restricted cash
3,434
3,818
Cash and cash equivalents
161,023
172,320
563,705
518,446
Total assets
1,646,677
1,577,246
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)RMB in millions, unless specified
Unaudited
Audited
As at
March 31, 2024
As at
December 31, 2023
EQUITY
Equity attributable to equity holders of the Company
Share capital
–
–
Share premium
28,989
37,989
Treasury shares
(4,549)
(4,740)
Shares held for share award schemes
(4,798)
(5,350)
Other reserves
(28,070)
(33,219)
Retained earnings
857,015
813,911
848,587
808,591
Non-controlling interests
68,182
65,090
Total equity
916,769
873,681
LIABILITIES
Non-current liabilities
Borrowings
153,185
155,819
Notes payable
130,974
137,101
Long-term payables
12,658
12,169
Other financial liabilities
8,150
8,781
Deferred income tax liabilities
16,762
17,635
Lease liabilities
15,238
16,468
Deferred revenue
4,378
3,435
341,345
351,408
Current liabilities
Accounts payable
112,520
100,948
Other payables and accruals
64,230
76,595
Borrowings
48,006
41,537
Notes payable
20,569
14,161
Current income tax liabilities
21,623
17,664
Other tax liabilities
4,620
4,372
Other financial liabilities
4,871
4,558
Lease liabilities
6,036
6,154
Deferred revenue
106,088
86,168
388,563
352,157
Total liabilities
729,908
703,565
Total equity and liabilities
1,646,677
1,577,246
RECONCILIATIONS OF IFRS TO NON-IFRS RESULTS
As
reported
Adjustments
Non-IFRS
RMB in millions,
unless specified
Share-based
compensation (a)
Net(gains)/losses from investee companies (b)
Amortisation of
intangible assets (c)
Impairment
provisions/ (reversals) (d)
SSV & CPP (e)
Others (f)
Income
tax effects(g)
Unaudited three months ended 31 March 2024
Operating profit
52,556
4,694
–
1,249
–
120
–
–
58,619
Profit for the period
42,651
6,203
(1,476)
2,805
1,562
132
–
(535)
51,342
Profit attributable to
equity holders
41,889
6,035
(1,449)
2,589
1,541
132
–
(472)
50,265
Operating margin
33 %
37 %
Net margin
27 %
32 %
Unaudited three months ended 31 December 2023
Operating profit
41,401
5,732
–
1,564
–
437
1
–
49,135
Profit for the period
27,850
6,646
(94)
2,960
5,705
1,594
1
(829)
43,833
Profit attributable to
equity holders
27,025
6,512
(55)
2,719
5,650
1,594
1
(765)
42,681
Operating margin
27 %
32 %
Net margin
18 %
28 %
Unaudited three months ended 31 March 2023
Operating profit (Restated) *
38,042
5,844
–
998
–
135
9
–
45,028
Profit for the period
26,394
7,313
(5,224)
2,271
1,862
1,526
9
(706)
33,445
Profit attributable to
equity holders
25,838
7,094
(5,224)
2,098
1,852
1,526
9
(655)
32,538
Operating margin (Restated) *
25 %
30 %
Net margin
18 %
22 %
Note:
(a) Including put options granted to employees of investee companies on their shares and shares to be issued under investee companies’ share-based incentive plans which can be acquired by the Group, and other incentives
(b) Including net (gains)/losses on deemed disposals/disposals of investee companies, fair value changes arising from investee companies, and other expenses in relation to equity transactions of investee companies
(c) Amortisation of intangible assets resulting from acquisitions
(d) Mainly including impairment provisions/(reversals) for associates, joint ventures, goodwill and other intangible assets arising from acquisitions
(e) Mainly including donations and expenses incurred for the Group’s Sustainable Social Value and Common Prosperity Programme ("SSV & CPP") initiatives
(f) Primarily non-recurring compliance-related costs and expenses incurred for certain litigation settlements of the Group and/or arising from investee companies
(g) Income tax effects of non-IFRS adjustments
* Since the fourth quarter of 2023, certain items have been reclassified from above to below the operating profit line. Historical comparative figures have been restated accordingly. Please refer to the earnings announcement for details.
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