Tencent Holdings Ltd. (OTCPK:TCEHY) Q1 2024 Earnings Conference Call May 14, 2024 8:00 AM ET

腾讯控股有限公司（OTCPK:TCEHY）2024 年第一季度财报电话会议 2024 年 5 月 14 日 上午 8:00（东部时间）

Company Participants 公司参与者

Pony Ma - Chairman, Chief Executive Officer

马化腾 - 主席，首席执行官

Martin Lau - President

马丁·刘 - 总裁

James Mitchell - Chief Strategy Officer

詹姆斯·米切尔 - 首席战略官

John Lo - Chief Financial Officer

约翰·洛 - 首席财务官

Wendy Huang - Investor Relations

黄文迪 - 投资者关系

Conference Call Participants

会议电话参与者

Kenneth Fong - UBS 肯尼斯·方 - 瑞银

Thomas Chong - Jefferies

托马斯·钟 - 杰富瑞

Alicia Yap - Citigroup

艾丽西亚·叶 - 花旗集团

Gary Yu - Morgan Stanley

加里·余 - 摩根士丹利

Anna Jung -

安娜·荣

John Choi - Daiwa

乔恩·崔 - 大和

Ronald Keung - Goldman Sachs

罗纳德·强 - 高盛

Charlene Liu - HSBC

刘查琳 - 汇丰银行

Alex Yao - JP Morgan

亚历克斯·姚 - 摩根大通

Robin Zhu - Bernstein

罗宾·朱 - 伯恩斯坦

Operator 操作符

Good day and good evening. Thank you for standing by. Welcome to Tencent Holdings Limited 2024 first quarter results announcement webinar. This is Wendy Huang from the Tencent IR team.

大家好，晚上好。感谢您的耐心等待。欢迎参加腾讯控股有限公司 2024 年第一季度业绩公告网络研讨会。我是来自腾讯投资者关系团队的黄文迪。

At this time, all participants are in a listen-only mode. After 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 5 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 on the bottom left, and please be advised that today’s webinar is being recorded.

此时，所有参与者处于仅听模式。在管理层的演示之后，将进行问答环节。对于通过电话拨入的参与者，如果您希望提问，请在电话上按 5 以举手。如果您是通过腾讯会议或群组会议应用程序访问，请点击左下角的举手按钮，并请注意，今天的网络研讨会正在录制中。

Before we start the presentation, we will like to remind you that this includes forward-looking statements which are underlined by a number of risks and uncertainties and 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.

在我们开始演示之前，我们想提醒您，这包括前瞻性声明，这些声明受到多种风险和不确定性的影响，可能由于各种原因在未来无法实现。有关一般市场状况的信息来自腾讯以外的多种来源。

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 prepared 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.

本次演示文稿还包含一些未经审计的非国际财务报告准则（IFRS）财务指标，这些指标应与根据 IFRS 编制的集团财务业绩指标一起考虑，而不是替代它们。有关风险因素和非 IFRS 指标的详细讨论，请参阅我们网站投资者关系部分的披露文件。

Let me now 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. Chief Financial Officer John Lo will conclude with a financial discussion before we open the floor for questions.

现在让我介绍一下今晚网络研讨会的管理团队。我们的董事长兼首席执行官马化腾将首先进行简要概述。总裁刘炽平和首席战略官詹姆斯·米切尔将提供业务回顾。首席财务官罗杰将以财务讨论结束，然后我们将开放提问环节。

I will now pass it to Pony.

我现在将把它交给 Pony。

Pony Ma 马化腾

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 team organization we put in place, resulting in an increase in game gross receipts and creating a foundation for our games revenue to resume growth in future quarters. We continue to accommodate high quality revenue streams, including advertising and video accounts and Weixin search, mini games, platform service fees, and ecommerce technology service fees, contributing our growth and operating profit growth outpacing our revenue growth.

谢谢 Wendy。晚上好。感谢大家的参与。在 2024 年第一季度，我们在中国和国际上几款领先游戏开始受益于我们建立的团队组织，导致游戏总收入增加，并为我们游戏收入在未来几个季度恢复增长奠定了基础。我们继续适应高质量的收入来源，包括广告和视频账户、微信搜索、小游戏、平台服务费以及电子商务技术服务费，推动我们的增长和运营利润增长超过我们的收入增长。

Executing on our commitment to return excess capital to shareholders, we established our buyback plan and are on track to repurchase over HK 100 billion of our shares in 2024, as well as paying an increased dividend while investing in AI technology, platform enhancements, and high production value content.

根据我们承诺将多余资本返还给股东，我们制定了回购计划，并计划在 2024 年回购超过 1000 亿港元的股份，同时增加股息，并投资于人工智能技术、平台升级和高制作价值内容。

Looking at our financial numbers for the quarter, total revenue was RMB 160 billion, up 6% year-on-year and 3% quarter-on-quarter. Gross profit was RMB 84 billion, up 23% year-on-year and 8% quarter-on-quarter. Non-IFRS operating profit was RMB 59 billion, up 30% year-on-year and 19% quarter-on-quarter. Non-IFRS net profit attributable to equity holders was RMB 50 billion, up 54% year-on-year and 18% quarter-on-quarter.

查看我们本季度的财务数据，总收入为人民币 1600 亿元，同比增长 6%，环比增长 3%。毛利润为人民币 840 亿元，同比增长 23%，环比增长 8%。非国际财务报告准则（Non-IFRS）营业利润为人民币 590 亿元，同比增长 30%，环比增长 19%。归属于股东的非国际财务报告准则（Non-IFRS）净利润为人民币 500 亿元，同比增长 54%，环比增长 18%。

Turning to our key services, for our communications and social networks, combined MAU of Weixin and WeChat groups year-on-year and quarter-on-quarter grew RMB 1.36 billion. Our digital content reinforces our leadership in long form video and music streaming as Tencent Video and TME subscriptions grew year-on-year.

转向我们的关键服务，在我们的通讯和社交网络中，微信和微信群的月活跃用户（MAU）同比和环比增长了13.6%。我们的数字内容巩固了我们在长视频和音乐流媒体领域的领导地位，因为腾讯视频和 TME 的订阅同比增长。

For games, we have 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 for our media, entertainment and live streaming industries increasingly use Tencent Cloud media services. Our enterprise SaaS products, WeCom and Tencent Meeting at Hunyuan-powered functionalities increased their adoption by enterprise customers.

对于游戏，我们已主动调整，推动我们在中国和国际市场的旗舰游戏的初步恢复，同时我们投资组合中的几款游戏在本季度创下了总收入的新高。在云计算方面，国际和国内的媒体、娱乐和直播行业客户越来越多地使用腾讯云媒体服务。我们的企业 SaaS 产品 WeCom 和腾讯会议在 Hunyuan 驱动的功能上增加了企业客户的采用率。

I will hand over to Martin for a business review.

我将把业务审查交给马丁。

Martin Lau 马丁·刘

Thank you Pony. Good evening and good morning to everybody. For the first quarter of 2024, our total revenue was up 6% year-on-year. VAS represented 49% of our total revenue, within which the social networks sub-segment was 19%, domestic games sub-segment was 22%, and international games was 8%. Online advertising was 17% of total revenue and fintech and business services was 33% of total revenue.

谢谢 Pony。大家晚上好，早上好。2024 年第一季度，我们的总收入同比增长了 6%。增值服务占我们总收入的 49%，其中社交网络子细分市场占 19%，国内游戏子细分市场占 22%，国际游戏占 8%。在线广告占总收入的 17%，金融科技和商业服务占总收入的 33%。

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 Weixin Search advertising, wealth management services, mini games, platform service fees, and ecommerce technology service fees. Improved cost efficiency in our long form video and cloud-based business also contributed to higher gross profit.

我们的整体毛利增长被视为有机增长的关键指标，第一季度同比增长 23%，快于 2021 年上半年当时我们的收入增长率更高。这是由于高利润率收入来源的快速增长，包括视频账户和微信搜索广告、财富管理服务、迷你游戏、平台服务费和电子商务技术服务费。我们在长视频和基于云的业务中提高的成本效率也为更高的毛利做出了贡献。

By segment, VAS gross profit increased 5% year-on-year to RMB 45 billion, representing 54% of our total gross profit. Online advertising gross profit increased 66% year-on-year to RMB 15 billion, contributing 17% of total gross profit, and fintech and business services gross profit increased 42% year-on-year to RMB 24 billion, contributing 28% of total gross profit.

按细分，增值服务（VAS）毛利润同比增长 5%，达到 450 亿元人民币，占我们总毛利润的 54%。在线广告毛利润同比增长 66%，达到 150 亿元人民币，贡献了总毛利润的 17%；金融科技和商业服务毛利润同比增长 42%，达到 240 亿元人民币，贡献了总毛利润的 28%。

For value-added services, segment revenue was RMB 79 billion, down 1% year-on-year. Social networks revenue was down 2% year-on-year to RMB 31 billion. 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.

增值服务的细分收入为 790 亿元人民币，同比下降 1%。社交网络收入同比下降 2%，为 310 亿元人民币。音乐订阅、视频账号直播、小型游戏和视频订阅的收入有所增加，而与直播服务相关的音乐和游戏收入大幅下降。长视频订阅收入同比增长 12%。

Average daily video subscriptions increased 8% year-on-year to RMB 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 and ARPU. TME strengthened collaboration with Tencent Video and released original soundtrack of the popular drama series, The Legend of Shen Li.

平均每日视频订阅同比增长 8%，达到 1.16 亿人民币，受益于热门自制剧集和动画系列，如《花开上海》、《猎人》和《完美世界》第四季。音乐订阅收入同比增长 39%，反映出订阅和每用户平均收入（ARPU）的增长。腾讯音乐娱乐（TME）加强了与腾讯视频的合作，并发布了热门剧集《神里传奇》的原创 soundtrack。

Domestic games revenue was down 2% year-on-year to RMB 35 billion. Increased revenue from Valorant, Fight of 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 monetize both 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.

国内游戏总销售收入同比下降2%，达到350亿元人民币。《Valorant》、《金铲之战》和《失落的方舟》的收入增长被《王者荣耀》和《和平精英》的收入下降所抵消，因为《王者荣耀》在2023年春节期间面临了艰难的比较，而《和平精英》本季度的收入反映了最近几个季度内容发布的变现能力较弱。然而，国内游戏在第一季度的毛利润同比增长了3%，显示出整体的复苏趋势。

International games revenue increased 3% year-on-year to RMB 14 billion, 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 rates of revenue lagged behind gross receipts due to long deferral periods for Supercell’s games.

国际游戏收入同比增长 3%，达到 140 亿元人民币，按固定汇率计算保持稳定。另一方面，受 PUBG Mobile 和 Supercell Games 贡献的推动，毛收入同比增长 34%。由于 Supercell 游戏的长期延期，收入的增长率落后于毛收入。

Moving onto 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 mini programs’ diverse range of services. This trend benefits from our heavy investment in AI, which makes the recommendation better and better over time.

转向通讯和社交网络，对于微信，用户越来越多地在聊天和朋友圈中稳定消费社交图谱提供的内容，同时在公众号和视频号中消费算法推荐的内容，并参与小程序提供的多样化服务。这一趋势得益于我们在人工智能方面的重大投资，这使得推荐系统随着时间的推移变得越来越好。

For official accounts, which enable creators to share text and images on chosen topics with interested followers, it achieved healthy year-on-year [pageview] growth as AI powered recommendation algorithms allows 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 the productivity tools, dining services and transportation.

对于官方账号，它使创作者能够与感兴趣的关注者分享特定主题的文本和图像，得益于人工智能驱动的推荐算法，我们能够更有效地提供有针对性的高质量内容，实现了健康的同比[页面浏览量]增长。小程序已成为商家和内容提供者在线和离线吸引用户的越来越强大的平台。在第一季度，用户在小程序上花费的总时间同比增长超过 20%。在非游戏使用案例中，日活跃用户的激活量同比增长了两位数，特别是在生产力工具、餐饮服务和交通领域。

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 ecommerce ecosystem by diversifying merchandise categories and enabling more content creators to monetize through ecommerce activities.

对于小游戏，毛收入同比增长 30%，新发布的游戏以及发布超过三年的游戏均有显著增长。视频账户用户观看时间在第一季度同比增长 80%。视频账户的观看时间现在是朋友圈的两倍多。我们还通过多样化商品类别和让更多内容创作者通过电子商务活动实现盈利，进一步加强了我们的直播电商生态系统。

Now with that, I’ll pass to James.

现在有了这个，我将把话传给詹姆斯。

James Mitchell 詹姆斯·米切尔

Thank you Martin.  谢谢马丁。

Moving onto domestic games, for our two flagship games, we highlighted last quarter proactive adjustments we made, including spreading out the timing of high value virtual item sales through the year and enhancing content design. While their revenues declined in the first quarter, we can see these adjustments are starting to yield results with gross receipts for each of Honor of Kings and Peacekeeper Elite increasing year-on-year in March. Several of our other games achieved notable milestones during the first quarter. Fight of the Golden Spatula delivered record DAU and ranked third by gross receipts across all mobile games in China during the quarter, driven by popular content updates including new Chibi Champions and a customizable arena. Crossfire mobile achieved all-time highs in paying users and gross receipts this quarter, benefiting from new PVE content and an enhanced reward system. Arena Breakout achieved new milestones in DAU, [indiscernible] users and gross receipts as we released a new large map with vehicles and introduced armor and weapons inspired by ancient Chinese culture. We aim to release several high production value games this year, including DnF mobile next week, Tarisland, Need for Speed mobile, One Piece mobile, and Delta Force: Hawk Operations.

转向国内游戏，对于我们的两款旗舰游戏，我们上个季度强调了我们所做的积极调整，包括在一年中分散高价值虚拟商品销售的时间，并加强内容设计。虽然它们在第一季度的收入有所下降，但我们已经可以看到这些调整开始产生效果，3月份《王者荣耀》和《和平精英》的总收入都实现了同比增长。在第一季度，我们的其他几款游戏也取得了显著的里程碑。《金铲之战》在本季度实现了日活跃用户（DAU）的记录，并在中国所有手机游戏中按总收入排名第三，这得益于包括新的Q版冠军和可定制竞技场在内的受欢迎的内容更新。《穿越火线：枪战王者》在这个季度实现了付费用户和总收入的历史新高，这得益于新的PVE内容和增强的奖励系统。《战地突围》在我们发布了带有载具的新大型地图，并引入了受中国古代文化启发的装甲和武器后，实现了DAU、[难以辨认]用户和总收入的新里程碑。我们计划在今年发布几款高制作价值的游戏，包括下周的《地下城与勇士》手游、《塔里斯兰德》、《极品飞车》手游、《海贼王》手游和《三角洲特种部队：鹰之行动》。

Among our international games, PUBG mobile increased DAU and gross receipts by double-digit percentage rates year-on-year in the first quarter, benefiting from popular new modes and featured events such as the Shadow Force mode and Golden Moon event. Notably, PUBG mobile is evolving from a game product into a game platform with increasing user time spent on new modes beyond the original Battle Royale, notably the extraction shooter mode Metro Royale. Brawl Stars average DAU more than doubled year-on-year and gross receipts more than quadrupled year-on-year in the first quarter. The game ranked the third highest mobile game by DAU globally ex-China in March. Supercell expanded Brawl Stars’ development team, enabling the creation of a new 5x5 mode, a simplified rewards system, and successful community events. Warframe achieved record high gross receipts in the first quarter with the introduction of a new faster moving Warframe, [indiscernible] prime.

在我们的国际游戏中，《PUBG 移动版》在第一季度的日活跃用户（DAU）和总收入同比增长了两位数的百分比，这得益于新推出的流行模式和特色活动，如暗影力量模式和金色月亮活动。值得注意的是，《PUBG 移动版》正从一个游戏产品演变为一个游戏平台，用户在原始的战斗皇家模式之外的新模式上花费的时间越来越多，特别是撤离射击模式Metro Royale。《荒野乱斗》的平均日活跃用户同比增长超过一倍，总收入同比增长超过四倍，在第一季度。该游戏在3月份全球（除中国外）的日活跃用户排名第三的移动游戏。Supercell扩大了《荒野乱斗》的开发团队，使得能够创建新的5x5模式，简化的奖励系统和成功的社区活动。《星际战甲》在第一季度通过引入新的快速移动战甲[难以辨认] Prime，实现了总收入的历史新高。

For online advertising, our revenue was RMB 26.5 billion in the quarter, up 26% year-on-year, benefiting from increased engagements in AI-powered ad targeting. Ad spend from all major categories except automotive increased year-on-year, particularly from games, internet services, and consumer goods sectors. During the quarter, we upgraded our adtech platform to help advertisers manage ad campaigns more effectively and we made generative AI-powered ad creation tools available to all advertisers. These initiatives enables advertisers to create ads more efficiently and to deliver better targeting.

在在线广告方面，我们在本季度的收入为 265 亿元人民币，同比增长 26%，受益于 AI 驱动的广告定位带来的参与度增加。除汽车类外，所有主要类别的广告支出均同比增长，尤其是游戏、互联网服务和消费品行业。在本季度，我们升级了我们的广告技术平台，以帮助广告主更有效地管理广告活动，并向所有广告主提供了生成式 AI 驱动的广告创作工具。这些举措使广告主能够更高效地创建广告并提供更好的定位。

For Weixin, video accounts ad revenue grew over 100% year-on-year due to higher video views and click-thru rates. Mini programs ad revenue grew over 40% year-on-year, benefiting among other features from mini games closed loop effect, whereby mini games developers both boost demand, being substantial advertisers themselves, but also creates supply as the mini games provide high CPM rewarded video ad inventory. On content platforms, our long form video ad revenue increased at a double-digit rate year-on-year as popular self-commissioned drama series attracted marketing budgets.

对于微信，视频号广告收入同比增长超过100%，这是由于视频观看量和点击率的提高。小程序广告收入同比增长超过40%，这得益于小程序游戏的闭环效应，小程序游戏开发者既是需求的推动者，本身是大量的广告商，同时也创造了供给，因为小程序游戏提供了高CPM奖励视频广告库存。在内容平台上，我们的长篇视频广告收入同比增长了两位数，因为受欢迎的自制电视剧吸引了营销预算。

Looking at fintech and business services, segment revenue was RMB 52 billion, up 7% year-on-year. Fintech services revenue slowed to a single digit year-on-year growth rate. For payments, commercial payment growth moderated due to slow offline consumption spending. Withdrawal fee revenue decreased year-on-year as consumers are increasingly funding commercial transactions with their Weixin cash balances and placing these cash balances in money market funds rather than withdrawing the cash balances to bank accounts, which triggers the withdrawal fee revenue.

在金融科技和商业服务方面，细分收入为 520 亿元人民币，同比增长 7%。金融科技服务收入的同比增长率放缓至个位数。由于线下消费支出放缓，支付领域的商业支付增长有所减弱。由于消费者越来越多地使用微信现金余额为商业交易提供资金，并将这些现金余额放入货币市场基金，而不是将现金余额提取到银行账户，从而触发提款费用收入，提款费用收入同比下降。

For wealth management, revenue grew robustly year-on-year with rapid increases in the number of users and average fund investments per user, primarily invested in low risk money market funds.

对于财富管理，收入同比增长强劲，用户数量和每个用户的平均基金投资额都有快速增长，主要投资于低风险的货币市场基金。

Turning to business services, revenue grew at a teens rate year-on-year in the first quarter, benefiting from higher cloud services revenue and increased technology service fee contribution due to rising video accounts ecommerce transactions. Business services gross profit more than doubled year-on-year due to increased contributions from higher margin revenue streams plus improved efficiency.

转向商业服务，第一季度收入同比增长了两位数，受益于云服务收入的增加和由于视频账户电子商务交易上升而带来的技术服务费用贡献增加。由于高利润收入来源的贡献增加以及效率的提高，商业服务的毛利润同比增长超过一倍。

Domestic and international clients, especially from the media, entertainment and live streaming industries, are increasingly adopting our integrated audio and video cloud solution, called Tencent Cloud Media Services, which achieved over 50% year-on-year revenue growth. IDC recognized Tencent Cloud media Services as the market leader in its sector for the sixth consecutive year.

国内和国际客户，尤其是来自媒体、娱乐和直播行业的客户，越来越多地采用我们的综合音视频云解决方案——腾讯云媒体服务，该服务实现了超过 50%的年度收入增长。IDC 连续第六年将腾讯云媒体服务认定为其行业的市场领导者。

Among our enterprise SaaS products, in WeCom merchants are increasingly willing to pay for use of customer communication functionality; as a result, WeCom revenue tripled year-on-year. For Tencent Meeting, we’re driving adoption and up-selling among enterprise clients and Tencent Meeting revenue doubled year-on-year. For Hunyuan, the main model achieved significant progress as we have scaled up using a mixture of experts approach, and we’re deploying Hunyuan in more of our services. Today, we announced that we’re making a version of Hunyuan providing text-to-image generative AI available on an open source basis.

在我们的企业SaaS产品中，微信企业版（WeCom）的商家越来越愿意为使用客户沟通功能付费；因此，WeCom的收入同比增长了三倍。对于腾讯会议（Tencent Meeting），我们正在推动企业客户的采用和升级销售，腾讯会议的收入同比增长了一倍。对于混元（Hunyuan），主要模型取得了显著进展，因为我们已经扩大了使用专家方法的规模，并且我们正在将混元部署到我们的更多服务中。今天，我们宣布我们将发布一个提供文本到图像生成AI的混元版本，并以开源的方式提供。

With that, I’ll pass to John.

那么，我将把话传给约翰。

John Lo 约翰·洛

Thank you James. Hi everybody.

谢谢你，詹姆斯。大家好。

For the first quarter of 2024, total revenue was RMB 159.5 billion, up 6% year-on-year. Gross profit was RMB 83.9 billion, up 23% year-on-year. Operating profit was RMB 52.6 billion, up 38% year-on-year. Interest income was RMB 4.2 billion, up 43% year-on-year, driven by growth in cash receipts and high interest yield. Finance costs were RMB 2.8 billion, up 7% year-on-year due to higher interest expenses.

2024 年第一季度，总收入为 1595 亿元人民币，同比增长 6%。毛利润为 839 亿元人民币，同比增长 23%。营业利润为 526 亿元人民币，同比增长 38%。利息收入为 42 亿元人民币，同比增长 43%，主要受现金收入增长和高利息收益的推动。财务成本为 28 亿元人民币，同比增长 7%，由于利息支出增加。

Share of profit of associates and JVs was RMB 2.2 billion, up from profit of RMB 0.1 billion in the same period last year. On a non-IFRS basis, share of profit was RMB 5.5 billion versus loss of RMB 0.1 billion last year, driven by better profitability at certain domestic associates and reduced losses at certain overseas associates.

联营公司和合资企业的利润份额为 22 亿元人民币，较去年同期的 1 亿元人民币利润有所上升。在非国际财务报告准则基础上，利润份额为 55 亿元人民币，而去年则为 10 亿元人民币的亏损，这得益于某些国内联营公司的盈利能力改善以及某些海外联营公司亏损的减少。

Income tax expense rose by 24% year-on-year to RMB 14.1 billion, primarily driven by operating profit growth and higher provision for withholding tax. IFRS net profit attributable to equity holders was RMB 41.9 billion, up 62% year-on-year. Diluted EPS was RMB 4.386, up 66% year-on-year. On non-IFRS financial figures, operating profit was RMB 58.6 billion, up 30% year-on-year. Net profit attributable to equity holders was RMB 50.3 billion, up 54% year-on-year. The difference in year-on-year growth rates between operating profit and net profit was mainly due to non-IFRS share of profits from associates and JVs, which amounted to RMB 5.5 billion this quarter compared to share of loss of RMB 0.1 billion in the same quarter last year.

所得税费用同比增长 24%，达到人民币 141 亿元，主要受营业利润增长和更高的预提税准备金驱动。根据国际财务报告准则（IFRS），归属于股东的净利润为人民币 419 亿元，同比增长 62%。稀释每股收益（EPS）为人民币 4.386，同比增长 66%。在非 IFRS 财务数据中，营业利润为人民币 586 亿元，同比增长 30%。归属于股东的净利润为人民币 503 亿元，同比增长 54%。营业利润和净利润之间的同比增长率差异主要是由于非 IFRS 的联营公司和合资企业的利润份额，本季度为人民币 55 亿元，而去年同期为人民币负 1 亿元。

Diluted EPS was RMB 5.263, up 57% year-on-year, outpacing non-IFRS net profit growth mainly due to reduced share count from share buybacks. For the first quarter of 2024, our weighted average number of shares for calculating diluted EPS decreased by 1.8% year-on-year.

稀释每股收益为人民币 5.263 元，同比增长 57%，主要由于股票回购导致的股份数量减少，超出了非国际财务报告准则净利润的增长。2024 年第一季度，我们用于计算稀释每股收益的加权平均股份数量同比减少了 1.8%。

Moving onto gross margins, overall gross margin was 53%, up seven percentage points year-on-year. By segment, VAS gross margin was 57%, up three percentage points year-on-year. This was due to growth in subscription revenues and increasing high margin mini game platform service fees, and [indiscernible] content cost and operating cost savings.

转向毛利率，整体毛利率为 53%，同比上升七个百分点。按细分市场来看，增值服务毛利率为 57%，同比上升三个百分点。这是由于订阅收入的增长以及高毛利迷你游戏平台服务费用的增加，以及[无法辨识]内容成本和运营成本的节省。

Online advertising gross margin increased to 55%, up 13 percentage points year-on-year, primarily driven by growth in our video accounts and Weixin Search advertising revenues. Fintech and business services gross margin increased to 46%, up 11 percentage points year-on-year. This was driven by higher contribution from high margin wealth management services revenue and ecommerce technology service fees, improved monetization of WeCom and other business services, and increased cost efficiency in our [indiscernible].

在线广告毛利率上升至 55%，同比增长 13 个百分点，主要受视频账户和微信搜索广告收入增长的推动。金融科技和商业服务毛利率上升至 46%，同比增长 11 个百分点。这得益于高毛利财富管理服务收入和电子商务技术服务费用的更高贡献、WeCom 及其他商业服务的货币化改善，以及我们[无法辨识]的成本效率提高。

On first quarter operating and expenses, selling and marketing were RMB 7.5 billion, up 7% year-on-year driven by increased spending on promotion and advertising for new content releases. The total represented 5% of revenues, stable year-on-year. R&D expenses were RMB 15.7 billion, up 3% year-on-year. G&A expenses excluding R&D were RMB 9.1 billion, down 3% year-on-year due to lower staff cost, including share-based compensation expenses and reduced operating lease and office expenses. At quarter end, we had approximately 105,000 employees, down 1% both year-on-year and quarter-on-quarter.

在第一季度的运营和费用中，销售和营销费用为 75 亿元人民币，同比增长 7%，主要受新内容发布的推广和广告支出增加的推动。总额占收入的 5%，同比稳定。研发费用为 157 亿元人民币，同比增长 3%。不包括研发的管理和行政费用为 91 亿元人民币，同比下降 3%，主要由于员工成本降低，包括基于股份的补偿费用以及减少的运营租赁和办公费用。季度末，我们的员工人数约为 105,000 人，同比和环比均下降 1%。

Let’s look at our first quarter non-IFRS margin ratios. Non-IFRS operating margin was 37%, up seven percentage points year-on-year. Non-IFRS net margin was 32%, up 10 percentage points year-on-year.

让我们看看我们第一季度的非国际财务报告准则（非 IFRS）利润率。非 IFRS 营业利润率为 37%，同比上升七个百分点。非 IFRS 净利润率为 32%，同比上升十个百分点。

To conclude, I will highlight some key cash flow and balance sheet metrics. Operating capex was RMB 6.6 billion, up 557% year-on-year from a low base quarter last year, mainly driven by investment in GBUs and servers to support our Hunyuan and AI recommendation algorithms. On a quarter-on-quarter basis, operating capex was down 1%. Non-operating capex was RMB 7.8 billion, up 127% year-on-year due to acquisition of land use rights during the quarter. As a result, total capex was RMB 14.4 billion, up 226% year-on-year.

最后，我将强调一些关键的现金流和资产负债表指标。运营资本支出为 66 亿元人民币，同比去年低基数季度增长 557%，主要是由于对 GPU 和服务器的投资，以支持我们的混元和 AI 推荐算法。从环比来看，运营资本支出下降了 1%。非运营资本支出为 78 亿元人民币，同比增加 127%，主要是由于本季度土地使用权的收购。因此，总资本支出为 144 亿元人民币，同比增加 226%。

Free cash flow was RMB 51.9 billion, largely stable year-on-year or up 52% quarter-on-quarter, primarily due to higher gross receipts from games. Net cash position was RMB 32.5 billion, up 69% year-on-year, reflecting strong free cash generation partially offset by RMB 13.5 billion cash out for share repurchase during the quarter.

自由现金流为人民币 519 亿元，同比基本稳定，环比增长 52%，主要由于游戏收入增加。净现金头寸为人民币 325 亿元，同比增长 69%，反映出强劲的自由现金生成，部分被本季度回购股份支出的人民币 135 亿元所抵消。

Thank you.  谢谢。

Question-and-Answer Session

问答环节

A - Wendy Huang A - 黄文迪

Thank you John. We shall now open the call for questions. If you are dialing in by phone, please press five to raise a question, then press six to un-mute yourself. If you are accessing from the Tencent Meeting or group application, please click the Raise Hand button at the bottom. We will take one main question and up to one follow-up question each time.

谢谢你，约翰。我们现在开始提问环节。如果您是通过电话拨入，请按五提问，然后按六解除静音。如果您是通过腾讯会议或群组应用访问，请点击底部的举手按钮。我们每次将接受一个主要问题和最多一个跟进问题。

The first question comes from Kenneth Fong with UBS.

第一个问题来自瑞银的 Kenneth Fong。

Kenneth Fong 方凯宁

Hi, good evening management. Thanks for taking my question. My first question is on online games. Last quarter, we highlighted one of our key strategies is to rejuvenate our key titles. That is showcased in the robust performance on the Supercell game, the recovery of PUBG. Given our rich IP portfolio and strong experience in executing online games, can management share with us how to think about the potential and growth plan ahead and how we can replicate success to our other IP and titles?

您好，晚上好，管理层。感谢您接受我的提问。我的第一个问题是关于在线游戏的。上个季度，我们强调了我们的关键战略之一是振兴我们的主要游戏标题。这在Supercell游戏的强劲表现和PUBG的复苏中得到了展示。鉴于我们丰富的知识产权组合和在执行在线游戏方面的丰富经验，管理层能否与我们分享如何看待未来的潜力和增长计划，以及我们如何将成功复制到我们的其他IP和游戏上？

I have a follow-up question on the buyback side. Last quarter, we completed at least RMB 100 billion of buybacks last quarter. Given our share price has been going up very meaningfully since last quarter, how should we think about the pace of the buyback? Would it be more share price dependent or any other factor that we should consider? Thank you.

我有一个关于回购方面的后续问题。上个季度，我们完成了至少人民币 1000 亿元的回购。考虑到我们的股价自上个季度以来大幅上涨，我们应该如何看待回购的节奏？这会更依赖于股价，还是我们应该考虑其他因素？谢谢。

James Mitchell 詹姆斯·米切尔

Hi Kenneth, thank you for the questions. Perhaps I’ll take the one on games and Martin on buybacks.

嗨，肯尼斯，谢谢你的问题。也许我会负责游戏的部分，马丁负责回购的部分。

For games, as you observe, we have been in the process of rejuvenating some of our key games, and we believe that process is well underway now and we’re confident in the progress of that process. There’s a couple of learnings that we derive from our experience along this journey. One is that what we classify as evergreen games truly do appear to be capable of growing new shoots and, indeed, rejuvenating themselves as evergreen trees should. A good example would be Brawl Stars, where we cited not only the quadrupling of gross receipts but also the more than doubling of daily active users.

对于游戏，正如你所观察到的，我们一直在进行一些关键游戏的振兴过程，我们认为这个过程现在正在进行中，我们对这个过程的进展充满信心。在这个旅程中，我们有一些经验教训。其中之一是，我们归类为常青游戏的游戏确实似乎能够像常青树一样长出新芽，并且确实能够自我振兴。一个很好的例子是《荒野乱斗》，我们不仅提到了总收入的四倍增长，而且还提到了日活跃用户的翻倍增长。

A second learning is that in the event that a game which we believe should be an evergreen title is stagnating, then the problem is usually not with the nature of the game, it’s with the nature of the team running the game, and we need to make changes to the team and sometimes the changes are change in mindset, sometimes the changes are change in people. What we find is that when we make those changes, then we see positive results flow quite quickly, and if we don’t see the positive results flow, then we make further changes.

第二个教训是，如果我们认为应该成为常青游戏的游戏停滞不前，那么问题通常不在于游戏的本质，而在于管理游戏的团队的本质，我们需要对团队进行调整，有时这些调整是心态上的改变，有时则是人员的变动。我们发现，当我们进行这些调整时，很快就会看到积极的结果，如果我们没有看到积极的结果，我们就会进行进一步的调整。

But the game themselves, these big competitive multi-player games are inherently evergreen, just as key sports such as football, basketball are inherently evergreen. With the right people running the games, then we get the right results.

但这些大型竞争性多人游戏本身就是永恒的，就像足球、篮球等关键运动本质上也是永恒的。只要有合适的人来运营这些游戏，我们就能得到正确的结果。

Martin Lau 马丁·刘

In terms of the buyback, we have committed to buying back at least HK 100 billion of our stock as we announced last time, and since then the buyback has been done on a pretty consistent basis. At this point in time, I don’t think the buyback is share price dependent because--it is true that the share price has come up quite a bit, but if you look at the share price when it was announced, it was pretty incredible, and so even today we felt the share price is still attractive, given the fact that our profit has increased quite substantially, given the fact that the value of our investment portfolio has been increasing, and also given the fact that our long term prospect is actually very good. That’s why we’ll continue to pursue our share buyback at this point in time.

在回购方面，我们承诺至少回购 1000 亿港元的股票，正如我们上次所宣布的，自那时以来，回购一直在相当稳定地进行。目前，我认为回购并不依赖于股价——确实，股价已经上涨了很多，但如果你看看宣布时的股价，那是相当惊人的，因此即使在今天，我们也认为股价仍然具有吸引力，考虑到我们的利润大幅增加，投资组合的价值也在上升，并且我们的长期前景实际上非常好。这就是为什么我们在此时会继续进行股票回购。

Kenneth Fong 方凯宁

Thank you, and congrats on the very strong set of results.

谢谢你，祝贺你取得了非常强劲的成绩。

Martin Lau 马丁·刘

Thank you. 谢谢。

Wendy Huang 黄文迪

Thank you Kenneth. Next, we will move to Thomas Chong from Jefferies.

谢谢你，Kenneth。接下来，我们将请 Jefferies 的 Thomas Chong 发言。

Thomas Chong 汤姆斯·张

Hi, good evening. Thanks management for taking my question, and congratulations on a strong set of results.

嗨，晚上好。感谢管理层回答我的问题，祝贺你们取得了强劲的业绩。

My first question is about our advertising business. We’ve seen a very good set of momentum in the first quarter. How should we think about our market share gain story and the adtech upgrade on the back of macro recovery? How are we actually seeing the ad sentiment as we come to June 18, and on video accounts, how should we envision the advertising growth momentum over the next few years and the strength of live streaming ecommerce GMB growth to drive our ad revenue?

我的首个问题是关于我们的广告业务。我们在第一季度观察到了非常良好的增长势头。我们应该如何思考我们在宏观经济复苏背景下市场份额增长的故事以及广告技术升级的影响？随着6月18日的临近，我们实际上是如何看待广告情绪的，并且在视频账户方面，未来几年我们应该如何设想广告增长的势头，以及直播电商GMB增长的强度如何推动我们的广告收入？

My second question is about our high quality growth strategy. Given our high quality growth strategy standout and our strong earnings growth momentum, how should we expect our earnings growth and margin trend over the next three years? Should we expect there might be some point that we need to go back to more investment? In terms of opex, how should we think about S&M expenses over the next few quarters given that we have more content and new game releases? Thank you.

我的第二个问题是关于我们的高质量增长战略。鉴于我们的高质量增长战略的突出表现和强劲的盈利增长势头，我们应该如何预期未来三年的盈利增长和利润率趋势？我们是否应该预期在某个时刻需要回到更多的投资？在运营支出方面，考虑到我们有更多的内容和新游戏发布，我们应该如何看待接下来几个季度的销售和市场费用？谢谢。

James Mitchell 詹姆斯·米切尔

Hi Thomas, so on your first question around advertising, I’d say that as you would expect, given the economy is mixed, advertiser sentiment is also quite mixed, and it’s certainly a challenging environment in which to sell advertising. The first quarter for us is a slightly unusual quarter because it’s a small quarter for advertising due to the Chinese New Year effect, and so sometimes the accelerations or the decelerations get magnified as a result. We would expect our advertising growth to be less rapid in subsequent quarters of the year than it was in the first quarter, more similar to consensus expectations for our advertising revenue growth for the rest of the year.

嗨，托马斯，关于你第一个问题，关于广告，我想说的是，正如你所预期的，由于经济形势复杂，广告商的情绪也相当复杂，确实是一个销售广告的挑战性环境。对我们来说，第一季度是一个稍微不寻常的季度，因为由于春节的影响，广告的规模较小，因此有时加速或减速的情况会因此被放大。我们预计在今年的后续季度，广告增长将比第一季度缓慢，更多地与我们对全年广告收入增长的共识预期相似。

But that said, we think that we are in a good position to continue taking share of the market at a rapid rate, given we’re very early in increasing our ad load on video accounts, which is currently around one quarter of the ad loads of our major competitors with short video products, and also we’re early in capturing the benefits of deploying AI to our adtech stack, and we think that we will--we are benefiting and will continue to benefit disproportionately from applying AI to our adtech, because historically as a social media platform, our click-thru rates were low, and so starting from that lower base, we have seen we can double or triple click-thru rates in a way that’s not possible for ad services that are starting from much higher click-thru rates.

即便如此，我们认为我们有很好的位置继续以快速的速度占领市场份额，考虑到我们在视频账户上增加广告负载还处于非常早期的阶段，目前大约是我们主要竞争对手短视频产品广告负载的四分之一，并且我们在将AI应用到我们广告技术栈中也处于早期阶段。我们认为，我们将——我们正在受益，并且将继续从将AI应用到我们广告技术中不成比例地受益，因为从历史上看，作为一个社交媒体平台，我们的点击率很低，所以从一个较低的基础开始，我们已经看到我们可以将点击率翻倍或三倍，这是那些从更高的点击率开始的广告服务所不可能的。

Overall, we remain quite constructive on our ability to grow our advertising revenue at a decent rate, and we believe we’ll also continue to take market share irrespective of the overall advertising market conditions. Thank you.

总体而言，我们对以合理的速度增长广告收入的能力持相当积极的态度，并且我们相信，无论整体广告市场状况如何，我们也将继续获得市场份额。谢谢。

Martin Lau 马丁·刘

In terms of the high quality growth strategy, I do want to clarify that we have always been pursuing a strategy and philosophy of investing in the platform and investing in our user experience and products, and monetize on a gradual basis, so the fact that we can now unleash a lot of these growth drivers is not because we are milking our platform or harvesting our platform, it’s because of the fact that we have always been investing in our platform and this is a continuous action. I think that’s actually very important.

关于高质量增长战略，我确实想要阐明，我们始终在追求一种策略和理念，即投资于平台、投资于用户体验和产品，并逐步实现货币化。因此，我们现在能够释放这些增长动力，并不是因为我们正在压榨或收割我们的平台，而是因为我们一直在对我们的平台进行投资，这是一种持续的行动。我认为这实际上非常重要。

The reason the high quality growth drivers become clearer is because we have actually pruned our business of the lower quality products and services and the distractions, if you will, in our businesses, so that we can actually focus on our core platforms and, at the same time, make the growth drivers more obvious and apparent. We do believe that these growth drivers, be it video accounts advertising or Weixin Search advertising, or value-added services on top of our payment platform, and over time the ecommerce service fees, that these have a pretty long runway going forward.

高质量增长的驱动因素之所以变得更加明显，是因为我们实际上已经对我们的业务进行了精简，去除了那些质量较低的产品和服务以及业务中的干扰因素，以便我们能够真正专注于我们的核心平台，同时，也使得增长驱动因素更加明显和突出。我们确实相信，无论是视频账户广告、微信搜索广告，还是我们支付平台之上的增值服务，以及随着时间推移的电商服务费，这些都将拥有相当长的增长前景。

We have always also been investing in new areas that can serve as growth drivers for the future, including AI, including new games, including Weixin ecommerce and SaaS products, just to name a few. We felt over time, our gross margin should actually continue to benefit from the continued increase of these high quality revenues and that has a pretty long runway.

我们一直在投资可以作为未来增长驱动力的新领域，包括人工智能、新游戏、微信电商和 SaaS 产品，仅举几例。我们认为，随着时间的推移，我们的毛利率实际上应该会继续受益于这些高质量收入的持续增长，并且这有相当长的增长空间。

Now in terms of sales and marketing, I’ll pass it to John to answer that question.

现在在销售和市场方面，我将把这个问题交给约翰来回答。

John Lo 约翰·洛

The selling and marketing expenses grew by 17% year-on-year, and we expect that the year-on-year growth will be at a lower rate, somewhere from low to mid-teens in 2024. Having said that, promotional advertising spend is something that we can adjust up and down dynamically according to our needs, and if we identify some services or products that we need to invest, we will definitely do it; but with the cost optimization culture and mechanism in mind, we would definitely assess that vigorously.

销售和市场营销费用同比增长了17%，我们预计2024年的同比增长率将会降低，预计在低至中等的十位数范围内。尽管如此，推广性广告支出是我们可以根据需求进行动态调整的，如果我们发现需要对某些服务或产品进行投资，我们绝对会这样做；但是，我们会在考虑到成本优化的文化和机制的情况下，绝对会进行严格的评估。

Wendy Huang 黄文迪

Thank you. Next, we will take a question from Alicia Yap from Citigroup.

谢谢。接下来，我们将接听来自花旗集团的 Alicia Yap 的问题。

Alicia Yap 阿莉西亚·叶

Hi. Good evening management. Thanks for taking my questions. Congrats on the solid quarter.

嗨。晚上好，管理层。感谢您回答我的问题。恭喜你们取得了稳健的季度业绩。

Two questions. First is on the gaming. With the positive growth of HoK, Peacekeeper, and also several games also achieving record high growth in receipts this quarter, the strong growth in the deferred should also bode well for the upcoming revenue growth in the coming quarters. Is there any outstanding adjustment that is still ongoing, or are there any risks or uncertainties on the gaming business that we need to be concerned or worried about?

两个问题。首先是关于游戏方面。鉴于《王者荣耀》、《和平精英》以及本季度几款游戏在收入上实现了创纪录的高增长，递延收入的强劲增长也应该为未来几个季度的收入增长带来积极的预示。是否有任何仍在进行中的未完成调整，或者在我们的游戏业务中是否存在任何我们需要关注或担心的风险或不确定性？

Second question is wondering if there’s any chance on the games application or the digital content application by Tencent or other developers in China could seen an improvement in the App Store revenue-sharing arrangement in the coming quarter that might support further uptick in the gross margin for the VAS. Thank you.

第二个问题是关于，腾讯或其他中国开发者的游戏应用程序或数字内容应用程序是否有可能在接下来的季度中看到应用商店收入分成安排的改善，这可能会进一步支持增值服务（VAS）毛利率的提升。谢谢。

James Mitchell 詹姆斯·米切尔

Hi Alicia, thank you for your questions and for the congratulations.

嗨，阿莉西亚，谢谢你的提问和祝贺。

On the first question around the games, yes, the deferred revenue growth is a positive leading indicator for game reported revenue growth. No, we don’t see particular risks to call out. We believe with the structural changes we have made, we have somewhat de-risked the game business, and therefore looking forward, our focus will be on execution of the new strategy for the existing games and successfully launching the several major new games we have identified in our pipeline.

关于第一个问题，围绕游戏方面，的确，递延收入的增长是游戏报告收入增长的一个积极先行指标。不，我们并没有看到需要特别指出的风险。我们相信，通过我们所做的结构性变革，我们已经在一定程度上降低了游戏业务的风险，因此，展望未来，我们的关注点将放在执行现有游戏的新战略上，并成功推出我们在产品线中确定的几款重要新游戏。

In terms of your second question around App Store revenue-sharing ratios, we do believe that App Store is currently over-earning at the expense of app providers, including ourselves, both in China and even more so internationally. But for the purposes of our business plan, we assume that those revenue-sharing arrangements remain as they are today. Thank you.

关于您的第二个问题，即应用商店的收入分成比例，我们确实认为应用商店目前正以牺牲应用提供商的利益为代价过度盈利，包括我们自己，无论是在中国还是国际市场。但就我们的业务计划而言，我们假设这些收入分成的安排将保持目前的状态。谢谢。

Wendy Huang 黄文迪

Thank you Alicia. We will take the next question from Gary Yu from Morgan Stanley. Gary, your line is open.

谢谢你，Alicia。我们将接下来的问题交给摩根士丹利的 Gary Yu。Gary，你的电话已经接通。

Gary Yu

Thank you. Thank you management for taking my question, and congratulations on a solid set of results.

谢谢。感谢管理层回答我的问题，祝贺你们取得了稳健的业绩。

I have a follow-up question on the game business, and thank you for the earlier comment regarding what we learned from the evergreen games. On the same note, what have we learned in terms of whenever we see a potential new games launch, what’s the management strategy to try to cultivate games into a next evergreen game. I think particularly on the domestic side, we have DnF mobile coming up, and then on the international side we may have more games coming up, so how should we look at the strategy for new games launch going forward?

我对游戏业务有一个后续问题，感谢您之前关于我们从常青游戏中学到的内容的评论。在同样的背景下，当我们看到潜在的新游戏发布时，我们学到了什么？管理策略是什么，以尝试将游戏培养成下一个常青游戏。我认为特别是在国内，我们有《地下城与勇士》移动版即将推出，而在国际方面，我们可能会有更多游戏推出，那么我们应该如何看待未来新游戏发布的策略？

My second question is also a follow-up question on margin upside. Across these business segments, how should we look at the sustainable margin level going forward, given it seems like the margin upside is across the board, across business segments, so how should we look at the relative margin trend going forward for different segments? Thank you.

我的第二个问题也是关于利润空间的后续问题。在这些业务部门中，考虑到利润空间似乎普遍存在，我们应该如何看待未来可持续的利润水平？对于不同的业务部门，我们应该如何看待未来的相对利润趋势？谢谢。

James Mitchell 詹姆斯·米切尔

Yes, so on your question about new games, the game industry is a challenging industry for new games because as the evergreen games become better and better, then every new game is competing not only against other new games released around the same time but also against every existing game, or the best of all the existing games that have survived and evolved to become evergreen games. That’s true on PC, it’s true on mobile, it’s true on console, it’s true in China, it’s increasingly true internationally as well, where you can see the time spent on the big consoles is more and more centered around the gigantic evergreen games, like Fortnite, like Call of Duty.

是的，关于你提到的新游戏，游戏行业对于新游戏来说是一个具有挑战性的行业，因为随着常青游戏变得越来越好，每个新游戏不仅要与同一时间发布的其他新游戏竞争，还要与所有现有游戏竞争，或者与那些幸存并演变成常青游戏的最佳现有游戏竞争。这在 PC 上是如此，在移动设备上也是如此，在主机上也是如此，在中国也是如此，国际上越来越如此，你可以看到在大型主机上花费的时间越来越集中在那些巨大的常青游戏上，比如《堡垒之夜》和《使命召唤》。

Our response to that is to continually raise the bar on the new games we actually bring to market and focus on fewer but bigger and better new games. Not every new game we bring to market has a high probability of becoming evergreen - there are some new games we bring to market which are more consciously content-driven games which have a cycle associated with them, and that’s fine, they can still be successful, profitable games that players enjoy and love. But for those games that we do aspire to the status of evergreen games, then the metrics we focus on are not the metrics that you may find most visible externally, such as the hype, the excitement, downloads, the first day revenues.

我们的回应是不断提高我们实际推出市场的新游戏的标准，专注于更少但更大更好的新游戏。并不是我们推出的每一款新游戏都有很高的可能性成为常青游戏——我们推出的一些新游戏更是有意识地以内容为驱动，这些游戏有其相关的周期，这没问题，它们仍然可以是成功的、盈利的、玩家喜欢和热爱的游戏。但对于那些我们确实渴望成为常青游戏的游戏，我们关注的指标并不是你可能在外部看到的最明显的指标，比如炒作、兴奋、下载量、首日收入。

Rather, we look at metrics of player engagement, such as the retention rates, and it is those leading indicators that tell us when a game is a new game that has a moderate launch and will fade away after a year or two, versus when there’s a new game that also has a moderate launch but goes from strength to strength, which is what we have seen with Fight for the Golden Spatula, that as we mentioned despite a fairly subdued start is now the third biggest mobile game in China behind two of our other games. Those are some of the thoughts we have and policies we have around new game launches.

我们更关注玩家参与度的指标，例如留存率，正是这些先行指标向我们揭示，一个新游戏如果是以中等规模推出并在一两年后逐渐淡出市场，与那些虽然也是中等规模推出但却越来越受欢迎的新游戏之间的区别。《金铲之战》正是后者的典型例子，尽管起初相对低调，但现在已经成为中国第三大手机游戏，仅次于我们的另外两款游戏。这些就是我们围绕新游戏发布所持有的一些思考和政策。

Gary, on your question around the sustainability of margins for each segment, it’s fairly – you know, a number of factors are at play, including competitive conditions, macroeconomic conditions, seasonality, but I think the most important factor over the longer term is the mix of products and businesses within that segment, and so you can see that all three of our big segments, but particularly for advertising and fintech and business services, there’s been a positive mix shift underway away from lower margin revenue streams and toward higher margin revenue streams. As Martin articulated, we see those positive mix shifts continuing for years to come for all three of our segments, and therefore we believe that both the margins where they are and also the upward margin trends are sustainable.

关于每个部门利润率的可持续性问题，情况相当复杂——你知道，有许多因素在起作用，包括竞争状况、宏观经济状况、季节性因素等。但我认为从长远来看，最重要的因素是该部门内产品和业务的组合。因此，你可以看到我们三个主要部门，尤其是广告、金融科技和商业服务部门，正在进行积极的组合转变，从较低利润的收入流向较高利润的收入流。正如马丁所表达的，我们预计这些积极的组合转变在未来几年将继续对我们所有三个部门产生影响，因此我们相信目前的利润率以及利润率上升的趋势是可持续的。

Wendy Huang 黄文迪

Thank you Gary. We will take the next question from Anna Jung [ph] from [Indiscernible] Securities.

谢谢你，Gary。我们将接下来的问题交给来自[无法辨认]证券的 Anna Jung [ph]。

Anna Jung 安娜·荣

Hi management, thanks for taking my question. My name is Anna Jung from [indiscernible], and it’s actually my first time to ask a question. The first question I want to ask management is, we saw Meta improve their Advantage Plus advertising tool based on the large language models, and we wonder if management can share more on how Tencent plans to use AI to improve the ad business. Also, in the future, do you think under the AI development, our competitors such as [ByteDance] or Alibaba, they also apply AI to their ad business, so how do you think that AI will drive the ad market shares to change in the longer term? This is my first question. Thank you.

嗨，管理层，谢谢您回答我的问题。我叫安娜·郑，来自[无法辨认]，这是我第一次提问。我想问管理层的第一个问题是，我们看到 Meta 基于大型语言模型改进了他们的 Advantage Plus 广告工具，我们想知道管理层能否分享更多关于腾讯如何计划利用 AI 来改善广告业务的信息。此外，您认为在未来，随着 AI 的发展，我们的竞争对手如[字节跳动]或阿里巴巴，他们也会将 AI 应用于他们的广告业务，那么您认为 AI 将如何在长期内推动广告市场份额的变化？这是我的第一个问题。谢谢。

James Mitchell 詹姆斯·米切尔

Welcome to joining our Q&A, Anna. I’ll take the first question, although Martin may supplement. We believe that tools like Advantage Plus are extremely important in terms of helping social media companies, whether it’s Meta or ourselves, grow into being all that they can be on the advertising front, because they simplify and automate the advertising buying and advertising targeting processes so that the social media companies can deliver experiences to advertisers that are more competitive with those that had already been delivered by search engines and by ecommerce platforms. But with the advantage that the social media platforms have much greater time spent, user engagement than search engines or ecommerce platforms, and so to the second part of your question around--a number of competitors are obviously applying AI as well, and we believe that all of them will benefit from AI too, but we think that the biggest beneficiaries will be those companies, of which we are one, that have very substantial under-monetized time spent and are now able to monetize that time spent more effectively by deploying AI, because the deployment of AI enables an upward structural shift in click-thru rates, and that shift is most pronounced for those inventories where the click-thru rates were lower to begin with, such as the social media inventory.

欢迎加入我们的问答，安娜。我将回答第一个问题，尽管马丁可能会补充。我们相信像 Advantage Plus 这样的工具在帮助社交媒体公司（无论是 Meta 还是我们自己）在广告方面实现其潜力方面是极其重要的，因为它们简化和自动化了广告购买和广告定位的过程，使社交媒体公司能够为广告客户提供更具竞争力的体验，这些体验与搜索引擎和电子商务平台已经提供的体验相媲美。 但社交媒体平台的优势在于用户在这些平台上花费的时间和参与度远高于搜索引擎或电子商务平台。因此，针对您问题的第二部分——显然有许多竞争对手也在应用人工智能，我们相信他们都将从人工智能中受益，但我们认为最大的受益者将是那些拥有大量未充分货币化的用户时间的公司，而我们正是其中之一。现在，通过部署人工智能，这些公司能够更有效地货币化这些时间，因为人工智能的部署使得点击率的结构性上升成为可能，而这种变化在点击率本来就较低的库存中最为明显，例如社交媒体库存。

Those tools also allow advertisers who previously were able to create advertisements for search, which are text in nature, but not to create advertisements for social media, which are image and video in nature, to now use generative-AI to create advertisements for social media. In general, we think there will be a reallocation of advertising spend toward those services which have high time spent, high engagement, and are now able to deliver increasing click-thru rates, increasing transaction volume more commensurate with the time spent and engagement superiority. Thank you.

这些工具还允许以前能够为搜索创建文本广告的广告商，现在可以使用生成式人工智能为社交媒体创建广告，这些广告以图像和视频为主。一般来说，我们认为广告支出将重新分配到那些花费时间长、参与度高的服务上，这些服务现在能够提供更高的点击率和更高的交易量，这与花费的时间和参与度的优势相符。谢谢。

Anna Jung 安娜·荣

Thank you so much. I do have a follow-up question towards that. Recently I noticed actually Meta, they announced their – the Meta AI function and the rollout to automated products such as WhatsApp and Facebook Messenger, etc. Do you think that in the future, Tencent, because we have such a great network product environment, will we have a similar product like Meta AI?

非常感谢。我确实有一个后续问题。最近我注意到 Meta 宣布了他们的 Meta AI 功能，并将其推广到 WhatsApp 和 Facebook Messenger 等自动化产品。您认为在未来，腾讯会因为我们拥有如此优秀的网络产品环境，而推出类似 Meta AI 的产品吗？

Martin Lau 马丁·刘

I think we do believe that with the right product, then our WeChat platform and our other products, which have a lot of user engagement, will be great distribution channels for these AI products, but I think at this point in time, everybody is actually trying out different products that may work. No one has really come up with a killer application yet, with the exception of probably OpenAI, [the question and answer from it], so I think that you should be confident that we have been developing the technology and we are having a best-in-class technology in Hunyuan, and at the same time we are actively creating and testing out different products to see what would make sense for our existing products, and as the time comes, these products will be rolled out on our platform.

我们确实相信，有了合适的产品，我们的微信平台和其他拥有众多用户参与的产品将成为这些AI产品的极佳分销渠道。但我认为在目前这个阶段，每个人都在尝试可能有效的不同产品。除了OpenAI可能已经推出的杀手级应用[它的问题和答案]之外，还没有人真正想出一个杀手级应用。因此，你应该对我们一直在开发技术，并且我们在混元拥有一流的技术感到有信心，同时我们也在积极创造和测试不同的产品，看看哪些对我们现有产品有意义，时机成熟时，这些产品将在我们的平台上推出。

Anna Jung 安娜·荣

I see, thank you so much. I’m sorry, can I just have one more additional question, because we are really excited for Tencent, and recently there’s--

我明白了，非常感谢。对不起，我能再问一个额外的问题吗？因为我们对腾讯真的很兴奋，最近有——

Wendy Huang 黄文迪

I’m sorry, in the interests of time, we need to save time for others--

抱歉，出于时间考虑，我们需要为其他人节省时间——

Anna Jung 安娜·荣

Okay, thank you. All right.

好的，谢谢。好的。

Wendy Huang 黄文迪

Only two for each analyst.

每个分析师仅两个。

Anna Jung 安娜·荣

Okay, thank you. 好的，谢谢。

Wendy Huang 黄文迪

We will take the next question from John Choi from Daiwa.

我们将从大和的 John Choi 那里提取下一个问题。

John Choi 约翰·崔

Hey, thanks for taking my question, and congratulations on a great set of results. I have a question about your business services and cloud. I realize that some of your new business at WeCom revenue tripled, Tencent Meeting also doubled. Are we seeing more of an acceleration trend in terms of adapting our services and in terms of, you know, given that cloud business is also very sensitive to macro conditions, are your customers now opening up or more warmed up on using our services and as a result, hopefully we should see this trend accelerated towards the remaining part of the year?

嘿，谢谢你回答我的问题，祝贺你们取得了出色的成绩。我有一个关于你们的商业服务和云计算的问题。我注意到你们在 WeCom 的新业务收入增长了三倍，腾讯会议的收入也翻了一番。我们是否看到在适应我们的服务方面有更多的加速趋势？考虑到云业务对宏观经济条件非常敏感，你们的客户现在是否更愿意使用我们的服务？因此，希望我们能看到这一趋势在今年剩余时间内加速发展。

I have a quick follow-up question on your wealth management. I think this has been one of the key drivers of your growth of fintech services. Can you elaborate a bit more about our strategy here, where we need to invest and what kind of further areas in terms of margins where we could benefit from this part of the business, but also what kind of investment that is required to further cultivate further development here? Thank you.

您关于我们的财富管理有一个快速的后续问题。我认为这是推动我们金融科技服务增长的关键因素之一。您能否进一步阐述我们的策略，我们需要在哪些领域进行投资，以及在利润率方面我们还能从这部分业务中获益的其他领域，同时还需要进行哪些投资以进一步促进这里的发展？谢谢。

Martin Lau 马丁·刘

Well, in terms of SaaS, I think what we have seen is our initial success in monetizing these products, which we have been offering as a free service for a long time, and that’s actually off a relative low base, so I think we look at it more as a validation, an early validation of the fact that we can get paid for some SaaS services in China. We really started from a base case of enterprises are not paying for software, which is very different from established markets like the U.S., and we are starting to monetize some value-added services offered to enterprises. But I think this is still early stage, this is still not a big amount of money that we’re talking about compared to what enterprise software has been able to achieve in the U.S., and I think it will continue to be a very long way for us to grow such revenue.

在 SaaS 方面，我认为我们所看到的是我们在将这些长期以来作为免费服务提供的产品货币化方面的初步成功，而这实际上是基于相对较低的基础，因此我认为我们更看重的是对这一事实的验证，即我们可以在中国为一些 SaaS 服务收费。我们确实是从企业不为软件付费的基础案例开始的，这与美国等成熟市场非常不同，我们开始对企业提供的一些增值服务进行货币化。但我认为这仍然处于早期阶段，与美国企业软件所能实现的相比，我们谈论的金额仍然不大，我认为我们在增长这部分收入的道路上仍然任重道远。

I don’t think it’s an acceleration of monetization, it’s more of a validation of the initial case, and from that point on we would grow it consistently, but we haven’t really reached the inflection point yet. But we’ll continue to invest in these SaaS services because we felt this is a great service in itself, it’s actually providing great connection for us with the enterprise customers, which we can cross-sell other of our cloud and enterprise services, and at the same time we felt at some point in time, maybe in not the very near future, that the inflection point would come, and we want to be the most competitive and leading player at the time the inflection point comes.

我认为这并不是货币化的加速，而是对最初案例的验证，从那时起我们会持续增长，但我们还没有真正达到拐点。不过，我们会继续投资这些 SaaS 服务，因为我们觉得这本身就是一项很好的服务，它实际上为我们与企业客户提供了很好的连接，我们可以交叉销售其他云和企业服务。同时，我们觉得在某个时刻，也许不是很近的未来，拐点会到来，我们希望在拐点到来时成为最具竞争力和领先的参与者。

Now in terms of the wealth management services, it’s mainly our customers putting their money into money market funds, which we offered alongside with fund management companies, so instead of our customers withdrawing the money into their bank accounts or spending the money, they actually put this money in money market funds, and we have seen an increasing trend around that partly because of the fact that there are many more use cases within our payment platform, so that people are getting used to putting more money within the platform, and partly because there is a reduced willingness for consumers to spend, so they actually save more rather than spend more.

在财富管理服务方面，主要是我们的客户将资金投入货币市场基金，这些基金是我们与基金管理公司一起提供的。因此，客户并没有将钱提取到他们的银行账户或消费，而是将这笔钱放入货币市场基金中。我们看到这一趋势在增加，部分原因是我们的支付平台上有更多的使用案例，使得人们习惯于在平台内存放更多资金；另一方面，消费者的消费意愿降低，因此他们实际上是更多地储蓄而不是消费。

I think on this front, what we want to do is continue to build up our payment platform so that people are comfortable and trusting us with more of their wealth, and they can more use cases so that they can use it for different purposes, that would increase the propensity for people to park their money with us, and so we’ll continue to work with more fund management companies so that they can offer good money market, as well as other wealth management products and services to our customers. But at the same time, we also want to make sure that we invest heavily in risk management, so that we really have a very close look and watch over the safety of the wealth for our customers. All these things are being pursued at the same time. If we can do all these, we believe this service will continue to grow on a consistent basis.

我认为在这方面，我们想要做的是继续建设我们的支付平台，以便人们能够放心地将更多财富交给我们，并且能够有更多的使用案例，以便他们可以用于不同的目的，这将增加人们将资金存放在我们这里的倾向。因此，我们将继续与更多的基金管理公司合作，以便他们能够为我们的客户提供良好的货币市场以及其他财富管理产品和服务。但与此同时，我们也希望确保在风险管理方面进行大量投资，以便我们能够非常仔细地关注和监控客户财富的安全。所有这些事情都是同时进行的。如果我们能够做到这些，我们相信这项服务将持续稳定地增长。

Wendy Huang 黄文迪

We will take the next question from Charlene Liu from HSBC. Charlene, your line is open. Charlene, can you hear us?

我们将接下来的问题交给来自汇丰银行的 Charlene Liu。Charlene，您的电话已接通。Charlene，您能听到我们吗？

Okay, maybe we will move to the next question, to Ronald Keung from Goldman Sachs.

好的，也许我们可以进入下一个问题，问问来自高盛的罗纳德·邱。

Ronald Keung 罗纳德·邱

Thank you Wendy, and thank you Pony, Martin, James and John for the sharing.

谢谢 Wendy，也谢谢 Pony、Martin、James 和 John 的分享。

I have two questions. One is I asked about the video accounts and mini program last year on ecommerce, so I want to hear, where do we see we are innovating most in terms of adtech? We’ve read about--you’ve talked about adtech upgrades, so will we leverage video accounts, live streaming and mini program, maybe on an ROI-based ad products? Then I have a follow-up question.

我有两个问题。第一个是我去年在电子商务方面询问过视频账号和小程序，所以我想听听，我们在哪些方面看到广告技术的创新最多？我们已经读到——你谈到了广告技术的升级，那么我们是否会利用视频账号、直播和小程序，也许在基于投资回报率的广告产品上？然后我有一个后续问题。

James Mitchell 詹姆斯·米切尔

Hi Ronald. On adtech, we’re innovating around the process of targeting the ads using artificial intelligence. We’re innovating around helping advertisers manage their advertising campaigns, and then most recently we have been--we are now deploying Hunyuan to facilitate advertisers creating their advertising content, so those are three areas where we’re driving innovation that are contributing to the rapid revenue growth you’re seeing for our advertising business.

您好，罗纳德。在广告技术方面，我们正在利用人工智能创新广告定位过程。我们正在创新帮助广告商管理他们的广告活动，而且最近我们已经在——我们现在正在部署混元来协助广告商创造他们的广告内容，这些是我们正在推动创新的三个领域，它们有助于促进您所看到的我们广告业务的快速收入增长。

Ronald Keung 罗纳德·邱

Okay, and then my follow-up question is on our investment portfolio. Given it’s very sizeable, nearly US $130 billion in value, do we have any thinking on consistent or any distribution policies after the JV and Meituan distributions in the past? I’m thinking about any predictable policies so that the market will more actively value this part of the value, given the substantial market value within Tencent. Thank you.

好的，我的后续问题是关于我们的投资组合。考虑到它的规模非常庞大，价值接近 1300 亿美元，我们是否有关于合资企业和美团过去分配后的持续或任何分配政策的想法？我在考虑任何可预测的政策，以便市场能够更积极地评估腾讯内部这一部分的价值。谢谢。

James Mitchell 詹姆斯·米切尔

On that front, we have been working with some of our investee companies, and many of them have been working unprompted by themselves to enhance their profitability, and so if you look at the non-IFRS associate income that we reported this quarter of a little over RMB 5 billion, that’s up very sharply year-on-year and it annualizes to a number in the 20s of billions renminbi. To the extent that investors are valuing Tencent’s overall earnings at a certain multiple, then implicitly they’re now valuing our investment portfolio at several hundred billion renminbi.

在这方面，我们一直在与一些被投资公司合作，其中许多公司在没有外部推动的情况下，自发地努力提高盈利能力。因此，如果你查看我们本季度报告的非国际财务报告准则（non-IFRS）联营公司收入，略超过 50 亿元人民币，这比去年大幅增长，年化后达到数百亿元人民币。如果投资者以某个倍数来评估腾讯的整体收益，那么隐含地，他们现在也在以数千亿元人民币来评估我们的投资组合。

There is still a gap between that implicit valuation through our multiple and the associate income contributing to our multiple of several hundred billion renminbi, versus the intrinsic value or the market value of the portfolio, which is substantially higher, but as the associates--you know, as companies like Pinduoduo become steadily more profitable, then more and more that gap will narrow itself as the profitability of the associates gets directly reflected in our own net income.

通过我们的多个隐含估值与为我们数百亿人民币的多个贡献的关联收入之间仍然存在差距，而投资组合的内在价值或市场价值则高得多。但是随着关联公司——你知道，像拼多多这样的公司变得越来越盈利，这个差距将会逐渐缩小，因为关联公司的盈利能力将直接反映在我们的净收入中。

Martin Lau 马丁·刘

At this point in time, we don’t really have a plan to distribute any stock for now. As a matter of fact, you can see in the past few years, we have been investing most of our cash flow into our investment portfolio, and that’s at a time when the market was seeing very fast growth and there were new companies being formed and grew to very large size, and as a result, we actually benefited a lot from investing in these companies. At the same time, the investment also helped us a lot in terms of building ecosystems on our core platform, so if you look at, for example games, we have been able to invest in a lot of game studios, which help us to get access to international markets as well as get a hold of a lot of evergreen and large titles. In the music industry, for example, we have invested in Spotify and also upstream in order for us to establish a very strong position for TME in China. On the payment side, we have actually invested in companies which actually contributed to a lot of use cases.

目前，我们并没有计划分配任何股票。实际上，正如你在过去几年所见，我们一直在将大部分现金流投资于我们的投资组合。那是在市场经历快速增长，新公司不断成立并迅速成长为大型企业的时候。因此，我们实际上从投资这些公司中获益良多。同时，这些投资在构建我们核心平台的生态系统方面也给我们带来了巨大的帮助。例如，在游戏领域，我们已经投资了许多游戏工作室，这帮助我们进入了国际市场，并获得了大量常青和大型游戏标题。在音乐产业中，例如，我们投资了Spotify，并向上游投资，以便在中国为TME确立了非常强大的地位。在支付领域，我们实际上投资了一些公司，这些公司为许多用例做出了重大贡献。

Both strategically and financially, the investment portfolio has actually generated a lot of return for the shareholders, but now it has reached a very big size and some of the companies, as it matures, we actually distribute, and now given the size of the portfolio, we don’t actually envision we’re going to have to put additional money into it. If we need to pursue new initiatives, we can actually recycle some of the investments within the portfolio, so the contribution to the shareholder value is that the free cash flow of the company can actually be used for shareholder enhancing activities, such as dividend paying and share buyback. That’s the way we think about it.

从战略和财务角度来看，投资组合实际上为股东创造了很多回报，但现在它已经达到了一个非常大的规模，随着一些公司的成熟，我们实际上会进行分配。考虑到投资组合的规模，我们并不设想需要再投入额外资金。如果我们需要追求新的举措，实际上可以在投资组合内回收一些投资，因此对股东价值的贡献在于公司的自由现金流可以用于提升股东价值的活动，例如支付股息和股票回购。这就是我们的思考方式。

Ronald Keung 罗纳德·邱

Got it. Thank you Martin.

明白了。谢谢你，马丁。

Wendy Huang 黄文迪

Thank you Ronald. We have successfully reconnected with Charlene Liu from HSBC. Charlene, your line is open.

谢谢你，罗纳德。我们已经成功与汇丰银行的刘 Charlene 重新联系。Charlene，你的线路是开放的。

Charlene Liu 刘查琳

Thank you so much, Wendy. Really appreciate the opportunity.

非常感谢你，温迪。真的很感激这个机会。

I have two questions. I think first [indiscernible] application of Hunyuan, management has--

我有两个问题。我认为首先[无法辨认]混元的应用，管理已经--

Martin Lau 马丁·刘

We can’t hear. Can you repeat that question?

我们听不见。你能再说一遍那个问题吗？

Charlene Liu 刘查琳

Yes, can you hear me okay? Yes, so management has spoken quite extensively on how Hunyuan can benefit the ad business. Can we talk about application of AI onto the game business, and how does management expect--

是的，你能听到我说话吗？是的，管理层已经详细讨论了 Hunyuan 如何能为广告业务带来好处。我们能谈谈人工智能在游戏业务中的应用，以及管理层的期望吗——

Martin Lau 马丁·刘

We can’t hear her. Sorry, we can’t hear her.

我们听不见她。抱歉，我们听不见她。

Wendy Huang 黄文迪

Sorry, Charlene, your line is not stable. Maybe we will catch up offline.

抱歉，Charlene，你的线路不稳定。也许我们可以线下聊聊。

Charlene Liu 刘查琳

Is this better? Sorry, is it better?

这更好吗？抱歉，这更好吗？

Martin Lau 马丁·刘

Yes, one more try, maybe.

是的，再试一次，也许。

Charlene Liu 刘查琳

Okay, sorry. Thank you so much, really appreciate this.

好的，抱歉。非常感谢，真的很感激。

Can we talk about Hunyuan’s potential application on the game business, and [indiscernible] how does management expect that to play a larger role to help in game production? Okay--sorry, thank you for the opportunity.

我们能谈谈混元在游戏业务中的潜在应用吗？管理层如何期望它在游戏制作中发挥更大作用？好的——抱歉，谢谢你给我这个机会。

Martin Lau 马丁·刘

I think for Hunyuan, the--

我认为对于混元，--

Charlene Liu 刘查琳

Game production-- 游戏制作--

Martin Lau 马丁·刘

It can be assisting game business in multiple ways. Right now, the best contributor is actually on the customer service front, when Hunyuan is actually deployed to answer questions and be a customer service bot for a lot of our games, is actually achieving very high customer satisfaction level. AI in general has already been deployed in our games, but not necessarily the generative-AI technology yet.

它可以在多个方面辅助游戏业务。目前，最大的贡献实际上是在客户服务方面，当混元被部署来回答问题并作为我们许多游戏的客户服务机器人时，实际上已经实现了非常高的客户满意度。AI普遍已经在我们的游戏中得到应用，但尚未必然涉及到生成式AI技术。

In terms of Hunyuan, I think over time when we actually can move Hunyuan into a multi-model, and especially if we can start creating really high quality, high fidelity videos, then that would actually be helpful. Before that happens, then Hunyuan can actually be used in NPCs and create certain interactive experiences, but it’s not going to be able to take over the very heavy growth of content creation in gaming yet. I think it probably will be a couple more generations before it can be deployed for gaming production.

在混元方面，我认为随着时间的推移，当我们实际上能够将混元转变为多模型，特别是如果我们能够开始制作真正高质量、高保真的视频，那么这将是有帮助的。在那之前，混元实际上可以用于 NPC 并创造某些互动体验，但它还无法接管游戏内容创作的快速增长。我认为可能还需要几代人才能在游戏制作中部署它。

Wendy Huang 黄文迪

Thank you Charlene, we will follow up with you on your other questions.

谢谢你，Charlene，我们会跟进你其他的问题。

Next, we will move to Alex Yao from JP Morgan.

接下来，我们将转到来自摩根大通的亚历克斯·姚。

Alex Yao 亚历克斯·姚

Thank you, management team, for taking our question, and congrats on a strong quarter. I have two questions.

谢谢，管理团队，感谢您们回答我们的问题，祝贺你们取得了强劲的季度业绩。我有两个问题。

Number one is on the fintech business. Can you elaborate the slowdown of the fintech business, perhaps decompose the business into payment and non-payment, and also how should we think about the medium term growth outlook for the fintech business as a whole?

第一是金融科技业务。你能详细说明金融科技业务的放缓吗？也许可以将业务分解为支付和非支付部分，以及我们应该如何看待金融科技业务整体的中期增长前景？

The second question is on the Weixin Search, which seems to be picking up monetization momentum in recent quarters. Can you discuss strategy to monetize Weixin Search activities? It would be great if you could share with us some of the operating metrics, just to help us understand the length of the runway. Thank you.

第二个问题是关于微信搜索的，似乎在最近几个季度开始获得盈利动能。你能谈谈如何实现微信搜索活动的盈利策略吗？如果你能与我们分享一些运营指标，那将非常有帮助，以帮助我们理解未来的发展潜力。谢谢。

Martin Lau 马丁·刘

In terms of fintech, I think most of the reason for the slowdown is actually the headwind on offline consumption. We felt this is a phenomenon which you probably see across many other industries as well. We felt as a whole, the government is actually putting in a lot of stimulus to revive the economy, to revive consumption confidence, and at some point in time we believe this headwind will actually turn. But before it turns, then I think our fintech revenue on the payment side, which forms the bulk of the revenue of fintech, would actually be slow in terms of its growth.

在金融科技方面，我认为放缓的主要原因实际上是线下消费的逆风。我们觉得这是一种现象，您可能在许多其他行业中也会看到。我们认为整体上，政府实际上正在投入大量刺激措施来复兴经济，恢复消费信心，在某个时刻我们相信这种逆风实际上会转变。但在转变之前，我认为我们在支付方面的金融科技收入（这构成了金融科技收入的主要部分）在增长方面会比较缓慢。

On the other hand, in terms of the withdrawal fee, I would say this is anyway a low quality revenue. The withdrawal fee is essentially people pulling money out of the system, and that will be one-time revenue but then the money actually leaves the system. When people withdraw less, then the money would actually stay within our system for longer. It will not generate an immediate revenue upon withdrawal, but it will be turned into an asset under management and would continue to generate wealth management fees over time, so that actually turns into a longer term high value-added revenue.

另一方面，就提现费用而言，我会说这无论如何都是低质量的收入。提现费用本质上是用户从系统中提取资金，这是一种一次性收入，但随后资金实际上会离开这个系统。当用户提现减少时，资金实际上会在我们系统中停留更长时间。它不会在提现时立即产生收入，但它将转变为管理资产，并随着时间的推移继续产生财富管理费用，因此实际上转变为长期高附加值收入。

In terms of wealth management services, I think it will continue to grow for the reasons that I talked about earlier. For loan generation fees, I think we are getting a little bit more cautious as there is a macro headwind, and we want to be very vigilant on risk management, so that’s how we look at the different components of the fintech revenue.

在财富管理服务方面，我认为它将继续增长，原因如我之前所提到的。对于贷款生成费用，我认为我们变得更加谨慎，因为存在宏观逆风，我们希望在风险管理上保持高度警惕，这就是我们看待金融科技收入不同组成部分的方式。

What was the other question?

另一个问题是什么？

Alex Yao 亚历克斯·姚

Weixin Search. 微信搜索。

Martin Lau 马丁·刘

Oh, in terms of Weixin Search, I think it’s a service which has been growing in terms of the usage and in terms of the search volume on a very healthy rate, so the service itself is growing. We have been monetizing that service on a relatively light basis - in fact, it just started last year that we started monetizing Weixin Search, so with the combination of the fact that there is a very large engagement with Weixin and the fact that Weixin Search itself is actually growing in volume, and that there is an expanding content ecosystem within Weixin, be it official accounts, be it mini programs, be it video accounts, and we’re relatively early in the monetization cycle, all these factors will contribute to a pretty long runway in terms of our continued growth of the search revenue on Weixin.

哦，就微信搜索而言，我认为这是一个在使用量和搜索量方面都在以非常健康的速度增长的服务，因此该服务本身正在增长。我们一直在以相对轻的方式对该服务进行变现——实际上，我们是在去年才开始对微信搜索进行变现，因此，考虑到与微信的互动非常大，以及微信搜索本身的搜索量实际上也在增长，还有微信内部正在扩展的内容生态系统，无论是公众号、还是小程序、还是视频号，而我们在变现周期中相对较早，所有这些因素都将有助于我们在微信搜索收入持续增长方面拥有相当长的跑道。

Wendy Huang 黄文迪

Thank you. In the interests of time, we will take the last question from Robin Zhu from Bernstein. Robin, your line is open.

谢谢。为了节省时间，我们将接受来自 Bernstein 的 Robin Zhu 的最后一个问题。Robin，您的电话已接通。

Robin Zhu 朱罗宾

Thank you. Hi management. Thanks for taking my questions.

谢谢。嗨，管理层。感谢您回答我的问题。

I guess just two, please. One, James, I think at one point, you said that you think video accounts monetization could be as big as Moments. Now that video accounts engagement is 2x of Moments’, could I get your thoughts on the intensity of ad revenue per engagement, and is there any reason why the two couldn’t equalize, meaning that actually total monetization of video accounts ends up being much larger than Moments, compared to what you said, I think a year or two ago now?

我想就两个问题，请。一个，詹姆斯，我记得你曾说过，你认为视频账号的变现可能和朋友圈一样大。现在视频账号的互动是朋友圈的两倍，我能否听听你对每次互动的广告收入强度的看法？有没有什么原因导致这两者无法平衡？这意味着视频账号的总变现实际上会比朋友圈大得多，这与你一两年前所说的相比？

Then secondly on games, I think different members of management have been critical about the internal game development process, and just wanted to get your thoughts on we have a pretty full pipeline, it looks like, for the rest of the year. Does that mean--or in your mind, do you think that the issues over the last few years have now resolved and we should look forward to a more consistent launch pipeline in the second half and in future years? Thank you.

然后关于游戏，我认为管理层的不同成员对内部游戏开发过程提出了批评，我想听听你的看法。看起来我们在今年剩下的时间里有一个相当充实的开发计划。这是否意味着——或者在你看来，过去几年的问题现在已经解决，我们应该期待下半年以及未来几年有一个更稳定的发布计划？谢谢。

James Mitchell 詹姆斯·米切尔

Hi Robin, thank you for your question. On the first one, yes, I think objectively you can see from the results of companies like Meta, that operate both traditional feel and also a short video feed, that over time that the monetization for short video feed converges with or overtakes the monetization of the traditional social feed, and we feel that’s the trajectory we’re on as well.

嗨，Robin，谢谢你的问题。关于第一个问题，是的，我认为从像 Meta 这样的公司的结果来看，客观上可以看到，既运营传统社交内容又运营短视频流的公司，随着时间的推移，短视频流的货币化与传统社交流的货币化趋于一致或超过，我们也觉得这是我们所走的轨迹。

With regards to the second question, we do feel we’ve debugged some of the more obvious challenges. No doubt there’s other challenges we haven’t identified or other challenges that would arise in the future, and so it is an iterative debugging process that will never stop. But we feel we’ve gone--we’ve resolved the big immediate challenges, and that is translating into both better engagement and monetization trends with our existing games, and also to greater confidence in our pipeline of new games.

关于第二个问题，我们确实觉得我们已经调试了一些比较明显的挑战。毫无疑问，还有其他我们尚未识别的挑战，或者未来会出现的其他挑战，因此这是一个永无止境的迭代调试过程。但我们觉得我们已经解决了主要的紧迫挑战，这转化为我们现有游戏的更好参与度和盈利趋势，以及对我们新游戏开发管道的更大信心。

You made a reference to our internal game development process, and I think that it’s easy for outsiders looking at Tencent to assume that there is one game development process, there is one game publishing process, there is one game operating mindset and so forth, and I can understand why that belief exists. But in reality, it’s a little bit like looking at Disney and assuming that the Disney animation studio, the Pixar studio, the 20th Century Fox studio all operate in a homogenous way, which is not the case. If you look at Tencent’s five biggest games, one of them is created by a team in Chungdu, one of them is created by a team in Shenzhen, one of them is created by a team in Helsinki, two of them are created by teams in Los Angeles. It’s a truly global business, globally distributed, globally different practices, and so there is no single unified internal game development process.

你提到了我们内部的游戏开发流程，我认为外部人士在看待腾讯时，很容易假设存在一个游戏开发流程，一个游戏发行流程，一个游戏运营思维等等，我能理解这种信念为何存在。但实际上，这有点像看待迪士尼，假设迪士尼动画工作室、皮克斯工作室和 20 世纪福克斯工作室都是以同质化的方式运作，事实并非如此。如果你看看腾讯的五款最大游戏，其中一款是由成都的团队创建的，一款是由深圳的团队创建的，一款是由赫尔辛基的团队创建的，两款是由洛杉矶的团队创建的。这是一个真正全球化的业务，全球分布，实践各异，因此并不存在单一统一的内部游戏开发流程。

Of course, we try to share best practices and learnings between the big development studios that have created these enormous--these successful games, but equally each of those studios that I talked about, each in a different part of the country or the world, still has its own unique attributes, and that’s part of their strength. Those strengths, we aim to reinforce over time. That’s what I’d say on the game process debugging side.

当然，我们努力在创造这些巨大成功游戏的大型开发工作室之间分享最佳实践和经验教训，但我提到的每个工作室，无论是在国内还是世界的不同地方，仍然拥有其独特的属性，这也是它们的优势之一。我们旨在随着时间的推移加强这些优势。这就是我对游戏过程调试方面的看法。

Martin Lau 马丁·刘

Yes, I just want to add, you actually used the word, critical on the game teams. I don’t think that’s really true. I think there are a lot of things our game teams have done right, but there’s just no perfect team, so no perfect games. We are continuously going through the process of debugging, and we are more transparent and honest on those efforts with the outside world, so that’s the reason why we discuss about what are the changes that we have done to our game teams or to our games.

是的，我只是想补充一下，你实际上在游戏团队上使用了“关键”这个词。我认为这并不完全正确。我认为我们的游戏团队做了很多正确的事情，但没有完美的团队，所以也没有完美的游戏。我们正在不断进行调试过程，并且对外界在这些努力上更加透明和诚实，这就是我们讨论我们对游戏团队或游戏所做的改变的原因。

We also believe some of the major titles that we have are really evergreen titles, such that we don’t necessarily blame it on the life cycle of a game when it doesn’t work but rather look at what exactly are the bugs or are the untapped potentials that we can actually make changes, so that we can actually get the games to be really evergreen titles. That’s, I think, the reason why we have the largest number of evergreen titles and probably the most proportion of evergreen titles in the industry.

我们也相信我们拥有的一些主要作品确实是常青作品，因此当它们不成功时，我们并不一定将其归咎于游戏的生命周期，而是关注具体的 bug 或未开发的潜力，以便我们可以进行更改，从而使这些游戏真正成为常青作品。我认为这就是我们在行业中拥有最多常青作品和可能最高比例常青作品的原因。

Just to reiterate on James’ point, the diversity is actually very important, so that’s why if you look at the Tencent game family, we actually have probably the most diverse number of studios in the world, and all these studios would actually work in their own way to achieve success in their games . But at the same time they can actually share experiences too, so hopefully collectively they can actually progress much faster than the rest of the industry.

为了重申詹姆斯的观点，多样性实际上非常重要，这就是为什么如果你看看腾讯的游戏家族，我们实际上拥有世界上最多样化的工作室，这些工作室会以自己的方式在游戏中取得成功。同时，他们也可以分享经验，因此希望他们能够比行业其他部分更快地进步。

Wendy Huang 黄文迪

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

谢谢。谢谢大家。我们现在结束网络研讨会。感谢大家今天参加我们的成果网络研讨会。

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

如果您希望查看我们的新闻稿和其他财务信息，请访问我们公司网站的投资者关系部分 www.tencent.com。此次网络研讨会的重播也将很快提供。

Thank you, and see you next quarter.

谢谢，下一季度见。