TENCENT(HK:00700)2023-08-29 09:07Financial Performance - For the second quarter of 2023, the company reported revenue of RMB 149.21 billion, an 11% increase year-over-year, while the gross profit reached RMB 70.84 billion, up 22%[6]. - The net profit attributable to equity holders for the second quarter was RMB 26.17 billion, reflecting a 41% year-over-year growth, with basic earnings per share at RMB 2.761, a 42% increase[13]. - The company achieved a total revenue of RMB 299.19 billion for the first half of 2023, an 11% increase compared to RMB 269.51 billion in the same period last year[9]. - The company reported a non-IFRS net profit attributable to equity holders of RMB 37.55 billion for the second quarter, a 33% increase year-over-year[13]. - The operating profit for Q2 2023 was RMB 40.3 billion, up from RMB 30.1 billion in Q2 2022[29]. - The company’s net profit attributable to equity holders increased by 1% quarter-over-quarter to RMB 26.2 billion in Q2 2023[41]. - The company reported a net profit of RMB 52,009 million for the six months ended June 30, 2023[87]. - The net profit for the same period was RMB 42,963 million, representing a net profit margin of 16%[61]. - The company reported a net loss of RMB 200 million in other income, primarily due to compliance-related costs, including a fine of approximately RMB 2.99 billion imposed by the People's Bank of China[38]. Revenue Streams - Monthly active accounts for WeChat and Weixin reached 1.327 billion, a 2% increase year-over-year, while QQ's mobile active accounts were 571 million, a slight increase of 0.4%[14]. - The advertising business experienced significant growth, driven by the application of machine learning capabilities and the commercialization of video accounts[15]. - Online advertising revenue grew by 34% year-on-year to RMB 25.0 billion, driven by strong demand for video ads and optimization of the machine learning advertising platform[33]. - Financial technology and enterprise services revenue rose by 15% year-on-year to RMB 48.6 billion, benefiting from increased commercial payment activities[33]. - International gaming revenue increased by 19% year-on-year to RMB 12.7 billion, with a 12% growth rate after excluding foreign exchange effects[33]. - The revenue from the online advertising business grew by 19% year-on-year to RMB 25 billion, benefiting from seasonal factors like the "618" shopping festival[45]. - The revenue from value-added services was RMB 74,211 million, up 3.3% year-over-year from RMB 71,683 million[77]. - The revenue from social networks for the six months ended June 30, 2023, was RMB 60,700 million, an increase from RMB 58,380 million in the same period of 2022, reflecting a growth of about 3.6%[151]. Cost and Expenses - The cost of revenue for Q2 2023 increased by 3% year-on-year to RMB 78.4 billion, with the cost as a percentage of total revenue decreasing from 57% to 53%[34]. - The cost of revenue in Q2 2023 decreased by 4% quarter-over-quarter to RMB 78.4 billion, resulting in a gross margin improvement from 45% to 47%[44]. - Sales and marketing expenses increased by 18% quarter-over-quarter to RMB 8.3 billion, reflecting increased promotional and advertising activities[46]. - The company reported a net financial cost of RMB 3.3 billion in Q2 2023, an increase of 82% year-over-year[38]. - Employee benefit expenses for the three and six months ended June 30, 2023, were RMB 26.770 billion and RMB 54.069 billion, a decrease from RMB 27.550 billion and RMB 56.779 billion in 2022[158]. - Research and development expenses for the three and six months ended June 30, 2023, were approximately RMB 16.010 billion and RMB 31.191 billion, compared to RMB 15.010 billion and RMB 30.393 billion for the same periods in 2022[160]. Cash Flow and Capital Expenditure - Free cash flow generated in Q2 2023 was RMB 29.9 billion, with net cash flow from operating activities at RMB 40.7 billion[70]. - The company’s capital expenditure in Q2 2023 was RMB 3.95 billion, reflecting ongoing investments in growth initiatives[48]. - Cash dividends paid during the period totaled RMB 20,586 million, while a physical dividend distribution amounted to RMB 32,169 million[90]. - The company repurchased shares amounting to RMB 15,091 million, up from RMB 5,577 million in the previous year, which is an increase of 170.5%[100]. - The total cash outflow related to leases for the six months ended June 30, 2023, was approximately RMB 2.982 billion, a decrease from RMB 3.359 billion for the same period in 2022[196]. Assets and Liabilities - Total assets as of June 30, 2023, amounted to RMB 1,537,503 million, a decrease from RMB 1,578,131 million at the end of 2022[80]. - Total liabilities decreased to RMB 696,687 million from RMB 795,271 million, a reduction of 12.4%[84]. - Current liabilities increased to RMB 348,864 million from RMB 434,204 million, a decrease of 19.7%[84]. - Long-term borrowings decreased to RMB 154,079 million from RMB 163,668 million, a decline of 5.8%[81]. - The company’s total equity attributable to equity holders was RMB 736,494 million as of June 30, 2023, compared to RMB 803,881 million at the end of the previous period[95]. Compliance and Regulatory Issues - The company incurred a fine of approximately RMB 2.99 billion for past regulatory non-compliance in providing payment services in mainland China, which was accrued within the six months ended June 30, 2023[48]. - The group has not experienced any significant changes in risk management policies as of June 30, 2023[119]. Future Outlook - The company plans to continue investing in new technologies and market expansion to drive future growth[54]. - Future guidance indicates a focus on maintaining growth momentum and exploring strategic acquisitions to strengthen market position[54].