2024-08-27 11:25Financial Performance - For the second quarter of 2024, Tencent reported a revenue of RMB 161.12 billion, an 8% increase year-over-year from RMB 149.21 billion[4]. - Gross profit for the same quarter was RMB 85.90 billion, representing a 21% increase compared to RMB 70.84 billion in the previous year[4]. - Net profit attributable to equity holders for Q2 2024 reached RMB 47.63 billion, an 82% increase from RMB 26.17 billion in Q2 2023[4]. - Basic earnings per share for Q2 2024 were RMB 5.112, an 85% increase from RMB 2.761 in the same quarter last year[4]. - For the first half of 2024, Tencent's revenue was RMB 320.62 billion, a 7% increase from RMB 299.19 billion in the first half of 2023[5]. - The net profit attributable to equity holders for the first half of 2024 was RMB 89.52 billion, a 72% increase from RMB 52.01 billion in the same period last year[5]. - Non-IFRS operating profit for the first half of 2024 was RMB 117.06 billion, a 29% increase from RMB 91.08 billion in the first half of 2023[5]. - Tencent's basic earnings per share for the first half of 2024 were RMB 9.590, a 75% increase from RMB 5.486 in the first half of 2023[5]. User Engagement and Growth - The company has seen significant growth in user engagement and monetization across its platforms, contributing to the overall revenue increase[7]. - The combined monthly active accounts for WeChat reached 1,371 million, a 3% year-over-year increase from 1,327 million[8]. - QQ's mobile monthly active accounts remained stable at 571 million, with a 3% quarter-over-quarter increase from 553 million[8]. - The number of paid members for Tencent Video increased by 13% year-over-year to 117 million[10]. - The number of paid music subscribers grew by 18% year-over-year to 117 million[10]. - The flagship games "Honor of Kings" and "PUBG Mobile" both saw revenue recovery in Q2 2024, with "Naruto" mobile game achieving 10 million daily active accounts in May 2024[10]. - The average daily active accounts for "Brawl Stars" reached a historical high, ranking third in international mobile games, with revenue increasing over tenfold year-over-year[10]. Revenue Breakdown - Revenue for Q2 2024 increased by 8% year-on-year to RMB 161.117 billion, driven by strong performance in value-added services and online advertising[14]. - Value-added services revenue grew by 6% year-on-year to RMB 78.822 billion, with international game revenue rising to RMB 13.9 billion, reflecting a 9% increase[14]. - Online advertising revenue surged by 19% year-on-year to RMB 29.871 billion, primarily driven by growth in video and long-form video advertising[15]. - Financial technology and enterprise services revenue increased by 4% year-on-year to RMB 50.440 billion, with wealth management services showing double-digit growth[15]. Expenses and Profitability - Sales and marketing expenses grew by 10% year-on-year to RMB 9.2 billion, reflecting increased promotional efforts for new content releases[20]. - The company recorded a share of profits from associates and joint ventures of RMB 7.718 billion, significantly up from RMB 2.186 billion in the previous quarter[21]. - Interest income rose by 13% year-on-year to RMB 3.9 billion, attributed to increased cash reserves[20]. - The company’s operating profit for Q2 2024 was RMB 50.732 billion, slightly down from RMB 52.556 billion in Q1 2024[21]. - The company did not declare any interim dividend for the six months ended June 30, 2024[12]. Cash Flow and Investments - Cash and cash equivalents net of debt stood at RMB 71.8 billion as of June 30, 2024[25]. - The company generated free cash flow of RMB 40.4 billion in Q2 2024, with net cash from operating activities at RMB 54.1 billion[38]. - The investment portfolio value as of June 30, 2024, was approximately RMB 740.18 billion, an increase from RMB 701.664 billion as of December 31, 2023[34]. - The company recorded a return from its investment portfolio of RMB 8.345 billion, representing a year-on-year growth of 1,108%[35]. - The company plans to continue monitoring the performance of its investment portfolio and seek strategic investment opportunities[36]. Taxation and Compliance - The effective corporate income tax rate in China is generally 25%, with certain subsidiaries qualifying for a reduced rate of 15% as high-tech enterprises and 10% for key software enterprises[90]. - The company is subject to various tax rates in different jurisdictions, with a maximum rate of 35% applicable in certain regions[91]. - The company has assessed its tax exposure in light of the OECD's Pillar Two legislative framework, which may impact future tax liabilities[95]. Shareholder Returns and Dividends - The proposed final dividend for the year ended December 31, 2023, is HKD 3.40 per share, compared to HKD 2.40 per share for 2022, totaling HKD 31.743 billion, an increase of 39.4% from HKD 22.762 billion in 2023[100]. - The company declared a cash dividend of RMB 20,586 million during the period[51]. - The company repurchased shares worth RMB 14,879 million during the period, resulting in a reduction of total equity[51]. Financial Position and Assets - The company's total assets reached RMB 1,654,970 million as of June 30, 2024, compared to RMB 1,577,246 million at the end of December 2023, indicating an increase of 4.9%[47]. - The company's total liabilities amounted to RMB 727,373 million, compared to RMB 703,565 million, an increase of 3.4%[47]. - The company’s equity attributable to shareholders rose to RMB 860,681 million, compared to RMB 808,591 million, an increase of 6.4%[46]. - The company reported a significant increase in accounts receivable, which rose to RMB 52,250 million from RMB 46,606 million, reflecting an increase of 12.0%[45]. Stock Options and Employee Incentives - The company has adopted six share option plans, with the latest plan allowing the board to grant options to eligible participants at their discretion, subject to the plan's terms and conditions[125]. - The total number of issued and fully paid ordinary shares as of June 30, 2024, was 9,354,596,965, a decrease from 9,574,017,108 shares as of December 31, 2023, reflecting a reduction of approximately 2.3%[124]. - The company reported a total of 1,447,425 stock options exercised from the options granted on April 4, 2019, with no forfeitures[170]. - The total number of stock options granted in the first half of 2024 is 122,611,076, with 10,679,485 options exercised and 20,087,434 options expired[178]. Future Outlook - Tencent plans to continue investing in new technologies and market expansion strategies to sustain growth in the coming quarters[7]. - Future outlook indicates a focus on market expansion and new product development, aiming for a revenue increase in the upcoming quarters[30]. - The company has set a target for a revenue increase of 10% year-over-year, supported by new strategic initiatives[30].