Tencent Q3 Earnings: Gaming And AI Fuel Profit Growth, Pony Ma Eyes E-Commerce Expansion

Chinese gaming giant Tencent Holding Ltd TCEHY reported fiscal third-quarter 2024 results Wednesday.

Revenue grew 8% year-on-year to $23.9 billion (CNY 167.19 billion), quashing the analyst consensus estimate of $23.4 billion.

Combined, the MAU of Weixin and WeChat grew by 3% year-on-year to 1.38 billion. Mobile device MAU of QQ grew 0.7% year-on-year to 562 million.

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Fee-based VAS registered subscriptions grew 9% year-on-year to 265 million.

Revenues from VAS increased by 9% Y/Y to CNY82.7 billion. International Games revenues were CNY14.5 billion, up 9% Y/Y, due to robust performances from games including PUBG MOBILE and Brawl Stars. Domestic Games revenues increased by 14% Y/Y to CNY37.3 billion, driven by games including VALORANT, Honour of Kings, Peacekeeper Elite, and DnF Mobile.

Social Networks revenues rose by 4% Y/Y to CNY30.9 billion, supported by growth in app-based game virtual item sales, music subscription revenues and Mini Games platform service fees.

Revenues from Marketing Services were CNY30.0 billion, up 17% Y/Y, driven by robust advertiser demand for Video Accounts, Mini Programs, and Weixin Search inventories. Revenues from FinTech and Business Services rose by 2% Y/Y to CNY53.1 billion.

Gross profit climbed 16% Y/Y to $12.7 billion. The margin expanded by 400 bps to 53%. Adjusted operating profit increased 19% Y/Y to $8.7 billion. The margin grew 400 bps to 37%.

Adjusted net income attributable to equity holders increased 33% Y/Y to $8.5 billion. Adjusted EPS of $0.89 beat the $0.88 analyst consensus estimate.

As of September 30, 2024, Tencent had $60.7 billion in cash and equivalents and generated $8.3 billion in free cash flow.

Tencent’s Chairman and CEO, Ma Huateng, highlighted strong third-quarter revenue growth, driven by the consistent global performance of established games and contributions from promising new titles. He noted the company’s enhanced eCommerce approach around Mini Shops, aiming for a seamless and reliable transaction experience across the entire Weixin ecosystem. He also emphasized the growing advantages of AI integration across Tencent’s products and operations, including marketing services and the cloud. The company plans to continue investing in AI technologies and solutions to benefit users and partners.

Price Action: TCEHY stock closed lower by 2.78% at $51.04 Tuesday.

Photo via Shutterstock

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