Jinwu Financial News | Tencent (00700) announced that for the three months ended March 31, 2024, the profit attributable to the company's equity holders recorded 41,889 billion yuan (RMB, same below), an increase of 62.12% over the previous year. Basic earnings per share were $4.479. The adjusted profit attributable to the company's equity holders was $50.265 billion, up 54.48% year on year and 18% month on month. Adjusted earnings per share were $5.375.

During the period, revenue was recorded at $159.501 billion, an increase of 6% over the previous year. Revenue costs fell 8% year over year to $75.6 billion due to reduced content costs and cloud project deployment costs. The combined number of monthly active accounts of WeChat and WeChat was 1,359 million, up 3% year on year; the number of monthly active accounts on QQ mobile terminals was 553 million, down 7% year on year; the number of registered accounts for paid value-added services (adjusted to the daily average number of quarterly accounts) was 260 million, up 12% year on year.

Looking at revenue in detail, the revenue of the value-added services business fell 0.9% year-on-year to 78.6 billion yuan in the first quarter of 2024. Total game sales in the international market increased 34% year over year, due to the recovery in popularity of Supercell games (especially “Brawl”) and the increase in users and sales of “PUBGMOBILE”. Due to Supercell's long game revenue deferral period, game revenue in the international market increased 3% year over year to 13.6 billion yuan (year over year stable at a fixed exchange rate). Total game turnover in the local market resumed year-on-year growth, with an increase of 3%. Game revenue in the local market fell 2% year over year to 34.5 billion yuan, due to revenue delays. As far as individual games are concerned, “Wang Zhe Rongyao” was affected by the high base during the Spring Festival last year, and revenue for “Peace Elite” declined year over year due to weak commercialization content in the second half of 2023. Much of this was offset by revenue contributions from our recently released games, including Dreadnought and Ark of Destiny, and strong growth in Battle for the Golden Shovel. Social networking revenue fell 2% to 30.5 billion yuan, reflecting an increase in service fee revenue for paid music and long video subscribers, video streaming services, and small game platforms, while revenue from live music streaming and game streaming services declined.

The revenue of the online advertising business increased 26% year-on-year to 26.5 billion yuan in the first quarter of 2024. This was driven by the growth of WeChat video accounts, applets, public accounts and search, and was driven by increased user engagement and our constantly upgraded AI-driven advertising technology platform. Advertising spending increased in all major industries except the automotive industry. Among them, advertising spending in the gaming, internet services and consumer goods industries increased significantly; revenue from the fintech and corporate services business increased 7% year-on-year to $52.3 billion in the first quarter of 2024. Revenue from fintech services grew at a single-digit percentage year over year, mainly due to a slowdown in offline consumer spending growth and a decrease in withdrawal revenue, while revenue from financial management services grew strongly. Enterprise service revenue achieved a year-on-year growth rate of more than ten points due to the increase in cloud service revenue and technical service fees for video account merchants.

During the period, gross profit was recorded at $83.87 billion, an increase of 23% over the previous year. Gross margin increased to 53% from 45% in the same period last year. The increase in gross profit is due to rapid growth in high-margin revenue sources, including WeChat video accounts and search advertising revenue, mini game platform service fees, financial service revenue, and video account merchant technical service fees. The increased cost efficiency of our long video and cloud business also contributed to gross profit growth.