Tencent Q4 2024 earnings report

Tencent on Wednesday posted a fourth-quarter beat on top and bottom line driven by a surge in gaming and advertising revenue.

The company also notched a ramp-up in capital expenditure, which more than tripled in 2024, as it presses ahead with boosting its focus on artificial intelligence amid intense competition from Chinese rivals like Alibaba. Tencent touted a hike in AI-related revenue in areas such as cloud computing and advertising.

Here’s how Tencent did in the fourth quarter of 2024 versus Refinitiv estimates:

• Revenue: 172.4 billion Chinese yuan ($23.9 billion), versus 168.9 billion yuan expected.
• Profit attributable to equity holders of the company: 51.3 billion yuan, compared with 46.03 billion yuan expected.

Revenue rose 11% year-on-year while profit was up 90% versus the same period in 2023.

Tencent is known as one of the world’s biggest gaming firms. Domestic games revenue in China rose 23% year-on-year to 33.2 billion yuan in the fourth quarter. Tencent said this hike was due to a low base in the prior year’s period, as well as growth in some of its hit games, including Honour of Kings and Peacekeeper Elite.

The annual growth rate for domestic games accelerated in the December quarter, compared with the previous three-month period.

International games revenue jumped 15% year-on-year to 16 billion. Over the past few years, Tencent has stepped up efforts overseas with games like PUBG Mobile, as the domestic games market slowed amid macroeconomic and regulatory headwinds.

Tencent’s marketing services — or its advertising business — grew 17% year-on-year to 35 billion yuan in the fourth quarter. Tencent runs WeChat, China’s biggest messaging app with more than 1.38 billion monthly active users. The company has been working on monetizing those users through different advertising products such as video and search.

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.

Tencent said that AI is driving improvements across various products inside the company.

Tencent said its marketing services business growth has been driven by “robust” advertiser demand as well as “ongoing enhancement of our AI-powered advertising infrastructure.” Tencent’s AI models allow it to serve uses with “more relevant ad recommendations,” the company said.

Meanwhile, AI cloud revenue approximately doubled year-on-year in 2024, Tencent said, though it declined to give a specific sales number.

Tencent’s cloud computing…