Tencent (700) Q2 2024 earnings summary

Executive summary

• Revenue for Q2 2024 rose 8% year-over-year to RMB161.1 billion, 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 non-IFRS net profit up 53% 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, with gross profit at RMB85.9 billion.

• Non-IFRS operating profit was RMB58.4 billion, up 27% year-over-year; adjusted EBITDA margin was 43%.

• 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%.

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%.

• Continued strategic investments in content, AI, and cloud infrastructure, focusing on evergreen game franchises and expanding e-commerce.