Tencent (700) Q3 2024 earnings summary

Executive summary

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

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

• Growth was driven by strong performance in domestic and international games, marketing services, and improved gross margins.

• Continued investment in AI and cloud infrastructure, with strategic focus on evergreen games, standardized e-commerce, and leveraging AI for operational efficiency.

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

Financial highlights

• Gross profit was RMB88.8 billion, up 16% year-on-year, with gross margin improving to 53.1%.

• Operating profit reached RMB53.3 billion, up 20% year-on-year; non-IFRS operating profit was RMB61.3 billion, up 19% year-on-year.

• Diluted EPS was RMB6.34, up 36% year-on-year; basic EPS was RMB5.762, up 51%.

• Free cash flow was RMB58.5 billion, up 14% year-on-year; net cash position at RMB95.5 billion.

• Capital expenditures reached RMB17.1 billion in Q3 2024.

Outlook and guidance

• Management expects continued robust growth in games, e-commerce, and AI-driven services, with ongoing investment in AI technology and cloud infrastructure.

• Major content updates and international launches planned for key games in coming quarters.

• No specific earnings growth target disclosed; share buyback for 2025 to be announced at year-end.

• Paris Olympics boosted brand ad revenue in Q3 2024, but this effect will not recur in Q4 2024.