• Total Revenue: RMB167 billion, up 8% year-on-year and 4% quarter-on-quarter.

• Gross Profit: RMB89 billion, up 16% year-on-year and 3% quarter-on-quarter.

• Non-IFRS Operating Profit: RMB61 billion, up 19% year-on-year and 5% quarter-on-quarter.

• Value-Added Services Revenue: RMB83 billion, up 9% year-on-year.

• Domestic Games Revenue: RMB37 billion, up 14% year-on-year.

• International Games Revenue: RMB15 billion, up 9% year-on-year.

• Marketing Services Revenue: Grew 17% year-on-year.

• FinTech and Business Services Revenue: RMB53 billion, up 2% year-on-year.

• Net Profit Attributable to Equity Holders: RMB59.8 billion, up 33% year-on-year.

• Diluted EPS: RMB6.34, up 36% year-on-year.

• Overall Gross Margin: 53%, up 4 percentage points year-on-year.

• Free Cash Flow: RMB58.5 billion, up 14% year-on-year.

• Net Cash Position: RMB95.5 billion, up 33% quarter-on-quarter.

• Warning! GuruFocus has detected 3 Warning Signs with TCEHY.

Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tencent Holdings Ltd (TCEHY) reported robust revenue growth in its Games business, driven by consistent performance of evergreen games and new titles with potential.

• The company upgraded its e-commerce strategy around mini shops, enhancing the transaction experience within the Weixin ecosystem.

• Total revenue for the third quarter was RMB167 billion, marking an 8% year-on-year increase, with gross profit up 16% year-on-year.

• Tencent Holdings Ltd (TCEHY) saw improved profitability in its cloud services, contributing to overall gross profit growth.

• The company is leveraging AI across products and operations, including marketing services and cloud, and continues to invest in AI technology.

Negative Points

• International games revenue growth lagged behind gross receipt growth due to elongation of the revenue deferral period.

• The average value per transaction in FinTech services declined, despite an increase in the number of commercial payment transactions.

• Finance costs increased by 27% year-on-year due to exchange losses compared to gains in the same period last year.

• The company faced challenges in the real estate and food and beverage categories, impacting marketing services revenue.

• There is uncertainty regarding the timing of economic recovery, despite positive policy directions from the Chinese government.

Q & A Highlights

Q: Can management share insights on the implications of recent major hit games in China and how these events shape Tencent's game strategy going forward? A: James Mitchell, Chief Strategy Officer, explained that the success of games like Black Myth: Wukong and Whiteout Survival highlights a structural trend where Chinese studios benefit from a large home market and substantial engineering workforce. Tencent's strategy focuses on creating evergreen games by leveraging both in-house and external studios, each focusing on their strengths.