Tencent Holdings (00700, Financial) recently released its financial results for the fourth quarter and full year ending December 31, 2024. The company reported a 11% year-over-year increase in Q4 revenue, reaching RMB 172.4 billion. Profit attributable to equity holders surged by 90% to RMB 51.3 billion. On a non-IFRS basis, this profit rose 30% to RMB 55.3 billion. For the entire year, revenue grew by 8% to RMB 660.3 billion, with profit attributable to equity holders increasing by 68% to RMB 194.1 billion. Non-IFRS profit for the year was RMB 222.7 billion, marking a 41% growth.
Following the earnings release, Tencent's top executives, including Chairman and CEO Pony Ma, President Martin Lau, CSO James Mitchell, and CFO John Lo, held a conference call to discuss the results and address analysts' questions.
One analyst from UBS raised concerns about the impact of increased capital expenditure in AI on Tencent's financials, particularly regarding depreciation and R&D expenses. James Mitchell responded by emphasizing that while capital expenditures have increased, they are strategically allocated to areas like purchasing GPUs for advertising technology and gaming, which are expected to yield high returns and maintain profit margins. He noted that the company is optimistic about balancing growth and profitability.
Additionally, the analyst inquired about the strategy for WeChat Mini Stores, a feature introduced in the third quarter. Martin Lau highlighted that WeChat Mini Stores are a long-term strategic initiative aimed at integrating various components of the WeChat ecosystem, such as social infrastructure, content, and search. The "gift-giving" feature within Mini Stores has been well-received, especially during festive periods, enhancing the reputation of quality products and facilitating user engagement.
Overall, Tencent remains confident in its ability to sustain growth while managing capital expenditures effectively. The company sees potential in optimizing consumer-facing products through technology and algorithm improvements to reduce costs.
