<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1c520818-da9a-4957-b408-ca565c3c4100.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1c520818-da9a-4957-b408-ca565c3c4100.png"/> Author | Huang Yu
Editor | Liu Baodan
After experiencing nine consecutive quarters of negative employee growth or slight growth in the hundreds, Tencent made a significant move, increasing its total number of employees by over 3,300 in the third quarter.
Does this mean that Tencent's internal adjustments and business slimming over the past two to three years have basically ended, and it will re-enter a new round of expansion? The answer can be found in Tencent's recently released third-quarter performance report.
The financial report shows that in the third quarter, Tencent achieved operating revenue of 167.193 billion yuan, a year-on-year increase of 8%, in line with market expectations; Non-IFRS net profit attributable to shareholders grew by 33% year-on-year to 59.813 billion yuan, setting a new historical high and exceeding market expectations.
From the perspective of overall revenue growth rate, Tencent has maintained a growth rate below 10% for four consecutive quarters. However, the gaming business, which is a pillar, has begun to revive, with total gaming revenue in the third quarter reaching 51.8 billion yuan, a year-on-year increase of 12.6%, the highest growth rate in nearly three years.
In addition, according to Wall Street News, since the second half of 2022, Tencent has achieved a new growth momentum where profit growth has exceeded revenue growth for eight consecutive quarters. The nearly 60 billion yuan profit this quarter is backed by Tencent's continuously optimized revenue structure.
In simple terms, under the main theme of &#34;cost reduction and efficiency enhancement, convergence and focus,&#34; Tencent has chosen to abandon ineffective revenue growth in recent years and focus on high-margin business growth.
According to the financial report, in the third quarter, Tencent's overall gross profit increased by 16% year-on-year, mainly due to the growth of high-profit revenue streams such as domestic games, video accounts, and WeChat search, as well as improved profitability in cloud services contributing to gross profit growth across various segments.
Of course, after several quarters of over 40% year-on-year profit growth, Tencent is currently facing pressure as profit growth begins to decline.
This may be partly because some of Tencent's efficiency improvement measures have reached their expected goals, and on the other hand, expenses for promotion and research and development have increased significantly.
Data shows that in the third quarter, Tencent's sales and marketing expenses increased by 19% year-on-year, reaching 9.4 billion yuan; general and administrative expenses, including research and development expenses and employee costs, increased by 11% year-on-year, reaching 29.1 billion yuan.
The signal for Tencent to re-expand is clear, but the era of rapid growth in the internet industry has passed, and Tencent's new round of expansion will certainly be more restrained.
So, where will Tencent's future growth momentum come from?
In addition to continuing to stimulate the vitality of the gaming business, since 2022, Pony Ma has not concealed his emphasis on video accounts, even stating that video accounts are essentially &#34;the hope of the entire company.&#34; However, since the beginning of this year, the visibility of video accounts in Tencent's financial reports has been decreasing, with the third quarter even failing to mention the user duration of video accounts.
For video accounts, an important task this year is to develop e-commerce, which complements the advertising business. However, so far, the e-commerce aspect of video accounts is still in the process of improving infrastructure, with slow progress in commercialization
Against this backdrop, Tencent has also shifted its development strategy, announcing in August this year the upgrade of its video account store to WeChat Store, placing greater emphasis on creating a complete commercial closed loop within the WeChat ecosystem.
The importance of WeChat to Tencent today cannot be overstated; it is not only Tencent's strongest platform in terms of daily active users and ecosystem but also the hope for Tencent to seek its next strong growth point.
In the third quarter earnings report, WeChat Store was mentioned for the first time, highlighting its upgraded transaction platform strategy aimed at creating a unified and trustworthy trading experience based on the entire WeChat ecosystem.
Tencent has high hopes for WeChat Store, envisioning it as a platform where merchants can operate indexed and standardized commercial storefronts, leveraging WeChat's social interaction, content platform, and payment capabilities to effectively reach customers and drive sales conversion.
Tencent's management expressed excitement about the long-term potential of this e-commerce ecosystem. In the third quarter, the GMV generated by mini-programs exceeded 2 trillion yuan, with a significant portion coming from services, but there was also considerable GMV from physical goods sold by merchants to customers.
Tencent is upgrading its entire e-commerce strategy around WeChat Store, aiming to build a larger e-commerce foundation through the entire WeChat ecosystem.
Another area where Tencent hopes to see future growth is AI, which can not only serve as a multiplier for Tencent's business development but also open new growth spaces for its B-end business, ensuring it does not fall behind in the competition for the next super traffic entrance.
Tencent's financial report pointed out that it continues to deploy AI in its products and operations, including marketing services and cloud services, with increasingly visible benefits.
In the new wave of overseas expansion, Tencent is also seizing opportunities for international growth, actively advancing its businesses such as Tencent Games, Tencent Cloud, and WeChat.
After several years of transformation, Tencent has emerged from its low point and is now riding the waves of AI and overseas expansion. To return to its peak in the future, it must strive to find incremental growth, promote the longevity of its established businesses, and allow the &#34;new sprouts&#34; to thrive.
The new journey is filled with opportunities and challenges, and everything remains uncertain

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The number of employees increased by 3,300 in one quarter

- Tencent's employee count increased by over 3,300 in Q3, signaling a potential end to its internal adjustments and a shift towards expansion.  
- The company reported Q3 revenue of 167.19 billion yuan, an 8% year-on-year increase, with net profit rising 33% to 59.81 billion yuan, driven by a resurgence in its gaming sector.  
- Future growth may hinge on enhancing its WeChat ecosystem and e-commerce initiatives, alongside leveraging AI for business development and international expansion.

Is Tencent starting to expand again?