Tencent (TCEHY) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

May 17, 2023 8:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good day and good evening. Thank you for standing by. Welcome to Tencent Holdings Limited 2023 First Quarter Results Announcement Webinar. I'm Wendy Huang from Tencent IR team. At this time, all participants are in a listen-only mode. After the management's presentation, there will be a question-and-answer session. [Operator Instructions] And please be advised that today's webinar is being recorded.

Before we start the presentation, we would like to remind you that it includes forward-looking statements which are underlined by a number of risks and uncertainties and may not be realized in the future for various reasons. Information about general market conditions is coming from a variety of sources outside of Tencent.

This presentation also contains some unaudited non-IFRS financial measures that should be considered in addition to, but not as a substitute for measures of the group's financial performance prepared in accordance with IFRS. For a detailed discussion of risk factors and non-IFRS measures, please refer to our disclosure documents on the IR section of our website.

Now let me introduce the management team on the call tonight. Our Chairman and CEO, Pony Ma will kick off with a short overview. President, Martin Lau and Chief Strategy Officer, James Mitchell will provide a business review. Chief Financial Officer, John Lo will conclude with financial discussion before we open the floor for questions.

Now I will pass it to Pony.

Pony Ma

Thank you, Wendy. Good evening. Thank you for joining us. During the first quarter, we resumed a double-digit revenue growth rate as our payment volumes benefited from and facilitated domestic consumption recovery.

Our games revenue improved and our advertising revenue sustained rapid growth. Our non-IFRS net profit increased at a faster pace, reflecting a positive revenue mix shift, operational efficiency and an easy base period. We are investing in our AI capabilities and cloud infrastructure to embrace the opportunities brought by foundation models and expect AI to be a growth multiplier that enables us to better serve our users, customers and society at large.

Now let me go through the headline financial numbers for the quarter. Total revenue was RMB150 billion, up 11% year-on-year and 3% quarter-on-quarter. Gross profit was RMB68 billion, up 19% year-on-year and 10% quarter-on-quarter.

Non-IFRS operating profit was RMB48 billion, up 32% year-on-year and 23% quarter-on-quarter. Non-IFRS net profit attributable to equity holders was RMB33 billion, up 27% year-on-year and 10% quarter-on-quarter. With our key services, we focused on upgrading our technologies and product innovations.