Tencent (700) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached RMB167.2 billion, up 8% year-over-year and 4% quarter-on-quarter, with gross profit up 16% to RMB88.8 billion and operating profit up 20%.

• Net profit attributable to equity holders rose 47% year-over-year to RMB53.2 billion; non-IFRS net profit was RMB59.8 billion, up 33%.

• Growth was driven by strong performance in domestic and international games, e-commerce upgrades, marketing services, and AI deployment.

• Free cash flow reached RMB58.5 billion, up 14% year-over-year; net cash position improved to RMB95.5 billion.

• Share repurchases totaled about 95 million shares for over HKD35.9 billion during the quarter.

Financial highlights

• Non-IFRS operating profit rose 19% year-over-year to RMB61.3 billion; operating margin was 36.6%.

• Diluted EPS increased 50% year-over-year to RMB5.644; basic EPS was RMB5.762, up 51%.

• Gross margin improved to 53.1%, up four percentage points year-over-year, with all major segments showing margin expansion.

• EBITDA was RMB64.4 billion, with an adjusted EBITDA margin of 42%.

• Net cash position was RMB95.5 billion, up 33% quarter-on-quarter and 162% year-over-year.

Outlook and guidance

• Management remains optimistic about long-term economic recovery, citing strong government stimulus and structural strengths in China.

• Major content updates and international launches are planned for key games, with stable and sustainable growth expected.

• E-commerce and Mini Shops are positioned for long-term growth, with ongoing infrastructure and product enhancements.

• Ongoing investment in AI technology and solutions to enhance products and operations.

• Paris Olympics boosted brand ad revenue in Q3, but this effect will not recur in Q4.