Tencent Holdings Ltd Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kenneth Fong - UBS Investment Bank - Analyst : Hi. Good evening, management. Thank you for taking my question. I have two questions. First is on mobile games. This year, we have a few major hit in China gaming market. In mobile, we have our (inaudible) Dungeon & Fighter. In PC, Black Myth: Wukong, which we have an equity stake has been a big hit. In Mini Games, Whiteout Survival, we started as our top Mini Program, Mini Games and now being a top 10 grossing in China after turning into an app-based game. So in light of that, can management share with us the implication and insights for the industry? And how would these events or major hit games actually shape our game strategy going forward? And my second question is on e-commerce. I noticed that we upgrade into our Weixin Mini Shop to enhance our e-commerce offering. Can management share more with us this initiative, including the positioning versus before? And how should we think about its potential? It is fair to say that we shouldn't think about this TAM from a live streaming e-commerce, but actually the whole e-commerce space has a much higher TAM. And how should we think about his role versus Mini Program which the GMV has hitted [2 trillion] last quarter. Thank you.

Question: Alicia Yap - Citigroup Inc - Analyst : Thank you, Wendy. Hi, good evening, management. Thanks for taking my questions. Two questions. First is that related to Weixin Search. You mentioned commercial queries and clicked to rate grew year-over-year. Can management share some colors on which industry advertisers started to utilize more of the commercial keyword to drive the traffic lead. And other than the (inaudible) feature within the Weixin app, is there any other entry point the advertiser can leverage on the search query. And also, will your ramp up the gen-AI chatbot, would that eventually embed with the commercial sponsor answer as well? Second question is related to international games. When you comment on elongating the deferred periods, is that only refer to certain big flagship titles that you have. Can you remind us the range of the deferred period for your international games? So -- and also judging from your comments about the decent gross receipt growth. It seems like international games revenue could see a more stable and more sustainable growth into next year or maybe the year after. Thank you.

Question: Ronald Keung - Goldman Sachs Group - Analyst : Thank you, Pony, Martin, James, John and Wendy. I have two questions. Kicking off with the macro related question. With the shift in [Mopro] growth domestic policies in September, and while we also see a more complex geopolitical environment ahead, just how are we positioning our business and strategies in face of domestic, which is policy opportunities, while international environment is still evolving. And specifically on consumption, I just want to expand on how are we seeing any latest trends on marketing services, payment indicators with the recent Singles Day. And you mentioned a decline in average order value per transaction for payment. So any thoughts on potential inflection points in terms of the ticket size trends that is important for consumption trends? Thank you.

Question: Alex Yao - JPMorgan Chase & Co - Analyst : Hey, thank you guys for taking my question. My first question is about the newly launched game, Delta Force. Based on the IRS ranking, the games monetization seemed to be a little bit behind the curve despites of high use return and retention rates. Is the current situation more of a monetization timing strategy thing? Or is there a monetization design them? And then the second question is regarding the payment revenue decline in this quarter. China retail space actually grew by low single digit in third quarter, but your payment revenue declined on year-over-year basis. So the question is Tencent payment overly exposed to certain weak consumption categories? Thank you.

Question: Charlene Liu - HSBC - Analyst : Thanks, Wendy, and thank you management team for the opportunity. The First question I wanted to ask is about outlook on earnings growth because we have seen close to two years of really strong margin expansion come through. Does Tencent have a more normalized earnings growth rate that the company targets in the medium-term? Or alternatively, is there a certain ratio that Tencent seeks to achieve between topline and earnings growth, say, for example, no GP growth at 1.5 times of topline, et cetera? Secondly, do we have an updated budget for 2025 share buyback? Is it fair to assume that Tencent would do at least the absolute amount that Tencent did in 2024. And how is the management thinking about shareholder return more generally, is buyback still the preferred form versus dispose of investments -- investees and dividend? Thank you.

Question: John Choi - Daiwa Securities Co. - Analyst : Okay. Thank you very much for taking my question and congratulations on strong set of results. I have a question on AI. I think management mentioned that [DPU] power services accounts for teens for your [IAS] business. But can you kind of elaborate a bit more how do we foresee the AI-related revenue contribution for the business service going forward? And my second question is could we have more color about your management strategy for monetizing by employing your Hunyuan element for different business lines and how we are able to see it? Thank you.

Question: Thomas Chong Chong - Jefferies LLC - Analyst : Hi. Good evening. Thanks, management, for taking my questions. My first question is back to the gaming business. I think recently, if we look into Southeast Asia as well as the domestic market or even globally, we're actually seeing shipping games experienced strong growth. And we also see (inaudible) is also experiencing a very good growth momentum. So I'm just wondering on a gamer preference-based perspective, are we actually seeing gamers increasingly shifting to certain games? And for domestic market, given the market is very big already, should we expect there might be cannibalization among different games in our portfolio? And my second question is relating to our FinTech business. We have talked about wealth management is experiencing positive growth. I just want to get some color with regard to our strategies in wealth management versus lending, given that I think other fintech companies are also talking about macro headwinds on the wealth business. Should we expect our strategy is our focus on wealth management going forward. And lastly, it's more about our investees, any thoughts about unlocking the values of our investees for our free cash flow is very strong enough in returning value to shareholders? Thank you.

Question: Yang Bai - CICC - Analyst : Thank you, management, for taking my question. My question is about the game business. The IG has made some internal adjustments, could management share more details and the reason about this adjustment and how do these adjustments related to the overall trends in the gaming market and Tencent's current business situation? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 13, 2024 / 12:00PM, 0700.HK - Q3 2024 Tencent Holdings Ltd Earnings Call

Question: Jialong Shi - Nomura Securities - Analyst : Good evening. Thanks, management, for taking my question and congratulations on a very solid quarter. So I have two questions. The first question is about the advertising business. Tencent advertising -- Tencent ad business has performed much better than industry peers this year. Video account has been a driver for your overall ad business among other drivers. So just wondering how should we think of the outlook for your ad business? If we take a look at the two bigger short video peers of your video account, both of them generate a very big chunk of that revenue from e-commerce brands and managements. So just wondering if it is fair to say e-commerce sector will also be instrumental to fully unleash the potential of your video account ads? My second question regards the collaboration between WeChat and Taobao. What were the factors that have made to the collaboration? Are we going to see more collaborations of this kind between Tencent and other Internet platforms such as granting access to retail contents for external search engine? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 13, 2024 / 12:00PM, 0700.HK - Q3 2024 Tencent Holdings Ltd Earnings Call