Tech Giant Tencent’s Revenue in Q1 2023 Exceeds CNY 149.99 Bn, and Net Profit Up 27% YoY

Consumer Discretionary, Technology Author: Zhisheng Wang, Yiran Xing Editor: Yiran Xing May 18, 2023 03:17 PM (GMT+8)

On May 17, 2023, Tencent announced its 2023 first quarterly report. In Q1 2023, its advertising business returned to high growth, and its gaming business performed well overseas.


Tencent Holdings Ltd. (hereinafter referred to as "Tencent", Chinese: 腾讯, HK: 00700), headquartered in Shenzhen, recently released its 2023 first quarterly report. In Q1 2023, Tencent achieved total operating revenue of CNY 149.99 billion (USD 21.38 billion), up 11% year-on-year; net profit (Non-IFRS) was CNY 32.54 billion, a 27% increase from the same period last year.

Founded in 1998, Tencent is one of the world's leading Internet technology companies, with businesses covering social media, finance, entertainment, consulting, etc., with products including WeChat, QQ, Tencent Video, Tencent Maps, Tencent Gaming and others. Its major revenue includes value-added business, online advertising, financial technology & corporate services, and other businesses. In Q1 2023, Tencent generated revenue of CNY 79.34 billion from value-added services, up 9% year-on-year; CNY 20.96 billion from online advertising, a 17% increase from the same period last year; and CNY 48.70 billion from financial technology and corporate services, up 14% over the previous year.

Tencent was one of the first Internet companies in China to begin its internationalization strategy, with its communication and social media services connecting over 1 billion people worldwide. Since 2005, Tencent has set up an internationalization division dedicated to overseas matters. Tencent has partnered with India's Global Network to develop the Indian market, followed by a USD 300 million investment in DST, the largest Internet company in the Russian-speaking market, to enter the Russian and Central European markets, and an investment in Riot Game, a U.S.-based game company, to gain exclusive distribution rights for League of Legends in China. Tencent started its internationalization gradually by investing in foreign games and portals, and its investment in the field of games is focused on PC online games.

It is worth mentioning that in Q1 2023, Tencent's overseas game revenue hit a record high, becoming the "second growth curve" of Tencent's games. The financial report shows that Tencent's game revenue in Q1 2023 from the international market was CNY 13.2 billion, up 25% year-on-year, while game revenue in the local market was CNY 35.1 billion, up 6% over the previous year. On May 15, Tencent Games held a press conference, focusing on 10 old games and the release of 20 new games.

In terms of R&D investment, in Q1 2023, Tencent's R&D expenditure continued to maintain high growth, reaching CNY 15.18 billion, basically the same as in Q1 2022. From 2018 to date, the company's R&D investment has accumulated over CNY 220 billion. According to the latest data from the China National Intellectual Property Administration, by the end of 2022, Tencent's total number of patent applications disclosed in major countries and regions around the world exceeded 62,000, and the number of patents granted exceeded 30,000, ranking second among private enterprises in China.

The major competitors of Tencent include Chinese companies such as Baidu (Chinese: 百度), Alibaba (Chinese: 阿里巴巴) and ByteDance,  as well as international players such as Google, Amazon and Apple from the US.

Based on current industry trends, Ma Huateng, co-founder and CEO of Tencent, has mentioned that the AI industry will enter a period of rapid development in China in the next decade, "Tecent is investing heavily in building AI capabilities and cloud infrastructure to embrace the opportunities presented by the underlying model. We believe that AI will become a multiplier for business development to better serve users, customers and society as a whole."

As of press time, Baidu closed at CNY 299.55 apiece, with a market cap of CNY 2,863 billion.