Tencent Holdings Limited (TCEHY) Q3 2023 Earnings Call Transcript

For the period ending September 30, 2023

November 15, 2023 7:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

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 reasons 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.

Let me now introduce the management team on webinar tonight. Our Chairman and CEO, Pony Ma, will kick off with a short overview. President, Martin Lau, will discuss strategy review. 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.

I will now pass it to Pony.

Pony Ma

Thank you, Wendy. Good evening. Thank you, everyone, for joining us. During the third quarter of 2023, we achieved a solid and high-quality revenue growth, notable margin expansion and structural operating leverage. Relatively new services such as video account and mini games contribute higher-margin revenue streams while we refocused away from less scalable activities.

We are increasing investment in our AI models, providing new features to our products and enhancing our targeting capabilities for both content and advertising. We aspire to position our leading AI capability, not only as a growth multiplier for ourselves, but also as a value provider to our enterprise customers and the society at large. Now let me go through the headline financials for the third quarter.

Total revenue was RMB 155 billion, up 10% year-on-year and 4% quarter-on-quarter. Gross profit was RMB 77 billion, up 23% year-on-year and 8% quarter-on-quarter. Non-IFRS operating profit was RMB 56 billion, up 36% year-on-year and 11% quarter-on-quarter. Non-IFRS net profit attributable to equity holders was RMB 45 billion, up 39% year-on-year and 20% quarter-on-quarter.

Turning to our key services for communication and social networks. Combined MAU of Weixin and WeChat grew both year-on-year and quarter-on-quarter RMB 1.3 billion. For games, we reinforced our leadership in competitive multiplayer games while investing to develop future hits in content-driven and casual games.