Tencent Holdings Limited, a juggernaut in China’s internet services sector, unveiled its 2023 third-quarter financials, showcasing a resilient performance marked by solid revenue growth and strategic technological advancements.
The company reported a 2% year-over-year increase in the combined MAU of Weixin and WeChat, reaching 1,336 million.
Financial Resilience Amidst Market Flux
In a period characterized by global economic uncertainties, Tencent reported a notable 10% year-over-year increase in total revenues, amounting to RMB 154.6 billion (USD 21.5 billion).
This growth trajectory underscores the company’s ability to adapt and thrive in a challenging market landscape.
Critically, on a non-IFRS basis, Tencent’s profit attributable to equity holders surged by an impressive 39% year-over-year. This leap, far outpacing revenue growth, hints at effective cost control measures and a strategic emphasis on core earnings.
The operating profit on this basis grew by 36%, with the operating margin expanding from 29% to 36%, signaling enhanced operational efficiency.
However, a different picture emerges under the IFRS lens, where operating profit saw a 6% decline year-over-year. This divergence underscores the impact of one-time or non-cash items on the company’s financials, painting a nuanced picture of its fiscal health.
Diversification: A Key Pillar of Stability
Tencent’s revenue streams exhibit a commendable diversity. The company saw growth across various sectors, from international games to FinTech and business services.
Notably, the gaming segment displayed resilience, with international games revenue climbing by 14%, driven by strong performances from titles like PUBG Mobile and VALORANT.
The online advertising sector, particularly through Video Accounts and Weixin Search, witnessed a 20% year-on-year surge, buoyed by robust demand in local services and FMCG categories. This growth reflects Tencent’s increasing prowess in leveraging its vast user base for advertising gains.
AI: The New Frontier
The standout narrative from Tencent’s quarterly results is its intensified focus on AI. Chairman and CEO Ma Huateng’s statement highlighted AI’s role as a “growth multiplier” and a value provider not only for Tencent but for its broader ecosystem.
This strategic shift is evident in the company’s growing investments in AI models and its efforts to integrate AI into its products, enhancing targeting capabilities for content and advertising.
The Road Ahead
Looking forward, Tencent appears well-positioned to navigate the ever-evolving tech landscape. Its robust financials, coupled with strategic investments in AI and other technologies, position it as a leader not just within China but on the global tech stage.
However, Tencent’s journey is not without challenges. Navigating regulatory landscapes and adapting to fast-changing consumer preferences will be crucial. But, with its current momentum and strategic foresight, Tencent is poised not just to weather the storm but to emerge as a beacon of innovation and growth in the tech world.
Tencent’s Stellar Mid-Year 2023 Financials: Double-Digit Growth Across Key Metrics
Tencent Holdings Limited, the cornerstone of China’s internet value-added services, has disclosed its results for the second quarter and the first half of 2023. The figures highlight an emphasis on business performance, partnerships, and an impressive uptick in user engagement.
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Operational Metrics: As of June 30, 2023, Tencent boasts a combined MAU of 1,327 million for WeChat. The company also emphasized the increasing engagement on WeChat, with the Video Accounts’ user time spent almost doubling YoY.
Mini Programs reached a remarkable 1.1 billion MAU, with Mini Games standing out as China’s leading casual games platform.
Digital Content: Tencent Video subscriptions are at 115 million, with music subscriptions crossing the 100 million mark in June 2023. Tencent’s dedication to producing original content, including animated and drama series, seems to be paying off in terms of user subscriptions.
Domestic and International Games: Tencent’s mobile and PC games MAU and DAU saw yearly increases.
Notably, three of their new game launches from the past two years ranked among the top 10 mobile games by total time spent during the quarter. In the international arena, Tencent acknowledged the growth from PC games like VALORANT and recent releases such as Goddess of Victory: NIKKE.
Online Advertising: The company attributes its 34% YoY growth in this sector, touching RMB25 billion in 2Q2023, to the enhancements in machine learning systems and robust demand for Video Accounts advertisements.
Advertising spending on Tencent platforms grew double-digit YoY from nearly every major advertiser category.
Tencent’s commitment to forging new frontiers is evident from its introduction of the Tencent Cloud Model-as-a-Service (MaaS) offering. This provides partners with a comprehensive library of models, marking Tencent’s pioneering efforts in generative AI.
Mr. Ma Huateng, Chairman and CEO of Tencent, provided insight into the company’s strategy, mentioning,
We achieved notably rapid growth in advertising business, benefitting from deploying machine learning on our advertising platform and from Video Accounts monetisation. We will continue to drive innovation, including through generative AI, where we are providing a library of models to our partners via our Tencent Cloud Model-as-a-Service (MaaS) offering.
Financial Highlights
- Q2 2023 Performance:
- Total Revenues: RMB149.2 billion (USD20.6 billion), an increase of 11% YoY.
- Non-IFRS Operating Profit: RMB50.1 billion (USD6.9 billion), up by 37% YoY.
- Operating Margin: Increased to 34% from 27% in the previous year.
- Profit for the Period: RMB38.6 billion (USD5.3 billion), a rise of 33% YoY.
- Net Margin: Enhanced to 26% from last year’s 22%.
- Profit Attributable to Equity Holders: RMB37.5 billion (USD5.2 billion), an increase of 33% YoY.
- H1 2023 Performance:
- Total Revenues: RMB299.2 billion (USD41.4 billion), marking an 11% YoY growth.
- Non-IFRS Operating Profit: RMB98.5 billion (USD13.6 billion), a surge of 35% YoY.
- Operating Margin: Elevated to 33% from 27% in the previous year.
- Profit for the Period: RMB72.1 billion (USD10 billion), up by 30% YoY.
- Net Margin: Rose to 24% from the previous year’s 21%.
- Profit Attributable to Equity Holders: RMB70.1 billion (USD9.7 billion), an increase of 31% YoY.
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