700.HK - Earnings call transcript Q3 2022

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Wendy Huang

Good day, and good evening. Thank you for standing by. Welcome to Tencent Holdings Limited 2022 Third Quarter Results Announcement Webinar. I'm Wendy Huang from Tencent IR team. At this time, all participants are in a listen-only mode. will question-and-answer there presentation, management's be session. a After advised webinar is Instructions] And recorded. today's be please [Operator being that

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

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

now me Let the on the team introduce webinar tonight. management

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

Huateng Ma

Good joining everyone Thanks, Thank for Wendy. you, evening. us.

and quarter, growth. activate third our year-on-year revenue-generating we the to streamlined services, returning During new cost earnings

X% year-on-year quarter-on-quarter. quarter-on-quarter. XX% RMB to some X% We quarter-on-quarter. was X% Gross revenue and with delivered billion, Non-IFRS also was equity XX up attributable X% quarter-on-quarter seasonality. quarter-on-quarter. year-on-year, earnings billion, XX but up up but profit and profit XX% profit down up tailwind XX flat net RMB Total billion, down operating Non-IFRS year-on-year holders billion, positive from year-on-year, growth was RMB X% RMB XXX was

Combined Martin strategic positions including million. of we Mobile of over was video, to our MAU now devices billion. I first games, review. in browser. MAU Weixin for payment literature, For our long-form generally and WeChat and will X.X became mobile hand key was activities, services, news, music, QQ social place XXX

Martin Lau

Thank In have and review, good morning our and develop you, everybody. some how our evening we ourselves revive Pony, you results. positioned improve streams to Today, update strategy efficiencies, quarter's stage to and discussed early progress growth. revenue profit last to and I will good on I new

on In I in steps touch will to our returning latest addition, capital shareholders.

off progress start initiatives. the efficiency Let's with our of

we and First, tightened focused our costs, and cost pulled projects core low further products. efficiency control resources from marketing on on with back

As a quarter-on-quarter. decreased marketing and result, selling XX% XX% expenses year-on-year by by and

adjustment Gross quarter-on-quarter, Second, we high-quality generate both year-on-year revenue. achieved significant to services. business margin in grew our from profit improvement proactive and benefiting

server operating cost. and accounts, was utilization headcount in video with associated down of compared noncore significantly. and At of workforce end bandwidth total optimized third the end first underperforming the controlled quarter, with staff bring our our we the we our as to rationalization view video businesses, Third, Fourth, the and down optimized costs our per quarter.

total at increased pay, year-on-year. single-digit costs a low severance staff Excluding rate growth

representing the While challenging, achieve is over quarters. the positive to us initiatives enabled significant year-on-year efficiency macro improvement few our profits, growth in last environment still a slightly

high-quality new revenue made in available on inventory in-feed mid-August. key has additional areas. accounts, in up we forward, growth streams ramping Video encouraging we developing revenue dipping since following are in been making fast the Looking basis progress three ads

RMB exceed on are in We the revenue to in fourth track quarter. X billion quarterly

Nikke, Victory: Tower capabilities. new hit we For international of demonstrating and publishing our launched strong Fantasy games, Goddess of

there by prioritizing which are SaaS, the the group With of these monetized demonstrate can enable scale to as well genres expansion is partnership more significant and business we world, Ubisoft bring services expansion strategic how rest positioned the be growing for and currently AAA platforms of games China. in time. precedents over our mobile will pipeline titles to our to with us globally, across studios Together with globally national Our are PC industry of new franchises leaders.

We is larger good which Tencent Docs combining WeCom, together, launched Meeting and bundle among a adoption enterprises. subscription seeing Tencent have recently

normalization. In encouraged of addition, we're to see regulatory macro across the signals positive path and

volume commercial recovered in payment For FinTech quarter. third the growth services,

front, Property China. and Samsung received regulatory we insurance for approval investment the On in in casualty

For received license the approval new September. be license game more domestic games, believe We we to and amendment forthcoming an for in an publishing will existing a future. in licenses

new accounts grew mutual revenue contribution advertising, For quarter-on-quarter, ads. even from in-feed excluding

We year-on-year late XXXX. growth are resume in track to on

advertising which months. cash Next, Consequently, for environment. games, to generates liabilities, and I each payments cash operate billion generated of across which would We our asset the spanning operating update services, cash both of current Fintech of flow free robust of networks, position After we start to flow a with capital XX on over taking capital businesses social cash from strength. past a content account media lease amounted even we expenditure, like $XX under into you our and flow flow allocation billion. $XX and the portfolio diversified

growth ecosystem organic we strategic business billion of the simultaneously nurturing in capital accounts, for products as and for asset end stakes as gross video combination enhancements We capital investments, Weixin This of as holdings billion. with believe cash invest ecosystem listed e-commerce fully generation have and vibrant our $XX infrastructure. supporting and have stakes deploying value we $XX returning and companies to we're upgrading fair well of while which of a SaaS organic On highlighted of investments, liquid benefit areas into international business carrying such namely back-end our the games XXXX, us are shareholders. in asset as unlisted value September side, $XX and with of our enable we cash in billion, to total and flow companies a

a business time, more we that growth, to partnership companies are strategic For to name such At in [indiscernible] to Ubisoft couple. also complementary the investments, capital core are in to our continue our same as we investments recent returning and invest shareholders. with

we the $X billion value approximately ratio non-IFRS shares, years, a $XX have past through kind Since which payout XX% XX dividends, amounted to shares. which In our year, the back JD.com of of of paid we For a earnings. out cash bought to of distribution the worth in March shareholders. billion of XXXX, of we paid dividend represented beginning

have based to worth billion to shareholders shareholders are $XX in total one Tencent shareholders. we of dividend March share shares yesterday's Qualifying Meituan distributed hold. they a every interim to So of our HKD over Meituan a per we which will will declaring shares Today, date, receive billion, price. kind XXXX. This XX.X returned approximately is $XX about special in share Tencent closing to distribution on for be equivalent

James about I'll that, with talk to pass So to business our review.

James Mitchell

Martin. you, Thank

of Online was represented VAS XX% which within RMB games, services Business total was segment XX.X our revenue X% The and down quarter third FinTech the XX%, billion, year-on-year. the down total social was revenue our X% was year-on-year. and value-added international subsegment of For advertising XX% X%. revenue. and domestic Services XXXX, was of games, XX%; XX%; revenue, total network

and Video delays network revenue streaming service video enhanced slightly was reflecting content. additional decreased match better content X% year-on-year Social from year-on-year to revenue and accounts subscription users to content while from to live decreased users, revenue game-related down subscription recommendation Revenue scheduling streaming live stripping. RMB billion. services resulted in Tencent efficiency music XX.X increased, as more

membership as we increased pricing. adjusted we ARPU However,

we Like for platforms Love all online ranked series, the in drama July, in quarter. which video across The Galaxy, #X self-commissioned China Our released views by

increased revenue paying subscription music year-on-year driven by more users. Our

effect to X% protection billion, accounts. was the revenue September of revenue measures, and resulted which game minor down domestic XXXX contributed from Peacekeeper due decreased as Our lower in XX.X year-on-year Honor paying challenges Kings took onwards. RMB transitional Elite to user

revenues. New Rift, League to incremental of and contributed games, Wild E-sports Return Manager Empire Legends

games increased of X% the Subway Miniclip's in drove international games of XX.X growth. new Surfers currency to robust billion, terms of launch Fantasy Tower constant through and Valorant, release acquisition a the or revenue Our RMB X% year-on-year and performance of successful

the Turning economy. XX%. mini faster leverage extensive the reach year-on-year ease to programs better active than social activations increase million representing of XXX of mini program XX% Mini We daily grew networks. more to over assist year-on-year. Daily of and surpassed by a Weixin programs the of users, real even use

among to stores. interactions. provided out can channel with users brands to status virtual Health programs high interaction. helped over XXX in mini for we spaces facilitating social We QQ shopping the build department contributed scenarios continuity users are offline our of The loyalty with programs and increasingly Super These year-to-date Gucci more and as and conduct the retail. launch and health brands and immersive membership Additional integrating KFC footwear use per mini and mini deepened users apparel they programs number We and programs our and commerce and and growing user. adoption activity. where merchants as Code food of daily collaborated QQ, the such service verify On points travel their visits municipal of malls activations brands cases business beverage, into Show billion their

to socialize For items off-line campaigns, example, branded with online users can virtual collects participate other in fans. and

games. Moving to domestic

our we and year-on-year implementation minor government July by constituted in XXXX. of the industry-leading decreased XX-years-old of China program spent compliant aged has fully a X.X% from time Time industry regulation XX% healthier With users environment. total fostering with spent have protection under become

On base year-on-year. adult our user the user other hand, and increased engagement

Honor game Wild adult percentage was Rift rose published PC, and single-digit by CrossFire CrossFire, PC we by percentage by and as of is XX month spec time Breakout. as growth the We're well game, and year-on-year the as the of DAU as double-digit a year-on-year. our longevity such adult new which Elite, driven Arena existing our and grew player taking Time For ago. September, on Peacekeeper PC combined IP Kings, years such spent mobile our titles and on one example, franchises, mobile a total titles of extending first

esports in enriching receipts game the media expanding the content became XX games this today. success grocery Hall and since update, which Video. grossing franchise its such event and of following internationally experience, on in demonstrates Clans infrastructure player as genre investee of consumption. in including in we launch, and such empower CrossFire grossing active operational PC worldwide leading top investee game as single-digit grew PC in mode And mode, studio result October, year-to-date Japan we tournament the in-game States. user commercial receipts days collaboration of anime year. popular esports Clans, a first game most receipts for live-action our continue engagement shooter driving in by developed and series Clash its developed the the ranking Town represents also shooter strategy Up Clash receipts achieved and drama RPG and success Tencent and small the third November daily breakthroughs user We've receipts of innovation in to by remains August, esports for remains the fan flight a mobile of the lasting high by Superstar from titles the Champions popular achieved XX community most extending management United competitive became a in boosted FPS percentage markets, In games, key released CrossFire sci-fi annual generally year. quarter CrossFire release content Nikke's Riot's VALORANT's studio by we environment in International areas the As Group, quarter. published two this the users studios first developed leveraging year-on-year the VALORANT by developed overall China ranked internationally the highest on released industry-wide versus which in scale. Shift franchise, of China. world XXXX, of our of graphics grossing with Benefiting are our the spent licensed games success as ever and internally cross events the XX our how record number the months content second playing the new marketing top Perfect people significantly games by open In in franchises. high Mobile base in success capabilities. games mobile its Studio MMORPG a from we localized can nine time and biggest an in in with ranking and notable Tower Time publishing major insights with professional the first China tactical increasing by itself to Fantasy, most investee and one CrossFire commercial of CrossFire World, the second was the Benefiting Mobile a game Nikke, launch. know-how grossing MMORPG grossing

the from quarter, narrowed XX.X quarter. in the the revenue benefiting second complementary Accounts, our seasonality, demand our decline monetization RMB The third in quarter advertising, FMCG benefiting in-feed robust existing initial high-end in revenue. XXXX. grew in-feed efforts improvements the advertising e-commerce Video of online has to certain Accounts rate in Sequentially, to was initial our billion headwinds FMCG monetization from to ads, Accounts and technology. and from incremental year-on-year Accounts The improve For and third Video we saw of our from ads categories industry-specific XX% the targeting XX%, revenue positive X% Advertising advertising in games, particularly and the of of Video Video from lapping our the and brands. was ongoing

Excluding Mini ad revenue grew elsewhere Video was year-on-year, from Accounts, in Programs. particularly

ad long-form versus series of airing to period. drama Within revenue Olympic decreased primarily tough the fewer media our releases comparisons due video the year Games in the ago subcategory, and Tokyo year-on-year,

at Looking up Segment X% X% revenue and FinTech Services. billion, quarter-on-quarter. Business was XX and year-on-year RMB

mainly offline a in FinTech previous services, and the For growth payment was revenue benefiting from quarter, online. higher year-on-year compared both activities, to recovery commercial

such as dining commercial volume Our year-on-year and achieved with growth, categories double-digit in transportation. groceries, services expansion payment notable

slightly declined year-on-year. our revenue Business For Services,

embrace schools AI such enabling financial on deploy public private for and a services, those as of prefer profit offline non-Internet significantly such such However, discounted as mix increased benefited internally Tencent us can our sectors Cloud working in facilitating key within Cloud revenue a delivery communication gross revenue industries exiting and increasingly as is tools, collaboration cloud us high certain projects customers bots provide with industrials humans scaling products transformation, content from and our control customers such automotive, away is subcontracting growth our clouds. real-time And and banks I'll sectors, their their in Gross loss-making customer shifting environment, activities profit contracts from a highlighting enables efficient their their Tencent Enterprise and products increasingly deeply enabling provision. that remote safer sector tourism, services the use proportion John. pass provides from activity. to Tencent which and digital as support. AI and examples and private to who so are network costs from solutions. cases trucks data digital financial with deployed and We're organizations cat using operating clouds municipalities such quarter-on-quarter. integrate of to to toward our mining their striving also or as back few as industry public and container such scale drivers hospitals help education and online Software-as-a-Service industrial now store year-on-year and for to both developed customers automated our boosting

John Lo

you, Hello, everybody. James. Thank

of due year-on-year RMB X% total revenue was For XXX.X year-on-year year-on-year RMB billion, the X% XXXX, Net billion, down investments, Diluted billion of to XX.X deemed down were XX.X down RMB quarter-on-quarter. certain third compared items quarter-on-quarter. holders profit to and net impairment investment certain largely was FinTech value investments XX% XX% profit X of holders billion, Operating of partly XX% associates to and billion was RMB stable up year-on-year losses increased verticals. year. increased or up change reflecting offset profitability X.XXX, Share Diluted was was or costs Q-on-Q revaluation operating from of associates RMB RMB XX.X Q-on-Q. due X.X or to disposal non-IFRS or billion domestic The X% mainly XX% tax quarter-on-quarter, up X% tax effective XX.X billion, RMB cost and as during quarter-on-quarter. RMB X% expense quarter-on-quarter. such disposals up of X% compared quarter or year, equity to up were RMB billion, billion, of X.XXX, billion, C, year-on-year provisions non-IFRS gains income X.X and adjusted or IFRS of finance other was entertainment year-on-year XX% rate XX.X%. or on from in EPS or by XX Gross interest quarter-on-quarter. up mainly up withholding RMB X% down quarter-on-quarter. to RMB quarter-on-quarter. improved last online the year-on-year up to -- was year-on-year was billion, gains provision which up net losses year-on-year profit quarter. Non-IFRS profit share X% attributed certain XX.X year-on-year XX.X or roughly billion, X% equity XXX% was tax Debt RMB profit gained billion expense, X.X to Q-on-Q. were a Interest was profit RMB last billion due JVs disposal XXX% in RMB share X.X net and EPS the RMB deemed X.X was of tax year-on-year X.X% including XXX% at Net was certain of by control fair losses The against attributable exchange On foreign basis, RMB measures. increased mainly X% gains.

XX% on gross segment. margin X online stable percentage point cost year-on-year of due margin optimization XX.X% down shift segment. account monetization video the X.X The or The Moving Q-on-Q we for mainly the or ads lease efficiency Selling expenses. The The to and year-on-year initial mentioned year-on-year loss-making margin our our and Gross earlier. driven by force. revenue decreases margin to expenses stable stat R&D, employees, XX.X live approximately R&D RMB Q-on-Q. On efforts efforts was revenue cost Gross Q-on-Q. X.X X.X% point XXX,XXX The G&A as a or up quarter stable percentage and expenses points within cloud measures up driven was up healthier excluding force. stat margin R&D due broadly a proactive operating for XX.X%, quarter-on-quarter. X.X year-on-year Business had up RMB improvement percentage for expenses marketing billion, stable was margin RMB XX.X% XX% to services to revenues. as well margin as within up were down increase leading year-on-year quarter-on-quarter. X.X and up higher X.X mix year-on-year activities, billion operating higher YoY XX.X% account up by margin the XX.X%, year-on-year from or improvement the Gross At to benefited broadly or reduce to quarter-on-quarter. points reflected was The Services higher percentage in lower feed year-on-year base. was mix quarter-on-quarter. end, to points initiatives, quarter-on-quarter. advertising expenses, due The or Q-on-Q as reduced was to we office as I well X% cost XX.X increase from billion, were or revenues YoY percentage FinTech video was overall X% services margins. or of X% game were year-on-year efficiency of as decreased gross implemented improvement streaming margin service. VAS margin expenses

at percentage operating operating margin Non-IFRS take year-on-year points point X.X margin look Non-IFRS percentage up and net X XX.X%, X.X margin percentage XX.X%, our year-on-year point up was Let's or a ratios. points or net percentage was quarter-on-quarter. X.X quarter-on-quarter.

proactively was foreign the generation. billion you. sequential partly spending. currency RMB metrics. translation a to sheet summarize cash plan will XX.X quarter to XX up on our by I disciplined for X.X was stable by billion, cash Thank XX% as tighten billion, Net free X.X or of was RMB the quarter-on-quarter. was year-on-year year-on-year balance differences billion. stronger billion, CapEx CapEx, flow X% up the Finally, dollar-denominated quarter-on-quarter. billion, XX% and effect change year-on-year Within XX% XX% tax, we year-on-year last reassess flow compared flow year-on-year or RMB due decreased U.S. some CapEx X.X Total spending Non-operating CapEx quarter-on-quarter, reflecting RMB RMB or down for position RMB or XX.X to key quarter XX.X total our cash down and was Q-on-Q, for the CapEx XX% year. XX% RMB our Operating XX% was debt offset billion, flow quarter. The Free operating cash

Wendy Huang

you, John. Thank

we the come the Now for will open Packer Our are Exane questions. floor BNP. Instructions] [Operator from William question the first from the

William Packer

thanks Many for Hi, question. management. taking my

you those to though return us with recent cost other and to the Firstly, macro one-off for should secondly, restructuring costs one-off important return of in and savings? future terms of then growth easing think correct been profit has follow-up progress about continue quantify momentum segment? to you potentially And gaming for this in game you. reduction think an growth, approvals weakened includes G&A costs gaming, revenue again. my Could has domestic to Am or headcount comps even line think the Do that top help from cost costs support associated to underlying a need sufficient? I new growth the be minor Thank improving line grow. headwind about growth? that we IP quarters How can top

Huateng Ma

Yes, by year-on-year well, have the under staff this ex-R&D restructuring using right so in force. just increased we basis, on that one-off can quantify all low payment, costs are have single IFRS included G&A G&A a we ex-R&D you basis. severance Total digits, we very

Martin Lau

growth, domestic So the challenging question, called new measures, also protection been industry is we're very important three in the growth our out the game on factors, macroeconomic minor which environment. right and industry the have hindering namely which game of our you licenses, in lack the supply-driven

that come two behind for two factors, revenue changes other We us new one we coming growth terms cash of prior of what into of the quickly. the September domestic benefit game is And grossing receipts of successfully from in industry, receipts believe would our in effect commercial quarters terms sustainably few the take more our notably We a to from are as a protection more then would to which for the we grossing growth, course, months that lapping and amortized revenue get measures games through expect basis. there's perspective, reaccelerate. of relatively other minor the sort P&L. and order game in reboost a on the of in through. to from Now us it flow licenses, then likely But

hand, any turn macroeconomic improvement up. insight On the great will the don't we other when have into

be turning game would factors measures, course, faster rate we lapping your turn to sufficient positive positively. would of if mining we growth. But those protection those of a factors of positive, and think alongside question then answer Of both see revenue one the

Wendy Huang

from from of comes America. is Eddie, the Bank Leung open. question line next your Eddie Well,

Edward Leung

pieces. on about your the on questions Two questions evening. Maybe first one to follow the games. Good up

fewer upgrade going we So to are the games lifetime lifetime like at, value. of style, order our licenses strategy for maximize development with the the to in existing change

question. advertisers? secondly, investment, the to return from advertising, So have your heard et that's cetera, area on you. then account you Maybe first and And regarding improvement? for about you some could Thank the provide video any further feedback

Huateng Ma

you, Yes. Thank Eddie.

So in game strategy, quarters fewer although the terms the to of through. our to will have show domestic development game then change take development and we game changed change few licenses indeed strategy, our the full effects of a

So higher single-country resources fewer, higher have global first we're And of value opposed of games aspirations on production purely all, also new focusing as our bigger games. impact, those aspirations. many to new

we the new Secondly, we licenses And length about of there then cross believe fire be issuance in time games. our more And actually big and talked energizing in example upgrading the that the at game will resources, indeed opening and remarks. future. nearer are further spending we existing of thirdly, do

the will And game to so released. to have extent, some as these more games mitigate industry headwinds new

Secondly, on quite other who, question by video differentiated consuming response ads video in-feed a large, accounts are say the accounts. services. first noteworthy that the would is on actually around and short-form deliver I video to advertiser your audience point that not the

who that such high-end D. has accounts eCPM that it's reach companies reach because reach a accounts Video fast-moving as audience is that turn there's of of video between can advertise and that It's a Moments. industry A incumbent and differentiated a any goods meant achieving accounts the is that and comparison to in we're the people service the they the And the where the incumbents, they very platforms. with premium otherwise service users also who which service so and turn to popular overlap has of robust. additional a brands, like at in rest that in such on service Weixin video C premium particularly as weren't to able is on to high meant consumer value and advertisers at And B very

inventory, their us for release of in Now terms like doing. key we an an would are for you. purchase improvement demand that But would to right in we're areas now, from eyes the simply more which area advertiser in access they to improvement therefore, they we is periodically like inventory, situation. more Thank feedback, and

Edward Leung

Thank you.

Wendy Huang

next from line comes your Alicia open. is from question Our Yap Alicia, Citigroup.

AliciaYap

Can good evening, Hi, me? management. you hear

Wendy Huang

we Yes, can.

AliciaYap

my questions. also taking two Congrats questions. beat for you thank solid on profit Meituan the the I and dividend. Yes, Okay. have

the First as compared We ad to the brand lately years. event past stable related sponsorship campaign bit budget allocation and the in the also be one on little in observed online advertising. as a that to the seems ad more budget awareness traffic dollars to the few

given economy on rebound. gaming. My Tencent have Music, Tencent for video to actually follow-up this diversified the with moment, question value example, the is properties gradually Tencent So across, will a proposition the media more stronger position at accounts to gain share advertise my

return I'm also not some are shows a and the seems more gamers attracting gamers. resilient -- bit correct. this also in like PC if It noticed the retaining we games, existing sure the we So little of

older on more the reallocate of Thank games development the revise So will we update PC introduce you. interest. resource to actually gamers' more to some also content

Huateng Ma

Alicia. you, Thank

that engine, desires advertising primarily the traditional or performance is and there's sort would I online performance then, flow general, strength volume performance But well be across nurtured within have native predominantly purely true metrics game performance all in think accounts advertising historic contractual advertising branded Tencent our sort metrics, both there's the is transactional very of we where companies is companies, transactional the for plays then merchandise that created advertisers. a as on performance substantial for advertiser then then as our advertising, ads. we And very in performance advertiser advertising demand and within suitable metrics. the the question, in transactional China more market inventory especially So gross recent is a e-commerce with awareness have Obviously, the by ads on of purely years, more through forth. ads, where those. and video And the focused And transactional programs, we mobile then search measured more recently, reach And have advertising, the advertising in perhaps branded more then release as inventory future, and inventory contractual performance. we minority mini the our advertising. the performance and performance endemic right of for then transactional that and think of of within so

case So performance historically, game is branded the for and sort suitable to PC have performance question your And then both of use then ad that advertisers. on yes. But transactional the were contractual suited advertisers advertisers. the we increasingly, around we most and games, the inventory

as question, in mentioned we more our Eddie's number development globally. investing are, PC a We in It's response the existing that games. also games case to of big in I have

And some are substantial. them of pretty

VALORANT for years Riot's billion critical past but we that's one first the reception in industry, China, then most also game, us. revenue PC become and have successful outside across PC studios of acquired of PC of annual our the five in games a is $X terms the becoming And game the of both terms a So game in many franchise.

subsidiaries. Steam in launched by have behind look #X the a one #X if Call you at the that or in it's So is in we'll studio think which game Fatshark is Europe, our title Steam Sweden, XXXXX: hasn't game Darktide, rankings. of #X called that is of a created but today, Duty I actually yet, And

And overseas have then but later. other of studios our PC the versus both become and released Fatshark where for platforms when mobile of to Thank them, PC often the PC across we -- PC game somewhat game a they mobile mind interoperable, the situation first. anyway, and you. front many So of Riot games, is and game mobile crafted and with our China release first move it's sort studios like

Wendy Huang

Alicia. you, Thank

question Gary your Stanley. next Our of line comes Yu from Morgan Gary, is open.

Gary Yu

Hi, congratulations you thank on questions. the I opportunity for two the strong have and results.

is one accounts. video follow-up First a on

of video video kind think complementary from ad I and you short to seems also platform Weixin be to differentiated our peers. ad that mentioned accounts other

by peers, existing video platform It's from about investment are then So then expect And we platform? think we other revenue kind our kind from the follow-up of format of portfolio. revenue of to core, coming from? other some budgets should on should when related bigger time, this ads? short is kind other how more where a cannibalization the question ad becomes And that to inevitably ad going ad a

Given when sizable become portfolio, consider or sold seems divestment I more that kind that to it have When some rest in they other of status with criteria definition. kind subsidiary reached leadership. the there associates, are financially which are of of strength to capable when at the is like look industry

mature of are So about you. think how stage? associates kind Meituan we the should Thank those which approaching

Martin Lau

it the video So actually of accounts is in is on spend we number purely from now, of the a video video seen people and accounts as clearly, that scale. that's aspects very There one the is actually we budget when very incremental revenue, it. a incremental revenue, I the the right we of is actually as incremental, think evidence two it's of us. sizable Number are reached one. scaling a terms accounts have saw in time for start actually And amount, significant that terms because demonetization that being

our helped very of it's the very existing other into more to accounts programs our ecosystem as track complements their the ecosystem Weixin. coming right? it on our our video off-line to in revenue revenue be actually actually and official other is actually ramp-up and traffic And much part overall by to it as points for including to ecosystem of and build mini achieved touch like a actually with programs as on some past, ecosystem. fact, whole a to the of And amount It can be domain our whole talk about accounts, short the to that considerable ecosystem, video the mini can in, will impacting only inventories parts be added revenue them. the complementary video as I And from be as merchants works on well actually other e-comm. reach including bring spent can RMB the as that allows also bring Mini that's or accounts. as where The well merchants of per in advertising a In view really the budget put advertising without X programs, any advertising that And actually we really Weixin platforms. of video through But advertisers. we in quarter. traffic billion ad traffic terms is video think the merchants now allowed the a through and accounts of streaming through accounts private

they existing merchants at we try money to it them, as put platform. domain be revenue that our private the is their on channels some in believe the our will from actually to involves they value or which spending And also want actually build of private of and coming is. which highest to something right? advertisers look domain, more the build e-commerce, may Because spending other Some

Huateng Ma

We'll the one positioning Gary, Then distribution of which I'm X, distribute at And it's of sure And strength on we those to the investment investee in with of species. the is are when criteria, and around Meituan your investee, benefits in third of financial section of but whether and a if we pronounce there, question say the appropriate give in, criteria the you around three our for deciding kind. second a the criteria not announcement investment. comparing in is distribution an look consider the JD Meituan It's the industry the one one kind. is returns. it's we're among the And distributions and distribution. strategic terms how there's distribution Page to called thinking reasons distribution actually prior the

at and And the forth. strong food example, delivery you being of it's look so then Meituan leader positioning, clear extremely through in-store lens, if in in for obviously and terms so industry that

had very look around IRR. not the we've you profitable If profile, terms is then you in if financial good investment of the It's returns And investment look of on at profitable. XX% returns, then it as as a buying market addressable when services you it, was term. that's other distribute its longer but investing basis because new to is we Meituan expand well headline community group a and as in JD know on

So our thinking we around and chose anyway, those distribute distribute now Meituan. three of to the criteria we distributions specifically to that and Thank explain why choose why JD you. help

Martin Lau

investors. want in and from I why -- to institutional there a the their shares lot we own of investors the look want terms of right, be I at the time add lot with distribute the company. James investment to time, it actually actually would who at industry of big right? to would the like would get a like of at who what see a obviously in overlap the institution the that's already. point And institutional And about we we we that as to also the of actually made to from we to that the may very very talk gain same allow a prospects strength As start But period lot investors actually sell to a fact me, long And excited perspective, there's of means the shares on lot shares. talked between shareholders about from I some making same shares. of that us when I'm big majority of to position. because Meituan would overlap But an decisions believe biggest which at time, say, strength, shareholders actually be about look the the and will financial And a of holding want Meituan, Meituan will for shares. probably I Meituan investors the be the we in terms biggest we profile there's do in a as at our financial what of look And very a the about of shareholder very like base,

Wendy Huang

Gary. you, Thank

Zhu Bernstein. comes next Robin of from Our question

Robin Zhu

a things. questions. of you. I thank Hi, Thanks my management couple guess for taking

a Just to take on we cash returning shareholders. back if one, step

now obviously, there's of for should of of one. So think we of And ever I'd these and lot that different of of made then start you new about two, or scaling before periodic back how that's flow And driving been more think business. cash results. sustainable percent a cutting returns, hear on of big how bits that? the Is anything weeks consider curious distributions, Beyond rate blackout to on like of that progress a payout as the we management how the be foot we are switch policy, raised free announcing money you front costs the and the of more when again to a cash run kind you. run that. formal growth Thank sort on spending go to think where kind to from buybacks the level? about rate of we these cash -- should would couple

John Lo

In would company. terms a we're growth-driven we So of are say right? not capital allocation, I a utility,

I So or have capital our going to yield-driven allocation. would not a we're dividend in return thinking say

be opportunities. to of right? in at of about the of that would and how So them over is our look then have that and that. capital it other a buyback we about, calibrated And I a dividend, increase actually other we different other actually been against the one three if true distributing of selective is think terms shares. actually excess you flow, depends in been of a time, the we XX% of is companies way is we nature, return the that each non-IFRS we for is program It now, buyback. earnings. And investing investment terms on -- people, look But we the at may in opportunities, the the reinvestment sources more talk have kind, given industry cash about And us distribution what share it one return share right then in is investment. environment dividend, one talk

very us investment get our is which exposure strong especially, share when is buyback. operations, as that. cash well So basket actually actually more attractively as that's also given flow our shares a portfolio, we why generation cash share to have of And actually valued actually and have conduct more buyback to we

So pretty a that's our we share dynamic it buyback why actually but this up year, in in we way. significant stepped way, a have actually managed

already clearly in distribution more that In terms the I case-by-case of think kind, actually that's and very considerations, reasons the talked about. basis. And James the a have

capital But we're to we yield. fit a and the terms shareholders Overall, maximize of time, target want do see not have are think order different the So very proactive we all to as same at in very shareholder I to thoughtful returning natures. those return. in the are of we

investments, say the you I section. -- I would of of terms X refer Page in our would strategy Now to

have as than enough fact cash talked as and as we strategic fund to them our as a that well well actually generation more return our shareholders. organic flow about think I growth the all very of liquid we will of assets capital a capability large growth be holding the strong to very

and than So all conflict other. each at with need these time, same we do we actually things you. Thank don't resources more to they the have

Wendy Huang

Thank you.

International. question next Wu Haitong Natalie comes of Our from

Natalie Wu

have Hi, as Thanks good two question. I my well. for taking evening.

The some there first one is in these regarding from the days. regulation. are signs China Since that regulatory easing environment

And any just So your should be year? regulation side? enterprise that affect fundamentals company one services. from recent regarding next on developments your And how sensed updates that is wondering can second

cetera, Meeting be Tencent monetization potential in enterprise et your for Thank to Just should you. wondering we material the how WeChat, years? of contribution family, think app including three will enterprise one

Huateng Ma

direction actually actually toward healthy to also industry last that call, complete you is supporting out trending normalized So the of on and in recent to we ratification regulation. development the updated the the regulation carry regulatory earnings side, the

Also, we that China So basically report past the the integrating digital report technology measure and digital I strength, greater digital to the scale with based the economy with it decade. achievement NDRC real economy as drive confirms noticed, growth. further And report, of the the economy on recent the that, economy. you the of and example, in More that of noticeably, high-quality advocates mentioned developing quality in continues. Party Congress will accelerate and government communications, economy think it digital development October, for the integrate the by direction late a also after real this in recognizes a the

we is what signals we with normalized this and that consistent approvals a very I regulatory in direction still that more think And is So all, steps all confirms think regulatory regulatory some last direction. I time. there in changed said are some that, what's feel environment the particular,

for approval Samsung investment for in in includes the received this In approval for online insurance have also the new expect September. approval we the in receive So have BanHao and company FinTech And China. China JV area, of and property in we investments gaming SAMR's area, Unicom. antitrust, BanHao BanHao's in And coming with received amendment area and casualty the a we in do received future. more we to also

regulatory all trending I the specific and these So is actions approvals think a towards environment more that overall signifies actually supportive environment.

John Lo

three your on years, would revenue Natalie, bring a within see think I material unlikely year. revenue enterprise then services to revenue uncertain. And contribution question we would whether future in one material our contribution relative one about the But to it's is total our

around we these competitive situation do longer-term, at we the they Zoom opportunity believe longer-term the on near-term opportunity. look and longer-term distribution landscape. And the then function I where experience the of services is will focused from the to partly monetization. it Over good think to Slack themselves get Teams if quickly forth, primarily lend speak that so we're a you of and monetization, and to How

the so situation in we're that's that And today.

are larger product Thank by paid we immediately. enterprises. Martin our gestation a and bundling game a early something together. and this And Meeting seems into good material international we adoption that view with Tencent subscription do that's initiatives As turning But accounts VCom more Tencent mentioned, have versus video Docs as you. [ph] longer revenue side

Wendy Huang

John from comes Choi question Our next Daiwa. of

John Choi

our business taking last your for given much businesses I of you said highly I more are my economy. quarterly more a question quarter, the very about with cyclical now question. you core a nature -- the that that is lot think Thank guys Okay. than before have

the tailwind or year, as we businesses? mean for seeing we seeing macro -- seen factors are Are this follow-up see year, and signals the your more profit Business lot early in this we've that the sequentially quick the business long-term to a services. Services appreciate into to about later a how But and guys improving. in quarter, basis. annual also as improvements an with you peers? on we a about So compare mid gross as external and we self on more the global and doing we versus these Does you increase go areas like you. on margins better our advertising And early if see some this better cyclical also we I situation it you should are see along Thank our think both FinTech COVID that should year? visibility next could

Huateng Ma

second was of beginning from around country. is I lockdowns. to was fourth bit terms sporadic quarter the macro, quarter quite the I the third a because lockdowns then more which clouded But in of due a think again think there it were in a there little good, actually quarter, lot of the recovery

will to still So as will I believe think to I improve. result, confident term. we definitely But think time. we're But now, little quite the right, do be period going term medium volatile. be And medium for the overall, about short economy in start of in a the term, it's the this a I probably think volatile bit

John Lo

I the big And to substantial the rest comparison several gap. the hard very have China speaking, chronologies. think together, companies don't -- then with that the software-as-a-service from there's the for infrastructure question, not less situation software-as-a-service course, and rest Amazon companies provide platform does perspective as on Microsoft so Generally China, the to it's are dissimilar Google businesses. as there's that and the companies bridge infrastructure ourselves. world, the in that Oracle of infrastructure. like And in a of services margin software-as-a-service in of But service, including is do provide that world such a situation business the

difference. So that's one

dissimilar. behavior Another is competitive difference the is

were the everyone slice pie been industry then grab try their the declining was growing slice their environment the were some as the very And margins the difficult is in quickly, expanding. has XX cases, were around companies year. to with way growth in jumping pressure In now very margins share. it's I maximize the intensely some versus world margins think very other slows, growing and more last industry in for China, services the quickly, -- revenue services market Western in weak on when in there's as the because for more web fight of now the pie

revenue the businesses own, see, services actually stronger within on weaker including accompanied cases, mix. Thank in some that as our You margins quality is highest we by and business most you. the refocused sustainable

Wendy Huang

Thank you.

next comes Keung question Our Sachs. Goldman from of Ronald

Ronald Keung

Poni, and you, Thank Martin, James, you. John. Thank

we double-digit ask growth I about commercial about one in the read because you First FinTech payments. this, noted

measures business our what to FinTech, latest track? this have of businesses games given year hold how and our in are in strategies on payment progress and commercial to and kind of And now these financial as across continues the this So that Thank in next ads is from wealth restructuring? And management in to year? kind you. macro the driven change is profits lending particularly environment co COVID

Martin Lau

of in and financial company, do in we holding believe make and So are that company very requirements process the financial of embrace the having closely license, a holding having of the happen the potential is impact would for terms company beneficial interacting to we cause the holding we do also business. want understanding a regulators financial organization we really material not the Because that preparation opportunities it. license oversight requisite and changes and internal that to the will see regulatory with needs to the

we point an yet have let beyond we proactive are don't But of time, we working at for update, you really know. that. an So update this when you we'll have

And generate them that more challenging risks period especially backdrop our for actually so the that on environment, regulatory third And have we a with that resources challenges these this going about regulators, is small bit of can really medium our scale and actually effort that on of challenging, requirements a actually have them been of go leveraging so merchants which compliance, financial up help the we actually to with as with we we And the but actually actually us on a timing to them of Number spending been one side, we to business of able help important cycle merchants it's important especially, But really for We And cope very the in time-to-time, say through we macro business, on to we the payment by and manage compliance would focus really payment And a things, few a offline of risk sporadic right? well terms In from very I there's this the we periods. as the as also in that. actually services upgrade felt the a once because to all and offline lot wealth lot business. are management proactively. to all requirement. lot difficult very side and connects sure good lockdowns. we would of time our a And making have it's help to working have along regulatory with have pretty actually And given is new programs have. the service spent a rebate the for have actually required challenges us is and generate a to of return lending management, actually payment given and business lot our complying that I been actually well organic spent compliance. as help services think growth. the way, should business business. for is we achieve the second as services,

now, to work long-term, it's this good the it's mid important us period. over very think I But -- with actually to challenging right actually relatively longer potential. for So I think through

Ronald Keung

you, capital question to returning maybe it. shareholders. Martin. follow-up a on Got Thank And

are positions, relatively I after Hong stocks not and our maybe either or most now Meituan, So in smaller listed Kong JD investments of think size.

think distributing ourselves versus investment about these do kind we of and of How into for balance how mentioned future balance games strategies So software how we think do we should growth? two? the of recycle about shareholders. areas particularly international portfolio You capital companies reinvesting to I the the for or

James Mitchell

generate Martin billion as his need do year. cash do of spoke think it introductory we I $XX we don't to flow comments, because free necessarily to a in

infrastructure a the has only free sufficient, own our cash our to shareholders companies, Ubisoft us also be of in heavy more if in capital distribution so investments you. very fully then that of software, as top not well as products, other new investments and complementary our fund from been to $XX nature than And to of a on and such fund periodic flow billion own in in as buybacks the rather the of will continue. separate incremental and but Thank is return volume of kind

Ronald Keung

you, Thank James.

Wendy Huang

Thank you.

question comes Our of from Liu next the Charlene HSBC.

Charlene Liu

questions. two have I

The business? SOEs company's also, benefit first recently expect with business we cloud set up is how collaboration, Cloud business. a the regarding should with can discuss And the our first sort cloud Unicom. one for collaboration JV Tencent this question. increasing Can going rationale of forward? China the management That's

Could strategic pressure a past cetera? to have For has preferred Can sell-down a the out denied. seek would a process? to shareholder, buyback quite process question, the potentially Tencent very sort to date, stepped the on share of your thoughts would outcome point this you sell the that even second I also you you the from though sensitive Thank favorably was share do it share over And part Tencent sort we in subsequently in what you observed taking like has et price light favorable for of consider process. to type of couple months, being responded that of on offset sort that we of up much.

Huateng Ma

Yes, JV Unicom, with and so products for on distributing focusing computing it's codeveloped the Tencent Unicom. CDN China multi-edge actually that's by and

prospects joint be would the it's right have plan the and being the now, But to good So going order drawn as order still we well financial products. these in base resources as promote customer is force our leverage limited. And short-term in believe business capability, benefits business development to forward. up will

what resources right? finding the would bring case-by-case event We on business terms us well specific each to case-on-case this whether a work And partners, the JV. party basis, for in a can as are company approval a that particular or say, collaboration, I of looking it's actually basis. I case look it of more private significant significance, We SOEs the any no opportunities is these actually right? on table. the trend towards on of think sector, or is terms as at there from a the at actually on In And SAM

Martin Lau

our I around On last trading long sell-down listed offset sell-down shares a as is what listed frequently buybacks share price during But be greater the emphasize the bought outcome the trading days. history want time, anyone has our Naspers of and the we've to up company, shares that declined would stepped process a whether sharply volume question back selling time. correct volume whether else share shares been that irrespective or the from company than if to same have and slightly in to a during window, at your for and to favorable the buyback selling it or not was factually a process we've we very this what similar then was

the buy from from value versus share shares because that is the around share around care actually net issues. short-term, then and which much count we it buyback neutral buy see and we course, we perspective, way, selling decrease count. who's back, we amount value therefore, what shares the of the So a we back if so shareholder X is value put is and when shares the superficially very But buy than about, another more shares, the of flow where is accretive in shares, of perspective. amount a not increasing shareholder To we sells decision flow cancel primarily Y do back a

for our And shareholders over value remaining so accretion there's time.

trading NAV when announced has should changes said to policy. views decision was as it this of has and it necessitated be but discount could a an by process levels, outcomes, process terms that's this exercise stated in that the think process, a this to And there for process to I favorable that abnormally has NAV narrowed then NAV, which that certain somewhat that narrowed that's discount large discount exercise. the

consideration return looking Thank something it's us very anyway, activity. that but aware we're obviously at of, for primary you. when it's our buyback So not policy, we're a our including capital

Charlene Liu

you. Thank Understood.

Wendy Huang

you, Alex question last Thank Charlene. JPMorgan. from We the of take Yao would

Alex Yao

taking for And my management evening. Two questions you my side. thank question. Good from

positive monetization is gaming quarter-over-quarter ecosystem improving ecosystem and launch. guys X% I the observed domestic of I incentive then of one abnormal declined quarter? between accounts the Has accounts. an on video video think stage is caused content monetization creators. the such in video is monetization a content on seasonality should gaming interplay the basis new all? ecosystem second accounts this But understand monetization intuitively, one What accounts capability monetization. And First domestic seasonality a more against still helped by of content on and early quarter. the the the to this introduce revenue of of an game of The the this financial at the you video

you. be So the Thank therefore, with positive content ecosystem. it should

John Lo

But game is for your may answer flows our it our Alex, short so have not understood the revenue. question, seasonality there's game a I reported cash on first exactly. versus different

However, years, has it, been the as industry in we quickly, and when seasonality previous industry year not apparent and within when growing the was in that is it overall stagnation. this we're

grossing and cash flow during a period, So to get P&L a more the of over months. in of we granular several receipts China flow typically in and Year period Chinese sees the receipts those specific, cash into game generation, peak industry amortize terms New then our

then And QX extent, so also the cash of is year. in previous obvious end but that decaying more in and the toward Year an it QX year. again, revenue And into years as New strength the flow, in the to the before seasonality hasn't been as receipts Chinese in QX this strength in reported translates

of the your peak the when for is at that QX, away the we due basically Chinese question reported trend year, answer in And influenced back half fact of go game QX to that's spend sequential Year So capture New to the it look the approval cycle. short fades through as that the we then the more our revenue. to in from by that revenue you somewhat QX,

Martin Lau

And long-term, lot a richer having and developers the will we start and richer the start for one streamers, want providers been accumulate traffic merchants their a primarily look of been accounts ecosystem terms have I video independent video start really they content the basically is over fact once the the think targeting generate e-commerce they and as said been looking ecosystem. the that, up monetization, become doing the content between ecosystem having content to and improving of streaming to has not to So interaction do actually providers. monetization start want the does bring who But they providers, going allocate has actually for a accounts now, then and they and on because and more this has once be the to different ads content impact specifically of are lot also the can live have traffic technology from within build can there advertising for other at revenue. taking that. contact we can actually in-feeds live in way they of a two, on that our would and right the start lot to I more But streamers. increasing actually e-commerce, the been And also traffic consistently of own. our would once they when live they streaming to streaming, content because say when has or that then the result, would more And there's traffic monetize our live actually users that content so stage,

stronger conducive more and think over ecosystem monetization interaction longer-term, the have I content and would the So actually a relationships.

Wendy Huang

Thank you, everyone.

webinar ending for joining today. the results webinar. We are you now Thank all our

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

Tencent Holdings Limited (TCEHY) 16 Nov 222022 Q3 Earnings call transcript