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In January this year, at Tencent's 2023 Annual Meeting, Ma Huateng spent 35 minutes publicly "reflecting" on Tencent's past year. Ma Huateng mentioned that although the performance of the past year was not perfect, Tencent did get out of some of its "dark moments".

Judging from the financial report, Tencent seems to have survived the cold winter, quickly recovered, and started working hard to make money.

On August 14, Tencent released its financial report. In the first half of this year, Tencent Holdings achieved revenue of 320.618 billion yuan, a year-on-year increase of 7%; net profit attributable to shareholders of the parent was 89.519 billion yuan, a year-on-year increase of 72%, equivalent to a net profit of 492 million yuan per day (a total of 182 days in the first half of 2024, data is for reference only).

With a small goal of making a profit every day, Ma Huateng can seem to breathe a sigh of relief.

01 Tencent, are you making a lot of money?

Tencent’s financial report this time was released in a very low-key manner.

The last time Tencent released its financial report, it was still emphasizing the V curve. This time, Ma Huateng began to talk about creating new business value and better serving user needs.

Judging from revenue and net profit, Tencent's performance in the first half of the year and Q2 was very impressive.

In the second quarter of 2024, Tencent Holdings' revenue was 161.12 billion yuan, compared with 149.208 billion yuan in the same period last year, an increase of 8% year-on-year; profit attributable to equity holders of the company was 47.63 billion yuan, an increase of 82% year-on-year; adjusted net profit was 57.31 billion yuan, a year-on-year increase of 53%; gross profit was 85.9 billion yuan, a year-on-year increase of 21%.

If we use the annual range, the increase in Tencent's net profit is even more obvious. From the second quarter of 2023 to the second quarter of 2024, the year-on-year growth rates of Tencent's net profit under non-IFRS standards in its five financial reports were 33%, 39%, 44%, 54% and 53% respectively.

With five consecutive fiscal quarters of growth, Tencent has really made a lot of money this time.

At the same time, Tencent has already achieved HK$52.3 billion of the HK$100 billion repurchase target it set at the beginning of the year, ranking first in Hong Kong stock repurchases for two consecutive quarters, and its repurchase efforts are still continuing to increase.

With a net profit of 492 million yuan every day and continuous repurchases in the capital market, Tencent's performance in the secondary market has also been strong. As of the close of the market on the 14th, Tencent's market value has reached 3.48 trillion Hong Kong dollars.

02 The game is finally popular?

Net profit maintained a growth of over 50%. Tencent, which businesses are making huge profits?

In terms of business revenue contribution, value-added services accounted for 49%, financial technology and enterprise services accounted for 31%, and online advertising accounted for 19%. The so-called value-added services are the gaming business. In the first half of the year, the revenue from the gaming business increased by 6% year-on-year to 78.822 billion yuan.

In the first half of this year, Tencent's international game revenue increased to 13.9 billion yuan, and domestic game revenue increased to 34.6 billion yuan. According to the "2024H1 Global Mobile Game Market Data Report", Tencent's games occupied 6 seats in the top 10 Chinese mobile game App Store revenue in the first half of this year.

Tencent games, which were always criticized, finally reversed their previous sluggish state and got their revenge.

In addition to games, advertising revenue increased by 19% year-on-year, making it the fastest growing part of revenue contribution. The growth of this business comes from video accounts and long videos.

When Ma Huateng gave a speech at the beginning of the year, he particularly emphasized the success of WeChat Video Account. He said that Video Account not only provided new possibilities in the case of the failure of Tencent Short Video, but also this achievement was not simply following the trend, but combined with the powerful social ecology of WeChat, it has embarked on a unique development path.

In this financial report, Tencent mentioned that the combined monthly active accounts of WeChat and WeChat increased to 1.371 billion. Driven by more active users, the user time of WeChat Mini Programs increased by more than 20% year-on-year, and the transaction volume facilitated by the Mini Programs achieved double-digit year-on-year growth. The total user usage time of Video Account increased significantly year-on-year.

According to the data from WeChat Open Class 2024, the GMV (gross merchandise volume) of video account live streaming has tripled that of 2022, the supply volume has increased by 300%, the number of orders has increased by 244%, and the GPM (total amount of orders per thousand viewers) has exceeded 900 yuan. These data not only show the market potential of video accounts, but also reflect Tencent's strength in video accounts.

In the first half of the year, revenue from financial technology and enterprise services increased to 50.44 billion yuan, while online advertising revenue reached 29.771 billion yuan, further boosting Tencent's overall revenue.

With these three pillars, Ma Huateng can finally breathe a sigh of relief this time.

03No layoffs this time?

Starting from 2022, Tencent began to reduce costs and increase efficiency, and reducing staff was one of the steps. In the past two years, Tencent has reduced nearly 10,000 employees. Especially in the second quarter of 2022, due to a 56% drop in net profit at the time, Tencent only took 3 months (compared with March and June of the same year) to reduce its employees by about 5,500.

Earlier this year, Ma Huateng proposed that Tencent should attach importance to the spirit of small teams in management, and asked managers to be cautious from the source of recruitment, and try to avoid large-scale recruitment and then rapid large-scale layoffs. Therefore, "when you haven't thought it through, try with a small team first, and don't be in a hurry."

As soon as the boss spoke, the recruitment team responded positively.

In the first quarter of this year, Tencent's recruitment was very conservative, with slight layoffs: 106,221 people in Q1 2023 and 104,787 people in Q1 2024, a year-on-year decrease of 1,434 people (1.36%). It should be noted that in Q1 this year, Tencent has reduced its staff for the sixth consecutive quarter.

According to the second quarter financial report, as of June 30, 2024, Tencent had 105,506 employees, 89 more than six months ago.

Tencent has finally completed large-scale optimization.

There will be no more large-scale layoffs. First, the point is that Tencent is not laying off employees just to save money. Second, the point is that even if the business is good, Tencent is starting to pick up and make money.

Text/Zero Degree