Lazada

TENCENT ANNOUNCES 2023 ANNUAL AND FOURTH QUARTER RESULTS

High Quality Revenue Streams Drove Gross Profit Growth of 23% in FY2023
Increasing Dividend by 42%; More Than Doubling Share Repurchase to Over HKD100 Billion in 2024

HONG KONG, March 20, 2024 /PRNewswire/ — Tencent Holdings Limited (HKEX: 00700 (HKD Counter) and 80700 (RMB Counter), “Tencent” or the “Company”), a world-leading Internet and technology company in China, today announced the audited consolidated results for the year ended December 31, 2023 (“FY2023”) and the unaudited consolidated results for the fourth quarter (“4Q2023”).

Mr. Ma Huateng, Chairman and CEO of Tencent, said, “In 2023, we achieved breakthroughs in a number of products and services, as Video Accounts‘ total user time spent more than doubled, enhancements to our advertising AI model significantly improved our targeting performance, and international contribution to our games revenue reached a record 30%. These developments drove high-quality revenue streams which fuelled our gross profit growth of 23%, and supported our plan to step up capital returns to shareholders. Tencent Hunyuan developed into a top-tier foundation model with superior performance in numerical reasoning, logical inference, and multi-turn conversations. In addition, we actively sought to leverage our technology and platform to create value for society through initiatives such as our digital philanthropy platform, one of the largest of its kind in the world, whose 99 Giving Day event raised a record RMB3.8 billion in public donations.”

FY2023 Financial Highlights

Revenues: +10% YoY, gross profit: +23% YoY, non-IFRS[1] profit attributable to equity holders of the Company: +36% YoY

  • Total revenues were RMB609.0 billion (USD86.0 billion[2]), up 10% over 2022.
  • Gross profit was RMB293.1 billion (USD41.4 billion), up 23% YoY.
  • On a non-IFRS basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items:
    • Operating profit* was RMB191.9 billion (USD27.1 billion), up 34% YoY. Operating margin* increased to 32% from 26% last year.
    • Profit for the year was RMB161.7 billion (USD22.8 billion), up 36% YoY. Net margin increased to 27% from 21% last year.
    • Profit attributable to equity holders of the Company for the year was RMB157.7 billion (USD22.3 billion), up 36% YoY.
    • Basic earnings per share were RMB16.678. Diluted earnings per share were RMB16.320.
  • On an IFRS basis:
    • Operating profit* was RMB160.1 billion (USD22.6 billion), up 44% YoY. Operating margin* increased to 26% from 20% last year.
    • Profit for the year was RMB118.0 billion (USD16.7 billion), down 37% YoY. Net margin decreased to 19% from 34% last year.
    • Profit attributable to equity holders of the Company for the year was RMB115.2 billion (USD16.3 billion), down 39% YoY.
    • Basic earnings per share were RMB12.186. Diluted earnings per share were RMB11.887.

[1] Non-IFRS adjustments excludes share-based compensation, M&A related impact such as net (gains)/losses from investee companies, amortisation of intangible assets, impairment provisions/(reversals), SSV & CPP, income tax effects and others

[2] Figures stated in USD are based on USD1 to RMB7.0827

* Certain items have been reclassified from above to below the operating profit line, and the comparative figures for prior periods have been restated accordingly. Please refer to the earnings announcement for details.

FY2023 Business Review and Outlook 

  • Video Accounts‘ total user time spent more than doubled, driven by DAU and time spent per user, benefitting from enhanced recommendation algorithms. We provided more monetisation support for Video Accounts creators, such as facilitating merchandise sales through live streaming, and matching creators with brands for marketing campaigns.
  • Mini Games‘ gross receipts increased over 50%, with Mini Games representing the leading casual game platform in China.
  • QQ Channels enhanced interest-based user interactions across categories such as games, lifestyle, and knowledge-based content.
  • Tencent Video and Tencent Music extended their leadership in the long-form video and music streaming industries, with 117 million[3] video subscriptions and 107 million[4] music subscriptions.
  • The number of Tencent mobile and PC “major hit games” in China surpassing average quarterly DAU of 5 million for mobile or 2 million for PC, and generating over RMB4 billion annual gross receipts (thresholds which we view as indicative of a major and enduring hit), increased from 6 in 2022 to 8 in 2023.
  • We upgraded our AI-powered advertising technology platform, which significantly enhanced our targeting accuracy and thus advertising revenue.
  • We strengthened our payment compliance capabilities, enhanced Mini Program-based transaction tools and upgraded cross-border payment experience.
  • WeCom and Tencent Meeting deployed generative AI-powered functionalities and increased their monetisation.
  • We launched our proprietary foundation model, Tencent Hunyuan, and scaled it up to trillion parameter scale, utilising a Mixture of Experts architecture.

We returned substantial capital to shareholders in 2023 through payment of cash dividend, share repurchases, and settlement of distribution in specie. We have proposed to increase our annual dividend in respect of the year ended 31 December 2023 by 42%, to HKD3.40 per share[5] (equivalent to approximately HKD32 billion), and we intend to at least double the size of our share repurchases, from approximately HKD49 billion in 2023 to over HKD100 billion in 2024.

[3] As at 31 December 2023

[4] The average number of subscriptions as of the last day of each month during 4Q2023

[5] Subject to shareholders’ approval at the 2024 AGM

FY2023 Environmental, Social and Governance (“ESG”) Initiatives

Harnessing our technology and platform, we continue to create social value for our users, partners and the society at large.

  • Our digital philanthropy platform helped raise a record RMB3.8 billion in public donations during the 99 Giving Day campaign, up 15% year-on-year.
  • Our New Cornerstone Investigator Program has supported 104 scientists, contributing to the development of basic science research.
  • We made progress in our decarbonisation journey by applying our fourth-generation data centre technology to reduce emissions and increasing the adoption of renewable energy.
  • In August 2023, we joined the United Nations Global Compact (“UNGC”), demonstrating our commitment to integrating UNGC’s principles into our strategy, culture and day-to-day operations, and supporting UNGC’s Sustainable Development Goals.

4Q2023 Financial Highlights

Revenues: +7% YoY, gross profit: +25% YoY, non-IFRS profit attributable to equity holders of the Company: +44% YoY

  • Total revenues were RMB155.2 billion (USD21.9 billion), up 7% over the fourth quarter of 2022 (“YoY”).
  • Gross profit was RMB77.6 billion (USD11.0 billion), up 25% YoY.
  • On a non-IFRS basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items:
    • Operating profit* was RMB49.1 billion (USD6.9 billion), up 35% YoY. Operating margin* increased to 32% from 25% last year.
    • Profit for the period was RMB43.8 billion (USD6.2 billion), up 43% YoY. Net margin increased to 28% from 21% last year.
    • Profit attributable to equity holders of the Company for the quarter was RMB42.7 billion (USD6.0 billion), up 44% YoY.
    • Basic earnings per share were RMB4.537. Diluted earnings per share were RMB4.443.
  • On an IFRS basis:
    • Operating profit* was RMB41.4 billion (USD5.8 billion), up 42% YoY. Operating margin* increased to 27% from 20% last year.
    • Profit for the period was RMB27.8 billion (USD3.9 billion), down 74% YoY. Net margin decreased to 18% from 74% last year.
    • Profit attributable to equity holders of the Company for the quarter was RMB27.0 billion (USD3.8 billion), down 75% YoY.
    • Basic earnings per share were RMB2.873. Diluted earnings per share were RMB2.807.
  • Total cash were RMB403.3 billion (USD56.9 billion) and free cash flow was RMB34.2 billion (USD 4.8 billion), up 48% YoY. Net cash position totalled RMB54.7 billion (USD 7.7 billion).
  • Fair value of our shareholdings[6] in listed investee companies (excluding subsidiaries) totalled RMB550.7 billion (USD77.8 billion) and the carrying book value of our unlisted investee companies was RMB337.3 billion (USD47.6 billion).
  • During the fourth quarter, the Company repurchased approximately 56.3 million shares on the Hong Kong Stock Exchange for a consideration of approximately RMB15.7 billion.

[6] Including those held via special purpose vehicles, on an attributable basis

Operating Metrics 

As at

31 December
2023

As at

31 December
2022

Year-

on-year

change

As at

30 September

2023

Quarter-on-
quarter

change

(in millions, unless specified)

Combined MAU of

 Weixin and WeChat

1,343

1,313

2 %

1,336

0.5 %

Mobile device MAU of QQ                                     

554

572

-3 %

558

-0.7 %

Fee-based VAS registered

 subscriptions

248

234

6 %

245

1 %

4Q2023 Business Review

Revenues from VAS decreased by 2% YoY to RMB69.1 billion for the fourth quarter of 2023. International Games revenues increased by 1% YoY to RMB13.9 billion, or declined by 1% YoY when excluding currency fluctuations, reflecting Supercell repositioning some of its games. PUBG Mobile saw a strong upturn in revenue, while VALORANT maintained robust growth. Domestic Games revenues declined by 3% YoY to RMB27.0 billion due to decreased contributions from Honour of Kings and Peacekeeper Elite, partially offset by contributions from our recently launched games, such as VALORANT and Lost Ark. Social Networks revenues decreased by 2% YoY to RMB28.2 billion, due to lower revenues from music-related and games-related live streaming services, partially mitigated by revenue growth from music subscriptions and Mini Games platform service fees.

Revenues from Online Advertising were RMB29.8 billion for the fourth quarter of 2023, up 21% YoY, propelled by advertising demand for Video Accounts, as well as the ongoing upgrade of our advertising platform. All categories except for automotive saw a year-on-year increase in advertising spending with us, with particularly notable growth in Internet services, healthcare and consumer goods categories.

Revenues from FinTech and Business Services increased by 15% YoY to RMB54.4 billion for the fourth quarter of 2023. FinTech Services sustained double-digit year-on-year growth due to the growth in commercial payment activities, as well as the expansion of wealth management services and consumer loan services. Business Services achieved YoY growth of around 20%, mainly driven by increased eCommerce technology service fees within Video Accounts, alongside moderate revenue growth in cloud services.

For other detailed disclosure, please refer to our website https://www.tencent.com/en-us/investors.htmlhttp://www.tencent.com/ir, or follow us via Weixin Official Account (Weixin ID: Tencent_IR):

About Tencent

Tencent uses technology to enrich the lives of Internet users.

Our communication and social services, Weixin and QQ, connect users with each other and with digital content and services, both online and offline, making their lives more convenient. Our targeted advertising service helps advertisers reach out to hundreds of millions of consumers in China. Our FinTech and business services support our partners’ business growth and assist their digital upgrade.

Tencent invests heavily in talent and technological innovation, actively promoting the development of the Internet industry. Tencent was founded in Shenzhen, China, in 1998. Tencent has been listed on the Main Board of the Stock Exchange of Hong Kong since 2004. 

Investor contact: IR@tencent.com

Media contact: GC@tencent.com 

Non-IFRS Financial Measures

To supplement the consolidated results of the Group prepared in accordance with IFRS, certain additional non-IFRS financial measures (in terms of operating profit, operating margin, profit for the period, net margin, profit attributable to equity holders of the Company, basic EPS and diluted EPS) have been presented in this press release. These unaudited non-IFRS financial measures should be considered in addition to, not as a substitute for, measures of the Group’s financial performance prepared in accordance with IFRS. In addition, these non-IFRS financial measures may be defined differently from similar terms used by other companies.

The Company’s management believes that the non-IFRS financial measures provide investors with useful supplementary information to assess the performance of the Group’s core operations by excluding certain non-cash items and certain impact of investment-related transactions. In addition, non-IFRS adjustments include relevant non-IFRS adjustments for the Group’s major associates based on available published financials of the relevant major associates, or estimates made by the Company’s management based on available information, certain expectations, assumptions and premises.

Forward-Looking Statements

This press release contains forward-looking statements relating to the business outlook, estimates of financial performance, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realised in the future. Underlying these forward-looking statements are a lot of risks and uncertainties. In light of the risks and uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as representations by the Board or the Company that the plans and objectives will be achieved, and investors should not place undue reliance on such statements.  

 

 

CONSOLIDATED INCOME STATEMENT

RMB in millions, unless specified

Unaudited

Audited

4Q2023

 

4Q2022

Restated*

2023

 

2022

Restated*

Revenues

155,196

144,954

609,015

554,552

VAS

69,079

70,417

298,375

287,565

Online Advertising

29,794

24,660

101,482

82,729

FinTech and Business Services

54,379

47,244

203,763

177,064

Others

1,944

2,633

5,395

7,194

Cost of revenues

(77,632)

(83,132)

(315,906)

(315,806)

Gross profit

77,564

61,822

293,109

238,746

Gross margin

50 %

43 %

48 %

43 %

Selling and marketing expenses

(10,971)

(6,115)

(34,211)

(29,229)

General and administrative expenses

(27,175)

(27,314)

(103,525)

(106,696)

Other gains/(losses), net

1,983

770*

4,701

8,006*

Operating profit

(Restated for prior periods)

41,401

29,163*

160,074

110,827*

Operating margin

(Restated for prior periods)

27 %

20%*

26 %

20%*

Net gains/(losses) from investments
   and others

(6,730)

85,084*

(6,090)

116,287*

Interest income

3,917

2,582*

13,808

8,592*

Finance costs

(3,543)

(3,658)

(12,268)

(9,352)

Share of profit/(loss) of associates and
   joint ventures, net

2,463

(1,692)

5,800

(16,129)

Profit before income tax

37,508

111,479

161,324

210,225

Income tax expense

(9,658)

(4,575)

(43,276)

(21,516)

Profit for the period

27,850

106,904

118,048

188,709

Net margin

18 %

74 %

19 %

34 %

Attributable to:

       Equity holders of the Company

27,025

106,268

115,216

188,243

       Non-controlling interests

825

636

2,832

466

Non-IFRS operating profit

   (Restated for prior periods)

49,135

36,424*

191,886

143,203*

Non-IFRS profit attributable to equity
   holders of the Company

42,681

29,711

157,688

115,649

Earnings per share for profit
   attributable to equity holders of
   the Company

(in RMB per share)

– basic

2.873

11.173

12.186

19.757

– diluted

2.807

10.977

11.887

19.341

* Certain items have been reclassified from above to below the operating profit line, and the comparative figures for prior periods have been restated accordingly. Please refer to the earnings announcement for details.

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

RMB in millions, unless specified

Audited

2023

2022

Profit for the year

118,048

188,709

Other comprehensive income, net of tax:

Items that may be subsequently reclassified to profit or loss

Share of other comprehensive income of associates and joint ventures

(176)

1,479

Transfer of share of other comprehensive income to profit or loss upon disposal
   and deemed disposal of associates and joint ventures

(9)

(129)

Transfer to profit or loss upon disposal of financial assets at fair value through 
   other comprehensive income

13

Net gain/(losses) from changes in fair value of financial assets at fair value
   through other comprehensive income

59

(52)

Currency translation differences

13,328

18,732

Other fair value (losses)/gains, net

(3,581)

5,457

Items that will not be subsequently reclassified to profit or loss

Share of other comprehensive income of associates and joint ventures

(561)

937

Net losses from changes in fair value of assets held for distribution

(29,991)

(6,102)

Net gains/(losses) from changes in fair value of financial assets at fair value
   through other comprehensive income

11,142

(148,686)

Currency translation differences

(1,077)

(794)

(10,866)

(129,145)

Total comprehensive income for the year

107,182

59,564

Attributable to:

    Equity holders of the Company

102,130

60,699

    Non-controlling interests

5,052

(1,135)

 

OTHER FINANCIAL INFORMATION

RMB in millions, unless specified

Unaudited     

Audited     

4Q2023

4Q2022

2023

2022

EBITDA (a)

53,983

44,002

214,381

164,037

Adjusted EBITDA (a)

59,494

49,606

235,454

188,986

Adjusted EBITDA margin (b)

38 %

34 %

39 %

34 %

Interest and related expenses

3,015

2,826

11,885

9,985

Net cash/(debt)(c)

54,740

(14,832)

54,740

(14,832)

Capital expenditures (d)

7,524

5,651

23,893

18,014

 

Note:

(a)    EBITDA is calculated as operating profit minus other gains/(losses), net, and adding back depreciation of property, plant and equipment, investment properties as well as right-of-use assets, and amortisation of intangible assets and land use rights. Adjusted EBITDA is calculated as EBITDA plus equity-settled share-based compensation expenses.

(b)    Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues.

(c)     Net cash/(debt) represents period end balance and is calculated as cash and cash equivalents, plus term deposits and others, minus borrowings and notes payable.

(d)    Capital expenditures consist of additions (excluding business combinations) to property, plant and equipment, construction in progress, investment properties, land use rights and intangible assets (excluding long-form video and music content, game licences and other content).

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

RMB in millions, unless specified

Audited

As at December 31

2023

2022

ASSETS

Non-current assets

  Property, plant and equipment

53,232

53,978

  Land use rights

17,179

18,046

  Right-of-use assets

20,464

22,524

  Construction in progress

13,583

9,229

  Investment properties

570

559

  Intangible assets

177,727

161,802

  Investments in associates

253,696

246,043

  Investments in joint ventures

7,969

6,672

  Financial assets at fair value through profit or loss

211,145

206,085

  Financial assets at fair value through other

   comprehensive income

213,951

 

185,247

  Prepayments, deposits and other assets

28,439

36,752

  Other financial assets

2,527

6,987

  Deferred income tax assets

29,017

29,882

  Term deposits

29,301

28,336

1,058,800

1,012,142

Current assets

  Inventories

456

2,333

  Accounts receivable

46,606

45,467

  Prepayments, deposits and other assets

88,411

76,685

  Other financial assets

5,949

1,278

  Financial assets at fair value through profit or loss

14,903

27,963

  Term deposits

185,983

104,776

  Restricted cash

3,818

2,783

  Cash and cash equivalents

172,320

156,739

  Assets held for distribution

147,965

518,446

565,989

Total assets

1,577,246

1,578,131

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)

RMB in millions, unless specified

Audited

As at December 31

2023

2022

EQUITY

Equity attributable to equity holders of the Company

  Share capital

  Share premium

37,989

62,418

  Treasury shares

(4,740)

(1,868)

  Shares held for share award schemes

(5,350)

(4,226)

  Other reserves

(33,219)

(40,914)

  Retained earnings

813,911

705,981

808,591

721,391

Non-controlling interests

65,090

61,469

Total equity

873,681

782,860

LIABILITIES

Non-current liabilities

  Borrowings

155,819

163,668

  Notes payable

137,101

148,669

  Long-term payables

12,169

9,067

  Other financial liabilities

8,781

5,574

  Deferred income tax liabilities

17,635

12,162

  Lease liabilities

16,468

18,424

  Deferred revenue

3,435

3,503

351,408

361,067

Current liabilities

  Accounts payable

100,948

92,381

  Other payables and accruals

76,595

61,139

  Borrowings

41,537

11,580

  Notes payable

14,161

10,446

  Current income tax liabilities

17,664

13,488

  Other tax liabilities

4,372

4,698

  Other financial liabilities

4,558

3,937

  Lease liabilities

6,154

6,354

  Deferred revenue

86,168

82,216

  Dividends payable for distribution in specie

147,965

352,157

434,204

Total liabilities

703,565

795,271

Total equity and liabilities

1,577,246

1,578,131

 

 

RECONCILIATIONS OF IFRS TO NON-IFRS RESULTS

As

reported

Adjustments

Non-IFRS

RMB in millions,

unless specified

Share-based

compensation
(a)

Net
(gains)/losses
from investee
companies (b)

Amortisation of

intangible assets (c)

Impairment

provisions/
(reversals) (d)

SSV &
CPP (e)

Others (f)

Income

tax effects (g)

Year ended December 31, 2023

Operating profit

160,074

22,782

5,019

998

3,013

191,886

Profit for the year

118,048

27,766

(6,170)

10,269

8,123

3,790

3,012

(3,104)

161,734

Profit attributable to

 equity holders

115,216

27,100

(6,024)

9,462

8,004

3,790

3,012

(2,872)

157,688

Operating margin

26 %

32 %

Net margin

19 %

27 %

Year ended December 31, 2022

Operating profit (Restated)

 110,827*

26,248

5,197

726

205

 143,203*

Profit for the year

188,709

33,311

(164,698)

11,818

48,004

5,763

2,125

(5,839)

119,193

Profit attributable to

 equity holders

188,243

32,651

(164,840)

10,880

46,326

5,763

2,125

(5,499)

115,649

Operating margin (Restated)

20%*

26%*

Net margin

34 %

21 %

 

Note:

(a)   Including put options granted to employees of investee companies on their shares and shares to be issued under investee companies’ share-based incentive plans which can be acquired by the Group, and other incentives

(b)   Including net (gains)/losses on deemed disposals/disposals of investee companies, fair value changes arising from investee companies, and other expenses in relation to equity transactions of investee companies

(c)   Amortisation of intangible assets arising from acquisitions

(d)   Mainly including impairment provisions/(reversals) for associates, joint ventures, goodwill and other intangible assets arising from acquisitions

(e)   Mainly including donations and expenses incurred for the Group’s Sustainable Social Value and Common Prosperity Programme (“SSV & CPP”) initiatives 

(f)    Primarily non-recurring compliance-related costs and expenses incurred for certain litigation settlements of the Group and/or arising from investee companies

(g)   Income tax effects of non-IFRS adjustments

* Certain items have been reclassified from above to below the operating profit line, and the comparative figures for prior periods have been restated accordingly. Please refer to the earnings announcement for details

 

 

RECONCILIATIONS OF IFRS TO NON-IFRS RESULTS

As

reported

Adjustments

Non-IFRS

RMB in millions,

unless specified

Share-based

compensation
(a)

Net
(gains)/losses
from investee
companies (b)

Amortisation of

intangible assets
(c)

Impairment

provisions/
(reversals) (d)

SSV &
CPP (e)

Others (f)

Income

tax effects
(g)

Three months ended 31 December 2023

Operating profit

41,401

5,732

1,564

437

1

49,135

Profit for the period

27,850

6,646

(94)

2,960

5,705

1,594

1

(829)

43,833

Profit attributable to

 equity holders

27,025

6,512

(55)

2,719

5,650

1,594

1

(765)

42,681

Operating margin

27 %

32 %

Net margin

18 %

28 %

Three months ended 30 September 2023

Operating profit (Restated)

 44,348**

5,655

1,434

231

 51,668*

Profit for the period

36,781

6,948

(565)

2,666

346

301

(640)

45,837

Profit attributable to

 equity holders

36,182

6,833

(583)

2,458

309

301

(579)

44,921

Operating margin (Restated)

29%*

33%*

Net margin

24 %

30 %

Three months ended 31 December 2022

Operating profit (Restated)

 29,163*

5,680

1,241

326

14

36,424*

Profit for the period

106,904

7,217

(107,955)

2,601

23,700

1,600

206

(3,717)

30,556

Profit attributable to

 equity holders

106,268

7,124

(107,928)

2,420

23,693

1,600

206

(3,672)

29,711

Operating margin (Restated)

20%*

25%*

Net margin

74 %

21 %

 

Note:

(a)   Including put options granted to employees of investee companies on their shares and shares to be issued under investee companies’ share-based incentive plans which can be acquired by the Group, and other incentives

(b)   Including net (gains)/losses on deemed disposals/disposals of investee companies, fair value changes arising from investee companies, and other expenses in relation to equity transactions of investee companies

(c)   Amortisation of intangible assets arising from acquisitions

(d)   Mainly including impairment provisions/(reversals) for associates, joint ventures, goodwill and other intangible assets arising from acquisitions

(e)   Mainly including donations and expenses incurred for the Group’s Sustainable Social Value and Common Prosperity Programme (“SSV & CPP”) initiatives 

(f)    Primarily non-recurring compliance-related costs and expenses incurred for certain litigation settlements of the Group and/or arising from investee companies

(g)   Income tax effects of non-IFRS adjustments

* Certain items have been reclassified from above to below the operating profit line, and the comparative figures for prior periods have been restated accordingly. Please refer to the earnings announcement for details

 

View original content to download multimedia: Read More