As a technology giant in the Hong Kong stock market that has attracted much attention this year, $TENCENT (00700.HK)$ today announced the 2024 annual report.

On March 19th, TENCENT disclosed that the total revenue for the fourth quarter of 2024 was 172.446 billion yuan (RMB, the same below), an increase of 11% year-on-year; operating profit in accordance with non-International Financial Reporting Standards was 59.475 billion yuan, up 21% year-on-year. For the whole year, TENCENT's total revenue in 2024 was 660.257 billion yuan, a year-on-year growth of 8%; operating profit according to non-International Financial Reporting Standards was 237.811 billion yuan, up 24% year-on-year.

Regarding this year's booming AI sector, TENCENT has also invested heavily, adopting a 'self-research + open-source' multi-model strategy, with R&D investment reaching 70.69 billion yuan in 2024, and a cumulative investment of 340.3 billion yuan over the past seven years. Against the backdrop of increasing investment in AI, TENCENT is accelerating the AI integration across all products based on the 'self-research + open-source' multi-model strategy.

At the annual report communication meeting, TENCENT's Chairman and CEO Ma Huateng also stated that the AI ecosystem is still in its early stages, and all industries will benefit from the popularization of AI, believing that every industry will embrace this opportunity. He expressed great respect for the emergence of independent, open-source products in the market.

In addition, TENCENT announced that it will continue to repurchase shares in 2025, expecting a scale of at least 80 billion Hong Kong dollars; cash dividends are increased by 32% to about 41 billion Hong Kong dollars, with total shareholder returns in 2025 reaching at least 121 billion Hong Kong dollars.

Last year's fourth quarter performance saw high growth.

On March 19, TENCENT released the Earnings Reports for the fourth quarter and the entire year of 2024, with core Company Business Data continuing to improve. The fourth quarter revenue was 172.446 billion yuan, an increase of 11% year-on-year; gross profit and operating profit (Non-IFRS) grew by 17% and 21% respectively, surpassing revenue growth for nine consecutive quarters.

Benefiting from the 'self-researched + open-source' multi-model strategy, AI has injected new momentum into TENCENT, with both new seed businesses and evergreen sectors achieving growth, driving increases in all three core businesses.

In the fourth quarter, the value-added services revenue was 79.02 billion yuan, an increase of 14% year-on-year, with game business revenues achieving double-digit growth in both domestic and overseas markets.

Revenue from Marketing Services was 35 billion yuan, an increase of 17% year-on-year, mainly benefiting from upgrades in advertising technology and driven by new seed businesses such as video accounts, mini-programs, WeChat search, and small stores.

Revenue from CNI Xiangmi Lake Fintech Index and enterprise services was 56.13 billion yuan, an increase of 3% year-on-year, benefiting from AI upgrades of products such as WeChat Work and Tencent Meeting and diversified business growth.

Pony Ma, Chairman and CEO of TENCENT's Board of Directors, stated, 'Benefiting from the AI-enabled advertising platform upgrade, increased user engagement in video accounts, and growth in evergreen games, we achieved double-digit revenue growth in the fourth quarter of 2024, while continuously improving operational efficiency.'

For the entire year of 2024, revenue reached 660.257 billion yuan, an increase of 8% year-on-year; operating profit according to non-international financial reporting standards was 237.811 billion yuan, an increase of 24%.

By business segment, value-added services revenue, including games, CNI Xiangmi Lake Fintech Index and enterprise services revenue, and Marketing Services revenue are key pillars for TENCENT, with 2024 revenues of 319.2 billion yuan, 212 billion yuan, and 121.4 billion yuan, increasing year-on-year by 7%, 4%, and 20% respectively, accounting for 49%, 32%, and 18% of total revenue.

Among them, Marketing Services business revenue reached 121.4 billion yuan with a growth rate of 20%. TENCENT stated that the growth is mainly due to the strong demand from advertisers for the advertisement inventory of video accounts, mini-programs, and WeChat search ads, as well as the continued upgrading of the AI-driven advertising technology platform. Most key industries have seen an increase in advertising spending, with significant growth in the advertising investments in the gaming, e-commerce, education, and Internet service sectors.

It is reported that driven by AI technology, the WeChat ecosystem has undergone a comprehensive upgrade, showing new vitality. TENCENT's 2024 Earnings Reports show that the combined monthly active Account numbers for WeChat and WeChat have increased to 1.385 billion, with AI technology accelerating the rollout in search, input methods, content generation, and other scenarios, providing intelligent support for users, creators, and businesses. New business initiatives such as video accounts, WeChat stores, and WeChat search have shown strong performance, becoming important engines for revitalizing the WeChat ecosystem.

WeChat Stores leverage the social, content, and payment capabilities of the WeChat ecosystem to offer an indexed and standardized commodity trading experience, enhancing user engagement and trading capabilities. In 2024, the sales scale of WeChat Stores has grown rapidly, with GMV reaching 1.92 times that of 2023, and the number of Orders increasing by 125%.

The "Gift Delivery" feature launched in the fourth quarter of last year has become an innovation growth point for businesses. For example,$EAST BUY (01797.HK)$Taking WeChat Stores as an example, during the New Year's Day and New Year's Eve period in 2025, the number of gift delivery Orders surged by 1622% and 661% respectively compared to the previous day, with GMV exceeding 5 million on New Year's Eve. Currently, EAST BUY's gift delivery Orders account for 85% of the overall Orders, with some important holidays exceeding 90%.

Significant investments in AI.

The layout in the field of AI has become a focus of TENCENT's Earnings Reports.

A few months ago, we reorganized the AI team to focus on rapid product innovation and deep model development, increased capital expenditure related to AI, and intensified our research and marketing efforts for native AI products.” Ma Huateng stated in the earnings report, “We believe these increased investments will bring sustained returns by enhancing the efficiency of our advertising business and extending the lifecycle of our games, while also creating long-term value with the accelerated popularization of our personal AI applications and more enterprises adopting our AI services.

It is reported that since 2024, TENCENT has initiated the process of accelerating the fusion of AI technology across all sectors. Based on the multi-model strategy of ‘self-research + open source,’ TENCENT has flexibly integrated external suitable models into a series of products based on its self-developed large model, benefiting industry innovation and providing users with the best AI experience.

The earnings report also shows that the AI strategy has entered a period of heavy investment, with TENCENT's R&D expenditure reaching 70.69 billion yuan in 2024, and a cumulative investment of 340.3 billion yuan over seven years. Capital expenditures have achieved triple-digit year-on-year growth for four consecutive quarters, with annual capital expenditures exceeding 76.7 billion yuan, a year-on-year increase of 221%, setting a historic high.

Against the backdrop of increasing investments in AI, TENCENT is accelerating the penetration of AI across products based on the ‘self-research + open source’ multi-model strategy. The self-developed Hongyuan large model has launched Hongyuan T1 and Turbo S, which have already been integrated into over 700 internal scenarios. In terms of ecological collaboration, TENCENT's YB, WeChat, and TENCENT Docs series of products have integrated the DeepSeek-R1 open-source model in bulk to provide users with a high-quality AI experience.

In the TENCENT annual report communication meeting, Ma Huateng spoke about DeepSeek, stating that after the deep thinking model was introduced, AI intelligence has improved significantly compared to previous years. Moreover, after the emergence of DeepSeek, the advantages of open source and Chinese engineers in focusing on cost and efficiency have become quite evident.

The level of intelligence in AI has improved significantly compared to previous years. For TENCENT, after careful consideration, the cloud business and YB are embracing AI. The opportunity for significant applications is now here, with companies adopting AI implementations and witnessing the development of AI Agents (intelligent agents), with a lot of imaginative space for AI-related tools behind them. Currently, the AI ecosystem is still in its early stages, and all industries will benefit from the popularization of AI. It is believed that every industry will embrace this opportunity. “We have communication with the industry and Liang Wenfeng, and we greatly admire the independent, open-source products that have emerged in the market, which we respect very much.”

In addition, Ma Huateng stated that in the field of embodied intelligence, TENCENT hopes to become a partner of all robot manufacturers, rather than replacing them in making hardware, which aligns with our overall strategic goals.

At the TENCENT Global Digital Ecosystem Conference held in Shanghai on March 19, TENCENT Group Senior Executive Vice President and CEO of the Cloud and Smart Industry Group, Tang Daosheng, stated, “TENCENT aims to create user-friendly AI. For example, the recently discussed TENCENT YB has gained wide recognition from users thanks to its leading model capabilities, high-quality content from WeChat public accounts, powerful internet search capabilities, and advantages of connecting within the TENCENT product ecosystem.”

In 2025, the repurchase will be at least 80 billion Hong Kong dollars.

Repurchasing shares and canceling them is almost a common action for TENCENT in recent years.

TENCENT announced that it will continue to repurchase shares in 2025, expected to scale at least 80 billion Hong Kong dollars; cash dividends will grow by 32% to about 41 billion Hong Kong dollars, and total shareholder returns in 2025 will be at least 121 billion Hong Kong dollars.

Data shows that the amounts repurchased by TENCENT in 2021, 2022, 2023, and 2024 were 2.6 billion Hong Kong dollars, 33.8 billion Hong Kong dollars, 49.4 billion Hong Kong dollars, and 112 billion Hong Kong dollars respectively. This also means that TENCENT's repurchase data in recent years has set a historical high for the company's annual repurchase amounts.

In addition, TENCENT's Earnings Reports also disclosed that as of December 31, 2024, TENCENT Group had 110,558 employees (105,417 in 2023). The number of employees hired by TENCENT may change from time to time depending on requirements, and employee compensation is determined according to industry norms.

TENCENT stated in the announcement that the Group regularly reviews employee compensation policies and overall compensation. Besides pensions and internal training courses, employees may be awarded bonuses, stock rewards, and stock options at the discretion based on individual performance. The total compensation cost for the year ending December 31, 2024, was 112.8 billion yuan (107.7 billion yuan in 2023).

Editor/rice