Tencent Holdings Ltd (TCEHY) Q3 2024 Earnings Call Highlights: Strong Revenue Growth and ...

GuruFocus.com11-14

Total Revenue: RMB167 billion, up 8% year-on-year and 4% quarter-on-quarter. Gross Profit: RMB89 billion, up 16% year-on-year and 3% quarter-on-quarter. Non-IFRS Operating Profit: RMB61 billion, up ...

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GuruFocus has detected 3 Warning Signs with TCEHY.\n\nRelease Date: November 13, 2024\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.\n Positive Points \n\nTencent Holdings Ltd (TCEHY) reported robust revenue growth in its Games business, driven by consistent performance of evergreen games and new titles with potential.\nThe company upgraded its e-commerce strategy around mini shops, enhancing the transaction experience within the Weixin ecosystem.\nTotal revenue for the third quarter was RMB167 billion, marking an 8% year-on-year increase, with gross profit up 16% year-on-year.\nTencent Holdings Ltd (TCEHY) saw improved profitability in its cloud services, contributing to overall gross profit growth.\nThe company is leveraging AI across products and operations, including marketing services and cloud, and continues to invest in AI technology.\n\n Negative Points \n\nInternational games revenue growth lagged behind gross receipt growth due to elongation of the revenue deferral period.\nThe average value per transaction in FinTech services declined, despite an increase in the number of commercial payment transactions.\nFinance costs increased by 27% year-on-year due to exchange losses compared to gains in the same period last year.\nThe company faced challenges in the real estate and food and beverage categories, impacting marketing services revenue.\nThere is uncertainty regarding the timing of economic recovery, despite positive policy directions from the Chinese government.\n\n Q & A Highlights \nQ: Can management share insights on the implications of recent major hit games in China and how these events shape Tencent's game strategy going forward? A: James Mitchell, Chief Strategy Officer, explained that the success of games like Black Myth: Wukong and Whiteout Survival highlights a structural trend where Chinese studios benefit from a large home market and substantial engineering workforce. Tencent's strategy focuses on creating evergreen games by leveraging both in-house and external studios, each focusing on their strengths.\nQ: Can you elaborate on the recent upgrades to Weixin Mini Shops and their potential impact on Tencent's e-commerce strategy? A: Chi Ping Lau, President, stated that Weixin Mini Shops aim to create a unified and trustworthy e-commerce platform within Weixin. This upgrade improves the shopping experience for consumers and provides merchants with better transaction support and access to new traffic. The potential is significant, with Mini Programs already facilitating substantial transactions.\nQ: What are the key drivers for Weixin Search's growth, and how does it integrate with other Tencent services? A: James Mitchell noted that financial services, internet services, and luxury goods are among the larger advertisers using Weixin Search. The integration with other Tencent services, such as Mini Programs and video accounts, enhances search capabilities. The focus is on improving user experience rather than immediate monetization.\nQ: How is Tencent positioning itself in light of domestic policy changes and a complex geopolitical environment? A: Chi Ping Lau emphasized that Tencent is encouraged by China's economic stimulus policies and remains constructive on long-term growth. The company focuses on compliance, improving products, and maintaining cost efficiency to navigate both domestic and international challenges.\nQ: What is Tencent's strategy for its payment and wealth management services amid macroeconomic headwinds? A: Chi Ping Lau explained that wealth management growth is driven by money market funds, which can be countercyclical. Tencent aims to convert more users to longer-term investment products. In lending, the company remains cautious to manage credit exposure, adjusting strategies based on economic conditions.\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.This article first appeared on \nGuruFocus.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2483826938"}