Management Discussion and Analysis
Selling and marketing expenses . Selling and marketing expenses grew by 6% year-on-year to RMB36.4 billion for the year
ended 31 December 2024, reflecting higher promotional and advertising efforts to support new content releases. As a
percentage of revenues, selling and marketing expenses remained largely stable at 6%, consistent with the previous year.
General and administrative expenses . General and administrative expenses increased by 9% year-on-year to RMB112.7 billion
for the year ended 31 December 2024. This increase was primarily driven by higher R&D expenses, including those related
to our AI initiatives, alongside higher staff costs. As a percentage of revenues, general and administrative expenses remained
broadly stable at 17%, in line with the prior year.
Interest income . Interest income increased by 16% year-on-year to RMB16.0 billion for the year ended 31 December 2024
due to growth in cash reserves.
Finance costs . Finance costs decreased by 2% year-on-year to RMB12.0 billion for the year ended 31 December 2024,
primarily due to recognition of foreign exchange gains this year versus losses in the previous year, partially offset by higher
interest expenses.
Share of profit/(loss) of associates and joint ventures, net . We recorded share of profits of associates and joint ventures of
RMB25.2 billion for the year ended 31 December 2024, up from share of profits of RMB5.8 billion for the previous year. Non-IFRS
share of profits of associates and joint ventures rose to RMB31.6 billion, compared to RMB13.0 billion for the previous year.
The increase in non-IFRS share of profits of associates and joint ventures reflected stronger financial performances across
several associates, driven by company-specific factors, including business growth, new content releases and operational
efficiency improvements.
Income tax expense . Income tax expense increased by 4% year-on-year to RMB45.0 billion for the year ended 31 December
2024, primarily due to our operating profit growth, partially offset by the high base effect from deferred tax adjustments at an
overseas subsidiary in the previous year. Excluding the deferred tax adjustments in the prior year, income tax expense would
have increased by 15% year-on-year.
Profit attributable to equity holders of the Company . Profit attributable to equity holders of the Company increased by 68%
year-on-year to RMB194.1 billion for the year ended 31 December 2024. Non-IFRS profit attributable to equity holders of the
Company increased by 41% to RMB222.7 billion for the year ended 31 December 2024.
10 Tencent Holdings Limited
Management Discussion and Analysis
FOURTH QUARTER OF 2024 COMPARED TO FOURTH QUARTER OF 2023
The following table sets forth the comparative figures for the fourth quarter of 2024 and the fourth quarter of 2023:
Unaudited
Three months ended
31 December 31 December
2024 2023
(RMB in millions)
Revenues 172,446 155,196
Cost of revenues (81,793) (77,632)
Gross profit 90,653 77,564
Selling and marketing expenses (10,285) (10,971)
General and administrative expenses (31,403) (27,175)
Other gains/(losses), net 2,513 1,983
Operating profit 51,478 41,401
Net gains/(losses) from investments and others 1,119 (6,730)
Interest income 3,910 3,917
Finance costs (2,512) (3,543)
Share of profit/(loss) of associates and joint ventures, net 9,253 2,463
Profit before income tax 63,248 37,508
Income tax expense (11,781) (9,658)
Profit for the period 51,467 27,850
Attributable to:
Equity holders of the Company 51,324 27,025
Non-controlling interests 143 825
51,467 27,850
Non-IFRS operating profit 59,475 49,135
Non-IFRS profit attributable to equity holders of the Company 55,312 42,681
Annual Report 2024 11
Management Discussion and Analysis
Revenues . Revenues increased by 11% year-on-year to RMB172.4 billion for the fourth quarter of 2024. The following table
sets forth revenues of the Group and its segments for the fourth quarter of 2024 and the fourth quarter of 2023:
Unaudited
Three months ended
Year-
31 December 31 December on-year 31 December 31 December
2024 2023 change 2024 2023
Revenues % of total revenues
(RMB in millions, unless specified)
VAS 79,022 69,079 14% 46% 45%
Marketing Services 35,004 29,794 17% 20% 19%
FinTech and Business Services 56,125 54,379 3% 33% 35%
Others 2,295 1,944 18% 1% 1%
The Group 172,446 155,196 11% 100% 100%
– Revenues from VAS increased by 14% year-on-year to RMB79.0 billion for the fourth quarter of 2024. International
Games revenues were RMB16.0 billion, reflecting a 15% year-on-year increase (16% increase on a constant currency
basis), driven by robust performances from Brawl Stars and PUBG MOBILE, alongside the early access release of
Path of Exile 2. Domestic Games revenues increased by 23% year-on-year to RMB33.2 billion, benefitting from: a low
base in the prior year’s period; growth in revenue from major games such as Honour of Kings, Peacekeeper Elite and
VALORANT; and contributions from recently released games DnF Mobile and Delta Force. Social Networks revenues rose
by 6% year-on-year to RMB29.8 billion, primarily due to growth in app-based game virtual item sales, music subscription
revenues and Mini Games platform service fees.
– Revenues from Marketing Services were RMB35.0 billion for the fourth quarter of 2024, up 17% year-on-year, driven by
robust advertiser demand for Video Accounts, Mini Programs and Weixin Search inventories. Advertising spending rose
across most major categories during the quarter.
– Revenues from FinTech and Business Services increased by 3% year-on-year to RMB56.1 billion for the fourth quarter
of 2024. FinTech Services revenue growth reflected higher revenues from wealth management services and consumer
loan services, while commercial payment services revenue was broadly stable year-on-year. Higher Business Services
revenues were driven by growth in eCommerce technology service fees and WeCom revenue.
12 Tencent Holdings Limited
Management Discussion and Analysis
Cost of revenues . Cost of revenues for the fourth quarter of 2024 rose by 5% year-on-year to RMB81.7 billion, mainly due to
higher content costs driven by growth of games revenues, along with increased bandwidth and server costs.
Gross profit . Gross profit for the fourth quarter of 2024 grew by 17% year-on-year to RMB90.7 billion, primarily supported by
growth in high-margin revenue streams from Domestic Games, Video Accounts and Weixin Search, alongside enhanced cost
efficiency in our cloud services. Gross margin improved to 53% from 50% in the same period last year. The following table sets
forth gross profit and gross margin of the Group and its segments for the fourth quarter of 2024 and the fourth quarter of 2023.
Unaudited
Three months ended
Year-
31 December 31 December on-year 31 December 31 December
2024 2023 change 2024 2023
Gross profit/(loss) Gross margin
(RMB in millions, unless specified)
VAS 44,157 37,090 19% 56% 54%
Marketing Services 20,197 16,922 19% 58% 57%
FinTech and Business Services 26,460 23,860 11% 47% 44%
Others (161) (308) NA (7%) (16%)
The Group 90,653 77,564 17% 53% 50%
– Gross profit for VAS grew by 19% year-on-year to RMB44.2 billion, primarily driven by growth in high-margin Domestic
Games revenues. Gross margin rose to 56%, up from 54% in the same period last year.
– Gross profit for Marketing Services was RMB20.2 billion, up 19% year-on-year, supported by growth in high-margin
Video Accounts and Weixin Search revenues. Gross margin was 58%, compared to 57% in the same period last year.
– Gross profit for FinTech and Business Services rose by 11% year-on-year to RMB26.5 billion, mainly due to revenue growth
from wealth management services, consumer loan services and WeCom, alongside improved cost efficiency in our cloud
services. Gross margin increased to 47% from 44% in the same period last year.
Annual Report 2024 13
Management Discussion and Analysis
Selling and marketing expenses . Selling and marketing expenses decreased by 6% year-on-year to RMB10.3 billion in the fourth
quarter of 2024, reflecting a high base in the prior-year period. As a percentage of revenues, selling and marketing expenses
declined to 6%, compared to 7% in the same period last year.
General and administrative expenses . General and administrative expenses increased by 16% year-on-year to RMB31.4 billion
for the fourth quarter of 2024, primarily driven by increased R&D expenses, including staff costs and depreciation expenses
related to our AI initiatives.
Interest income . Interest income was RMB3.9 billion for the fourth quarter of 2024, broadly stable year-on-year.
Finance costs . Finance costs decreased by 29% year-on-year to RMB2.5 billion for the fourth quarter of 2024, mainly due to
recognition of foreign exchange gains this quarter, compared to losses recorded in the same period last year.
Share of profit/(loss) of associates and joint ventures, net . We recorded share of profits of associates and joint ventures of
RMB9.3 billion for the fourth quarter of 2024, an increase from share of profits of RMB2.4 billion in the same period last year.
Non-IFRS share of profits of associates and joint ventures rose to RMB7.7 billion, compared to share of profits of RMB4.5
billion in the same period last year. The increase in non-IFRS share of profits of associates and joint ventures was due to
associate company-specific factors, such as business growth, new content releases and enhanced operating efficiencies.
Income tax expense . Income tax expense rose by 22% year-on-year to RMB11.8 billion for the fourth quarter of 2024, driven
primarily by growth in operating profit.
Profit attributable to equity holders of the Company . Profit attributable to equity holders of the Company increased by 90% to
RMB51.3 billion for the fourth quarter of 2024 on a year-on-year basis. Non-IFRS profit attributable to equity holders of the
Company increased by 30% year-on-year to RMB55.3 billion for the fourth quarter of 2024.
14 Tencent Holdings Limited
Management Discussion and Analysis
FOURTH QUARTER OF 2024 COMPARED TO THIRD QUARTER OF 2024
The following table sets forth the comparative figures for the fourth quarter of 2024 and the third quarter of 2024:
Unaudited
Three months ended
31 December 30 September
2024 2024
(RMB in millions)
Revenues 172,446 167,193
Cost of revenues (81,793) (78,365)
Gross profit 90,653 88,828
Selling and marketing expenses (10,285) (9,411)
General and administrative expenses (31,403) (29,058)
Other gains/(losses), net 2,513 2,974
Operating profit 51,478 53,333
Net gains/(losses) from investments and others 1,119 3,066
Interest income 3,910 3,996
Finance costs (2,512) (3,531)
Share of profit/(loss) of associates and joint ventures, net 9,253 6,019
Profit before income tax 63,248 62,883
Income tax expense (11,781) (8,900)
Profit for the period 51,467 53,983
Attributable to:
Equity holders of the Company 51,324 53,230
Non-controlling interests 143 753
51,467 53,983
Non-IFRS operating profit 59,475 61,274
Non-IFRS profit attributable to equity holders of the Company 55,312 59,813
Annual Report 2024 15
Management Discussion and Analysis
Revenues . Revenues for the fourth quarter of 2024 increased by 3% quarter-on-quarter to RMB172.4 billion.
– Revenues from VAS decreased by 4% quarter-on-quarter to RMB79.0 billion. International Games revenues were
RMB16.0 billion, up 10% quarter-on-quarter, driven by newly launched game Age of Empires Mobile and the early
access release of Path of Exile 2, as well as Supercell’s games. Domestic Games revenues were RMB33.2 billion,
representing a 11% decline quarter-on-quarter, primarily due to seasonally lower revenue in the fourth quarter. Social
Networks revenues decreased by 3% quarter-on-quarter to RMB29.8 billion, reflecting seasonally lower revenue from
app-based game virtual item sales.
– Revenues from Marketing Services rose by 17% quarter-on-quarter to RMB35.0 billion, due to increased revenues from
Video Accounts, Weixin Moments and our mobile ad network, benefitting from ongoing improvements to our AI-powered
advertising infrastructure, and a seasonal uptick in eCommerce advertising spending.
– Revenues from FinTech and Business Services increased by 6% quarter-on-quarter to RMB56.1 billion, driven by higher
revenues from payment activities, consumer loan services, cloud services and eCommerce technology service fees.
Cost of revenues . Cost of revenues were RMB81.7 billion for the fourth quarter of 2024, up 4% quarter-on-quarter.
Gross profit . Gross profit was RMB90.7 billion for the fourth quarter of 2024, up 2% quarter-on-quarter. Gross margin was
53%, broadly stable quarter-on-quarter.
– Gross profit for VAS was RMB44.2 billion, down 7% quarter-on-quarter primarily due to seasonally lower revenues from
Domestic Games. Gross margin was 56%, compared to 57% in the third quarter of 2024.
– Gross profit for Marketing Services increased by 27% quarter-on-quarter to RMB20.2 billion driven by seasonally higher
eCommerce advertising spending. Gross margin increased to 58% from 53% in the previous quarter.
– Gross profit for FinTech and Business Services increased by 4% quarter-on-quarter to RMB26.5 billion, mainly due
to revenue growth from consumer loan services and eCommerce technology service fees. Gross margin was 47%,
compared to 48% in the third quarter of 2024.
Selling and marketing expenses . Selling and marketing expenses rose by 9% quarter-on-quarter to RMB10.3 billion for the
fourth quarter of 2024, reflecting seasonally higher promotional and advertising efforts related to games and eSports events.
16 Tencent Holdings Limited
Management Discussion and Analysis
General and administrative expenses . General and administrative expenses increased by 8% quarter-on-quarter to
RMB31.4 billion for the fourth quarter of 2024, driven by costs related to AI initiatives, including higher depreciation on servers
and network equipment.
Share of profit/(loss) of associates and joint ventures, net . We recorded share of profits of associates and joint ventures of
RMB9.3 billion for the fourth quarter of 2024, compared to share of profits of RMB6.0 billion for the previous quarter. Non-IFRS
share of profits of associates and joint ventures was RMB7.7 billion for the fourth quarter of 2024, compared to share of profits
of RMB8.5 billion for the previous quarter.
Profit attributable to equity holders of the Company . Profit attributable to equity holders of the Company decreased by 4% to
RMB51.3 billion for the fourth quarter of 2024 on a quarter-on-quarter basis. Non-IFRS profit attributable to equity holders of
the Company decreased by 8% to RMB55.3 billion for the fourth quarter of 2024.
OTHER FINANCIAL INFORMATION
Unaudited
Three months ended Year ended
31 December 30 September 31 December 31 December 31 December
2024 2024 2023 2024 2023
(RMB in millions, unless specified)
EBITDA (a) 63,917 64,397 53,983 256,310 214,381
Adjusted EBITDA (a) 69,579 69,656 59,494 277,012 235,454
Adjusted EBITDA margin (b) 40% 42% 38% 42% 39%
Interest and related expenses 3,340 3,145 3,015 12,447 11,885
Net cash/(debt) (c) 76,798 95,462 54,740 76,798 54,740
Capital expenditures (d) 36,578 17,094 7,524 76,760 23,893
Note:
(a) EBITDA is calculated as operating profit minus other gains/(losses), net, and adding back depreciation of property, plant and
equipment, investment properties as well as right-of-use assets, and amortisation of intangible assets and land use rights. Adjusted
EBITDA is calculated as EBITDA plus equity-settled share-based compensation expenses.
(b) Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues.
(c) Net cash/(debt) represents period end balance and is calculated as cash and cash equivalents, plus term deposits and others,
including highly liquid investment products held for treasury purposes, minus borrowings and notes payable.
(d) Capital expenditures primarily consist of investments in computer equipment and components, and other property, plant and
equipment, construction in progress, investment properties, land use rights, as well as certain intangible assets.
Annual Report 2024 17
Management Discussion and Analysis
The following table reconciles our operating profit to our EBITDA and Adjusted EBITDA for the periods presented:
Unaudited
Three months ended Year ended
31 December 30 September 31 December 31 December 31 December
2024 2024 2023 2024 2023
(RMB in millions, unless specified)
Operating profit 51,478 53,333 41,401 208,099 160,074
Adjustments:
Other (gains)/losses, net (2,513) (2,974) (1,983) (8,002) (4,701)
Depreciation of property, plant and equipment and
investment properties 5,811 5,183 5,117 21,141 19,908
Depreciation of right-of-use assets 1,595 1,549 1,544 6,191 6,397
Amortisation of intangible assets
and land use rights 7,546 7,306 7,904 28,881 32,703
EBITDA 63,917 64,397 53,983 256,310 214,381
Equity-settled share-based compensation 5,662 5,259 5,511 20,702 21,073
Adjusted EBITDA 69,579 69,656 59,494 277,012 235,454
18 Tencent Holdings Limited
Management Discussion and Analysis
NON-IFRS FINANCIAL MEASURES
To supplement the consolidated results of the Group prepared in accordance with IFRS, certain additional non-IFRS financial
measures (in terms of operating profit, operating margin, profit for the period, profit attributable to equity holders of the
Company, basic EPS and diluted EPS) have been presented in this annual report. These unaudited non-IFRS financial
measures should be considered in addition to, not as a substitute for, measures of the Group’s financial performance prepared
in accordance with IFRS. In addition, these non-IFRS financial measures may be defined differently from similar terms used by
other companies.
The Company’s management believes that the non-IFRS financial measures provide investors with useful supplementary
information to assess the performance of the Group’s core operations by excluding certain non-cash items and certain impact
of investment-related transactions. In addition, non-IFRS adjustments include relevant non-IFRS adjustments for the Group’s
major associates based on available published financials of the relevant major associates, or estimates made by the Company’s
management based on available information, certain expectations, assumptions and premises.
The following tables set forth the reconciliations of the Group’s non-IFRS financial measures for the fourth quarter of 2024 and
2023, the third quarter of 2024, as well as the years ended 31 December 2024 and 2023 to the nearest measures prepared in
accordance with IFRS:
Unaudited three months ended 31 December 2024
Adjustments
Net (gains)/
losses from Amortisation Impairment
As Share-based investee of intangible provisions/ SSV & Income tax
reported compensation companies assets (reversals) CPP effects Non-IFRS
(a) (b) (c) (d) (e) (g)
(RMB in millions, unless specified)
Operating profit 51,478 6,140 – 1,416 – 441 – 59,475
Share of profit/(loss) of associates and
joint ventures, net 9,253 1,003 (3,799) 1,176 116 – – 7,749
Profit for the period 51,467 7,143 (6,888) 2,592 1,760 1,109 (706) 56,477
Profit attributable
to equity holders 51,324 7,034 (6,931) 2,396 1,037 1,109 (657) 55,312
EPS (RMB per share)
– basic 5.597 6.032
– diluted 5.485 5.909
Operating margin 30% 34%
Annual Report 2024 19