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.
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.
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.
- 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.
Tencent Reports Robust Q1 Results, Sees Growth Across Key Business Segments
Tencent Holdings Ltd., one of the world’s largest internet companies, has reported strong financial results for the first quarter of 2023, with significant growth across its key business segments, according to a press release.
The Shenzhen-based tech giant reported total revenues of RMB 135.3 billion (USD 20.9 billion), marking a 25% increase over the first quarter of 2022. Operating profit rose by 28% year-on-year to reach RMB 47.7 billion (USD 7.4 billion), while the operating margin improved to 35%, up from 34% last year.
However, the company’s net margin decreased to 24% from 26% last year, even as profit for the period increased by 17% year-on-year to RMB 33.1 billion (USD 5.1 billion). Profit attributable to equity holders of the company for the period was RMB 32.5 billion (USD 5.0 billion), a 14% increase year-on-year.
In terms of business operations, Tencent saw growth in several key areas. The combined monthly active users (MAU) of WeChat, Tencent’s flagship social media platform, reached 1.26 billion, a 5.9% increase year-on-year. The company also reported a significant increase in the number of video accounts, driven by the promotion of video accounts and short videos.
Tencent’s gaming division, a significant revenue driver for the company, also saw robust growth. Revenue from smartphone games grew by 28% year-on-year to RMB 36.7 billion, driven by a steady increase in the number of paying users and a significant increase in average revenue per paying user (ARPPU).
The company’s online advertising revenue rose by 23% year-on-year to RMB 24.1 billion. This growth was largely driven by a 26% increase in revenue from social and other advertising, which reached RMB 16.8 billion.
Tencent’s cloud services division reported a 39% increase in revenue year-on-year, reaching RMB 6.6 billion. This growth was primarily driven by increased revenue contributions from industry solutions, internet services, and public services.
Tencent has announced a significant strategic shift in its business model, according to a recent press release. The company is moving away from its traditional focus on gaming and social media, and instead, is investing heavily in cloud services and artificial intelligence (AI) technologies.
The company’s decision to pivot comes as it faces increasing regulatory scrutiny in its home market. Chinese authorities have been tightening regulations on the tech sector, particularly in areas such as data privacy and anti-competitive practices.
Tencent’s move towards cloud and AI could be seen as a strategic response to these challenges, allowing the company to diversify its revenue streams and reduce its dependence on gaming and social media.
Tencent’s new strategy involves a significant investment in research and development (R&D). The company plans to recruit 10,000 additional R&D staff over the next five years, a move that will significantly expand its existing team of 60,000. This investment is expected to drive innovation and help Tencent establish a leading position in the global cloud and AI markets.