The webinar, hosted by Wendy Huang from the 10 cent IR team on May 15, 2025, outlines participation rules and highlights forward-looking statements, non-IFRS financial measures, and the management team's presentation including an overview by Chairman CEO, business review by President and Chief Strategy Officer, and financial discussion by CFO.

The company reported a 13% year-on-year increase in total revenue to 180 billion RMB, with a 22% rise in non-IFRS net profit to 61 billion RMB. Significant growth is attributed to high-quality revenue streams and AI investments, including new applications like yuanba, expected to generate substantial long-term returns.

In Q1 2025, Tencent reported a 13% year-on-year increase in total revenue, with notable growth in social networks, domestic and international games, marketing services, and FinTech. The company emphasized reinvestment in AI opportunities, including capital and operating expenses for GPU and AI projects, expecting temporary offsets to operating leverage but long-term value creation.

In Q1 2025, value added services revenue reached 92 billion RMB, up 17% YoY, with social networks revenue increasing 7% YoY to 33 billion RMB. Music subscriptions saw a 17% YoY revenue growth with 123 million subscribers. Long form video subscription revenue remained stable while video subscribers grew 1% YoY to 117 million. Domestic games revenue surged 24% YoY, driven by flagship games and new releases, and international games revenue rose 23% YoY.

The Wen platform has implemented upgrades to strengthen its content ecosystem, including simplifying live streaming setup, enhancing recommendation algorithms, and introducing AI features for content creation and interaction.

Tencent reports significant growth in revenue from flagship games like Honor of Kings and Peacekeeper Elite, alongside increases in marketing services and FinTech and business services segments. Notable performances include record-high gross receipts for Crossfire Mobile and Valor, and strong user engagement in Delta Force and PUBG Mobile. AI upgrades and enhanced ad platforms contribute to higher user engagement and revenue across major advertiser categories.

In Q1 2025, total revenue reached 180 billion renminbi, up 13% YoY, with gross profit increasing 20% to 100.5 billion renminbi. Operating profit rose 10% to 57.6 billion renminbi, while interest income fell 12% due to lower yields. Scores jumped 37% YoY to 3.9 billion renminbi, influenced by foreign exchange shifts. Share of profit from associates and joint ventures doubled to 4.6 billion renminbi. Net profit attributable to equity holders grew 22% to 61.3 billion renminbi, and diluted EPS increased 25% to 6.58 renminbi, boosted by share buybacks.

In Q1 2025, the company experienced growth in operating and net profits, with a focus on AI native applications and higher margin revenues from domestic games, marketing services, and FinTech. Operating expenses increased due to promotional efforts and staff costs, while operating margin improved. Notably, operating CapEx surged by 300% year-on-year, primarily for AI capabilities enhancement, leading to a 9% decline in free cash flow year-on-year.

The discussion focuses on WeChat's approach to AI, highlighting differentiation through its ecosystem and various business models including advertising, transactions, GPU rental, and subscriptions. Additionally, it addresses recent organizational adjustments in e-commerce, emphasizing the unique synergies within the WeChat ecosystem and strategies for live streaming platforms and upcoming campaigns.

On May 15, 2025, participants discuss logistics including question limits and confirm meal arrangements during a conference call.

The discussion focuses on the early stages of yuanbao integration within the ecosystem, highlighting increasing user interaction and content direction for summarization and analysis. Experiments linking various ecosystem components are ongoing, with expectations for more systematic integration in future quarters.

During a discussion on May 15, 2025, a participant emphasizes the focus on generating demand for technology, suggesting managing GPU capacity and investment pace will be addressed once high demand becomes a challenge.

A discussion highlights Tencent's robust domestic gaming quarter, exploring if this signifies a catch-up demand or structural growth facilitated by AI and content release cycles. It also delves into the evolving global regulatory landscape affecting app store economics and value distribution in the video game sector, particularly in China.

The speaker discusses Tencent's strong domestic game revenue growth in Q1 2025, attributing it to strategic changes, AI utilization, and alignment with audience preferences shifting towards first-person action games. They also address the evolving economics of app stores, predicting a global shift towards more equitable relationships between digital content providers and app stores.

Over the past 2 to 3 months, Tencent has observed increasing user interaction with AI agents across various business applications, noting a discovery process in determining which AI functionalities resonate most with users and enhance user value and potential monetization. While it's early for systematic analysis, users are showing growing affinity and engagement with AI-enhanced features, indicating potential for improved user experience and monetization, including in mid-tier games.

As of May 15, 2025, the primary focus is deploying game AI in competitive multiplayer games, with potential future applications in content-driven games, including facilitated content creation and dynamic environment generation.

The company addresses the effects of recent US licensing restrictions on high-end GPUs, detailing strategies to manage AI development and inference needs amidst the challenges. Additionally, they discuss the steady growth and improved credit quality in their consumer loan facilitation business, attributing part of the success to consumers' increased savings balances, and outline a measured approach for future expansion.

The discussion focuses on the company's strategy to reinvest in AI, elaborating on the impact on the gap between revenue and operating profit, expected expense items beyond CapEx, and the structural growth in the domestic game business, particularly in the first-person shooter genre.

The dialogue discusses Tencent's approach to narrowing the gap between profit and revenue growth through AI deployment, with a focus on managing costs and headcount. It also highlights the increasing popularity of first person action games in China, driven by younger gamers and new gameplay modalities, indicating a convergence with global gaming trends.

The discussion explores the significant role AI technology plays in enhancing advertising revenue through improved click-through rates and user engagement. It also addresses the evolving landscape of search queries, highlighting the integration of AI in search features and its potential to attract more user and revenue share.

The company experienced a notable increase in advertising revenue growth, attributed to factors other than inventory release, with a focus on long-term sustainability. Meanwhile, inquiries highlight user engagement and future prospects for AI chatbot applications, emphasizing ongoing efforts in AI product innovation and user experience optimization.

The dialogue highlights strategies focusing on leveraging AI and optimizing traffic to extend the growth runway for the advertising business. Key points include improving ad tech, enhancing user engagement through personalized content, and building a robust transaction ecosystem to increase advertiser value and revenue growth.

The company has significantly grown its Yuanbao user base and focuses on retention through enhanced experiences. The next stages involve adding functionalities to improve user activation and attraction, customizing product form factors, leveraging their unique ecosystem, and continuously upgrading the Hu Yuan model for differentiation.

Discussion focuses on the long-term eCommerce strategy for WeChat, emphasizing initiatives over specific KPIs, and queries about payment volume declines, attributing improvements to macro factors and payment strategies.

The primary focus is on enhancing the shopping experience for consumers with higher quality products, convenient return policies, good customer service, and competitive pricing. Additionally, the strategy includes attracting more high-quality brands and motivated merchants to the ecosystem and increasing traffic to merchants through live broadcasts and leveraging mini programs within the ecosystem. Long-term growth initiatives involve connecting users to products uniquely through various modules and social components, aiming to magnify transactions and boost merchant sales. Despite market fluctuations, there's strong growth in mini-shop transaction volume, with hopes for sustained consumer confidence and consumption activity.

The webinar discussed increasing transactions and decreasing prices, attributing this to supply-side competition and recovering consumption patterns. The impact of tariffs and potential government stimulus on the economy were highlighted as key factors to watch.