TENCENT ANNOUNCES 2024 FIRST QUARTER RESULTS

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].

Operating Metrics 

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.com
Media 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 STATEMENT
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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
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OTHER FINANCIAL INFORMATION 
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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
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RECONCILIATIONS OF IFRS TO NON-IFRS RESULTS