On March 19, Tencent released its financial results for the fourth quarter and full year of 2024. The company reported an 11% year-on-year (YoY) revenue increase in Q4, reaching RMB 172.45 billion (USD 24.1 billion), surpassing market expectations of RMB 168.74 billion (USD 23.6 billion). For the full year, Tencent’s revenue rose 8% to RMB 660.3 billion (USD 92.4 billion).
Gross profit for Q4 climbed 17% YoY to RMB 90.7 billion (USD 12.7 billion), driven by high-margin revenue sources such as gaming, search, and WeChat Channels, as well as improved cost efficiency in cloud services. The company’s gross profit margin expanded from 50% to 53% YoY. Cost of revenue increased 5% to RMB 81.7 billion (USD 11.4 billion), primarily due to rising content costs from gaming and higher bandwidth and server expenses.
Tencent attributed its double-digit Q4 revenue growth to artificial intelligence-powered upgrades in its advertising platform, increased user engagement in WeChat Channels, and the continued success of its core gaming titles. In recent months, the company restructured its AI team to focus on product innovation and AI model development while increasing capital expenditure on AI and AI-native product marketing.
Revenue from Tencent’s value-added services segment rose 14% YoY in Q4 to RMB 79 billion (USD 11 billion). International gaming revenue grew 15% to RMB 16 billion (USD 2.2 billion), or 16% on a constant currency basis, bolstered by strong performances from Brawl Stars, PUBG Mobile, and the early access launch of Path of Exile 2.
Tencent’s domestic gaming revenue surged 23% to RMB 33.2 billion (USD 4.6 billion), benefiting from a low base in the prior year, higher revenue from Honor of Kings, Game for Peace, and Valorant, and contributions from newly launched titles such as Dungeon & Fighter: Origins and Delta Force.
Social networking revenue rose 6% to RMB 29.8 billion (USD 4.2 billion), driven by increased sales of virtual items in mobile games, growth in paid music subscriptions, and rising service fees from minigames on WeChat.
Advertising services revenue jumped 17% to RMB 35 billion (USD 4.9 billion), reflecting strong demand for ad placements on WeChat. Most major industries increased their advertising spend during the quarter.
Fintech and business services revenue increased 3% to RMB 56.1 billion (USD 7.9 billion), with fintech growth driven by wealth management and consumer lending, while commercial payment revenue remained largely stable. Business services revenue rose due to higher technology service fees from merchants and increased revenue from WeCom.
For full-year 2024, Tencent’s value-added services revenue grew 7% to RMB 319.2 billion (USD 44.7 billion). International gaming revenue reached RMB 58 billion (USD 8.1 billion), up 9% YoY in both reported and constant currency terms, supported by PUBG Mobile and Supercell’s titles. Domestic gaming revenue grew 10% to RMB 139.7 billion (USD 19.6 billion), driven by Valorant, Naruto, Teamfight Tactics, League of Legends: Wild Rift, and new contributions from Dungeon & Fighter: Origins and Delta Force. Tencent increased its number of evergreen games from 12 in 2023 to 14 in 2024, reflecting the longevity of its major titles.
Social networking revenue rose 2% to RMB 121.5 billion (USD 17 billion), supported by increased revenue from paid music and long-form video subscriptions, higher sales of virtual items in mobile games, and minigame service fees. These gains were partially offset by declining live streaming revenue from music and gaming. Tencent Video’s paid subscriber count reached 113 million, while Tencent Music’s paid user base grew to 121 million. Tencent Video operates internationally as WeTV.
Advertising services revenue climbed 20% to RMB 121.4 billion (USD 17 billion), fueled by strong demand for ad placements across WeChat and Tencent’s AI-driven ad platform upgrades. Ad spending rose across most major sectors, particularly gaming, e-commerce, education, and internet services.
Fintech and business services revenue increased 4% to RMB 212 billion (USD 29.7 billion), supported by growth in wealth management and commercial payments. Business services revenue rose due to higher WeCom revenue and increased technology service fees from merchants.
Tencent’s annual cost of revenue declined 2% to RMB 311.1 billion (USD 43.6 billion) as the company reduced expenses related to live streaming revenue-sharing, long-form video content, and cloud project deployment.
Gross profit rose 19% YoY to RMB 349.2 billion (USD 48.9 billion), supported by growth in high-margin revenue streams such as domestic gaming, search, minigames, and WeChat Channels. Profitability also improved in Tencent’s cloud and long-form video businesses, with the company’s gross margin expanding from 48% in 2023 to 53% in 2024.
For value-added services, gross profit grew 12% to RMB 181.7 billion (USD 25.4 billion), with a margin increase from 54% to 57%, supported by higher-margin domestic gaming and minigame service fee revenue, along with cost optimization in long-form video content.
Gross profit for advertising services surged 31% to RMB 67.2 billion (USD 9.4 billion), with a margin increase from 51% to 55%, reflecting the expansion of high-margin ad placements in WeChat Channels and Tencent’s search platform.
Fintech and business services gross profit climbed 24% to RMB 99.7 billion (USD 14 billion), with a margin improvement from 40% to 47%, aided by growth in wealth management, WeCom, and merchant technology service fees, as well as cost efficiencies in cloud services.
Sales and marketing expenses rose 6% YoY to RMB 36.4 billion (USD 5.1 billion), reflecting increased promotional efforts for new content releases. These expenses remained stable at 6% of total revenue.
General and administrative expenses grew 9% to RMB 112.7 billion (USD 15.8 billion), primarily due to increased R&D spending, particularly on AI initiatives, and higher employee costs. These expenses remained steady at 17% of total revenue.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Wang Yuchan for 36Kr.