Tencent Holdings Limited

Good day and good evening. Thank you for standing by. Welcome to Tencent Holdings Limited 2025 Second 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 are dialing 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 Google 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 it includes forward-looking 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 un-audited 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 and non-IFRS measures, please refer to our disclosure documents on the IR section of our website. Now let me introduce the management team on the webinar tonight. Our chairman and CEO, Pony Ma, will kick off with a short overview. President Martin Lau and Chief Strategy Officer James Mitchell will provide a business review. And 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 second quarter of 2025, we delivered a double-digit revenue and non-IFRS operating profit growth as we invest in and also benefit from utilizing AI. Our games performed well in terms of users and revenue. As evergreen games such as Honor of Kings and Peacekeeper Elite evolve into platforms while increasing their usage of AI, and as new games such as Delta Force broken out, our marketing services revenue sustained rapid growth as we upgrade our advertising foundation model, leading to a better performance of ads across our traffic platforms. We are striving to bring further benefits of AI to consumers and enterprises through powering more use cases within WeChat and driving usage of our AI native app, Yuanbao, and upgrading the capabilities of our Huanyuan Foundation models. Looking at our financial numbers for the second quarter, total revenue was 185 billion RMB, up 15% year-on-year. Gross profit was 105 billion RMB, up 22% year-on-year. Non-IFRS operating profit was 69 billion RMB, up 18% year-on-year. and non-IFRS net profit achievable to equity holders was 63 billion RMB, up 10% year-on-year. If we exclude associated profit contribution from the current quarter and from the same quarter last year, When associate profit was high due to better profitability and catch-up adjustment for a large associate, our underlying net profit would have increased by 20% year-on-year. Turning to our key services, for communication and social networks, combined MAU of WeChat grew year-on-year and quarter-on-quarter to 1.4%. For digital content, TME solidified its leadership position in music streaming. For games, we extend our leadership position with the progress in gameplay-centric games such as Peace Keep, People Elite, and Data Force, as well as in content-centric games such as Naruto and Watering Waves. For cloud, Donna has recognized Tencent Cloud as one of the top communication platform as a service solutions globally for the three consecutive years. I will now hand over to Martin for business review.

Thank you, Pony, and good evening and good morning to everybody. For the second quarter of 2025, our total revenue was up 15% year on year. Bass represented 50% of our total revenue, within which social networks sub-segment was 18%, domestic games sub-segment was 22%, and international games was 10%. Marketing services was 19% of total revenue, and fintech and business services was 30% of total revenue. In terms of gross profit, our gross profit was up 22% year on year in the second quarter to 105 billion RMB. Notably, gross profit for each of our three reporting segments grew over 20% year on year. Vast gross profit increased 23% year-on-year to 55 billion RMB, representing 53% of our total gross profit. Marketing services gross profit increased 24% year-on-year to 21 billion RMB, contributing 20% of total gross profit. And FinTech and business services gross profit increased 21% year-on-year to 29 billion RMB, contributing 28% of our total gross profit. Turning to business segments, value-added services revenue was 91 billion RMB, up 16% year-on-year. Social networks revenue was up 6% year-on-year, driven by increased revenue from app-based game item sales, video accounts live streaming service, and music subscriptions. Music subscription revenue increased 17% year on year supported by growth in our pool as well as subscribers. Overall subscriber grew 6% year on year to 124 million. Our super VIP subscribers exceeded 15 million benefiting from privileges such as collectible artist cards and expanded early access to merchandise and live events. Long-form video subscription revenue decreased 2% year-on-year. Video subscribers declined 3% year-on-year to 114 million due to fewer scheduled releases of top tier content. Despite a light release quarter, our self-commissioned drama series, The Prisoner of Beauty was the most watched drama series across all long-form video platforms in China in May. Domestic games revenue grew by 17% year-on-year, driven by growth contributions from Delta Force and from Evergreen Games, notably Honor of Kings, Valorant, and Peacekeeper Elite. International games revenue increased by 35% year-on-year, or 33% in constant currency terms, driven by Supercell's games, PUBG Mobile, and the release of Dune Awakening. Now, moving on to communications and social networks. Mini programs increasingly act as a powerful platform for users to connect with merchants and content providers. GME facilitated by mini programs grew by a teens percentage year on year in the second quarter, benefiting from improved support for use cases, including financial services, dine-in ordering, and transportation. For mini games, the total gross receipt increased 20% year on year. We upgraded mini games technology infrastructure with expanded game engine compatibility, enhanced graphics rendering, and reduced load time, which together facilitate developers importing complex app-based games to mini games. And these games include simulation and MMORPGs. For mini shops, we allowed brands and merchants to port their SKU libraries from mini programs to mini shops and to unify loyalty programs across two platforms. In addition, we continued to strengthen the social commerce experience which distinguishes Weixin from traditional e-commerce platforms. First, we extended gifting feature from mini shops to mini programs. video accounts, and official accounts. Second, we introduced the shop with friends feature, encouraging users to share products and shops they like with friends via chats and moments and participate together in group discount deals. On the AI front, we added AI-powered citation to content so that users reading official accounts articles or video accounts comments can activate contextual AI commentary on related information. We upgraded MiniShop's customer service with large language model capabilities to provide merchants with more intelligent responses to customer inquiries and personalized product recommendations. We enabled Yuanbao as a wishing contact to interpret and summarize video accounts content. Meanwhile, we are rapidly enhancing the functionalities of our AI native app Yuanbao, and we share more details about how we are growing the DAU later this year. And with that, I'm passing it on to James.