Tencent's Q4 2024 Earnings Soar as AI Integration Boosts Gaming and Advertising Revenue

Tencent fourth-quarter profit surges 90% on gaming and advertising boost

Chinese tech company Tencent is a gaming giant and the parent company of WeChat, the ubiquitous social messaging app in China. Tencent on Wednesday posted a fourth-quarter beat on top and bottom line driven by a surge in gaming and advertising revenue. Here's how Tencent did in the fourth quarter of 2024 versus Refinitiv estimates: While Tencent is one of the world's biggest gaming companies, the tech giant has also placed a large focus on becoming a key artificial intelligence player in China over the last two years, putting out various AI models. On Tuesday, the company launched its Hunyuan3D-2.0 model which can turn text or images into 3D graphics. In February, Tencent had unveiled Turbo S, an AI model designed to answer user queries as quickly as possible. Investors are still watching as to how Tencent plans to monetize its AI investments. The Shenzhen-headquartered firm's AI push is emblematic of the current state of competition among China's tech giants, which has been spurred on by startup DeepSeek and its highly efficient artificial intelligence model that was released earlier this year. AI updates have been released thick and fast from companies including Alibaba and Baidu. Last week, Alibaba launched a new version of its AI assistant app that will be powered by its own Qwen AI reasoning model. Baidu on Sunday released two new models including a new reasoning model. Tencent is working with its own AI models as well as those of rivals. The company has its in-house AI chatbot called Yuanbao, which is based on its own Hunyuan foundational model as well as DeepSeek's R1. Tencent has also sought to integrate DeepSeek's technology across some of its other products, including WeChat's search features in China.

China's Tencent sees profits surge as AI drive accelerates

Beijing (AFP) - Chinese internet and gaming giant Tencent said on Wednesday that profits in the fourth quarter of 2024 surged 90 percent as the firm accelerates a push into artificial intelligence (AI). The publication of quarterly and annual results came after weeks of robust investor confidence in Chinese technology stocks, and in AI in particular, following January's shock emergence of local startup DeepSeek on the global stage. Shenzhen-based Tencent is the operator of China's all-purpose WeChat app and a major player in the global gaming industry. Its net profits in the three months ending on December 31 totalled 51.3 billion yuan ($7.1 billion), up 90 percent year-on-year, according to a statement on the Hong Kong Stock Exchange website. The statement also showed that Tencent's revenue in the period reached 172.4 billion yuan, a rise of 11 percent year-on-year that outpaced a Bloomberg forecast. Tencent CEO Pony Ma said the double-digit revenue growth was down to using AI to enhance the firm's advertising platform, higher video account engagement and growth in its gaming arm. He said Tencent had "reorganised our AI teams" around fast product innovation and deep model research, while also boosting AI-related spending. Tencent brought in revenue of 660.3 billion yuan for the whole year, increasing eight percent from 2023. Net profits jumped 68 percent to 194.1 billion yuan. The strong results came after the company's stock price soared this month to its highest level in nearly four years. AI frenzy Chinese tech giants have been funnelling resources into the competitive field of AI since the release of DeepSeek's chatbot in January. The little-known Chinese company caused a global stir because it appeared to have developed the chatbot at a fraction of the price of Western industry leaders such as the United States's OpenAI. Ma told a news conference on Wednesday that Tencent had "actively embraced" DeepSeek across multiple services. "I think it's a very great thing. We have a lot of respect for them and we also embrace them," Ma said. Tencent said last month that it had started trialling its own AI reasoning model called "Hunyuan Thinker", which will offer a more "professional" format for answering questions and a more "human" writing style. Rival Alibaba also said it would spend more than $50 billion on AI and cloud computing over the next three years. Investors were also heartened by a rare meeting last month between Chinese President Xi Jinping and a gathering of prominent entrepreneurs that included Tencent's Ma. However, the company continues to face challenges, including a sluggish domestic economy and political pressure from Washington. In January, US authorities added Tencent to a list of firms it says are affiliated with Beijing's military. Tencent described the move as a "mistake" and China's foreign ministry accused Washington of "suppression".

Tencent Q4 Earnings Soar: 30% Surge In Net Income, Strong Performance From Games And AI - Tencent Holdings (OTC:TCEHY)

Chinese gaming giant Tencent Holding Ltd TCEHY reported fiscal fourth-quarter 2024 results on Wednesday. Revenue grew 11% year-on-year to CNY172.4 billion ($24.0 billion), quashing the analyst consensus estimate of CNY168.95 billion. Combined, the MAU of Weixin and WeChat grew by 3% Y/Y to 1.385 billion as of December 31, 2024. Fee-based VAS registered subscriptions grew 7% Y/Y to 262 million. Mobile device MAU of QQ fell 5% Y/Y to 524 million as of December 31, 2024. Revenues from VAS increased by 14% Y/Y to CNY79.0 billion. International Games revenues were CNY16.0 billion, up 15% Y/Y, due to strong performances from games including PUBG MOBILE and Brawl Stars along with the early access release of Path of Exile 2. Domestic Games revenues increased by 23% Y/Y to CNY33.2 billion, driven by games including VALORANT, Honour of Kings, Peacekeeper Elite, and DnF Mobile, along with contributions from newly released games, DnF Mobile and Delta Force. Social Networks revenues rose by 6% Y/Y to CNY29.8 billion, supported by growth in app-based game virtual item sales, music subscription revenues and Mini Games platform service fees. Revenues from Marketing Services upped 17% Y/Y to CNY35.0 billion, aided by strong advertiser demand for Video Accounts, Mini Programs, and Weixin Search inventories. Revenues from FinTech and Business Services upped 3% Y/Y to CNY56.1 billion on higher revenues from wealth management services and consumer loan services. Gross profit climbed 17% Y/Y to CNY90.7 billion ($12.6 billion) in the quarter, with margin expansion of 53% from 50% a prior-year quarter. Adjusted operating profit surged 21% Y/Y to CNY59.5 billion, with the margin expanding 2.8ppt Y/Y to 34.5%. Adjusted net income attributable to equity holders increased 30% Y/Y to CNY55.3 billion ($7.7 billion). Adjusted EPS of CNY5.91 beat the CNY5.46 analyst consensus estimate. As of December 31, 2024, Tencent had CNY415.4 billion ($57.8 billion) in cash and equivalents and generated CNY155.3 billion ($21.6 billion) in free cash flow. In 2024, the company bought back around 307 million shares on the Hong Kong Stock Exchange for around HKD112.0 billion ($14.4 billion). For 2025, Tencent plans to raise the annual dividend by 32% to HKD4.50 per share and repurchase at least HKD80 billion ($10 billion) worth of shares. Ma Huateng, Chairman and CEO of Tencent, highlighted that AI-driven improvements to the advertising platform, increased engagement with Video Accounts, and growth in the core games led to achieved double-digit revenue growth while maintaining operational leverage in the quarter. He further added that the company has restructured the AI teams to focus on both rapid product innovation and in-depth model research. They also ramped up AI-related capital investments, along with increased R&D and marketing for AI-native products. Price Action: TCEHY stock closed lower by 0.43% at $69.49 on Tuesday. Also Read: Alibaba, Grab, Tencent, Meituan Gear Up For Growth As China Bets On Services To Revive Economy Photo via Shutterstock. TCEHYTencent Holdings Ltd $70.701.74% Overview Market News and Data brought to you by Benzinga APIs