TENCENT ANNOUNCES 2024 THIRD QUARTER RESULTS

HONG KONG,Nov. 13, 2024/PRNewswire/ --TencentHoldings Limited (HKEX: 00700 (HKD Counter) and 80700 (RMB Counter),"Tencent"or the"Company"), a world-leading Internet and technology company inChina, today announced the unaudited consolidated results for the third quarter ("3Q2024") endedSep 30, 2024.

Mr. Ma Huateng, Chairman and CEO ofTencent, said,"During the third quarter of 2024, we delivered robust revenue growth in our games business, underpinned by consistent performance of evergreen games globally and contributions from new games with evergreen potential. We upgraded our eCommerce strategy around Mini Shops, to create a unified and trustworthy transaction experience spanning the entire Weixin ecosystem. We are increasingly seeing tangible benefits of deploying AI across our products and operations including marketing services and cloud, and will continue investing in AI technology, tools and solutions that assist users and partners."

3Q2024Financial Highlights

Revenues: +8% YoY; gross profit: +16% YoY; non-IFRS[1]operating profit*: +19% YoY

  • Total revenueswereRMB167.2 billion(USD23.9 billion[2]), up 8% over the third quarter of 2023 ("YoY").
  • Gross profitwasRMB88.8 billion(USD12.7 billion), up 16% 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*wasRMB61.3 billion(USD8.7 billion), up 19% YoY. Operating margin*increased to 37% from 33% last year.
    • Profit for the periodwasRMB60.9 billion(USD8.7 billion), up 33% YoY.
    • Profit attributable to equity holders of the Company for the quarter wasRMB59.8 billion(USD8.5 billion), up 33% YoY.
    • Basic earnings per sharewereRMB6.475.Diluted earnings per sharewereRMB6.340.
  • On an IFRS basis:
    • Operating profit*wasRMB53.3 billion(USD7.6 billion), up 20% YoY. Operating margin*increased to 32% from 29% last year.
    • Profit for the period wasRMB54.0 billion(USD7.7 billion), up 47% YoY.
    • Profit attributable to equity holders of the Company for the quarter wasRMB53.2 billion(USD7.6 billion), up 47% YoY.
    • Basic earnings per share wereRMB5.762. Diluted earnings per share wereRMB5.644.
  • Total cashwasRMB425.5 billion(USD60.7 billion) andfree cash flowwasRMB58.5 billion(USD8.3 billion), +14% YoY.Net cash positiontotalledRMB95.5 billion(USD13.6 billion).
  • Fair value of our shareholdings[3]in listed investee companies (excluding subsidiaries) totalledRMB612.5 billion(USD87.4 billion) and the carrying book value of our shareholdings in unlisted investee companies (excluding subsidiaries) wasRMB327.7 billion(USD46.8 billion).
  • During the third quarter of 2024, the Company repurchased approximately 94.9 million shares on the Hong Kong Stock Exchange for a consideration of approximatelyHKD35.9 billion.

[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 RMB7.0074

[3]Including those held via special purpose vehicles, on an attributable basis

* 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. 

3Q24 Business Review and Outlook

  • Mini Programs'GMV grew at a high teens year-on-year rate to overRMB 2 trillionin the third quarter of 2024, benefitting from better coverage and solutions for use cases such as food ordering, electric vehicle charging and medical services.
  • We provided merchants with more traffic and transaction support throughMini Shops, a platform where merchants operate storefronts with indexed and standardised merchandise. Leveraging Weixin's social interactions, content platforms and payment capabilities, Mini Shops help merchants to effectively reach customers and drive sales conversions.
  • Utilising large language model capabilities,Weixin Searchfacilitated its understanding of complex queries and content, enhancing the relevance of search results.Weixin Searchgrew commercial queries and click-through rates year-on-year.
  • TheQQteam has comprehensively upgraded the platform's back end infrastructure, and added and popularised new functionalities such asTencentChannels, resulting in QQ mobile device MAU returning to year-on-year growth in the third quarter of 2024.
  • Musicsubscriptions increased 16% year-on-year to 119 million[4], benefitting from enhanced recommendation algorithms, enriched content offerings and upgraded audio quality.
  • Long-form videosubscriptions increased 6% year-on-year to 116 million[5], benefitting from popular animated series and drama series.
  • Our flagship evergreen games in domestic markets,Honour of KingsandPeacekeeper Elite, delivered healthy year-on-year growth in gross receipts. Other evergreen games,Naruto MobileandVALORANT, reached new highs in quarterly average DAU. We releasedDelta Force, our first multi-platform first person shooter, which achieved high average user daily time spent and retention rates, demonstrating evergreen potential.
  • In international markets,VALORANTexpanded from PC to PlayStation and Xbox with the launch of its console version in five key international markets, contributing to the game growing gross receipts by over 30% year-on-year during the third quarter of 2024.
  • We releasedTencentHunyuan Turbo, an upgraded foundation model utilising a heterogeneous Mixture-of-Experts (MoE) architecture, which doubled training and inference efficiency, and halved inference cost, versus its predecessorTencentHunyuan Pro.

[4]The average number of subscriptions as of the last day of each month during the third quarter of 2024

[5]The average daily number of subscriptions for the third quarter of 2024; year-on-year growth rate was calculated based on restated comparative figure

Operating Metrics



As at

30 September

2024

As at

30 September

2023

Year-

on-year

change

As at

30 June

2024

Quarter-on-

quarter

change



(in millions, unless specified)













Combined MAU of Weixin               

  and WeChat

1,382

1,336

3 %

1,371

0.8 %













Mobile device MAU of QQ                                     

562

558

0.7 %

571

-2 %













Fee-based VAS registered

  subscriptions#

265

243

9 %

263

0.8 %



# Adjusted to report the average daily number of subscriptions during the quarter, since the first quarter of 2024

3Q24 Management Discussion and Analysis

Revenues from VAS increased by 9% year-on-year toRMB82.7 billionfor the third quarter of 2024. International Games revenues wereRMB14.5 billion, up 9% year-on-year (or up 11% on a constant currency basis), due to robust performances from games including PUBG MOBILE and Brawl Stars. Revenue growth for International Games substantially lagged gross receipts growth, as improved retention rates for certain titles led to us elongating revenue deferral periods. Domestic Games revenues increased by 14% year-on-year toRMB37.3 billion, driven by games including VALORANT, Honour of Kings, Peacekeeper Elite and DnF Mobile. Social Networks revenues rose by 4% year-on-year toRMB30.9 billion, supported by growth in app-based game virtual item sales, music subscription revenues and Mini Games platform service fees, partially offset by a decline in music-related and games-related live streaming revenues.

Revenues from Marketing Services[6]wereRMB30.0 billionfor the third quarter of 2024, up 17% year-on-year, driven by robust advertiser demand for Video Accounts, Mini Programs andWeixin Searchinventories and, to a lesser extent, contributions from Paris Olympics-related brand advertising. Advertising spending from the games and eCommerce categories increased year-on-year, which outweighed reduced spending from the real estate and food& beverage categories.

Revenues from FinTech and Business Services rose by 2% year-on-year toRMB53.1 billionfor the third quarter of 2024. FinTech Services revenues in aggregate remained largely stable compared to the same quarter last year, within which wealth management services revenues increased year-on-year due to more users and higher aggregated customer assets while payment services revenues declined due to subdued consumption spending. Business Services revenues were up year-on-year, driven by growth in cloud services revenues and eCommerce technology service fees.

For other detailed disclosure, please refer to our websitehttps://www.tencent.com/en-us/investors.htmlhttp://www.tencent.com/ir, or follow us via Weixin Official Account (Weixin ID:Tencent_IR).

[6]Starting this quarter, we have renamed this revenue segment from'Online Advertising'to'Marketing Services'to better represent the breadth of our marketing solutions and accompanying technology services across our online marketing properties

AboutTencent

Tencentuses 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 inChina. Our FinTech and business services support partners'business growth and assist their digital upgrade.

Tencentinvests heavily in talent and technological innovation, actively promoting the development of the Internet industry.Tencentwas founded inShenzhen, China, in 1998.Tencenthas been listed on the Main Board of the Stock Exchange ofHong Kongsince 2004. 

Investor contact:IR@tencent.com

Media contact:GC@tencent.com 

Non-IFRS Financial Measures

To supplement the consolidated results of the Group ("the Company and its subsidiaries") prepared in accordance with IFRS, certain additional non-IFRS financial measures (in terms of operating profit, operating margin, profit for the period, 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 Group. These forward-looking statements are based on information currently available to the Group 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 STATEMENT

RMB in millions, unless specified





Unaudited



Unaudited



3Q2024

 

3Q2023

Restated*



3Q2024

 

2Q2024

 

Revenues

167,193

154,625



167,193

161,117

VAS

82,695

75,748



82,695

78,822

Marketing Services

29,993

25,721



29,993

29,871

FinTech and Business Services

53,089

52,048



53,089

50,440

Others

1,416

1,108



1,416

1,984

Cost of revenues

(78,365)

(78,102)



(78,365)

(75,222)

Gross profit

88,828

76,523



88,828

85,895

Gross margin

53 %

49 %



53 %

53 %

Selling and marketing expenses

(9,411)

(7,912)



(9,411)

(9,156)

General and administrative expenses

(29,058)

(26,289)



(29,058)

(27,491)

Other gains/(losses), net

2,974

2,026*



2,974

1,484

Operating profit

53,333

44,348*



53,333

50,732

  Operating margin

32 %

29%*



32 %

31 %

Net gains/(losses) from investments

   and others

3,066

618*



3,066

 

(654)

Interest income

3,996

3,509*



3,996

3,850

Finance costs

(3,531)

(2,784)



(3,531)

(3,112)

Share of profit/(loss) of associates and

   joint ventures, net

6,019

2,098



6,019

 

7,718

Profit before income tax

62,883

47,789



62,883

58,534

Income tax expense

(8,900)

(11,008)



(8,900)

(10,168)

Profit for the period

53,983

36,781



53,983

48,366













Attributable to:



    Equity holders of the Company

53,230

36,182



53,230

47,630

    Non-controlling interests

753

599



753

736













Non-IFRS operating profit

61,274

51,668*



61,274

58,443

Non-IFRS profit attributable to equity

   holders of the Company

59,813

44,921



59,813

57,313













Earnings per share for profit

   attributable to equity holders of

   the Company

   (in RMB per share)











- basic

5.762

3.828



5.762

5.112

- diluted

5.644

3.752



5.644

4.994

* 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 INCOME

RMB in millions, unless specified





Unaudited



3Q2024

3Q2023

Profit for the period

53,983

36,781

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

155

278

Transfer to profit or loss upon disposal of financial assets at fair value through

   other comprehensive income

-

1

Net gains/(losses) from changes in fair value of financial assets at fair value

   through other comprehensive income

20

(3)

Currency translation differences

(2,909)

(7,303)

Net movement in reserves for hedges

(880)

(897)

Items that will not be subsequently reclassified to profit or loss





Share of other comprehensive income of associates and joint ventures

52

564

Net gains/(losses) from changes in fair value of financial assets at fair value

   through other comprehensive income

33,578

(25,417)

Currency translation differences

(153)

(720)

Net movement in reserves for hedges

19

-



29,882

(33,497)

Total comprehensive income for theperiod

83,865

3,284

Attributable to:





    Equity holders of the Company

82,179

3,526

    Non-controlling interests

1,686

(242)

 

 

OTHER FINANCIAL INFORMATION

RMB in millions, unless specified





Unaudited



3Q2024

2Q2024

3Q2023

EBITDA (a)

64,397

62,902

55,824

Adjusted EBITDA (a)

69,656

68,518

61,301

Adjusted EBITDA margin (b)

42 %

43 %

40 %

Interest and related expenses

3,145

2,918

3,061

Net cash/(debt) (c)

95,462

71,757

36,431

Capital expenditures (d)

17,094

8,729

8,005

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 POSITION

RMB in millions, unless specified



Unaudited

Audited



As at

September 30, 2024

As at

December 31, 2023

ASSETS







Non-current assets







  Property, plant and equipment

69,583



53,232

  Land use rights

23,310



17,179

  Right-of-use assets

17,793



20,464

  Construction in progress

12,801



13,583

  Investment properties

738



570

  Intangible assets

178,773



177,727

  Investments in associates

266,057



253,696

  Investments in joint ventures

7,113



7,969

  Financial assets at fair value through profit or loss

209,200



211,145

  Financial assets at fair value through other

   comprehensive income

283,632



213,951

  Prepayments, deposits and other assets

27,995



28,439

  Other financial assets

848



2,527

  Deferred income tax assets

31,214



29,017

  Term deposits

70,134



29,301











1,199,191



1,058,800









Current assets







  Inventories

9,823



456

  Accounts receivable

47,336



46,606

  Prepayments, deposits and other assets

103,135



88,411

  Other financial assets

4,950



5,949

  Financial assets at fair value through profit or loss

9,773



14,903

  Financial assets at fair value through other

   comprehensive income

2,132



-

  Term deposits

197,995



185,983

  Restricted cash

3,554



3,818

  Cash and cash equivalents

145,468



172,320











524,166



518,446









Total assets

1,723,357



1,577,246

 

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION(continued)

RMB in millions, unless specified









Unaudited

Audited





As at

September 30, 2024

As at

December 31, 2023

EQUITY









Equity attributable to equity holders of the Company









  Share capital



-



-

  Share premium



37,201



37,989

  Treasury shares



(2,571)



(4,740)

  Shares held for share award schemes



(4,976)



(5,350)

  Other reserves



21,113



(33,219)

  Retained earnings



861,819



813,911





912,586



808,591











Non-controlling interests



67,921



65,090











Total equity



980,507



873,681











LIABILITIES









Non-current liabilities









  Borrowings



151,600



155,819

  Notes payable



127,285



137,101

  Long-term payables



12,227



12,169

  Other financial liabilities



7,904



8,781

  Deferred income tax liabilities



15,561



17,635

  Lease liabilities



14,023



16,468

  Deferred revenue



6,473



3,435















335,073



351,408











Current liabilities









  Accounts payable



142,665



100,948

  Other payables and accruals



73,036



76,595

  Borrowings



42,767



41,537

  Notes payable



8,403



14,161

  Current income tax liabilities



19,044



17,664

  Other tax liabilities



4,873



4,372

  Other financial liabilities



4,823



4,558

  Lease liabilities



5,583



6,154

  Deferred revenue



106,583



86,168















407,777



352,157











Total liabilities



742,850



703,565











Total equity and liabilities



1,723,357



1,577,246

 

 

RECONCILIATIONS OF THE GROUP'S NON-IFRS FINANCIAL MEASURES TO THE NEAREST MEASURES PREPARED IN ACCORDANCE WITH IFRS









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 30 September 2024



Operating profit

53,333

6,377

–

1,324

–

240

–

–

61,274



Share of profit/(loss)ofassociates

  and joint ventures, net

6,019

985

60

1,433

12

–

–

–

8,509



Profit for the period

53,983

7,362

(6,610)

2,757

3,788

304

–

(653)

60,931



Profit attributable to

 equity holders

53,230

7,180

(6,664)

2,591

3,766

304

–

(594)

59,813



Operating margin

32 %















37 %





Unaudited three months ended 30 June 2024



Operating profit

50,732

6,213

–

1,305

–

190

3

–

58,443



Share of profit/(loss) of associates and

  joint ventures, net

7,718

926

(91)

1,313

20

–

–

–

9,886



Profit for the period

48,366

7,139

(3,672)

2,618

3,526

1,025

3

(561)

58,444



Profit attributable to

 equity holders

47,630

6,981

(3,726)

2,418

3,492

1,025

3

(510)

57,313



Operating margin

31 %















36 %





Unaudited three months ended 30 September 2023



Operating profit (Restated) *

44,348

5,655

–

1,434

–

231

–

–

51,668



Share of profit/(loss) of associates and

  joint ventures, net

2,098

1,293

138

1,232

25

–

–

–

4,786



Profit for the period

36,781

6,948

(565)

2,666

346

301

–

(640)

45,837



Profit attributable to

 equity holders

36,182

6,833

(583)

2,458

309

301

–

(579)

44,921



Operating margin (Restated) *

29 %















33 %





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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