TENCENT(00700)2024-03-20 08:39Revenue and Profit Growth - Revenue increased by 10% year-over-year to RMB 609.015 billion in 2023, compared to RMB 554.552 billion in 2022[1] - Gross profit grew by 23% to RMB 293.109 billion in 2023, up from RMB 238.746 billion in 2022[1] - Non-IFRS operating profit rose by 34% to RMB 191.886 billion in 2023, compared to RMB 143.203 billion in 2022[1] - Gross profit for the full year 2023 increased by 23% year-over-year to RMB 293.1 billion, with gross margin improving from 43% to 48%[34] - Operating profit for 2023 stood at RMB 160.074 billion, up from RMB 110.827 billion in 2022[102] - Net profit attributable to equity holders of the company was RMB 115.216 billion in 2023, down from RMB 188.243 billion in 2022[102] - Basic earnings per share for 2023 were RMB 12.186, compared to RMB 19.757 in 2022[102] - Total revenue for Q4 2023 was RMB 155.196 billion, a 7% year-over-year increase from RMB 144.954 billion in Q4 2022[108] - Non-IFRS operating profit for Q4 2023 was RMB 49.135 billion, a 35% increase from RMB 36.424 billion in Q4 2022[108] - Adjusted EBITDA increased to RMB 59.494 billion in Q4 2023, with an adjusted EBITDA margin of 38%[58] Gaming and Value-Added Services - International market games accounted for 30% of total gaming revenue in 2023, a new high[4] - Mini-games total revenue grew by over 50% in 2023, solidifying its position as China's leading casual gaming platform[7] - Value-added services business revenue for Q4 2023 decreased by 2% year-over-year to RMB 69.1 billion, with international market gaming revenue growing by 1% to RMB 13.9 billion[28] - Value-added services business revenue for the full year 2023 increased by 4% year-over-year to RMB 298.4 billion, with international market gaming revenue growing by 14% to RMB 53.2 billion[29] - Value-added services business achieved a gross profit of RMB 161.9 billion for the year ended December 31, 2023, an 11% YoY increase, with gross margin rising from 51% to 54%[36] - Value-added services gross profit in Q4 2023 grew 6% YoY to RMB 37.1 billion, with gross margin improving from 50% to 54% due to higher-margin game platform fees[53] - Value-added services revenue decreased by 9% YoY to RMB 69.1 billion, with international game revenue growing 5% QoQ to RMB 13.9 billion, while domestic game revenue declined 18% QoQ to RMB 27 billion[55] Advertising and Online Services - Network advertising revenue grew by 23% year-over-year to RMB 101.5 billion in 2023, driven by new ad inventory from Video Accounts and Weixin Search[16] - Online advertising business gross profit grew 47% YoY to RMB 51.3 billion for the year ended December 31, 2023, with gross margin increasing from 42% to 51%[36] - Online advertising revenue in Q4 2023 grew 21% YoY to RMB 29.8 billion, driven by strong demand for video account ads and platform upgrades[48] - Online advertising gross profit in Q4 2023 surged 55% YoY to RMB 16.9 billion, with gross margin rising from 44% to 57% due to video account ad growth[53] - Online advertising revenue grew 16% YoY to RMB 29.8 billion in Q4 2023, driven by platform upgrades and increased ad inventory[62] Financial Technology and Enterprise Services - Financial technology and enterprise services business gross profit increased by 38% year-over-year to RMB 80.6 billion, with gross margin rising from 33% to 40%[23] - Financial technology and enterprise services business revenue for the full year 2023 increased by 15% year-over-year to RMB 203.8 billion, driven by growth in payment activities and wealth management services[33] - Fintech and business services revenue in Q4 2023 increased 15% YoY to RMB 54.4 billion, supported by growth in commercial payment activities and cloud services[48] - Fintech and business services gross profit in Q4 2023 increased 50% YoY to RMB 23.9 billion, with gross margin improving from 34% to 44%[53] - Fintech and business services revenue increased 4% YoY to RMB 54.4 billion in Q4 2023, supported by seasonal growth in cloud services and increased payment activities[62] Expenses and Costs - Sales and marketing expenses grew by 17% year-over-year to RMB 34.2 billion, accounting for 6% of revenue compared to 5% in the previous year[23] - General and administrative expenses decreased by 3% year-over-year to RMB 103.5 billion, accounting for 17% of revenue compared to 19% in the previous year[23] - Sales and marketing expenses in Q4 2023 grew 79% YoY to RMB 11 billion, accounting for 7% of revenue, up from 4% in the same period last year[40] - Sales and marketing expenses increased by 39% QoQ to RMB 11 billion in Q4 2023, reflecting higher game promotion and advertising efforts[65] - R&D expenses for 2023 amounted to RMB 64.078 billion, a 4.4% increase from RMB 61.401 billion in 2022, with employee benefits accounting for RMB 52.416 billion[87] - Expenses related to SSV and CPP projects (excluding share-based compensation) were RMB 998 million in 2023, up from RMB 726 million in 2022[88] Investments and Financial Assets - Net investment loss and other amounted to RMB 6.1 billion, primarily due to impairment provisions for certain investee companies[23] - Interest income increased by 61% year-over-year to RMB 13.8 billion, driven by higher cash reserves and increased yields on term deposits[25] - Share of profits/(losses) of associates and joint ventures turned to a profit of RMB 5.8 billion from a loss of RMB 16.1 billion in the previous year[25] - The company made impairment provisions totaling RMB 6.847 billion for associates showing signs of impairment, with most of the recoverable amounts determined using fair value less costs of disposal[125] - New investments and additional investments in financial assets, including those in electronic payment, game development, and e-commerce, amounted to approximately RMB 53.276 billion[128] - The fair value of financial assets measured at fair value through other comprehensive income decreased by RMB 1.954 billion in 2023, compared to a decrease of RMB 7.117 billion in 2022[128] - Investments in associates increased to RMB 253.696 billion in 2023 from RMB 246.043 billion in 2022, with listed associates contributing RMB 132.776 billion and unlisted associates RMB 120.920 billion[163] - The company made new and additional investments totaling approximately RMB 8.454 billion in 2023, primarily in e-commerce, fintech services, and other internet-related businesses[169] Dividends and Share Repurchases - The company plans to increase its share repurchase program to over HKD 100 billion in 2024, more than double the HKD 49 billion in 2023[9] - The company proposed a final dividend of HKD 3.40 per share for 2023, a 42% increase from HKD 2.40 per share in 2022[2] - The company distributed a dividend of approximately RMB 115.8 billion in the form of physical shares, with a fair value change of RMB 30 billion recognized in equity due to the fluctuation in the fair value of Meituan shares from January 1, 2023, to the distribution date[121] - The company repurchased and canceled shares worth RMB 4.74 billion during the year[142] User Metrics and Engagement - Video accounts' total user time doubled in 2023, driven by increased daily active accounts and average usage time per user[4] - Tencent Video reached 117 million paying members and TME reached 107 million paying members by the end of 2023[8] - Combined monthly active users of WeChat and WeChat reached 1,343 million at the end of 2023, a 2% increase from 1,313 million at the end of 2022[190] - QQ's mobile monthly active users decreased by 3% to 554 million at the end of 2023 from 572 million at the end of 2022[190] - Paid value-added service registered accounts increased by 6% to 248 million at the end of 2023 from 234 million at the end of 2022[190] Financial Position and Assets - Total assets decreased slightly from RMB 1,578,131 million in 2022 to RMB 1,577,246 million in 2023[75] - Intangible assets increased significantly from RMB 161,802 million in 2022 to RMB 177,727 million in 2023, a growth of approximately 9.8%[75] - Investments in associates rose from RMB 246,043 million in 2022 to RMB 253,696 million in 2023, an increase of about 3.1%[75] - Financial assets at fair value through profit or loss increased from RMB 206,085 million in 2022 to RMB 211,145 million in 2023, up by approximately 2.5%[75] - Cash and cash equivalents grew from RMB 156,739 million in 2022 to RMB 172,320 million in 2023, an increase of around 9.9%[75] - The company's equity attributable to owners of the company decreased from RMB 806,299 million in 2022 to RMB 721,391 million in 2023[77] - Retained earnings increased from RMB 669,911 million in 2022 to RMB 705,981 million in 2023, reflecting a growth of approximately 5.4%[77] - The company's financial assets at fair value through other comprehensive income decreased from RMB 185,247 million in 2022 to RMB 213,951 million in 2023, a significant increase of about 15.5%[75] - The company's total equity decreased from RMB 876,693 million in 2022 to RMB 782,860 million in 2023[77] - Total assets at the end of 2023 were RMB 213,951 million, compared to RMB 185,247 million at the end of 2022, representing an increase of 15.5%[182] Debt and Borrowings - The company's total bank borrowings increased to RMB 41,537 million at the end of 2023 from RMB 11,580 million at the end of 2022[196] - RMB bank borrowings increased to RMB 46.015 billion at the end of 2023 from RMB 22.514 billion at the end of 2022, with interest rates ranging from 2.45% to 4.60%[200] - USD bank borrowings decreased to USD 17.75 billion at the end of 2023 from USD 20.998 billion at the end of 2022, with interest rates based on SOFR plus 0.80% to 0.95%[200] - JPY bank borrowings decreased to JPY 894 million at the end of 2023 from JPY 1.25 billion at the end of 2022, with interest rates ranging from 0.00% to 1.86%[200] - EUR bank borrowings decreased to EUR 2 million at the end of 2023 from EUR 3 million at the end of 2022, with interest rates ranging from 1.00% to 2.54%[200] - Long-term USD bank borrowings (unsecured) decreased to RMB 109.782 billion in 2023 from RMB 141.090 billion in 2022[179] - All USD LIBOR-based borrowings were transitioned to SOFR-based by July 2023[180] Other Financial Metrics - Net fair value loss on financial assets measured at fair value through profit or loss was RMB 2.886 billion in 2023, a significant decrease from RMB 7.737 billion in 2022[91] - The company's intangible assets amortization related to acquisitions was approximately RMB 5.019 billion in 2023, slightly down from RMB 5.197 billion in 2022[136] - The company recorded a penalty related to Tenpay of RMB 2.995 billion in 2023, which was not present in the previous year[137] - The total segment revenue for the year was RMB 554.552 billion, with the largest segment contributing RMB 287.565 billion[138] - The total amortization expense across all segments was RMB 29.511 billion, with the largest segment accounting for RMB 19.320 billion[139] - The company granted a total of 17,221,857 share options in 2023, with an average exercise price of HKD 334.04[133] - The number of awarded shares at the end of 2023 was 132,989,249, an increase from 123,861,178 at the end of 2022[135] - Total equity as of December 31, 2023, was RMB 873.681 billion, with retained earnings of RMB 813.911 billion[142] - Comprehensive income for the year was RMB 107.182 billion, including annual profit of RMB 115.216 billion[142] - Employee benefits expenses for the year included share-based compensation of RMB 22.782 billion, with RMB 63 million related to SSV and CPP employees[150] - The company recorded a net loss of RMB 1.295 billion due to the dilution of equity interests in certain associates[153] - The company reclassified certain items in the consolidated income statement to better reflect operational performance and investment-related income[145] - The company applied temporary exceptions for deferred tax accounting related to Pillar Two supplementary tax following the amendment of IAS 12[147] - The company's share premium decreased to RMB 37.989 billion by the end of 2023, down from RMB 62.418 billion at the start of the year[142] - The company's non-controlling interests increased to RMB 65.09 billion by the end of 2023, up from RMB 61.469 billion at the start of the year[142] - The company's total comprehensive income for the year included a net loss of RMB 737 million from the fair value changes of assets held for distribution[142] - The company's share of losses from associates and joint ventures, including impairment provisions for investments, goodwill, and other intangible assets, amounted to RMB 1.933 billion in 2023, compared to RMB 3.201 billion in 2022[154] - The company's share of amortization of intangible assets from acquisitions was RMB 5.250 billion in 2023, down from RMB 6.621 billion in 2022[154] - Share-based compensation expenses decreased to RMB 4.984 billion in 2023 from RMB 7.063 billion in 2022[154] - The company's basic earnings per share (EPS) for 2023 was RMB 12.186, a decrease from RMB 19.757 in 2022[158] - The company proposed a final dividend of HK$3.40 per share for 2023, up from HK$2.40 per share in 2022[161] - Accounts payable increased to RMB 100.948 billion in 2023 from RMB 92.381 billion in 2022, with the majority (RMB 94.537 billion) due within 0-30 days[177] - Revenue costs for the year ended December 31, 2023, were RMB 3,159 billion, remaining stable year-over-year[189]