1. Performance exceeded expectations, profit decline bottomed out, and large repurchases underpinned stock prices
The performance exceeded expectations.22Q4 had revenue of US$32.17 billion and annual revenue of US$116.61 billion, down 4% and 1%, respectively. Excluding the impact of exchange rate fluctuations, it rose 2% and 4% year on year, respectively, exceeding Bloomberg's agreed expectations. The decline in the company's revenue growth rate is mainly due to factors such as macroeconomic headwinds and short video shocks.
The profit decline bottomed out, and profits were released in 2023.22Q4's gross profit was US$23.829 billion, down 12.79% year on year, and gross margin fell to 74.08% compared to Q3. 22Q4's capital expenditure was US$9.22 billion, up 66.4% year on year. 22Q4 operating profit was US$6.013 billion, down 29.46% year on year. The decline was narrower than the previous quarter (-49.15%). The operating profit margin continued to fall to 18.78%, mainly due to a 22% year-on-year increase in operating expenses (US$25.77 billion), including US$4.2 billion in one-time restructuring work expenses (laying off 11,000 employees, etc.). It is expected that after the layoff compensation is completed, expenses will be further controlled, thereby increasing operating profit margins.
Cash flow has been substantially restored.Free cash flow for 22Q4 was US$5.288 billion, a significant recovery from US$173 million in Q3, mainly due to a sharp increase in net cash flow from operating activities to US$14.511 billion.
A large amount...