Tencent Misses Revenue Forecasts In Q3, But Diversified Revenue Streams Lead to Higher Profits

Tencent Holding Ltd TCEHY reported a third-quarter revenue growth of 10% year-on-year to RMB154.6 billion ($21.5 billion), missing the consensus of $21.9 billion.

The Chinese multinational technology and entertainment conglomerate's non-IFRS operating profit increased by 36% Y/Y to RMB55.5 billion ($7.7 billion). The margin increased to 36% from 29% last year.

The non-IFRS EPS was RMB4.657 vs consensus $0.57.

Revenues from VAS increased by 4% Y/Y to RMB75.7 billion. International Games revenues increased by 14% Y/Y to RMB13.3 billion. Revenues from Online Advertising were RMB25.7 billion, up 20% Y/Y. Revenues from FinTech and Business Services increased by 16% Y/Y to RMB52 billion.

Adjusted EBITDA was RMB61.3 billion, up 26% Y/Y.

The company held RMB387.4 billion ($54.0 billion) in cash and equivalents. Free cash flow was RMB51.1 billion, up 85% Y/Y.

Mr. Ma Huateng, Chairman and CEO of Tencent, said, "Relatively new services such as Video Accounts and Mini Games contributed high margin revenue streams while we re-focused away from less-scalable activities. We are increasing investment in our AI models, providing new features to our products, and enhancing our targeting capabilities for both content and advertising."

The FY23 revenue and EPS consensus are $85.68 billion and $2.02.

Price Action: TCEHY shares closed higher by 2.06% at $40.68 on Tuesday.