TENCENT(00700)2024-08-14 08:30Revenue Growth - Revenue for Q2 2024 increased by 1% quarter-over-quarter to RMB 161.1 billion[19] - Total revenue grew by 8% YoY to RMB 161.1 billion in Q2 2024[47] - Revenue for Q2 2024 increased to RMB 161,117 million, up 1% from RMB 159,501 million in Q1 2024[49] - Total revenue for the quarter was RMB 161,117 million, an 8.0% increase from the previous year[79] - Revenue for the six months ended June 30, 2024, reached RMB 320.618 billion, compared to RMB 299.194 billion in the same period of 2023[166] Cost and Profit Margins - Cost of revenue for Q2 2024 decreased by 0.5% quarter-over-quarter to RMB 75.2 billion[1] - Gross profit for Q2 2024 increased by 21% year-over-year to RMB 85.9 billion, with gross margin rising from 47% to 53%[5] - Gross profit for the FinTech and Business Services segment increased by 0.7% quarter-over-quarter to RMB 24 billion, with gross margin rising from 46% to 48%[7] - Value-added services gross profit increased by 12% year-over-year to RMB 45 billion, with gross margin rising from 54% to 57%[17] - Network advertising gross profit increased by 36% YoY to RMB 16.6 billion, with gross margin rising from 49% to 56%[48] - Gross profit for Q2 2024 was RMB 85,895 million, compared to RMB 83,870 million in Q1 2024[49] - The gross profit margin for value-added services remained stable at 57% in Q2 2024[50] - Gross profit for the six months ended June 30, 2024, was RMB 169.765 billion, up from RMB 139.022 billion in the same period of 2023[166] Game Revenue - International market game revenue grew to RMB 13.9 billion, a 9% increase year-over-year, driven by strong performance of PUBG MOBILE and Supercell games[24] - Domestic market game revenue increased by 9% year-over-year to RMB 34.6 billion, driven by growth in VALORANT and the successful launch of Dungeon & Fighter: Origins[24] User Engagement and Membership - Mini Program user engagement time increased by over 20% year-over-year, with transaction volume achieving double-digit percentage growth[4] - Tencent Music's paid membership increased by 18% year-over-year to 117 million[31] Expenses and Investments - Sales and marketing expenses for Q2 2024 increased by 10% year-over-year to RMB 9.2 billion, maintaining a stable percentage of revenue at 6%[25] - Sales and marketing expenses for Q2 2024 increased by 21% to RMB 9,156 million, driven by promotional activities for new games[72] - R&D expenses for the quarter were RMB 17.277 billion, up 7.9% year-over-year[87] - Intangible assets amortization related to acquisitions was RMB 1.305 billion for the quarter, a 27.6% increase from the previous year[88] - New investments and additional investments in companies primarily engaged in social media platforms, sports equipment and apparel, e-commerce, and other internet-related businesses totaled approximately RMB 2.92 billion for the six months ended June 30, 2024[126] - The company's investments in listed enterprises under non-current assets were RMB 11,845 million as of June 30, 2024, up from RMB 11,495 million as of December 31, 2023[101] - The company's investments in non-listed enterprises under non-current assets were RMB 182,559 million as of June 30, 2024, down from RMB 190,698 million as of December 31, 2023[101] - The company's financial investments and others under non-current assets were RMB 12,444 million as of June 30, 2024, up from RMB 8,952 million as of December 31, 2023[101] Profit and Earnings - The company's equity holders' profit increased by 82% YoY to RMB 47.6 billion in Q2 2024[33] - Non-IFRS equity holders' profit grew by 53% YoY to RMB 57.3 billion in Q2 2024[33] - Net profit attributable to equity holders for Q2 2024 was RMB 47,630 million, up 13.7% from RMB 41,889 million in Q1 2024[49] - Net profit attributable to equity holders of the company was RMB 47,630 million for the quarter, an 82.0% increase year-over-year[95] - Basic earnings per share for the quarter were RMB 5.112, up 85.1% compared to the same period last year[95] - Diluted earnings per share for the quarter were RMB 4.994, an 85.3% increase year-over-year[96] - Net profit attributable to equity holders for the six months ended June 30, 2024, was RMB 89.519 billion, up from RMB 52.009 billion in the same period of 2023[166] - Basic earnings per share for the period were RMB 5.112, compared to RMB 2.761 in the previous year[175] Advertising and Fintech Revenue - Network advertising revenue increased by 13% QoQ to RMB 29.9 billion, driven by seasonal growth post-Spring Festival[34] - Fintech and enterprise services revenue grew by 4% YoY to RMB 50.4 billion in Q2 2024, with enterprise services achieving double-digit growth[39] - Online advertising revenue grew to RMB 29,871 million, a 19.5% increase compared to the same period last year[79] - Fintech and enterprise services revenue reached RMB 50,440 million, up 3.7% year-over-year[79] - Revenue from online advertising for the six months ended June 30, 2024, was RMB 56.377 billion, compared to RMB 45.967 billion in the same period of 2023[166] - Revenue from fintech and business services for the six months ended June 30, 2024, was RMB 102.742 billion, up from RMB 97.336 billion in the same period of 2023[166] Shareholder and Equity Information - Share of profits from associates and joint ventures reached RMB 7.7 billion in Q2 2024, up from RMB 2.2 billion in the previous quarter[40] - Non-IFRS share of profits from associates and joint ventures increased to RMB 9.9 billion in Q2 2024, driven by improved performance of domestic and overseas gaming studios[40] - Total dividends declared were RMB 262,961 million, up 3.7% compared to the previous year[98] - The company repurchased 154,730,000 shares on the Hong Kong Stock Exchange for a total consideration of approximately HKD 52.3 billion (excluding expenses) during the six months ended June 30, 2024[147] - The company's equity investments in listed enterprises increased to RMB 233.214 billion as of June 30, 2024, up from RMB 189.286 billion as of December 31, 2023[142] - Total equity as of January 1, 2024, amounted to RMB 873.681 billion[149] - Retained earnings as of January 1, 2024, were RMB 813.911 billion[149] - Comprehensive income for the period was RMB 91.017 billion[149] - Other comprehensive income (net of tax) was RMB (697) million[149] - Total comprehensive income for the period was RMB 125.967 billion[149] - Total equity as of June 30, 2024, amounted to RMB 927.597 billion[149] - Retained earnings as of June 30, 2024, were RMB 842.048 billion[149] - Non-controlling interests as of June 30, 2024, were RMB 66.916 billion[149] - Total transactions with equity holders during the period amounted to RMB (73.652) billion[149] - Other reserves (unaudited) as of January 1, 2024, were RMB (33.219) billion[149] - Total equity as of January 1, 2023, amounted to RMB 782,860 million[151] - Retained earnings as of January 1, 2023, were RMB 705,981 million[151] - Non-controlling interests as of January 1, 2023, were RMB 61,469 million[151] Cash Flow and Financial Position - Interest income for Q2 2024 grew by 13% to RMB 3,850 million due to increased cash reserves[71] - Adjusted EBITDA for Q2 2024 was RMB 68,518 million, compared to RMB 69,259 million in Q1 2024[76] - The company's free cash flow for Q2 2024 was RMB 40.4 billion, driven by operating cash flow of RMB 54.1 billion, partially offset by capital expenditures of RMB 5.9 billion, media content payments of RMB 6.2 billion, and lease liability payments of RMB 1.6 billion[141] - Net cash flow from operating activities for the six months ended June 30, 2024, was RMB 126,458 million[153] - Net cash used in investing activities for the six months ended June 30, 2024, was RMB 45,449 million[153] - Net cash used in financing activities for the six months ended June 30, 2024, was RMB 99,781 million[153] - Cash and cash equivalents at the end of June 30, 2024, were RMB 153,511 million[153] - Cash and cash equivalents as of June 30, 2024, were RMB 153.511 billion, down from RMB 161.023 billion as of March 31, 2024[173] - Net cash position as of June 30, 2024, was RMB 71.757 billion, compared to RMB 92.534 billion as of March 31, 2024[173] - Total assets as of June 30, 2024, amounted to RMB 1,654.970 billion, up from RMB 1,577.246 billion as of December 31, 2023[169] Debt and Liabilities - The total amount of US dollar notes payable was $19.45 billion as of June 30, 2024, with interest rates ranging from 1.375% to 4.700%[108] - The company's RMB bank loans increased to RMB 627.08 billion as of June 30, 2024, up from RMB 460.15 billion as of December 31, 2023, with interest rates ranging from 2.30% to 4.60%[129] - USD bank loans decreased to USD 15.85 billion as of June 30, 2024, compared to USD 17.75 billion as of December 31, 2023, with interest rates ranging from SOFR plus 0.80% to 0.95%[129] - Long-term USD bank borrowings (non-current portion) stood at RMB 109.753 billion as of June 30, 2024[186] - Long-term RMB bank borrowings (non-current portion) were RMB 43.170 billion as of June 30, 2024[186] - Short-term USD bank borrowings (current portion) amounted to RMB 19.242 billion as of June 30, 2024[186] - Short-term RMB bank borrowings (current portion) were RMB 10.440 billion as of June 30, 2024[186] - Total non-current liabilities were RMB 152.946 billion as of June 30, 2024[186] - Total current liabilities were RMB 52.462 billion as of June 30, 2024[186] Other Financial Metrics - Adjusted EBITDA ratio stood at 43% in Q2 2024, up from 38% in the same period last year[41] - Disposal gains from investments totaled RMB 1.257 billion in Q2 2024, down from RMB 1.752 billion in the same period last year[59] - The company recognized a net gain of approximately RMB 4.523 billion from deemed disposals of investments in companies for the six months ended June 30, 2024, compared to RMB 1.936 billion for the same period in 2023[113] - Donations for the company's SSV and CPP initiatives were approximately RMB 835 million and RMB 847 million for the three and six months ended June 30, 2024, respectively[114] - The total number of share options outstanding as of June 30, 2024, was 111,693,972, with an average exercise price of HKD 348.45[105] - The fair value of investments in associates was approximately RMB 322.778 billion as of June 30, 2024, down from RMB 351.594 billion as of December 31, 2023[122] - The fair value of the company's equity investments in listed companies (excluding subsidiaries) was RMB 564.5 billion as of June 30, 2024, while the book value of non-listed investments was RMB 327.4 billion[141] - The company's accounts payable aged over 90 days increased to RMB 7.423 billion as of June 30, 2024, compared to RMB 4.476 billion as of December 31, 2023[136] - The company's long-term USD notes payable (non-current portion) decreased to RMB 131.575 billion as of June 30, 2024, down from RMB 137.101 billion as of December 31, 2023[139] - The company's total financial assets increased to RMB 254.286 billion as of June 30, 2024, up from RMB 213.951 billion as of December 31, 2023, driven by fair value changes of RMB 41.386 billion[130] - Total comprehensive income for the period was RMB 51,144 million[151] - Employee benefits expenses, including share-based compensation, were RMB 6.213 billion for the three months ended June 30, 2024, up from RMB 5.551 billion in the same period last year[178] - Current income tax for the six months ended June 30, 2024, was RMB 21.183 billion, compared to RMB 18.068 billion in the previous year[181] - The company paid a final dividend of HKD 3.40 per share for the year ended December 31, 2023, totaling HKD 31.743 billion[182] - The company's shares have been listed on the Main Board of the Stock Exchange since June 16, 2004[155] - The interim financial data is presented in RMB unless otherwise stated[156]