Tencent’s fourth-quarter revenue rose 7% year-over-year and the company intends to double its stock buyback program to over HKD100B (about $12.8B).

Dividend Expansion

The video games company also proposed to increase its annual dividend for the year ended Dec. 31, 2023 by 42%, to HKD3.40 per share (equal to about HKD$32B).

Fourth Quarter Metrics Review

Total revenues for the fourth quarter grew 7% year-over-year to RMB155.2B ($21.9B), yet it fell short of average estimates of RMB157.4B as reported by Bloomberg News.

On a non-IFRS basis, profit attributable to equity holders of the company surged 44% year-over-year to RMB42.7B.

Company’s Perspective

“In 2023, we achieved breakthroughs in a number of products and services, as Video Accounts’ total user time spent more than doubled, enhancements to our advertising AI model significantly improved our targeting performance,” stated Tencent’s Chairman and CEO Ma Huateng.

The year also saw the company’s own artificial intelligence, or AI, model Hunyuan, develop into a top-tier foundation model with superior performance in various areas, according to Huateng.

Revenue Insights

Revenue from VAS (value-added services) segment fell 2% year-over year to RMB69.1B in the fourth quarter. International Games revenues increased 1% year-over year to RMB13.9B.

“PUBG Mobile” experienced a strong upturn in revenue, while “VALORANT” sustained robust growth.

However, Domestic Games revenues dropped 3% year-over year to RMB27B due to decreased contributions from “Honour of Kings” and “Peacekeeper Elite.”

Segment Performance

Social Networks revenues went down 2% year-over-year to RMB28.2B, while revenues from Online Advertising rose 21% year-over-year to RMB29.8B.

Revenues from FinTech and Business Services in the fourth-quarter grew 15% year-on-year to RMB54.4B.

Key Metrics

For full year 2023, the combined monthly active users of the messaging/social media apps Weixin and WeChat rose 2% year-over-year to 1.343B. Quarter-over-quarter there was a 0.5% increase.

Mobile device MAU of instant messaging service QQ decreased by 3% year-over-year to 554M in 2023, while Fee-based VAS registered subscriptions rose 7% to 248M.

Buyback Strategy

The Chinese tech giant plans to at least double the size of its share buyback from about HKD49B in 2023 to over HKD100B in 2024.

In comparison, Chinese e-commerce giant Alibaba’s board approved an increase of $25B to its stock buyback program through the end of March 2027 in February.