Tencent marks 8% YOY growth driven by AI investments

Tencent released its annual results which saw an 8% increase to RMB 660.3 billion (US$91.9 billion). Although its share price dipped slightly following the announcement, it has surged over 80% compared to a year ago. Meanwhile, it's quarterly results climbed 11%. 

Huateng Ma, chairman and CEO of Tencent, said in a press release, “Benefitting from AI-powered enhancements on our advertising platform, higher engagement in Video Accounts, and growth in our evergreen games, we achieved double-digit revenue growth while sustaining continued operating leverage in the fourth quarter of 2024”.

Ma mentioned that over the past few months that Tencent has restructured its AI teams to better focus on rapid product innovation and in-depth model research. The company has also ramped up AI-related capital expenditures and boosted R&D and marketing efforts for AI-native products.

“We believe these stepped-up investments will generate ongoing returns via uplifting productivity in our advertising business and longevity of our games, as well as longer-term value from accelerated consumer usage of our AI applications and enterprise adoption of our AI services,” added Ma. 

Tencent games and marketing services lead business growth in Q4

Revenue from value-added services (VAS) rose by 14% year-on-year in Q4 2024. International games revenue reached RMB 16.0 billion (US$ 2.23 billion), marking a 15% increase year-on-year, driven by strong performances from Brawl Stars and PUBG Mobile, as well as the early access release of Path of Exile 2. Domestic games revenue surged by 23% year-on-year to RMB 33.2 billion (US$ 4.62 billion), benefiting from a low base in the previous year and growth in major games like Honour of Kings, Peacekeeper Elite, and Valorant, along with contributions from newly released games DnF Mobile and Delta Force.

Social-network revenue grew by 6% year-on-year to RMB 29.8 billion (US$ 4.15 billion), mainly due to increased sales of virtual items in app-based games, music subscription revenue, and service fees from the Mini Games platform.

Marketing services revenue reached RMB 35.0 billion (US$ 4.87 billion) in Q4 2024, a 17% year-on-year increase, fuelled by strong advertiser demand for Video Accounts, Mini Programs, and Weixin Search inventories. Ad spend rose across most major categories during the quarter. Fintech and business services revenue grew by 3% year-on-year to RMB 56.1 billion (US$ 7.81 billion) in Q4 2024, with higher business services revenue driven by growth in ecommerce technology service fees and WeCom revenue.

Last month, Alibaba Group announced its annual results, also strongly fuelled by AI investment. Its revenue jumped 8% year-on-year, and its share price soared over 60% in the past year.