Tencent's Q4 earnings missed expectations due to a decline in advertising revenue and increased costs. Revenue grew 8% YoY to RMB144.19bn, while non-GAAP net profit declined 25% YoY to RMB24.88bn. Advertising revenue decreased 13% YoY to RMB21.5bn, primarily due to weak demand in sectors like education, real estate, insurance, and games. Increased server, bandwidth, and content costs also hurt gross margin. However, deferred revenue from games has been increasing for two consecutive quarters, with online game revenue growing 9.5% YoY to RMB42.8bn. Tencent's game revenue generated in the domestic market increased 1% YoY to RMB29.6bn, while that in the international market grew 34% YoY to RMB13.2bn. Overall, Tencent's growth outlook remains positive, with revenue expected to grow 15.9% YoY in 2024E.
