Tencent Holdings Limited

Today and good evening. Thank you for standing by. Welcome to Tencent Holdings Limited 2024 first quarter results announcement webinar. I'm Wendy Huang from Tencent IR team. At this time, all participants are in a listen-only mode. After the management's presentation, there will be a question and answer session. For participants who dial in by phone, if you wish to ask a question, please press five on your telephone to raise your hand. If you are accessing from the Tencent meeting or group meeting application, please click the raise hand button at the bottom left. And please be advised that today's webinar is being recorded. Before we start the presentation, we would like to remind you that includes four looping statements, which are underlined by a number of risks and uncertainties, and it may not be realized in the future for various reasons. Information about general market conditions is coming from a variety of sources outside of Tencent. This presentation also contains some unaudited non-IFRS financial measures that should be considered in addition to, but not as a substitute for, measures of the group's financial performance propelled in accordance with IFRS. For a detailed discussion of risk factors in the non-IFRS measures, please refer to our disclosure documents on the IR section of our website. Let me now introduce the management team on the webinar tonight. Our chairman and CEO, Pony Mao, will kick off with a short overview. President Martin Lau and Chief Strategy Officer James Mitchell will provide a business review. Chief Financial Officer John Lowe will conclude with financial discussion before we open the floor for questions. I will now pass it to Pony.

Thank you, Wendy. Good evening. Thank you, everyone, for joining us. During the first quarter of 2024, several of our leading games in China and internationally started to benefit from the team organization we put in place, resulting in an increase in game growth receipts and creating a foundation for our games revenue to resume growth in future quarters. We continue to cultivate high-quality revenue streams, including advertising in video accounts and reaching search, mini games, platform service fees, and e-commerce technology service fees, contributing to our growth and operating profit growth, outpacing our revenue growth. Executing on our commitment to return access capital to shareholders, we stepped up our buyback plan and are on track to repurchase over 100 billion Hong Kong dollars of our shares in 2024, as well as paying an increased dividend while investing in AI technology, platform enhancements and high production value content. Looking at our financial numbers for the quarter, total revenue was 160 billion RMB, up 6% year-on-year and 3% quarter-on-quarter. Growth profit was 84 billion RMB, up 23% year-on-year and 8% quarter-on-quarter. Non-IFRS operating profit was 59 billion RMB, up 30% year-on-year and 19% quarter-on-quarter. Non-IFRS net profit attributable to applicant holders was 50 billion RMB, up 54% year-on-year and 18% quarter-on-quarter. Turning to our key services for communication and social networks, combined MAU of WeChat and WeChat Groups year-on-year and quarter-on-quarter to 1.36 billion. For digital content, we reinforced our leadership in long-form video and music streaming, as Tencent Video and TME subscriptions grew year-on-year. For games, we made proactive adjustments, driving initial recovery for our flagship games in China and international markets, while several games in our portfolio achieved record highs in gross receipts during the quarter. For cloud, international and domestic clients from media, entertainment, and live streaming industries increasingly use Tencent Cloud Media Services. Our enterprise SaaS products, Recon and Tencent Meeting, add Hunyuan-powered functionalities and increase their adoption by enterprise customers. I will now hand over to Ma Jin for business review.

Thank you, Tony. Good evening and good morning to everybody. For the first quarter of 2024, our total revenue was up 6% year on year. That represented 49% of our total revenue, within which social networks subsegment was 19%, domestic games subsegment was 22%, and international games was 8%. Online advertising was 17% of total revenue and FinTech and business services was 33% of total revenue. Our overall gross profit growth, which we consider as a key proxy for our organic growth was 23% year on year in the first quarter, faster than first half of 2021 when our revenue growth rates were much higher. This was driven by the rapid growth of high margin revenue streams, including video accounts and vision search advertising, wealth management services, mini games, platform service fees, and e-commerce technology service fees. Improved cost efficiency in our long form video and cloud businesses also contributed to higher gross profit. By segment, VAS gross profit increased 5% year on year to 45 billion RMB, representing 54% of our total gross profit. Online advertising gross profit increased 66% year on year to 15 billion RMB, contributing 17% of total gross profit. And fintech and business services gross profit increased 42% year-on-year to 24 billion RMB, contributing 28% of total gross profit. For value-added services, segment revenue was 79 billion RMB, down 1% year-on-year. Social networks revenue was down 2% year-on-year to 31 billion RMB. revenue from music subscriptions, video accounts live streaming, mini games, and video subscriptions increased, while revenue from music and games related to live streaming services declined sharply. Long-form video subscription revenue increased 12% year-on-year. Average daily video subscriptions increased 8% year-on-year to 116 million, benefiting from popular self-commissioned drama series and animated series such as Blossom Shanghai, The Hunter, and Perfect World Season 4. Music subscription revenue increased 39% year-on-year, reflecting growth in subscriptions in April. TME strengthened collaboration with Tencent Video and released the original soundtrack of a popular drama series, The Legend of Shen Li. Domestic games revenue was down 2% year on year to 35 billion RMB. increased revenue from Valorant, fight at the Golden Spatula and Lost Ark was offset by decreased revenue from Honor of Kings and Peacekeeper Elite. As Honor of Kings faced a tough comparison against Chinese New Year of 2023 and Peacekeeper Elite revenue in the quarter reflected weak monetizable content releases in recent quarters. However, total gross receipts of domestic games in the first quarter increased 3% year-on-year, showing a general recovery trend. International games revenue increased 3% year-on-year to 14 billion RMB, or stable in constant currency terms. On the other hand, gross receipts increased by 34% year-on-year, driven by PUBG Mobile and Supercell Games contributions. The growth rate of revenue lagged behind gross receipts due to long deferral periods for supercells games. Moving on to communications and social networks. For Weixin, users are increasingly supplementing their stable consumption of social graph supplied content in chat and moments with consumption of algorithmically recommended content in official accounts and video accounts. and engagement with many programs, diverse range of services. This trend benefits from our heavy investment in AI, which makes the recommendation better and better over time. For official accounts, which enable creators to share text and images on chosen topics with interested followers, It achieved healthy year on year page view growth as AI powered recommendation algorithms allow us to provide targeted high quality content more effectively. Mini programs have become an increasingly powerful platform for merchants and content providers to engage users online and offline. Total user time spent on mini programs grew over 20% year on year in the first quarter. Among non-game use cases, daily activations increased at double-digit rates year-on-year, particularly in productivity tools, dining services, and transportation. For mini-games, gross receipts increased 30% year-on-year with notable growth from new releases, as well as games released for over three years. Video accounts user time spent grew 80% year on year in the first quarter. Time spent on video accounts is now over two times that of moments. We also strengthened our live streaming e-commerce ecosystem by diversifying merchandise categories and enabling more content creators to monetize through e-commerce activities. Now with that, I'll pass to James.