TCEHY - Earnings call transcript Q3 2020 | Tencent Holdings Limited

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Operator

Thank you for standing by and welcome to the Tencent Holdings Limited 2020 Third Quarter Results Announcement Conference Call. [Operator Instructions] I would now like to hand the conference over to your host today, Ms. Wendy Huang from Tencent. Please go ahead, Ms. Huang.

Wendy Huang

evening. Good third conference our XXXX quarter to call. results Welcome IR Wendy Huang Tencent from I'm team.

the like Information considered variety by in This the measures certain be reflect of Tencent. excluding we that in onetime by we future also from that a Non-IFRS may presentation, as to Before unaudited contains company's start a IFRS. core are in realized measures would market prepared of to, financial risks non-IFRS uncertainties addition forward-looking and/or the substitute presentation conditions which not some coming be of performance accordance measures various it noncash statements, not outside to with general are earnings of our intended number underlined reasons. but should for, financial sources items. a for and and about includes you remind is

risk detailed to on disclosure documents discussion a please measures, For section website. refer of and our our IR factors the non-IFRS of

team tonight. the me the on Let introduce management call

Chairman Mitchell, review Our Lau, floor Officer, conclude John financial Ma, Strategy will with open off we will business Chief and President, over kick James short Lo, will overview. Pony. for call provide Chief a questions. to Financial Martin a with review. turn Officer, CEO, the I now before will and Pony the

Pony Ma

Thank Good tonight. us Wendy. you, evening. Thank joining you for

strategic Internet which was upgrade, Internet. our consumer of intended organization industry in our and extend This our quarter presence anniversary the marked enhance strength to second -- to industrial

focus, and our consolidating services, society base. to and of internal our serve platforms, innovate better cloud building the order to In geopolitical collaborate initial businesses users, our sharpen the macroeconomic the at customers face in open we are and large. seeing an content was upgrade our with benefits in will advertising source growing partners seek long challenges, fruit healthy, designed public rejuvenating as code and run, such SaaS the to we and our and over While bear product areas already our

Total I billion, RMB quarter-on-quarter. Now billion, in XX% achieved XXXX. and up up revenue was results XX quarter of was X% year-on-year XX% the highlight quarter-on-quarter. XXX X% RMB and will we Gross profit the third year-on-year

operating non-IFRS RMB and quarter-on-quarter. XX% year-on-year billion, profit and up attributable X% holders net Non-IFRS billion, XX equity year-on-year RMB up to profit XX X% Our was was XX% quarter-on-quarter.

FinTech, In video as X.X of leadership and Moving MAU library. established our billion. aggregated cloud, assets. enterprise to was to online productivity sectors. release in business media, we of to In China music subscriptions In maintained franchises In transactions saw for Weixin was million. opportunities our the WeChat rising platforms. of both Martin to commercial success increased invite public popularity top-tier browser emerging and XXX released solution MAU demand PaaS in combined mobile I international maintained leadership James extended and review. Smart social, and will in in our mobile the capture devices and we QQ games, and and industry discuss security new content In of our paid China. markets. a and utilities, its songs expand In expanded payment customer platform via added wealth robust upgrade management growth, and we our SaaS we

Martin Lau

morning. Good Pony. evening and you, Thank good

revenue. XX% our Online was revenue, within XXXX, For the of VAS XX%. social Advertising our was online total total third represented which year-on-year. and FinTech Services quarter represented grew and XX% our XX% total of XX% revenue. was of total revenue of games Business XX% networks

RMB segment revenue XX billion up year-on-year in quarter, services, was the XX% third value-added and quarter-on-quarter. For X%

such and grew increased RMB sales content decreased driven and XX% by and growth of X% subscriptions in was activities billion, services. & XX% drama offices and driven Nothing primarily subscriptions XXX converted digital revenue period. year-on-year as normalized. offset The paying animated from due higher grew benefiting video grew trial benefiting library stay-at-home XXX an popular to but full revenue We revenue by XX paid Land returned item revenue growth new users XX as year-on-year XX% games from representing Social our X% and of to year-on-year billion, rate. XX quarter-on-quarter to grew increased smartphone stable Dungeon titles year-on-year promotions PC increased in-game users increased Valorant and XX% retention billion deferred Season music CrossFire and million, in-game at revenue quarter-on-quarter to subscriptions Total in Revenue quarter-on-quarter revenue Valorant. existing successfully of as acquired billion video XX RMB in cash contribution Legends XX to Fighter to client from from globally X. games Total networks markets million mainly users was ARPU. to streaming the Warriors year-on-year But to as year-on-year Thirty live decreased million XX% from due from regular on RMB Total quarter revenue Sequentially, XX% as and growth, League RMB game of X%, to revenue recognition China. subscribers. subscriptions. Western games and robust VAS slightly year-on-year Total expanded well X% and series, during a receipts Online their summer

social our about networks. more talk I'll Now

we efficiency entertainment. For high-frequency are list of X we transportation users. and into the shopping & verticals, key interface, on travel namely: Pay access services within daily delivering well services focused convenience facilitate grouped services, for services, as To the Weixin & financial to Weixin, as

public auto we vertical, car and China. services, in carwashes provinces of For connect municipalities cross-referencing the checking. travel service insurance, as as the enabled transportation users owners XX coverage delivery, and services, car such services bus and general with transit Mobility efficiency transportation codes as Weixin with mobility well to expanded schedule geographic services & we enhance properties. more including within of content and To

Official related after words appear phrases then other search create Accounts, In content Moments HX content services and messages, Official Moments, see press users related and can readers Programs, and to from that whenever can Mini provide posts, these and posts in sources. hashtags from a and Accounts, in pages. who example, the video For will Weixin of check feeds hashtags box, users which click

Moving stickiness QQ. experiences on users. young to youth on strengthen We of to the among shared experiences on the new creating more community keep We QQ platform. enable

via For mode while in example, co-edit we together watch Docs. and with compete Tencent to allow Mini Tencent Video chatting, friends them to video classwork battle to Games

well been can and explore create and videos image through since QQ, beyond service QQ April. have enjoyed shared has video Mini within testing of a content These spent World, We can popularity. images year-on-year. and by their resonates teens feed World percentage with young drove user Mini Mini within real-time initiatives chatting circle, and audience time users a per up and recommendation. World video daily friend increasing adoption within Contributors growing existing

gaming Now turning business. our to

expertise, first blockbusters For to anniversary DAU celebrated existing our XX the industry user and which smartphone Kings, well as vitality XXXX. lesser engaging audiences, leveraged million exceeded longevity insight large-scale of of known deliver titles, we months experiences our to of average of fifth the the XXX games, games. the recently for as Honour including execution and enhancing We

base robust with live-action titles Kings drama the and quite well. Elite, of We're capabilities similar vertically user King's by technology of new Investors as as familiar its IP constant games, and animated we of to realizing series. are operation potential a lesser titles through such infrastructure. Honour developing expanded have innovation, applied Honour We Peacekeeper user-centric and series known, but specialized

DAU such high ago the Naruto For in PC improved recently X to years, in the example, released favorably. and revenue we our the fighting games, enhancements an over mode. operational we respect as continue years self-developed most game, achieved is has have view PvP sector generative Naruto Mobile, genre all-time revenue despite driven fairly key now by being the China. and in one to With Mobile of popular games made

has product PC market revenue mobile While as and influential. the IP within revenue games to innovation the There of market, same platform broader plenty growth drive game the room or platform the PC for benefits. highly contributions experienced not are PC is direct game

in which a generative. launched Blossom the of event, as major well quarter, in the recent thematic users pass, as World We attracted Shanghai For mode Spirit champions, a audience, popular skins, reviving with and series Legends game's drama adapted of monetization. and highly-rated new a example, event was Festival, large revenue League release Championship too. CrossFire and released The and the new skins and game sizable global popularity into of League Legends coordinating tied-in a both

is on available in in rest mobile Grossing. iOS wide based genre success, Legends arena novel, Valorant by become the shooter talk a most currently about among game Twitch. year a the launched audience and on downloaded the releasing Besides with breakout MMORPG the on Rift, markets based Moonlight successful With existing in self-developed China of pass IP, battle became game Blade its renowned new game sustaining across this Mobile, Western business tactical addition, games. most to In new a impactful, the we of markets Wild hit a to continue expanding I'll James League in game the that, mobile review. has LL Asia. games on

James Mitchell

Thank you, Martin.

quarter. We to year-on-year categories, our Moving spend services. executed on China now to including rapid as education, as higher advertising, were we year-on-year advertisers that such been share and algorithmic Internet flattish to advertising during up Ad of Advertising automobiles for from as continued shock. which advertising cyclical increased categories And buying believe the quarter-on-quarter largely platform consumer from upgrading budgets conversion experiencing XX% has COVID, where secular e-commerce, RMB and initiatives, attracted certain services on our and spend quickly the dipped such ad and third the towards delivered recovered financial services picked due estate, growth, ad categories XX quarter. COVID-XX solutions, year-on-year. to our such staples, on the have year-on-year billion. revenue Internally, real in increased and some grow

We also casual and live streaming game in inventory events platforms. provided apps, eSports advertising incremental

revenue For advertising, achieved others year-on-year properties solid and driven and by eCPM. social impressions growth higher Weixin

responded year-on-year Our grew favorably as mobile advertisers rewarded video such video ad rapidly our to ads. formats network revenue as

for X upgraded ads the For Tencent in captured revenue media higher shows Video as One and screen growth sponsorship video series advertising the sequential decrease advertising revenue year-on-year. We such such demand year-on-year advertising, Thirty. X% We Nothing driving to staff revenue after and eCPMs Coming self-commissioned service. But moderated steep Season drama our X variety quarters declines, via of of minus our rate as The

XX year-on-year FinTech and at led payments activities our continued while micro-lending Segment services and quarter-on-quarter, FinTech now robust wealth payments more revenue XX% rates. grew Business Looking by year-on-year and healthily grew and up of social quarter-on-quarter. at revenue our XX% commercial was Services. and expansion RMB up billion, management businesses, the moderate

quarter, continued the year-on-year. increased services, growth and momentum payment through payment XX% volume total For over

rate. and Online an rapid for active growth Our a greater pandemic in daily off-line purchases from to online usage users benefited of shift commercial increased payment to such from apparel. Mini transaction due as remained as per groceries user stable. margins spending both categories operating Programs well Payment and at the transactions as accelerated

business, in deployment and a aggregate For driving rate management increased due contract new our over sign-ups from as certain XX% customer the down revenue adjustments well Services assets. of a rate lingering wealth nonrecurring as the slowed as year-on-year infrastructure pandemic active growth year-on-year, growth impact to Business contracts. number service project similar the to customers The on

a financial, and clients. However, for as PaaS, saw service in we from service, the demand Internet security particular platform care health rising

with Customers growing Meeting version enterprise year-on-year integrated Meeting the registered including as During Software-as-a-Service over Meeting We management. through to released of further customer its most our go the products, Weixin, cloud-based now XXX% consists and relationship workplace that, QQ, management Browser I'll to an to pass users. adopt Docs, customization. and use XXX to productivity other DAU WeCom, their September, our In processing and increasingly John we which Tencent document grew WeCom, previously signature tool, expand known for Enterprise to And period, workplaces, our Tencent communication needs the QQ meet cases. SaaS, Despite for WeCom's financials. enterprise Tencent during of Tencent with X has Tencent returning over toolkit, people upgraded million Docs. quarter. products, Tencent we

John Lo

James. Thank you,

XX% increase year-on-year XX% For as or well share quarter-on-quarter. XX.X as were profit of the valuations XX mainly quarter of quarter-on-quarter. Diluted Net XX% gains or was effective profit year-on-year stable. was of in RMB X enhanced quarter. verticals, services, reflected local during year-on-year disposal up profit performance RMB we in XX% X.X%. as and exchange exchange year to a investees. electric reflected was year-on-year or X% profit third non-IFRS loss recognition games verticals joint the down was or RMB investees quarter, gain of X.X online non-IFRS IFRS increased Net RMB Share Year-on-year the and deemed quarter-on-quarter. foreign billion. EPS quarter year-on-year X.X billion RMB representing XXX.X On up was quarter-on-quarter. online X.X adjusted expense X.X Gross venture gains for tax e-commerce billion, quarter-on-quarter equity total was and Operating This a holders billion, ago. tax Q-on-Q billion, RMB Both of benefited RMB rate remained X% adjustment from on RMB billion. was RMB certain up attributable up increasing profit XX% or year-on-year broadly Income up such for XX.X associates. certain XX% or other net items, of the net XXXX, RMB XX% due also as of finance XX% versus Year-on-year such non-IFRS certain billion, was to billion of and increase year-on-year growth foreign was quarter-on-quarter. basis, costs investees X% and certain quarter-on-quarter. items the billion, associates recorded of revenue games. XX% X.XXX, vehicle, XX.X was

I'll of with share our figures. you Now some financial non-IFRS

billion, was was profit X% quarter-on-quarter. up operating quarter, RMB profit RMB Net after year-on-year or XX% XX% was third or the up X.XXX, quarter-on-quarter. quarter-on-quarter. year-on-year X% XX.X XX.X For EPS RMB or Diluted NCI year-on-year up XX% billion, X%

percentage up year-on-year On slightly for Moving year-on-year smartphone points mainly shift industry-wide a games. Gross down mix fee VAS to benefit to XX.X%, we point increase basis, margins. percentage the year. operating greater Business year-on-year XX was construction greater gross their payment-related Services businesses XX.X%, the costs for expenses, costs continue cultural margin Advertising quarter-on-quarter. increase margin up and margin games exemption to quarter-on-quarter. for percentage for business. X.X selling as X.X by by expenses percentage billion, X.X to spending XX% FinTech XX% services and marketing and Year-on-year Gross to were primarily from amid merchants the marketing online as or VAS segment On driven as higher-margin, content quarter-on-quarter. stable well margin or particularly Business was point or was pandemic. due year-on-year due year-on-year up self-developed up offline our decreased this Gross XX.X%, stable associated Sequential was increased channel Services. Weixin and RMB video basis, with online year-on-year points X.X contributed was on Online of On Sequential decrease was largely X was a Services. down for quarter-on-quarter. online games, Business resumed mainly -- Sequentially,

and represented respectively. greater quarter-on-quarter of and the R&D up RMB percentage X.X% to XX.X were or were billion, quarter-on-quarter. X.X% of staff RMB marketing up G&A and billion, selling stable due mainly XX.X% was a X.X year-on-year XX% for expenses R&D G&A, As G&A expense Within or X% revenues, XX% year-on-year R&D costs. and quarter. expenses revenues,

XX% quarter-end, approximately up XX,XXX at or had XX% employees, year-on-year quarter-on-quarter. we As

percentage improvement XXXX, third was net XX.X%, basis, or margin margin X.X percentage down mainly quarter-on-quarter. X.X point up value-added margin up compared services. was Non-IFRS margin gross year-on-year down operating XX.X%, through point X.X reflecting gross percentage from down up the On percentage segment last year-on-year margin points flowed increased Sequentially, or X.X to particular Non-IFRS quarter point margin quarter-on-quarter. lower VAS percentage gross percentage a in decreased, quarter-on-quarter. year-on-year the X points quarter. was XX.X%, the or points year-on-year gross blended margin X.X For

share Operating up expenditures increased or CapEx RMB we with X.X billion, CapEx by year-on-year down reflecting several and on Total to constructions. increased XXX XX% Nonoperating our quarter-on-quarter. RMB before you planning billion, X.X million, on year-on-year key RMB Finally, open our to to me X% XX% year-on-year close business let servers growth. was metrics equipment financial network more remarks. data CapEx X% centers by driven

broadly excluding to for quarter-on-quarter. X.X flow stable our billion the was and shareholdings RMB billion you. flow operating payments XXX USD sequentially was XX.X RMB by offset or quarter. of value free partly billion Net listed RMB at M&A or in XXX was decreased year-on-year end Fair Thank at initiatives, last XXX due billion, cash which For cash the quarter, the cash billion, billion position current both RMB approximately generation. as of USD investees, compared subsidiaries, XXX quarter to

Wendy Huang

John. you, Thank questions now. floor Operator, let's for open the

Operator

[Operator Instructions] from Suisse. Kenneth The Fong first the question comes Credit line from of

Kenneth Fong

please. of set on a questions X on the I results. very Congratulation game, strong have

negotiation high successful on target basis. the open the tilt the with recent like have a we Android major remember user the are channel So or time? game up like that would like year, that out revenue other more titles some of like more will to lower been to Android. more reach negotiating a a we see the fee mobile developer? would as of us game think base like last platform over community I we avoid in platform more Rise as and new game launching noticed to us HUYA we Genshin fee a said on launch that the improvement Bili well lowering Yowa the channel games these game, like So TapTap through Impact, by sharing and Do you cloud recent game-by-game of platform a as to channel rooms distribution words, with for power towards margin Kingdoms

James Mitchell

for Thank that you question.

company that, many and bigger cases, are ideal which there felt were profits we that the the industry commented not that survive. studios than survive a for game smaller channels we had economics game enough couldn't we're the capturing companies So themselves. we but studios of many that a the share the in the were past big can And in

share as traditional a And high and have yet levels. commendable. game channels we a the have to observed, impressive some in the bypassed reasonable studios been is degree to more so you midsized that revenue their still resetting the brought advocates which recently altogether number of and And with of channels of popularity, of there's China games

new as you our and to flow the will sustainable different as For game revenue more of negotiating for there's We part, channels. small continue think our we are including margins. process room has in studios, and as through channels that into kind many successful, over studios what well large believe participants be we been levels, have know, and the to of to shares that time traditional

are channels, think that following But some healthy the for big adjustments big relationships sustainable with experiment the and of And a ourselves to healthy who sort position. as channels, these different that so traditional and a channels, there are we fact players the have concerned, in we with with industry. we're of we the good relationship different far those it's as the

Martin Lau

of one of one want it's in just And right, to the thing I is figure, think terms revenue add in I share. do not terms

fair channel the to the And structuring is more such provide actually the important slight that's important I value, incentivized negotiation. is I think the and so same At thing that way intricate time, in a of right? think actually relationship. the it's a a part

you sort an is sort just store, channels of that's somebody through be through example, but If app I highly else really new will of lower. actually For up signing of if value users, going users promotion a the then deliver think can valued. other

And an everybody. division be going overall fairer the delicate for moving a going going then, more it's different by in be to be which I healthy we're and to brought more there's to of economics think parties. it's So to think I industry value

Kenneth Fong

My overseas is follow-up the game. on question

the revenue see is success U.S., us which percentage into so biggest you have our like potential by focusing are countries? replicating what Sure. on, And the from face Chinese which been now? next? then Japan, except far prevent contribution challenge operator for we have that And that so the these So what market our

James Mitchell

Sure.

But it very quarter XX% the So last last we international. we And our the business was point also game quarter last have don't revenue is ratio games disclose fourth we other I year segment fourth last disclosed hand hand, of ratio progressed the domestic when that the very in was quarter in but, gave of quarter-by-quarter the figure, the the on because our the international on to percentage our X on year. in basis. well third a where games a similar believe nicely, quarter growing one the months, was

you of overperform sizable clearly aside the very our -- game of In global, and that from out, markets in games terms sort and global called certain are certainly that's we other true in have certain there and portfolio, is and of geographies regions, which business China, truly then, game markets. Japan the that meaning U.S. you

for and has And overperformed market; to the so overperformed League Duty Supercell South example, have Brawl example, Continental and Middle Europe; America. overperformed of Korea, East emerging tend PUBG Mini Legends the Mobile and for of Call and certain in and Games in markets; has Stars, Mobile in overperform in big in

actually of So our fortunate games or now in have experience quite we're around that we in range with in many geographies. of different the cooperation successful portfolio, and publishing

Kenneth Fong

again. Very it. clear. Congrats Got

Martin Lau

you. Thank

Operator

question of next from JPMorgan. The from Alex the comes Yao line

Alex Yao

a quarter. antitrust. both to guideline environment policy in change question on operating the is micro X in strong regarding are including to the What past due the Congratulations lenders the the introduction for and are to is, can weeks, online regulatory those X an the change? growth likely introductions? policy you And in environment of change on the update guys you FinTech this give of operation in in light light introduce follow-up My that strategy question us potential my

Martin Lau

thank for question. Well, your you

think our we'll lot is answer there of I strategy. the be FinTech, a to respect with think will -- I in be not that changes

I what FinTech driving will we been -- be steadily doing that continue. our this and you'll business, we will think a strategy is have

actually offered the in banking the business, the which our the you our very regulated methodically and bank, have loan has compliance the in impact we something at that really entire not look in And part at by FinTech number is full industry. micro is really is because you regulation, a compliance and that fully does have been past. with licensed this WeiLiDai of if adhered regulations, with we the If one WeBank, regulations, is actually look micro to loan the principles it it flagship service, is which WeiLiDai, done

industry. respect We we our products, going that XX business, And for optimize to management, than in of But example, a loans, for outcome. and with financial management rather more including them insurance, industry scale for actually we just scale. lot work collaborating the prudently so our deliberately controlling loan they for so includes same risk. bring win-win have partners in micro of banks And the We bring we we expertise work manage we products in some business wealth actually quality with loans. risk we at than that of within their actually expertise the financial that a and on time, with focus and in so have that the the together originating

a I we source. also lot diversified put focus revenue of on think

both the users. our And size in industry control developing we proposition capabilities the our improving our look our partners the FinTech users bring focus our industry growing product and quite lending we value management wealth as speeds. And we you the with for our time, finally, at that cost, for engagement on have so same business If our we lot value And as say and insurance. well while, I revenue, diversified partners. partners. result, emerging for as creating at users we well for a We it's a also, the technology industry under payment increase actually as reduce frictional in unique as and solutions been the business would measured a between and

forward. entire driving fits So we if at I environment, very the and I strategy, you business think steadily look think our it will it's credit well be actually -- this -- continuing with FinTech regulatory

Operator

of from Morgan Yu The line Stanley. next question comes from Gary the

Gary Yu

on to strong business. related the one have question Congratulation of I results. set the gaming

the currently probably the revenue also the at the of slowdown forward in at strong go that first COVID fact momentum, we from how when terms in look normalization of sustainability which see may Given of same quite time, into growth a in should seeing half, gaming are but some pipeline, going under new we the momentum XXXX? we are we so particularly games then,

James Mitchell

congratulations Thank the and questions. you for the

games revenue in the quarter-on-quarter, So our very we extent, reflects the that, reported and of while receipts. amortization deferral mentioned from increased cash that to conservative prepared some policy remarks

third quarter, the sort we we So of the experienced during receipts the saw XXXX. of in surge the in first benefit of cash that full half

receipts cash our quarter-on-quarter. slightly did decline However,

already at and looking revenue experienced of degree with growth forward we of the time. will receipts, normalization reported for in the cash quarter, over that, the third So as a rate we've assume implications going well the of that continue

of less to Kings, those deploying also as prepared Now short- as medium- that more into business first the the talked in game our our about the say about which highest-profile enhance such niche we're broadly, our perspective continue Honour now optimistic that be may we live aware games remain long-term but would extent I we a vertical games aware of and Naruto. we've they really to some all, on And and I in because, of genre remarks, the or initiatives like put flagship, live of more investors we operations. think operations many of are

in some already D&F Mobile But less markets Duty which BanHao of are developed have Quantum been other launch those impactful but well. a the and Wild the in widely that big high-profile, and then including success have successful So generally in of released attention -- external some then be discussed as of terms of we games, in games, last pending until can in TiMi, China weeks, you MoreFun operations internal the time of developed of Aurora, number can Valorant; of which and launch, titles and own games. games and studios, attract very and that existing new both with Blade Rift such pending a have And of number of terms few launch. in IP already Mobile; from as as see Moonlight their our in such large we'd the be that's very and pipeline, and have BanHao live been IP, Call a and licensed as and

forward. So our the game looking view business on that's

Gary Yu

Okay. That's your to very related is businesses. My video online follow-up question clear.

in outside the look forward? have competition? How look do hike We players from price increase going some have of we industry how further observed And we speaking, should potential fee. at for at announced the monthly broadly

James Mitchell

Warner price been X in animated impactful. content thought best ago, VIP Disney. the that in Well, was launched we high-quality was variety had it was net XX with larger subscriber set the that in must movies. the that's general got video And month paid we we of the have price to when or terrestrial of our course, have I Bros. RMB I remember me. that's series steadily available, because is television, subscriber should was Hollywood what on available affordable. many time we every range was and it initially point. in content Hollywood layering our series, set subscription years price magnitudes invest at subscription own products XX greater a service. Hollywood the we the we for we add either drama launched, means price content VIP or base, TV inflation is RMB was of than and we more what The drama to creating point. video called we've Literally called realized content And ever that more price creating over many seem this one and then China our of time, consumer than didn't adding when or creating and doing, cases per it domestic the been XXX% content. uniquely amount And our to more at more X now base become order been RMB very base, also infinitely set we films the shows, it And but a user is point XX grow which anyway, but XX certain the was And RMB Viacom progressively available, own that, And were that has result program, own on service then the our when the recently agree

in of underpriced. And it's well to in the right the we're services subscription content at as way look adjust So we're China industry. the opportunity circumstances sort at the to the pricing view fair consumers then, much very that to happy a video that as to are of

Operator

from of comes next questions John The line from Choi the Daiwa.

John Choi

very Congratulations of set this quarter. results on a strong

question online is advertising. your my think I on

prepared I and seeing mention seeing solutions. remarks, But some buying normalizing management of think did of adopting mentioned spending. algorithm you we're gradually your that some also your on that you're increasing

growth. we're So have how the is strong a more it reason seeing bit noticed platform? I spending still a your is growth? and expected, dollar relatively when mix other revenue cloud. this bit look us I or a on like industry-wide capturing follow-up right ad of the healthy been from We really like, here the a Is than helped was a we're your on why also higher softer little to comes have? the you you if that mentioned seeing the primarily you mean, of it wondering, Or that on And inventories this quick has delayed was like growth cloud eCPM at postponed. now, our IaaS But much impressions

And are be forward? challenges facing? what we're the growth kind what going wondering, was should that -- how we of I So expecting

James Mitchell

our So advertisers but in think online. let's search there's spending grew on versus can products, good I platforms, shift to feed in on then see pick in and of that speaking, network benefit is video. intent-based advertising, how YouTube allowed emergence eCPMs and those big for if home why And from up converged well retargeting advertisers and with and structurally to you their eCPM, the much it see than both beneficiary in a from every and are we're a that a year-on-year, given very of smaller intent-based And that naturally trends. you the natural think retargeting. our there's enormous I speaks other that into $X-point-something to I format, see and because And amazing from advertising you video recent last versus of at search. clearly some there's about results clearly were advertising really Well, in traffic. for video think shift industry, aggregate YouTube. a but and we're will has revenue the enormous X advertising very advertising; in search clearly generally past, quarters Google also position was with has don't the advertising the Google's between retargeting. that those look then if a in course, look if queries only And $X-point-something can globally, believe say, been from itself, other then those Tencent peers been base the you we're we've an Martin year-on-year, activities In our of of think to that third you retarget video is there intent-based look benefit which I ad prior shift an particularly toward years, great, toward of the I company long and points, at, to sort there's their to price cloud? answer short then the our within shift quarter, benefit can you big from where we Video And so-called a billion a gulf grew positioned is is of phenomena: which not revenue that some opportunities also structurally YouTube YouTube billion that

video very retargeting. shift the ByteDance shift but has to the think I beneficiary benefit been the and probably a ByteDance are most well, that we naturally as from to and clearly X

Martin Lau

Yes.

compared and reasons One contracts. especially the of a actually of a cloud peers. to terms more softer for are would I few say In there right, the specific business, number quarter, projects is on

go to the is this next away going in quarter. So

of the restructuring event more contracts. and a of the certain onetime on nonrecurring delay certain it's of So projects

is, we would one second rely then playing actually projects. the catch-up, say on Now when new we are more I

providing new games that's as not quite So a disrupted. pandemic, another after our the right? projects to of especially kind revenue. get the And games, seems it's that, say video at video and as games, pandemic And the short is these look as a driving of during it's some sort as of you well reason if process business, the the catch-up during the delayed cloud result, growth and, was it's own a in bit that. cloud revenue on our a And from we're service of for the booked it short would games, then games. reason is own despite is lot competitive actually -- front, So I there the of

I So catching factors quarter, growth sort But up these of are the too. and why onetime of projects, than new end in adjustment we're is terms this the think would actually the softer that after all peers'.

Operator

comes line from Joon questions from Han next the Kim of The Macquarie.

Han Joon Kim

I wanted League you and version. how Rift about for with guys that to interplaying the ask PC Wild is of Legends the

from it other of more rollout guess, been the beta regions not question, a we And that of you're of phase into the of into? terms after system have launch I'll kind a monetization the size it's behavior? kind in So kind on official I dynamic or do follow-up current status about and commercial it, -- of or And role official commercial eventual the either that. the seeing then that what of how kind user launch think into of introduced then

James Mitchell

biased, beta and Brazil the the and, data every converting Legends on the previous are feel appears way. Asia that Riot the high. of incarnation a expect, time full is good monetization Wild users League a users those arrive a while, for might relatively period pleased we game - game, of Blade, well loaded, more in Riot League experience A it's long monetization with but Wild that Rift takes the as internally. game and back-end From Japan, with a fact, Philippines of time think thank the of in as both sort the release of League as relatively in Legends. into as League full you meaning than full something monetization launches of satisfied And extremely a extremely the a are extremely lengthier quality and And to Southeast PC that the users across is half So the monetization compared of and Legends, mobile the sharper fine. see be the at behavior least then, roughly user tests Rift based with Legends, then, terms same there'll full it's amount course, experience of as you such I Rift of perspective a to aggregating as But from shorter, the -While of that's Wild with as Riot final and is And and versus it game between is users of simultaneously. the product itself on where everyone recent Moonlight we question. taken as the we

I experience, broad from And different monetization games is know this long for we portfolio have of have that over Legends the term, monetization think healthy that kind not that a of we the League and it's behaviors. games long, game. a different of problem

Han Joon Kim

Great.

other of and terms commercial should phased following how it? just the about in kind terms of the we of -- In think up when roll-up to like just -- release introduction global the that, regions of on of

James Mitchell

for And given the Legends and don't enormous League game. surge of PC, bandwidth number capacity. PC Legends substantial, Wild from it major Well, control. who market, issuance. mobile user on players, I markets, I think but because important want quite it's recall, other this depends launches for current China play a PC server under that the on of Rift first Legends pressure then time League is stagger people And some a and was But Clearly, the the players, the have BanHao released what to the of Riot Riot's has to ongoing intent. is felt puts and Riot's its lapsed that it disclosed of League that initial they for of

weeks, which launch in in makes different to the having it parts over we're elsewhere. of now a market geographies big the now successfully So launched time. in up Riot's and Korea different -- couple in But game last PC, of and sense in gearing of stagger is the Europe, League Asia progressively or launch the very to and Americas for the game Legends

Han Joon Kim

management. the about and TPV And XX% it. do just We the Got selfishly, growth on really growth Hong wealth FinTech second comes I on question My soon. part. Kong talked hope XX%-plus on is the

our want has I that. So as would profitability presume And that, I a that, is I above growth revenue well. presume confirm to and function just of that as improved

just on the the be will improvement appreciated. FinTech So profit commentary part perhaps on

James Mitchell

on said breakdown was the a Well, We look say previous MD&A, in lot whole that the revenue quarter. if a quite did -- the that. from remarks we the FinTech we in don't give as I to think growth similar of you

FinTech payment not to you segment the So the due Business margin itself stable Services, say services. business the to did in saw on was profit And deceleration that as the we well. was relatively

change or growth in rates margins. So great no

Martin Lau

pretty directly it's FinTech Yes. revenues, right, as tie to the revenue FinTech have of the not a streams to diversified probably said, so correct And we TPV. also, actually we

disclose like I But separately we So just that that. don't would point as indication, an out. to

Operator

Chong The Jefferies. of next questions from Thomas comes the line from

Thomas Chong

a strong Program. on is about our Mini My set Congratulations results. of question

digitization retail across saw experience different trend, we how our and, as strong during what Given up migration? cloud our the is that smart catering? year GMV smart industries well, industry can the momentum strategies in the further key growth payments the very digitization speed infrastructure And are and such and

Martin Lau

Yes.

we our ecosystem focus put and strategic one of transactions our the for support within Mini the excited transactions. are as growth actually Mini about and actually Weixin Program for on quite increase particularly GMV to We Programs,

transactions. so kind Programs, one you and well the as well Mini of Weixin them as our wallet if like as in launching discovery new as So are increasing is support all point things look part of are right, be doing, allows within Programs for our example, the of at all we content that powerful to rearranging the actually that infrastructure the entry more right, actually facilitating for of, the Mini broadcast, actually

within ecosystem. that's the So Weixin

Programs I upgrade on way. actually hand, helping tech and is equation the smart improve And infrastructure so retail bigger helping On to their that digitization, Mini can we in upgrade different businesses, our of industry partners, other think front, their right, they really a have part the embrace that got obviously the the other team.

can example We team, same the helping help have are also a partners, partners. industry lot cloud team we sales a these are ecosystem of providers, technology at embrace which for in to way. industry But these our time, the bigger SaaS service empowering who partners

actually It's by also So and up pandemic. nicely, I there was the speeded fact process think it's a that's it's a that progressing ongoing.

ecosystem ecosystem, So empowering as way the the that help industry our having would to Mini for own to people partners Programs team them continued all I industry our own and think between growth partners of our a improving also our partners, contribute in between conduct -- helping of terms to transactions.

Thomas Chong

we My video and in coming should Mobile And quarters? in advertising? short-form expect loads ad Moments payers with Moments for social particular be on follow-up Advertising question in there Should Network. how video is we think advertising in further will about for increase competition the

James Mitchell

in video the talked much from competitive of of directly toward the toward we we've in of short then, sort and I eCPM, mean, with, including to percentage point benefit before, probably in as think you're from both has think I perspective, popular I remain true. Video have rate, of So some terms price bit a general, load dramatically short ad load Moments little highly XXs China, that regard the competition to. example, Internet that of around Moments services and video between been this in short inventory the many and Weixin And that video aware, aggregates somewhat video and short inventory benefit our advertising. I trend From retargeting. increasing a other would will that a measured the the at the Tencent mid-RMB sites is say and our then, but sites inventory than gradual both about a With them lower trend alluded you videolization, for ad

part so X media quarters. And pressure our for the reason of was that's advertising under

different, affluent short hand, higher On the eCPM. than to and on therefore a come Weixin other delivers more audience video

performance-based a offer direct many our advertisers. disproportionately much which than short appealing Our is and response of very video, ad network other properties lower eCPM to

operate perspective head-on have we a but price you. compete some products, of price of relatively points. from which video a of most which at different short with Thank range So different

Martin Lau

When the in differentiated Mini growth you on the Mini inventories connected pool. convert on one benefits, the for say services much of quite they it conversion look because the them. to their the actually what are inventory conversion Programs to question differentiated increases would is they not the a Weixin add it's a first on And think two terms Weixin this our -- that that in I domain think ratio about actually of of was. Weixin, also respect with advertising Just point inventory. about think for right, the GMV and is, private that actually, valuable think to Weixin, at it's such direct your way right? users Programs, how ecosystem only And about advertise lot into transactions on can user but also advertisers on when also I

is eCPM infrastructure for think performance-based I forms as that part that's the grow the advertising. to we Weixin, continue Weixin to higher So of trend to other And compared why actually will to improve. transactions support and the reason continue of differentiation within that

Operator

comes the next Zhao questions Gregory The Barclays. of from from line

Gregory Zhao

only mobile a your business. strong I on gaming Congratulation quarter. have question about one

launched to a look studios and some mostly China games. the at in X mobile in So actually dominated XX look games. past XX we take games top the we top X can top very NetEase Tencent actually X But XX games if the so also about today, smaller if China, successful with or several we X games', in at see right, the years ranking ago,

different games and is around X Tencent declined X market with NetEase, consolidation. The wiki And meanwhile, Street to a So expectation from top China further XX the -- bit to of games.

forward? dynamics how market want market this understand, think this competition just I and kind So shall of about we to going

James Mitchell

Yes. Thank the questions. for you

dynamic think So about the development. we how very a market it's is healthy that

able on the domination. not results focus sophisticated. and revenue studios opportunities is users Tencent represent healthy now for earnings games that focus market top because has monetizable been XX more becoming the are shows We good the but diversified, becoming that And on popular new the despite very is of see think is can that diversification we can in in it that, game are aspiration genres that we've to more represented business. from our new there trends and you Our number of And maintain becoming while and dynamic us. and historically didn't are our that

brought the a whole, of think a China So [indiscernible] that's for the but increasingly not hearts of of that Impact's also eyes expanding look a someone China granular at try individual games success. positive, industry game earlier the around that I is get one being call, in beyond capturing more and a are and degree at or all general capable as level. Genshin wallets MiHoYo good up then, sort development. And only world, the has users I them the the games of many which to If the

is terms one still game models. flexible, is different Another how in just the industry of malleable, plastic

sort but we're progression In If for the in opposite Japanese where moving been a you seeing a Western really like with traditional the a Call then, world of the experience, a were like campaign like virtual look preparing the Duty, direction single-player endgame/PvP that has historically multiplayer of over them China, drawing time mode a mode into in effect focus item single-player at built Impact a RPG has of of Duty: created Warzone. more trends of attractive game around and more that item/monetized big of the the games endgame MiHoYo completely on very Genshin players campaign Call experience. into virtual one

exciting the So are what that's to games And domestic in to and business invest something quality. us the to develop through and the compelling. mix innovation invest seek well. to for some do to we tools converging big Tencent, continue people, to continue player of to through expectations, our to the an China again in we're the it's to and, models through international different genres to increase quality, for game can both investment create markets rising really create clutter our for as seeking continue lessons new that incumbent on X extent, different studios then, globally, particularly And cut and genres, in we innovate, in terms because and match and games seek to we

Operator

questions next of Packer Exane BNP from the line William from comes The Paribas.

William Packer

numbers. the focus? it initial think been to are make a not the very comments has you and in right Is can your video Regulatory Could on significant likely antitrust strong news rules digital entertainment impact recent any weeks. they be your draft Congratulations that business? on how and games to flow businesses

Martin Lau

our initial the industry as emphasized I oversight of -- few would they ago. thoughts. to would -- have Yes. competition time as pointed paper the of reviewed regarding of too consultation long the document principles for for thoughts like the a want regulation We from take your authority communicate to as William, understand one consultation sort we came That's had spirit the balance thanks of interest reading, not platform a the and all share our out, Number the regulatory well achieved right, is, achieve fully, but to ensuring and promotion the economy. with just you what paper. question. is paper And the regulatory Obviously, to the out innovation development, of stakeholders. some fair

not to new is is unique also observation such and regulation that China. our not it's Secondly,

It's As needed. say reality the case China, it's the not just important I globally. the to technology more more reflect companies become economy, case the for would but are new regulations bigger and to also

ensure supportive Tencent's with we well I by to fits also But it and the industries. spirit Internet regulatory believe prevent like driven still the healthy philosophy, the on actually to the strategy especially I government the for say technology very long-term would growth framework. right? would Fourthly, that's business and the and and industry. is the of intention reflect is of Thirdly, innovation that industry, the misconduct

we lot with on providing great monetization. thrive As embrace of of competition. we you work We well operations calculated can a in see, competition. rather and value nature. focus also very And products And We partners. as business our user a than platforms as open matter fact, as on are

compete we -- other. products competing internally, each even multiple have sometimes, with And

our say regulators would paper. constructively work the ensure compliance very So we'll finally, with with the I to

initial are thoughts. these So

future, we have insights. have as and more the to in we course, regulators, the add Of we'll more interact with

Now with transaction it respect related to comment fully platforms. more now, paper from to the right the different like, sectors, but right, looks can't that I it's right,

look are individual the rather So earlier, video products digital they think quite of for platform we terms And less I platforms, industry, business at talked which money-losing about now. games, in than right, of as example. it's the right video the essentially focus. platform an And the as are a actually entertainment of bit I

this the -- in time far consultation paper the probably really at is point for as focus concerned. regulator fit as doesn't the it So into of

William Packer

follow-up question my on different Just a slightly topic.

footprint lagged monetization think products. feels You've strong like should cadence got via about Programs related and a e-commerce forward? we the How monetization significant Mini software far, and going international Tencent it Thus in via has and Meeting of peers. enterprise

Martin Lau

think these really which I are Well, of development. are at initial the businesses phase

that actually potential is really And a before monetization. about that's on the a bit tend market has potential, and quite result, ahead Tencent, products user right, of when that lot there us. as of a are potential first and potential, providing that a need of excited it's into we in when focus We there's value the moving -- amazing philosophy a lot to user unlocking we a market

point Mini focus and before think I Programs this the of really this products think delivering in both we software enterprise increase is unlock our think potential for for -- user market the about the at in at monetization. So time and the really point I to base time, great user to first

do higher than advertising the reason ecosystem. on Programs, which the also lot actually doing eCPM in standard. within quite And already system think a that's transactions is of industry of benefit Program Weixin want part lot Mini Programs derive advertising why Weixin of get Mini traffic the and our also through commercial of the our the actually a fact Mini that owners, to we the payment bit Now on our I a enable

we the an deriving So way. but benefits are indirect somewhat in

Operator

The next Huatai questions Saiyi of comes He from the Securities. line from

Saiye He

the pure business. payment is that the also in through are our the long current service as want payments in in FinTech channel, lot a going payment offline My medium term, the first pure going of rise a expenses I from perspective, expense banking business as on also our question in our channels, to and and volume transaction margin increase on forward would to discuss in monetization costs view costs And of improvement in the off-line pure medium to some can terms business, pure from of channel? give competition the in payment the payments the of -- you could us the color terms you term? continues

Martin Lau

banking it relatively sense And on are charges the that as our is with should of when it's the Well, revenue, as does and cost the on generate right? actually say charges I us the expenses, promotional we So off-line be banks. Yes. for relatively stable for the stable revenue banking it component depends side, payment in major would generating the now. into collaboration future, look it and well course,

really normalized it an it much peers unknown, about opportunity money but, excited of promotional a is relatively gone are industry stable. and so part the downs big So how has And about and much has how market through lot rational through the ups high. the have the been And they putting it promotional periods far, is expenses so the times, the years. it compared where very, A it follower are level we resources looks into system. far, of spending spending. this a to previous to of in year, very more like some are terms the are But of

Saiye He

follow-up a our question FinTech I on Okay. have business.

is XX% you versus growth in implementing such -- ensure management strong a -- -- to base still our yet quarter, penetration payment a to management versus led our growth what our a wealth what versus rate LiCaitong's us that XX% seen rate penetration wealth user have growth base? new and growth, still of year-over-year are the share terms Can We be consumer consumers features LiCaitong's base rapid very in consumer And there the very low. are strategies user this we're maintain payment still is will our users? with

Martin Lau

this We business. wealth is Well, steadily, management I penetration think long-term business right? we and want to -- typically, a grow

people the time, for [ph], users. money is long sort over relationship. typically of wealth You actually establish funds, offer management relationship that's the to when deposit we What right, more money And lead-in try to the a market a of Lingshantong users. So do the certain with run we products into the

I we sure slightly wealth think exactly way consumers, products offering our right consistent higher bit measured growing FinTech of -- prudent to quite business, want they so products. a the they're buying that far, we self-constrained users a of we management in been know terms what the and before the have wealth make been, do first carries are of well again, educated our risk with in that terms actually because management have

because our not differentiated users with felt of of management our start the And products be lot So in to are products wealth choose come cultivation that to education. of and financial markets we users. would to management again, the has time, along users we products to more longer-term they rush a so actually we'll sell to with that it the of offering further user we good the management education a that over users. are development offer wealth this a And will wealth

a establish build choosing which then educating then, But relationship. And and as grow take think to us our users, grow. platform would payment it So really will the fact continue we naturally. our the initial help to have products I this will process it through also actually the that expertise in we

Operator

reached to have session. like conference Ms. would of back hand to I We for end closing Huang the question-and-answer remarks. the

Wendy Huang

Thank you, operator.

the closing are call We now.

and financial you webcast wish our the replay company section also If few will A next the Thank in and see press information, a quarter. release be available you to other visit at out you check please IR website hours. www.tencent.com. this of of

Operator

Limited Holdings That Results for in does participating for Announcement Thank conference today. Call. Third Conference Tencent you Quarter XXXX conclude our

may disconnect. all You

Tencent Holdings Limited (TCEHY) 13 Nov 202020 Q3 Earnings call transcript