Tencent (700) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached RMB161.1 billion, up 8% year-over-year, with gross profit up 21% to RMB85.9 billion and operating profit up 40%.

• Net profit attributable to equity holders surged 82% year-over-year to RMB47.6 billion, with basic EPS up 85% to RMB5.112.

• Non-IFRS net profit attributable to equity holders rose 53% year-over-year to RMB57.3 billion.

• User engagement remained robust, with Weixin and WeChat MAU up 3% year-over-year to 1,371 million and fee-based VAS subscriptions up 12%.

• Continued investment in platforms and AI technologies to drive future business value and user engagement.

Financial highlights

• Gross margin expanded to 53% in Q2 2024 from 47% a year ago, driven by high-margin revenue streams and cost optimization.

• Non-IFRS operating profit was RMB58.4 billion, up 27% year-over-year; operating margin improved to 36%.

• Free cash flow for Q2 2024 was RMB40.4 billion, up 35% year-over-year.

• Basic EPS for Q2 2024 was RMB5.112 (up 85% year-over-year); diluted EPS was RMB4.994 (up 85%).

• Net cash position as of June 30, 2024 was RMB71.8 billion.

Outlook and guidance

• Management expects gross profit to continue outpacing revenue growth, though the multiplier may moderate as efficiency gains plateau.

• Non-IFRS effective tax rate for 2024 is expected to be 18%-20%.

• Focus on expanding high-margin business streams, operational efficiency, and long-term investments in content and AI.

• Anticipated further growth in games, advertising, and business services, with a focus on innovation and user needs.