Q4 2019 Earnings Call

March 18, 2020

[music].

Ladies and gentlemen, thank you for standing by and welcome to tests in 2019 fourth quarter and annual results announcement conference calls.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to Tencent's 2019 4th Quarter and Annual Results Announcement Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question today, you need to press star 1 on your telephone.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to Tencent's 2019 Q4 and annual results announcement conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question today, you need to press star one on your telephone. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker host today, Ms. Jane Yip. Thank you. Please go ahead, ma'am.

This time all that this insight in listen only mode. After the speakers presentation, there will be a question and answer session.

So you asked the question today, you need to press Star one on your telephone please be advised that today's conference is being recorded.

Operator: Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker host today, Ms. Jane Yip. Thank you.

I'll now like to have the conference over to your speaker hosts today Ms. Jean Yves. Thank you. Please go ahead Matt.

Alicia Yap: Thank you. Good evening. Welcome to our 2019 fourth quarter and Annual Results Conference Call. I'm Jane Gi from the IR team at Tencent.

Thank you good evening welcome to all Trued up in a Nike Inc. fourth quarter and any without the company's cool and Jane give somebody ask him up 10 cents.

Jane Yip: Thank you. Good evening. Welcome to our 2019 Q4 and annual results conference call. I'm Jane Yip from the IR team of Tencent. Before we start the presentation, we would like to remind you that it includes forward-looking statements, which are underlined by a number of risks and uncertainties, and may not be realized in the future for various reasons. Information about general market conditions is coming from a variety of sources outside of Tencent. This presentation also contains some unaudited non-IFRS financial measures that should be considered in addition to, but not as a substitute for, measures of the company's financial performance prepared in accordance with IFRS. Non-IFRS measures, formerly referred to as non-GAAP measures, are intended to reflect our core earnings by excluding certain one-time or non-cash items.

It's always data presentation, we would like to remind you that includes forward looking statements, which underlined by number of with and then second teeth and may not be will likely to be true for various reasons.

Alicia Yap: Before we start the presentation, we would like to remind you that it includes forward-looking statements, which are accompanied 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. 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 company's financial performance prepared in accordance with IFRS. Non-IFRS measures, formerly referred to as non-GAAP measures, are intended to reflect our core earnings by excluding certain one-time or non-cash items.

The nation about general market conditions, it's coming from if if I T cells.

Outside of 10 cents.

Presentation also contain some unaudited non I, if I add financial machines that should be considered in addition to but not as a separate cheerful measures of the company financial performance put that in accordance with I thought it.

No I F. R. S. Meshes, so many prefer to that's what we for as.

Non-GAAP Mashes I intend to with <unk>, our core earnings by excluding certain onetime or non cash items quite detailed discussion off with such as an all no and I have a as measured pace with her two I'll disclosure documents on the session I'll call upside.

Alicia Yap: For a detailed discussion of risk factors and non-IFRS measures, please refer to our disclosure documents in the IR section of our website. Let me introduce the management team on the call tonight. Our chairman and CEO, Pony Ma, will kick off with a short overview. President Martino will discuss...

Jane Yip: For a detailed discussion of risk factors and on non-IFRS measures, please refer to our disclosure documents on the IR section of our website. Let me introduce the management team on the call tonight. Our chairman and CEO, Pony Ma, will kick off with a short overview. President Martin Lau will discuss our strategy review. Chief Strategy Officer James Mitchell will speak about the business review. Chief Financial Officer John Lo will conclude with financial review before we open the floor for questions. I will now turn the call over to Pony.

I mean, you used the management team on the call Tonight I'll chime in on C. O Pony law will kick off with a shot overview plus within Maki now, we'll discuss our strategy will be.

He starts you office, so James Central will speak about the business we built.

Financial officer drawn, though will conclude with a national with you before we open difficult questions.

I'll now turn to call over to Pony.

Pony Ma: Thank you, Jane. Good evening, everyone. Thank you for joining us. During 2019, we reinforced our leadership in consumer internet and extend our presence in industrial internet while sustaining healthy operating and financial metrics. Let me update you on our key achievement in our four strategic areas. In social, Weixin ecosystem became increasingly vibrant and better connect users with services. Annual transaction volume via mini-programs crossed CNY 800 billion. As it related to QQ, we revamped the product with enhanced chat features and friend recommendation, as well as expanded entertainment use cases via mini-programs, increasing QQ's popularity among young generations. In online games, we extend our China leadership while expanding internationally via popular games including PUBG Mobile, Brawl Stars, and Call of Duty Mobile.

Thank you again.

unknown: [inaudible]

With everything everyone. Thanks for joining the.

[noise] group, a little bit nitrogen, we <unk> forces our lead the suit in consumer income there and extend our purpose <unk> industrial Internet.

While sustaining healthy operating and financial metrics.

Let me update you on all key achievements.

Our fourth <unk> hours.

Being soldier, we've seen ecosystem became increasingly vibrant and Becker conducted uses we the services.

A new transaction volume.

<unk>.

Calc 800 <unk> b.

That's the late to QQ, we granted the pull it out.

As trust features and then they'll come in they should.

Expanded entertainment use cases.

I mean your programs.

Increasing cuckoos popularity among young generation.

You know like games, we expect our trying to leadership, while expanding internationally.

Good luck games, including public mobile.

Fall styles and calc duty mobile.

Pony Ma: Our international revenue rose to 23% of online game revenue in Q4 2019. In content and advertising, video subscriptions exceeded 100 million milestone in the year. We innovated our business model and increased operating efficiencies of our long-form video business, significantly reducing its 2019 operating loss to below RMB 3 billion, much lower than industry peers. Despite macro headwinds, we achieved robust advertising revenue growth, progressively realizing the long-term potential in moments and expanding our mobile ad network. In fintech and business services, average daily commercial payment transactions exceed 1 billion in Q4 as we deepened penetration among offline merchants. We consistently expand our market share in cloud, with revenue crossing RMB 17 billion in 2019. Number of paying customers surpassed 1 million.

Our international revenue rose to 23% online games revenue into fourth quarter after southern Nike.

In content and advertising.

Dealer subscription exceed the 100 meeting milestones into your.

We innovated our business model and increased operating efficiencies of our long form video business.

Significant they do thing is 2019 operating loss to be low obviously be then.

Much lower than industry peers.

Despite the macro headwinds we achieved robust the advertising revenue rose.

Cope with the realizing the long term potential in moments and expanding our mobile AD network.

Being fintech and business services.

Over the two daily commercial payment transactions.

The 1 billion in the fourth quarter.

So we deepened the penetration a mall fly matches.

We consistently expand our market share even call.

With that the new clothing 17, beating on beef in 2019.

Number of paying coupled with the PUC want me to it.

Now let me go through the <unk> line.

Alicia Yap: Officer James Mitchell will speak about the business review, and Chief Financial Officer John Loh will conclude the financial review before we open the floor for questions. I will now turn the call over to Tony. Thank you.

Pony Ma: Now let me go through the headline financial numbers, and John will provide more detailed discussion in the financial section. Total revenue was CNY 106 billion, up 25% year on year and 9% quarter on quarter. Quarterly revenue for the first time exceeds CNY 100 billion, both including and excluding Supercell contributions. Gross profit was CNY 46 billion, up 31% year-on-year and 9% quarter-on-quarter. Our non-IFRS operating profit was CNY 30 billion, up 35% year-on-year and 6% quarter-on-quarter. Non-IFRS net profit attributable to equity holders was CNY 25.5 billion, up 29% year-on-year and 4% quarter-on-quarter. Moving to platform update. In social, combined MAU of WeChat and Weixin increased 6% year-on-year to 1.165 billion.

Financial numbers and John will provide more detailed discussion into financial section.

Huateng Ma: Good evening, everyone. Thank you for joining us. During 2019, we reinforced our leadership in consumer internet and extended our presence in industrial internet, while sustaining healthy operating and financial methods. Let me update you on our key achievements in our four strategic areas. In social, the reaching ecosystem became increasingly vibrant and better connected users with the service. Annual transaction volume in mini-programs of close to 800 billion RMB.

Total revenue was 106 beat 'em beat up 25% year on year at night for same quarter on quarter.

Huateng Ma: As related to QQ, we revamped the product with enhanced chat features and friend recommendations, as well as expanded entertainment use cases via mini-programs, increasing QQ's popularity among young generations. In online games, we extend our China leadership while expanding internationally via popular games including PUBG Mobile, for All Stars, and Call of Duty Mobile. Our international revenue rose to 23% of online game revenue in the fourth quarter of 2008, mainly from content and advertising

Huateng Ma: Video subscriptions exceeded 100 million milestones in a year. We innovated our business model and increased operating efficiency of our long-form video business, significantly reducing its 2019 operating loss to below RMB 3 billion, much lower than industry peers. Despite macro headwinds, we achieved robust advertising revenue growth, progressively realizing the long-term potential of moments and expanding our mobile ad network, in fintech, and business services. Average daily commercial payment transactions exceeded $1 billion in the fourth quarter as we deepened penetration among offline merchants.

Quarterly revenue for the full time exceeds 100 beat it on B.

unknown: We consistently expand our market share in the cloud, with revenue crossing 17 billion RMB in 2019, and our number of paying customers surpassed 1 million. Now let me go through the headline financial numbers, and John will provide more detailed discussion in the financial section. Total revenue was 106 billion RMB, up 25% year-on-year and 9% quarter-on-quarter. Quarterly revenue for the first time exceeded $100 billion, both including and excluding supercell contributions. The gross profit was 46 billion RMB, up 31% year-on-year and 9% quote-unquote. Our non-IFRS operating profit was 30 billion RMB, up 35% year-on-year and 6% quarter-on-quarter; non-IFRS net profit attributable to equity holders was 25.5 billion RMB, up 29% year-on-year and 4%.

Both including and excluding supercell contributions.

[noise] girls coffee was 46 billion on beat up 31% year on year, 9% quote unquote, though.

Our non F. <unk> operating profit was 30 billion on be up 35% year on year and 6% quarter on quarter.

No <unk> net profit attributable to equity holders was 25.5 billion on beat up 29% year on year and 4%.

What kind of quota.

Moving to perform update.

Huateng Ma: [inaudible] Moving to platform update, in social, combined MAU of WeChat and WeChat Messenger increased 6% year-on-year to 1.165 billion. Meanwhile, smart devices MAU of QQ declined 7.5% year-on-year to $647 million as we proactively clean up spamming and bot accounts. In games, we solidified our number one position in China with peacekeeper elite popularity and extended our international success with the launch of Call of Duty Mobile and Team Fight Tactics during the year. In Media, Music, Subscription.

Soulja combine it may you off wishing and we chat increased 6% year on year to 1.16 spot beam.

[noise] smart devices and there you off cupule declined 7.5% year on year to 647 million plus we pull activity cleaned up spamming and bought accounts.

Pony Ma: Smart devices MAU of QQ declined 7.5% year-on-year to 647 million, as we proactively cleaned up spamming and bot accounts. In games, we solidified our number one position in China with Peacekeeper Elite's popularity and extend our international success with launch of Call of Duty: Mobile and Teamfight Tactics during the year. In media, music subscription growth accelerated, benefiting from the pay-for-streaming model. In fintech, we operate the largest mobile payment platform in China by DAU and transaction volumes. In cloud, we continue to outgrow peers with increasing scale and higher operating efficiency. In utilities, we maintain our industry leadership in mobile security, mobile browser, and Android app store in China. I will invite Martin to discuss strategy review.

In games, we solidified our number one position in China with piece of paper elite.

Popularity.

Then our international success with launch on the call do T mobile and Kim five tactics during the year.

Immediate music subscription.

Huateng Ma: Growth Accelerate, benefiting from the pay-for-streaming model. In Fintech, we operate the largest mobile payment platform in China by DAU and transaction volume. In cloud, we continue to outgrow peers with increasing scale and higher operating efficiency. In utilities, we maintain our industry leadership in mobile security, mobile browser, and Android app store in China. I will invite Martin to discuss the strategy review. Thank you, Pony, and good evening and good morning,

Gross a salad benefiting from the pay for streaming model.

<unk> Fintech, we operate the largest mobile payment type or in China by idea you and transaction volumes.

In called we continue to outgrow peers with increasing scale and high operating efficiency.

Yeah. Thank you Peter Keith we maintain our industry leadership in mobile security mobile browser and enjoy apps fall in China.

Well in Biomark into discuss strategy review.

[noise], Thank you Tony and good evening and good morning, everybody.

Martin Lau: Thank you, Pony, and good evening and good morning, everybody. As we headed into the year of 2020, I believe all of us are facing the massive challenges of the coronavirus pandemic, which is profoundly impacting China as well as globally. I like to say our hearts go out to the people, the families that are affected, and we hope their conditions will improve and their difficulties will go away soon. Now, at Tencent, we rose up to the challenge and we tried to provide relief and help to people in need in a number of different ways.

Martin Lau: As we head into the year of 2020, I believe all of us are facing the massive challenges of the coronavirus pandemic, which is profoundly impacting China as well as globally. I would like to say our hearts go out to the people and the families that are affected, and we hope their conditions will improve, and their difficulties will go away soon. Now, at Tencent, we rose to the challenge, and we tried to provide relief and help to people in need in a number of different ways.

As we headed into the your Q2 2020.

I believe all of us are facing the massive challenges of the curve a little virus epidemic, which is profoundly impacting China as well as globally.

I would like to say our hearts go out to the people with the families that affected and we hope that conditions, we improve and their difficulties would go away.

Now at 10 cents, a we rose up to the challenge and we tried to provide relief and hope to people in need in a number of different ways.

Martin Lau: We established an emergency fund of 1.5 billion RMB to procure and donate medical supplies and equipment, to offer relief support and sponsor pandemic-related program development as well as to sponsor medical research to try to solve this problem.

Martin Lau: We established an emergency fund of CNY 1.5 billion to procure and donate medical supplies and equipment, to offer relief support and sponsor pandemic-related programs development, as well as to sponsor medical research to try to solve this problem. At individual level, our employees volunteered to help deliver donated resources on the ground to the troubled area of Hubei. Thousands of our employees also worked around the clock to develop a number of pandemic-related online products to serve over 1 billion users in China. To help efficiently combat the outbreak, our technologies and smart solutions play a crucial role to digitalize public services rapidly, generating over 1,000 related Mini Programs in municipal services, healthcare, and education. Leveraging our high DAU platforms, authorities can deliver pandemic-related news and timely information, promoting public awareness and educating preventive measures.

Stylish didn't emergency fund of EUR, 1.5 billion power and B to prepare and donates medical supplies and equipment.

To offer relief supports and sponsor pandemic related programs development as well as to sponsor medical research to try to solve this problem.

Martin Lau: At the individual level, our employees volunteered to help deliver donated resources on the ground to the troubled area of Hubei. Thousands of our employees also worked around the clock to develop a number of pandemic-related online products to serve over a billion users in China, to help efficiently combat the outbreak. Our technologies and smart solutions play a crucial role in rapidly digitalizing public services, generating over a thousand related mini-programs in municipal services, healthcare, and education.

At individual level employees volunteered to help deliver donated resources on the ground to the troubled area of who'll be.

Martin Lau: Thousands of our employees also worked around the clock to develop a number of pandemic-related online products to serve over 1 billion users in China. To help efficiently combat the outbreak, our technologies and smart solutions play a crucial role to digitalize public services rapidly, generating over 1,000 related Mini Programs in municipal services, healthcare, and education. Leveraging our high DAU platforms, authorities can deliver pandemic-related news and timely information, promoting public awareness and educating preventive measures.

Thousands of our employees also worked around the clock to develop a number of pandemic related online products to serve over a billion users in China.

[noise] to help efficiently combat the outbreak.

Technologies and Smart solutions played a crucial role to digitalize public service is rapidly generating over a thousand related many programs in municipal services healthcare and education.

Martin Lau: Leveraging our high DAU platforms, authorities can deliver pandemic-related news and timely information, promoting public awareness and education on preventive mesh. A reliable and smooth light broadcast system enabled schools to move courses online and helped students resume their studies.

Leveraging our idea you platforms authorities can deliver pandemic related news and time information promoting public awareness and educating preventive measures.

Martin Lau: A reliable and smooth live broadcast system enabled schools to move courses online and helped students to resume their studies. For enterprises, we upgraded our remote working and collaboration solutions to help mitigate interruptions to their business. We also helped retailers to leverage Mini Programs to move online in order to recover sales. Successful retailers have seen their sales through Mini Programs increasing by tenfold, and some even more. For internet users, our free online courses and rich digital content enrich their leisure time at home. Our communication and social platforms connect users with their friends and family, including when they are under quarantine. We believe these efforts fully embody our mission, which is value for users, tech for good. Now, the outbreak also presents a short-term impact to some of our businesses, which I would like to summarize for all of you.

Reliable and smooth light broadcast system enabled schools to move courses online and helped students who we assume that studies.

Martin Lau: For enterprises, we upgraded our remote working and collaboration solutions to help mitigate interruptions to their business. We also help retailers to leverage many programs to move online in order to recover sales. Some successful retailers have seen their sales through these mini programs increasing by tenfold, and some even more.

For enterprises, we upgraded our remote working and collaboration solutions to help mitigate interruptions to their business.

We also help retail is to leverage muni programs to move online in order to recover cells.

Successful retailers have seen theirselves too many programs, increasing by tenfold and some even more.

For Internet users are free online courses and rich digital content to enrich their leisure time at home or.

Martin Lau: For internet users, our free online courses and rich digital content enrich their leisure time at home. Our communication and social platforms connect users with their friends and family, including when they are under quarantine. We believe these efforts fully embody our mission, which is value for users, and tech for good. Now, the outbreak also presented a short-term impact on some of our businesses, which I would like to summarize for all of you. For mobile payment, offline commercial transactions and revenue declined significantly as many restaurants and stores did not open after Chinese New Year.

Communication and social platforms connecting users with their friends and family, including when they are under Clinton.

We believe these efforts fully and body our mission, which is value for users tech for good.

Martin Lau: The volume rebounded quickly after we resumed. During this time, we reduced our marketing expenses, and therefore, net-net, we expect a limited negative impact of mobile payment on our profitability. For online advertising, despite some advertisers' reduced spending during this period, performance-based advertising is sustaining robust year-on-year growth rates, driven by our high ROI, as well as our healthy and diversified advertiser base. For cloud services, there's a short-term negative impact on revenue due to delayed implementation of projects.

[noise] [noise] not the outbreak also presented a short term impact could some of our businesses, which I would like to summarize who will review.

For mobile payment offline commercial transactions and revenue declined significantly as many restaurants in school or did not open after Chinese new year.

Martin Lau: For mobile payment, offline commercial transactions and revenue declined significantly as many restaurants and stores did not open after Chinese New Year. The volume rebounded quickly after work resumes. During this time, we reduced marketing expenses, and therefore net-net, we expect limited negative impact of mobile payment on our profitability. For online advertising, despite some advertisers reduced spending during this period, our performance-based advertising is sustaining robust year-on-year growth rates driven by our high ROI as well as our healthy and diversified advertiser mix. For cloud services, there's a short-term negative impact on revenue due to delayed implementation of projects. However, we believe the coronavirus outbreak catalyzed the expansion in industry demand and addressable market for long term as enterprises embrace digital upgrades.

Volume rebound that quickly after work we suits.

During this time.

We reduced the marketing expenses and therefore net net we expect to limits at negative impact.

Oh mobile payments on our profitability.

[laughter] for online advertising despite some advertise this reduced spending during this period.

Performance based advertising.

It's sustaining robust you're on your growth rate.

Great driven by our high ROI as well as are healthy and diversified advertiser mix.

The cloud services, there's a short term that could impact on revenue due to delayed implementation of project.

Martin Lau: However, we believe the coronavirus outbreak catalyzed the expansion of industry demand and the addressable market for the long term as enterprises embrace digital upgrades. For smart industries, increased adoption by consumers and enterprises led to growth in users and traffic to our WeChat work, Tencent Meeting, Tencent Health, and Tencent Education Services. For many programs, as an easy-to-deploy digitization tool, it is used by many merchants and institutions to move their services online rapidly. Therefore, DAU daily visits and the number of mini programs surged, especially in fresh food and grocery delivery services. Municipal Services, Remote Working, Online Healthcare Services, and Online Education.

However, we believe the Corona virus outbreak capitalized expansion in industry demand and addressable market for long term as enterprises embrace digital upgrades.

Martin Lau: For smart industries, increased adoption by consumers and then enterprises led to growth in users and traffic to our WeChat Work, Tencent Meeting, Tencent Health, and Tencent Education Services. For Mini Programs, as an easy-to-deploy digitization tool, it is used by many merchants and institutions to move their services online rapidly. Therefore, DAU daily visits a number of Mini Programs searched, especially in fresh food and grocery delivery services, municipal services, remote working, online healthcare services, and online education. For digital entertainment, it is not only an alternative to out-of-home activities, but also help to reduce people's anxiety during such a difficult time. Users are increasing their time spent on a whole range of digital content services, including our online games, video, and reading services. We believe challenges are transitory, but user behavior and enterprise mindset change are structural. We are well-positioned to accelerate the digitization of industries for the future.

For smart industries increased adoption by consumers and the prices led to growth in users in traffic to our we check work 10 said meeting Tencent health and Tencent Education services.

For many programs as an easy to deploy digitization tool. It is used by many merchants and institutions to move their services online rapidly.

Therefore, they are you daily visits and number of many programs searched, especially in fresh food and grocery delivery services.

Municipal services remote working online healthcare services and on an education.

[noise] for digital entertainment. It has not only an alternative to out of home activities, but also helped to reduce people's inside the doing such a difficult time.

Martin Lau: Digital entertainment is not only an alternative to out-of-home activities but also helps to reduce people's anxiety during such a difficult time. Users are increasing their time spent on a whole range of digital content services, including our online games, video, and reading services. We believe challenges are transitory, but user behavior and enterprise mindset change are structural. We are well-positioned to accelerate the digitization of industries for the future. So that concludes the discussion focused on the COVID outbreak.

Martin Lau: For digital entertainment, it is not only an alternative to out-of-home activities, but also help to reduce people's anxiety during such a difficult time. Users are increasing their time spent on a whole range of digital content services, including our online games, video, and reading services. We believe challenges are transitory, but user behavior and enterprise mindset change are structural. We are well-positioned to accelerate the digitization of industries for the future.

Uses an increasing their time spent on a whole range of digital content services, including our online games video and reading services.

We believe challenges are transitory, but user behavior in enterprise mindset change a structural.

We are well positioned to accelerate the digitization of industries.

For the future.

[noise]. So that concludes the discussion focused on the call that outbreak now let's move onto some strategic areas that we're pioneering the industry evolution and also facilitating the pitch to upgrade.

Martin Lau: That concludes the discussion focused on the COVID outbreak. Now let's move on to some strategic areas that we are pioneering the industry evolution and also facilitating the digital upgrade. In the area of smart healthcare, leveraging our AI and cloud technologies, we are committed to bringing convenient and professional healthcare services to users and institutions. During the outbreak, our Tencent Health, Tencent Medipedia, and Health Code services helped prevent the spread of coronavirus and also acquired large number of users. First, on Tencent Health, it is our all-in-one entry point for online medical services. Over 300 million Weixin users use it as an important access to real-time data and information, as well as conduct online consultation. During the outbreak, we launched AI-powered tools to enable users to self-diagnose via chatbots.

Martin Lau: Now let's move on to some strategic areas that we are pioneering the industry evolution and also facilitating the digital upgrade, in the area of smart healthcare. Leveraging our AI and cloud technologies, we are committed to bringing convenient and professional healthcare services to users and institutions. During the outbreak, Tencent Health, Tencent Mediapedia, and Health Code Services helped prevent the spread of coronavirus and also acquired a large number of users.

In the area of smart healthcare.

Leveraging our <unk> and cloud technologies, we are committed to bring inconvenient and professional healthcare services to users and institutions.

During the outbreak Tencent held 10 submitted Pdm and health coach services help prevent the spread up Corona virus and also acquired large number of users.

Martin Lau: First, Tencent Health is our all-in-one entry point for online medical services. Over 300 million WeChat users use it as an important access point to real-time data and information, as well as to conduct online consultations. During the outbreak, we launched AI-powered tools to enable users to self-diagnose via chatbot. These services and tools were also built into a smart solution, facilitating 40 medical institutions to deliver prompt and timely services to help contain the spread of coronavirus. Second,

First on Tencent House. It is our all in one entry point for online medical services.

Over 300 million wishing users use it as an important access to real time data and information as well as conduct online consultation.

Duly outbreak, we launched a high power tools to enable users to self diagnose the chat bots.

Martin Lau: These services and tools were also built into our smart solution, facilitating 40 medical institutions to deliver prompt and timely services to help contain the spread of coronavirus. Second, Tencent Medipedia provides reliable and professional medical information resource, covering knowledge graph of over 10,000 diseases. We developed pandemic-related content and distribute it via our multiple high-traffic platforms such as Weixin and Tencent News, attracting over 600 million page views. We also launched free online consultation to enable access to over 10,000 doctors from our ecosystem partners such as WeDoctor and DoctorWork. Third, Health Code becomes the most used e-pass for verifying health and travel history during the outbreak. Leveraging our extensive reach of Weixin and easy-to-use Mini Programs, Health Code rapidly covered 900 million users across more than 300 cities and counties with 8 billion total visits since early February.

These services and tools were also built into our smart solution, facilitating 40 medical institutions to deliver prom and timely services to help contained a spread of Corona virus.

Second.

Martin Lau: Tencent Mediapedia provides a reliable and professional medical information resource covering knowledge graphs of over 10,000 diseases. We have developed pandemic-related content and distribute it via our multiple high-traffic platforms, such as Weixin and Tencent News, attracting over 600 million page views. We also launched free online consultation to enable access to over 10,000 doctors from our ecosystem partners such as vDoctor and DoctorWorks. Third, Health Code became the most used e-pass for verifying health and travel history during the outbreak, leveraging our extensive reach of WeChat and easy-to-use mini-programs. Health Code rapidly covered 900 million users across more than 300 cities and counties with 8 billion total visits since early February.

10 submit the PDR provides reliable and professional medical information resource covering knowledge graph of over 10000 diseases, we developed a pandemic related content and distribute it via our multiple high truck platforms, such as relation and Tencent news.

Attracting over 600 million page views.

Martin Lau: We also launched free online consultation to enable access to over 10,000 doctors from our ecosystem partners such as WeDoctor and DoctorWork. Third, Health Code becomes the most used e-pass for verifying health and travel history during the outbreak. Leveraging our extensive reach of Weixin and easy-to-use Mini Programs, Health Code rapidly covered 900 million users across more than 300 cities and counties with 8 billion total visits since early February.

We also launched a free online consultation to enable access to over 10000 doctors from an ecosystem partners such as be Doctor and Dr. work.

Third health coach becomes the most used you pass for verifying health and travel history doing the outbreak.

I mentioned, our extensive which operation and easy to use meaty programs.

Health code rapidly covered 900 million users across more than 300 cities and counties with 8 billion total visits since early February.

Now moving on to remove working which has gained a strong momentum recently as more users in the organizations.

Martin Lau: Now moving on to remote working, which has gained strong momentum recently as more users and organizations are using remote working as their main type of working. Tencent Meeting, which is our dedicated business video conference app, has recorded over 10 million DAU within 2 months since launch in last December, and has become the largest standalone app for cloud conferencing in China. In particular, we saw strong demands from business, government, and education sectors and helped employees work from home and student resume their studies. Our product delivers secure, stable, and high-definition video experience leveraging our advanced security, cloud, and AI technologies. Users can join meeting via multiple channels across platforms and devices such as mobile app, Weixin, Mini Programs, PC, and phone calls. Our team responded swiftly to customer feedback and upgraded the product frequently, releasing 14 versions in the recent 40 days.

Using remote working as the main type of foot working.

Tencent meeting, which is our dedicated business Videoconference App has recorded over 10 million Dia you within two months since launch last December.

Lets become the largest standalone apps for cloud conferencing in China.

In particular, we saw strong demands from business government and education sectors.

And helped employees work from home and student resumed their studies.

Martin Lau: Our product delivers a secure, stable, and high-definition video experience, leveraging our advanced security, cloud, and AI technologies. Users can join meetings via multiple channels across platforms and devices such as mobile app, WeChat mini programs, PC, and phone calls.

Our product delivers securus stable and high definition video experience leveraging our advanced security cloud and technologies.

Users can join meeting your multiple channels across platforms and devices, such as mobile App wishing many programs PC and some costs.

Martin Lau: Our team responded swiftly to customer feedback and upgraded the product, frequently releasing 14 versions in the last 40 days. With infrastructure and sales team support from Tencent Cloud, we're able to enhance Tencent Meetings' performance and efficiency. For WeChat Work, it has become a leading hub for teamwork in China with millions of enterprises adopting it to resume working, and usage has surged tenfold recently. A unique proposition lies in integration with Weixin, which facilitates business customer management and sales conversion via Weixin Moment. Mini Programs and Ways and Pays, in addition to providing a collaboration tool for employees internally.

Our team responded swiftly to customer feedback an upgrade at the product frequently releasing 14 versions in the recent 40 days.

With infrastructure and self esteem support from Tencent cloud, we're able to enhance tencent meetings performance and efficiency.

Martin Lau: With infrastructure and sales team support from Tencent Cloud, we're able to enhance Tencent Meeting's performance and efficiency. For WeChat Work, it has become a leading hub for teamwork in China, with millions of enterprises adopting it to resume working and usage surged tenfold recently. Our unique proposition lies in integration with Weixin, which facilitates business customers management and sales conversion via Weixin Moments, Mini Programs, and Weixin Pay, in addition to providing a collaboration tool for the employees internally. This helped us attract clients and increase the engagement. Meanwhile, as we expanded our client base, we encountered differentiated needs from some industries. For example, government and financial institutions prefer private cloud deployment because of the security. Therefore, WeChat Work now can be deployed flexibly on both public and private cloud to cater to different customer needs.

The which at work it has become a leading hub for teamwork in China with millions of enterprises adopting it to resume working and usage searched tenfold recently.

Our unique proposition lights in integration would operation, which facilitates business customers management and sells conversion via basin moment.

Many programs and basin pay in addition to providing a collaboration tool for the employees internally.

Martin Lau: This helps us attract clients and increase engagement. Meanwhile, as we expanded our client base, we encountered differentiated needs from some industries. For example, government and financial institutions prefer private cloud deployment because of security.

This helps us attract climbs and increased engagement.

Meanwhile, as we expanded our client base, we encountered differentiated needs from some industries for example, government and financial institutions prefer private cloud deployment because of the security.

Martin Lau: Therefore, which has worked, now can be deployed flexibly on both public and private clouds to cater to different customer needs. Our customers can also select and configure specialized solutions among our rich office tool offerings provided by over 20,000 SaaS providers, allowing a tailor-made system to better serve business operations. Now, moving to the consumer internet, our mini video app WeiShi achieved rapid growth and presented strong momentum by leveraging our social platform. During using Weixin, users can create and share 30 second videos in Weixin Moments.

Therefore, which at work.

Now can be deployed flexibly on both public and private cloud to cater to different customer needs.

Martin Lau: Our customers can also select and configure specialized solutions among our rich office tool offerings provided by over 20,000 SaaS providers, allowing tailor-made system to better serve business operations. Now, moving to consumer internet. Our mini video app, Weishi, achieved rapid growth and presented strong momentum leveraging our social platforms. Using Weishi, users can create and share 30-second videos to Weixin Moments. They can also use Weixin and QQ plugins to discover talk-of-the-town videos in a timely basis. These initiatives contributed to the quarter-on-quarter growth of more than 80% in daily active users and over 70% in daily uploads for the Q4 for Weishi. To engage users, we made Weishi attractive and fun by introducing certain innovative and interactive features. For instance, we launched Weishi Challenge, a 30-second challenge for interesting acts led by celebrities and imitated by users.

Our customers can also selecting configure specialized solutions among a rich office to offerings provide about over 20000, SaaS providers, along taylormade system to better serve business operations.

Now moving to consumer Internet.

Martin Lau: They can also use Weixin and QQ plugins to discover talk of the time videos on a timely basis. These initiatives contributed to the quarter-on-quarter growth of more than 80% in daily active users and over 70% in daily uploads for the fourth quarter of Weishi. To engage users, we make ratio attractive and fun by introducing certain innovative and interactive features. For instance, we launched Weishu Challenge, a 30-second challenge for interesting acts led by celebrities and imitated by users.

Amini video and wish you achieved rapid growth and presented strong momentum leveraging our social platforms.

During way using way sure users came true eight and share 32nd videos tuition moment. They can also use relation and QQ plug ins to discover talk up the town videos in a timely basis.

These initiatives contributed to the quarter on quarter growth of more than 80% in daily active users.

And over 70% in daily uploads for the fourth quarter for waste issue.

To engage users, we may wish attractive and fun by introducing certain innovative and interactive features.

For instance, we launched away should challenge a 32nd challenge for interesting acts like a celebrities and emitted by users tens of millions of users participated and uploaded video to compete with well look to Els and friends during the past half year.

Martin Lau: Tens of millions of users participated and uploaded videos to compete with both KOLs and friends during the past half year. We also creatively added the Red Envelope feature in Weishi, which can be shared on Weixin and QQ. The Junior Spring Festival of 2020.

Martin Lau: Tens of millions of users participated and uploaded video to compete with both KOLs and friends during the past half year. We also creatively added red envelope feature in Weishi, which can be shared to Weixin and QQ. During the Spring Festival of 2020, users exchanged 1.6 billion Weishi video red envelopes. We also constantly enhance technologies for content creation, curation, and recommendation. We provide AI-powered cameras for Weishi users to lower difficulties in creating content. Our advanced video recognition system accurately tag and classify the content to be ready for recommendation to users. By deep learning users interest graph, the smart recommendation engine is able to facilitate content discovery for them. In terms of content, we leverage our rich in-house IPs to expedite unique content creation by KOLs and MCNs.

We also creatively added red envelope feature in ratio, which can be shared situation and QQ.

During the Spring Festival.

Offer twentytwenty.

Martin Lau: Users exchanged 1.6 billion WeChat video Red Envelopes. We also constantly enhance technologies for content creation, Curation, and Recommendation. We provide AI-powered cameras for WeChat users to lower difficulties in creating content. Our advanced video recognition system accurately tags and classifies the content to be ready for recommendation to users. And by deep learning users' interest graph, the smart recommendation engine is able to facilitate content discovery for them.

Users exchanged 1.6 billion way should video Red envelopes.

We also constantly and health technologies for content creation.

Duration and recommendation.

We provide AI proud cameras for wishes users to lower difficulties in creating content.

Our availability recognition system accurately tack and classified the content to be ready for recommendation to users and by deep learning uses interest graph the smart recommendation engine.

Is able to facilitate contented discovery for them.

Martin Lau: In terms of content, we leverage our rich in-house IPs to expedite unique content creation by KOLs and MCNs. For example, we allow KOLs and MCNs to repurpose our high-quality content from Tencent Video and Tencent Sports to produce clips and highlights for mini-videos. We encourage star players of Honor of Kings and other Tencent games to share their weekly moments on Weishi. In addition, Weixia and Tencent Animation and Comics also produced the popular mini-drama series Tonglingfei, which was converted into unique mini-videos for Weishi by MCNs and KOLs and has attracted a large number of video viewers.

In terms of content, we leverage our rich in house I piece to expedite unique content creation by Cales M. M sentence. For example, we allow kill Ellison M.C. adds to the purpose of high quality content from Tencent video and Tencent sports to produce clips and highlights flamini video.

Martin Lau: For example, we allow KOLs and MCNs to repurpose our high-quality content from Tencent Video and Tencent Sports to produce clips and highlights for mini video. We encourage star players of Honor of Kings and other Tencent games to share their weekly moments on Weishi. In addition, Weishi and Tencent Animation and Comics also produced popular mini drama series, Tong Ling Fei, which was converted into unique mini videos for Weishi by MCNs and KOLs and has attracted large number of video views. Moving on to our online games business, especially on mobile games, we have made significant breakthroughs in self-developed games for international markets. For example, PUBG Mobile has become the most popular international mobile game in terms of DAU and MAU.

We encourage star players of honor Kings and other Tencent games to share the weekly moments on ratio.

In addition, wish and Tencent animation and comics also produced.

Popular mini drama series tolling fee, which was converted into unique muni videos for ratio by MCN NK cells and has attracted large number of video views.

Moving onto our online games business, especially among them <unk> mobile games.

Martin Lau: Moving on to our online games business, especially mobile games, we have made significant breakthroughs in self-developed games for international markets. For example, PUBG Mobile has become the most popular international mobile game in terms of DAU and MAU. Call of Duty Mobile was the largest new launch by downloads and was crowned as the best mobile game of the year in 2019 by TGA, the game award.

We have made significant breakthroughs in self developed games for international markets.

For example.

T mobile has become the most popular international mobile game in terms of D.A., you and EMEA you.

Martin Lau: Call of Duty: Mobile was the largest new launch by downloads and was crowned as the best mobile game of the year in 2019 by TGA, The Game Awards. Moreover, Supercell's Brawl Stars was one of the best performing original IP mobile titles in 2019. If you look at the global chart, we developed 5 of the top 10 most popular international mobile games. The proven success globally demonstrate our accumulated capabilities built up over many years. First, our know-how in mobile game development. Our in-house studio group, TiMi and Lightspeed & Quantum, representing the highest level of mobile game development capability, have delivered authentic PC and console game quality on mobile. Second, advanced technological know-how.

Got a duty mobile was the largest new launch by downloads and was crying that as the best mobile game up the year in 2019 by Tha The game Awards.

Moreover, Superstars brought stars was one of the best performing original IP mobile titles in 2019.

Martin Lau: Moreover, Supercell's Brawl Stars was one of the best-performing original IP mobile titles in 2019. If you look at the global chart, we've developed five of the top ten most popular international mobile games. The proof

If you look at the Global chart would develop five off the top 10, most popular international mobile games.

The proven.

Martin Lau: Success globally demonstrates our accumulated capabilities built up over many years. First, our know-how in mobile game development. Our in-house studio group, Timmy, Lightspeed, and Quantum, representing the highest level of mobile game development capability, have delivered authentic PC and console game quality on mobile. Second, advanced technological know-how.

Success.

Globally demonstrate.

Accumulated capabilities built up over many years first.

Our know how in mobile game development, our in House studio group, TV and high speed and quantum.

Representing the highest level of mobile game development capability have delivered authentic PC and console game quality on mobile.

Second avails techno logic or no.

Martin Lau: Leveraging our strategic partnership with Epic Games, we have deep technical experience in the industry-leading game engine, and our heavy investment in AI and cloud technology over the years ensure a good in-game experience as well as reliable and high-speed access to our games. Thirdly, our long-term business cooperation with partners over the years have paved the way for our smooth and in-depth communication along the topics of IP development, gameplay design, international user insight, global publishing, as well as operational experience exchange. Last but not least, expertise in operating large-scale social networks and games we're experienced in curating social experiences for players to promote their enjoyment and engagement. We also organize top global e-sports tournaments to further popularize our games. Going forward, we'll strengthen our technology service and platform to position ourselves to capture the opportunities from an expanding addressable game market and long-term digital upgrades in various industries.

Leveraging our strategic partnership with epic games, we have deep technical experience in the industry leading game engine.

And our heavy investment in AI and cloud technology over the years and sure.

A good end game experience as well as reliable and high speed access to our games.

Thirdly, our long term business cooperation with partners over the years have paved the way for our smooth and ended up communication along the topics of IP development gameplay design International user insights global publishing as well as operational experience. This exchange.

Last but not least expertise in operating large scale social networks and games.

James Gordon Mitchell: We're experiencing curating social experiences for players to promote their enjoyment and engagement. We also organized top global esports tournaments to further popularize our game. Going forward, we'll strengthen our technology service and platform to position ourselves to capture the opportunities from an expanding addressable game market and long-term digital upgrades in various industries. So with that, I'll pass to James to talk about our business review. Thank you, Martin. Good evening or good morning, everyone

We're experiencing shoe rating social experiences players to promote their enjoyment and engagement.

We also organize top global E sports tournaments to further popularize our games.

Going forward will strengthen our technology service and platform to position ourselves to capture the opportunities from an expanding addressable game market and long term digital upgrades in various industries.

Martin Lau: With that, I'll pass to James to talk about our business reveal.

So with that I'll pass to James to talk about our business is real.

James Gordon Mitchell: For the fourth quarter of 2019, our total revenue grew 25% year on year. VAS represents 50% of our revenue, of which online games accounted for 29% and social networks 21%, and Business Services represented 28% of total revenue and online advertising. The value-added service segment revenue was 52.3 billion renminbi in the quarter, up 20% year-on-year and up, Social Networks. Our total VAS subscriptions were $180 million at the end of 2019, up 12% year-on-year. Growth in video and music subscriptions was driven by self-commissioned Chinese animated series, and our paid music content library, Fund of Subscription.

James Mitchell: Thank you, Martin. Good evening or good morning, everyone. For Q4 2019, our total revenue grew 25% year on year. VAS represents 50% of our revenue, within which online games were 29% and social networks, 21%. FinTech and business services represented 28% of total revenue and online advertising, 19%. Value-Added Services segment revenue was CNY 52.3 billion in the quarter, up 20% year on year and up 3% quarter on quarter. In social networks, our total VAS subscriptions were 180 million at the end of 2019, up 12% year on year. Growth in video and music subscriptions was driven by self-commissioned Chinese animated series, our paid music content library, and bundled subscription offerings. Total video subscriptions were 106 million, up 19% year on year.

Thank you Mark infrared evening everyone.

For the fourth quarter of 2019, Aceto revenue grew 25% year on year.

I asked represents 50% I revenue within which online games for 29% social networks, 21% in Tech and business services represented 28% of total revenue and online advertising 19%.

The value added services segment revenue was 52.3 billion renminbi in the quarter up 20% year on year, 3% quarter on quarter.

In social networks, our total V S subscriptions for 118 million at the end of 2019 up 12% year on yeah.

Right and video and music subscriptions was driven by self Commission Chinese animated series I hate music content library and bundled subscription offerings.

James Gordon Mitchell: Total video subscriptions were $106 million, up $9 billion. Our social network revenue increased 13% year-on-year to $22 billion, among which was the Live Broadcast Service. However, social network revenue was flat quarter on quarter as the seasonal decline of in-game item sales offset digital content revenue growth.

Yes options rocket and 6 million up 19% year on yet.

James Mitchell: Our social network revenue increased 13% year on year to RMB 22 billion, among which live broadcast services and music subscriptions revenue grew strongly year on year. Social network revenue was flat quarter on quarter as the seasonal decline of in-game item sales offset digital content revenue growth. Turning to online games, revenue grew 25% year on year and grew 6% quarter on quarter to RMB 30.3 billion. Non-China markets contributed 23% of our game revenue, benefiting from key titles such as PUBG Mobile and Call of Duty Mobile, as well as the consolidation of Supercell. For smartphone games, total revenue rose 37% year on year to RMB 26 billion, driven by titles such as Honor of Kings and Peacekeeper Elite, as well as rapid growth from international markets.

Aside from network revenue increased 13% year on year to 22 billion renminbi, among which like broadcast services and music subscriptions revenue grew strongly on yet.

Social network revenue was flat quarter on quarter as a seasonal decline of in game item sales offset digital content revenue growth.

James Gordon Mitchell: Returning to online games, revenue grew 25% year-on-year and grew 6% quarter-on-quarter to $30.3 billion. Non-China markets contributed 23% of our game revenue, benefiting from key titles such as PUBG Mobile and Call of Duty Mobile, as well as the consolidation of the game itself. Smartphone games total revenue rose 37% year-on-year to $26 billion, proven by titles such as Honor and Elite, as well as rapid growth from international markets. sequentially, smartphone games revenue increased sevenfold, and consolidation of supercells offset soft seasonality in China.

Turning to online games revenue grew 25% year on year grew 6% quote unquote EPS of 30.3 billion renminbi.

Non China markets contributed 23% game revenue benefiting from key titles such as our team I bought in quarter, two came about as well as the consolidation.

[noise] smartphone games total revenue rose, 37% year on yet 26 billion renminbi driven by titles such as owner of Kings and peacekeepers fleet as well as rapid growth from international markets sequentially smartphone games revenue increased 7% consolidations supercell offset softer seasonality in China.

James Mitchell: Sequentially, smartphone games revenue increased 7% as consolidation of Supercell offset soft seasonality in China. For PC client games, revenue decreased 7% year on year and fell 10% quarter on quarter to CNY 10.4 billion. Paying users in DNF declined, while global revenue from League of Legends increased. Diving into social networks. Within our Weixin ecosystem, we focused on facilitating service and commerce connections. After the outbreak of COVID-19, we added a dedicated healthcare section within Weixin Pay's public service entry point, which has been used by more than 300 million people. We're beta testing live broadcast in Mini Programs and launched tools which enable merchants to increase sales conversion and encourage social sharing of their shows and Mini Programs. For QQ, we enabled AI-based recommendation for stickers and elevated the entertainment experience within QQ Mini Programs.

The PC client games revenue decreased 7% year on year fell 10% quarter on quarter to 10.4 billion renminbi, Hank using DNF declined while global revenue from league of legends increased.

James Gordon Mitchell: The PC Client Games revenue decreased 7% year-on-year and fell 10% quarter-on-quarter to $10.4 billion. [inaudible] Diving into social networks, within our WeChat ecosystem, we focused on facilitating service and commerce connections. After the outbreak of COVID-19, we added a dedicated health care section within Weishen Pei's public service entry point, which has been used by more than 300 million users, were beta-testing live broadcasting mini-programs and launch tools, which enable much... Sales Combustion, encourage social sharing of their shows and mini-programs. With QQ, we enabled AI-based recommendation for stickers and elevated the entertainment experience within the QQ Mini program.

Diving into social networks with innovation ecosystem be focused on facilitating servicing commerce connections asked the outbreak of Coca at 19 biotic added a dedicated healthcare section with inflation pace public service entry point, which has been used by more than 300 million people.

Where beta testing lifepro tossed in many programs and launch tools, which enable much it's to increase sales conversion and encourage social sharing especially those in many programs.

The QQ, we enable AI based recommendation for stickiness and elevated the entertainment experience within QQ. Many programs as a result, QQ user engagement increased and JD messages sent out keeps you use it grew at a mid teens percentage year on year in the quarter.

James Gordon Mitchell: As a result, QQ user engagement increased, and daily messages sent per QQ user grew at a mid-point, year-on-year. We optimized features for QQ school plus home, serving over 120 million users since the COVID-19 outbreak began. Schools can attend, or students can attend live broadcast curriculum courses and online tutoring programs from leading educational content providers. We offer online classroom management tools for teachers to handle school, such as HomeWorks.

James Mitchell: As a result, QQ user engagement increased, and daily messages sent per QQ user grew at a mid-teens percentage year-on-year in the quarter. We optimized features for QQ School-Home groups, which have served over 120 million users since the COVID-19 outbreak began. Schools can attend, or students can attend, live broadcast curriculum courses and online tutoring programs from leading educational content providers. We offer online classroom management tools for teachers to handle school routines, such as homework assignment. For online games in China, we enhanced the vitality of our key smartphone game franchises with high-quality content updates, such as the inclusion of the Auto Chess mode in Honor of Kings and new gameplay systems for Peacekeeper Elite. For PC client games, a record number of viewers watched League of Legends World Championship in Paris.

We optimize features for QQ school, plus hundreds, which has served over 120 million you use the carpet 19 outbreak the gap schools can attend or students can attend type broadcast curriculum course online tutoring programs, leading educational content providers.

We also online classroom management tools for teachers to handle school routines such assembled assignment.

Online games in China, we enhanced the vitality about he's smartphone game franchises with high quality content updates such as the inclusion of such as much in honor of Kings New game plays it systems are peacekeeper elite.

James Gordon Mitchell: For online games, in China, we enhance the vitality of our... Smartphone Game Franchise. With high-quality content updates such as the inclusion of the Auto Chess mode in Honor of Kings, a new game, PC Client Games, a record number of viewers watched the League of Legends World Championship in Paris. Tie-in marketing activities and item sales increased League of Legends paying users and revenue quarter-on-quarter. However, Dungeon and Fighter paying users increased revenue quarter-on-quarter.

A PC client games, a record number of viewers watched league of Legends World Championship in Paris tie in marketing activities and item sales increased league of legends hang uses of revenue quarter on quarter. However, Duncan and fight of thank yous has decreased in the fourth quarter two to content challenges and Martin has already called out some highlights our international game business.

James Mitchell: Tie-in marketing activities and item sales increased League of Legends paying users and revenue quarter-on-quarter. However, Dungeon & Fighter paying users decreased in Q4 due to content challenges. Martin has already called out some highlights of our international game business. Moving to online advertising, our total advertising revenue was CNY 20.3 billion in the quarter, up 19% year-on-year and up 10% quarter-on-quarter. Our social and others advertising revenue was CNY 16.3 billion, up 37% year-on-year and up 11% quarter-on-quarter, underpinned by healthy demand from verticals, including e-commerce, education, and games. We believe our Weixin Moments advertising provides highly attractive ROIs, and we added a fourth ad unit per user day in Weixin Moments during the e-commerce promotional periods in Q4, which generated positive advertiser sell-through and consumer engagement.

James Gordon Mitchell: Order Due to Content Challenge, and Martin has already called out some highlights of our international... Moving to online advertising, our total advertising revenue is $20.3 billion per quarter, up 19% year-on-year and up 10% quarter-on-quarter. Our social and other advertising revenue was 16.3 billion renminbi, up 37% year-on-year and up 11% quarter-on-quarter, underpinned by healthy demand from verticals and... e-commerce, We believe our Weixin Moments advertising provides highly attractive ROIs, and we added a fourth ad unit per user day in Weixin Moments during the e-commerce promotion and Forthwater, which generated positive advertiser sell-through and consumer engagement. We've permanently implemented the fourth ad load since mid-February from Mobile Ad Network.

Moving to online advertising auto advertising revenue was 20.3 billion.

At quarter, 19% year on year on up 10% quarter on quarter.

Our social and others advertising revenue was 16.3 billion renminbi up 37% year on year on up 11% quarter on quarter underpinned by healthy demand for the verticals including E.

E Commerce education and games, we believe out west in moments advertising provides highly attractive Barbara wise and we added a fourth AD unit per usage I inflation moments during the E commerce promotional appearances for what else, which generated positive appetizers sell through in consumer engagement.

James Mitchell: We've permanently implemented the fourth ad load from mid-February. For our mobile ad network, we signed up high-traffic media partners such as entertainment and social media services and added more rewarded video ad inventories. Our mobile ad network revenue more than doubled year on year in the quarter and was the largest contributor to our sequential advertising revenue growth, which we believe testifies to our increasing ad tech capabilities even on non-Tencent sites. Our media advertising revenue for Q4 was CNY 4 billion, down 24% year on year and up 8% quarter on quarter. While we generated relatively low advertising revenue around NBA basketball games in Q4, our video and news advertising revenue each increased quarter on quarter.

We have permanently implements the fourth AD load from mid February.

From mobile AD network, we signed up high traffic media partners, such as entertainment and social media services and added more rewarding adding entries on mobile AD network revenue more than doubled year on year in the quarter amongst the largest contributor to our sequential advertising revenue growth, which we believe testifies to our increasing.

James Gordon Mitchell: We've signed up high-traffic media partners such as entertainment and social media services and added more rewarded video add-ons. Our mobile ad network revenue more than doubled year on year in the quarter and was the largest contributor to our sequential advertising revenue growth, which we believe testifies to our increasing ad tech capabilities even on non-Tencent sites. Our media advertising revenue for the fourth quarter was $4 billion, down 24% year-on-year and up 8% quarter-on-quarter.

Hi Tech capabilities, even on non 10 cents sites.

Our media advertising revenue for the fourth quarter was 4 billion renminbi down 24% year on year, an up 8% quarter on quarter.

James Gordon Mitchell: While we generated relatively little advertising revenue around NBA basketball games in the fourth quarter, our video and news advertising revenue... [inaudible] Looking at FinTech and business services, revenue was 29.9 billion renminbi in the fourth quarter, up 39% year on year and up 12% quarter on quarter. FinTech services revenue grew robustly year-on-year and quarter-on-quarter as our platforms and services are increasingly adopted by consumers, merchants, As Pony mentioned, commercial payments activity recorded a new high with over 1 billion average commercial transactions per day, exceeding the major global card networks.

Well, we generated relative you know advertising wrapping around MPS basketball games in the fourth quarter, our video and use advertising revenue each increased quarter on quarter.

Looking at things hacking business services revenue was 29.9 billion renminbi into fourth quarter up 39% year on year in up 12% quarter on quarter.

James Mitchell: Looking at FinTech and Business Services, revenue was CNY 29.9 billion in Q4, up 39% year on year, and up 12% quarter on quarter. FinTech Services revenue grew robustly year on year and quarter on quarter as our platforms and services are increasingly adopted by consumers, merchants, and wealth management partners. As Pony mentioned, commercial payments activity recorded a new high with over 1 billion average commercial transactions per day, exceeding the major global card networks, and average value per transaction also increased. For wealth management, our active customer base more than doubled year on year as we expanded into the mass market, and our aggregated customer assets increased over 50% year on year. For lending, Weilidai originated loan balances increased. Within Business Services, our Cloud Services revenue sustained rapid growth driven by increased volumes of key contracts and clients.

And second.

Services revenue grew robustly year on year in quarter on quarter as our platforms and services are increasingly adopted by consumers much in some wealth management partners as Penni mentioned commercial payments absolutely recorded a new high with over 1 billion average commercial transactions per day exceeding the major global car was an average value per transaction also.

James Gordon Mitchell: An average value per transaction also increased. For Wealth Management, our active customer base more than doubled year-on-year as we expanded into the mass market, and our aggregated customer assets increased over 50% year-on-year for Lending. For business services, our cloud services revenues sustained rapid growth driven by increased volumes of key contracts and clients. Gross margins improved as we continue to optimize supply chains and expand our business scale. We exceeded a million paying cloud customers as we expanded sales teams for different verticals and deepened our partnerships.

The increase.

The wealth management Iraqi customer base more than doubled year on year as we expand into the mass market, an aggregated tussler assets increased over 50% year on year.

And for lending weighty die originated loan balances increased.

Within business services cloud services revenues to sank rapid growth driven by increased volumes of key contracts and clients gross margins improved as we continue to optimize supply chains and expand our business scale.

James Mitchell: Gross margins improved as we continued to optimize supply chains and expand our business scale. We exceeded 1 million paying cloud customers as we expanded sales teams for different regions and industries and deepened our partnerships with systems integrators. We enhanced our enterprise software as a service offerings via our first-party products, notably Tencent Meeting and WeChat Work, as well as partnerships with third-party software providers. I'll now pass to John to discuss the financial metrics.

We exceeded a million pan cloud customers as we expand sales teams different regions and industries and deepened our partnerships with systems integrators.

James Gordon Mitchell: And we enhanced our enterprise software-as-a-service offerings via our first-party products, notably Tencent Meeting and WeChat Work, as well as partnerships with third-party software providers. And I'll now pass to John to discuss the finances. Thank you, James. Hello, everyone.

Enhanced our enterprise software as a service offerings far out first party lots, notably chance that museum reach out work as well as partnerships with third party software providers and I'll now pass to John's discussed the financial metrics.

John Loh: For the fourth quarter of 2019, total revenue was 105.8 billion renminbi, up 25% year-on-year or 9% quarter-on-quarter. Excluding the impact from consolidating the supercell consortium group, I'll refer to it as supercell afterwards for simplicity. Total revenue would have been 21% year-on-year or 6% quarter-on-quarter. Gross profit was $46.1 billion RMB, up 31% year-on-year or 9% quarter-on-quarter. Net other gains were $3.6 billion RMB compared to net other losses of $2.1 billion RMB in the fourth quarter of 2018, and up 289% quarter-on-quarter.

John Lo: Thank you, James. Hello, everyone. For Q4 2019, total revenue was CNY 105.8 billion, up 25% year-on-year or 9% quarter-on-quarter. Excluding the impact from consolidating the Supercell consortium group, I'll refer it as Supercell afterwards for simplicity, total revenue would have been 21% year-on-year or 6% quarter-on-quarter. Gross profit was CNY 46.1 billion, up 31% year-on-year or 9% quarter-on-quarter. Net other gains was CNY 3.6 billion compared to net loss, other losses of CNY 2.1 billion in Q4 2018. Up 289% quarter-on-quarter.

Thank you Jane Hello, everyone for the fourth quarter of 2019 total revenue was 105.8 billion renminbi up 25% year on year or 9% quarter quota.

Excluding the impact from consolidating the supercell consortium growth I'll refer it has to sell afterwards for simplicity.

Total revenue would have been 21% year on year or 6% quarter on quarter.

Gross profit was 46.1 billion randomly up 31% year on year or 9% quarter on quarter net of the gains plus 3.6 billion Rand be compared to net loss other losses of 2.1 billion ran at being a fourth quarter of 2018.

And up 289% quarter on quarter the year on year change was mainly due to non I have iris items, including one up expenses relating to share issuance to ATM you strategic partner in quarter, four last year and net sabadell gains from certain investee companies.

John Loh: The year-on-year change was mainly due to non-IR virus items, including one-off expenses relating to share issuance to a TME strategic partner in Q4 last year and net fair value gains from certain invested companies. Consequently, the increase was mainly due to the increase in fair value gains of certain investors, which were also non-IBIs to adjust. Operating profit was 28.6 billion renminbi, up 65% year-on-year or 11% quarter-on-quarter. Net finance costs were 2.8 billion renminbi, up 102% year-on-year or 58% quarter-on-quarter.

John Lo: The year-on-year change was mainly due to non-IFRS items, including one-off expenses relating to share issuance to a TME strategic partner in Q4 last year and net fair value gains from certain investee companies. Sequentially, the increase was mainly due to the increase in fair value gains of certain investees, which were also non-IFRS adjustments. Operating profit was CNY 28.6 billion, up 65% year-on-year or 11% quarter-on-quarter. Net finance costs were CNY 2.8 billion, up 102% year-on-year or 58% quarter-on-quarter. The year-on-year increase was mainly due to greater interest expense resulting from higher amount of indebtedness.

Sequentially the increase was mainly due to.

Okay fair value gains of certain Investees, which were also known as iced Justin.

Operating profit was 28.6 billion renminbi up 65% year on year or 11% quote unquote that.

Net finance costs, where to put a bit in renminbi up 102% year on year or 58% quarter on quarter.

John Loh: The year-on-year increase was mainly due to greater interest expense resulting from a higher amount of indebtedness. Share of Losses of Associates and Joint Ventures for the 4th Quarter of 2019 was 1.3 billion renminbi. Compared to Share of Profit in the 4th Quarter of 2018 and the 3rd Quarter on a Non-IR Virus Basis, share profit decreased from RM1.9 billion a year ago and 2.1 billion renminbi a quarter ago to 1.3 billion renminbi this quarter. Partly due to the consolidation of Supercell, which was then in a...

The year on year increase was mainly due to create the interest expense resulted from higher amount of indebtedness.

Share of losses of associates and joint ventures for the fourth quarter 2019 was 1.3 billion Randy compared to ship profit in the fourth quarter 2018, and third quarter on a non IRS basis share profit decreased from 1.9 billion renminbi a year ago.

John Lo: Share of losses of associates and joint ventures for Q4 2019 was CNY 1.3 billion compared to share of profit in Q4 2018 and Q3. On a non-IFRS basis, share of profit decreased from CNY 1.9 billion a year ago, and CNY 2.1 billion a quarter ago to CNY 1.3 billion this quarter. Partly due to the consolidation of Supercell, which was then an associate. Income tax ex-

And coupon one been in renminbi, a quarter ago to 1.3 billion renminbi this quarter.

<unk>.

Partly due to the consolidation of supercell, which was down in associates.

Income taxes.

Operator 2: Ladies and gentlemen, your speaker is currently experiencing some technical difficulties with the line. Please stand by while we address the situation. Your lines will be placed on music hold until the conference resumes. Ladies and gentlemen, thank you all for staying on the line. We will now resume the call.

Operator: Ladies and gentlemen, your speaker is currently experiencing some technical difficulties with the line. Please stand by while we address the situation. Your lines will be placed on music hold until the conference resumes. Ladies and gentlemen, thank you all for staying on the line. We will now resume the call.

Ladies and gentlemen, your speaker is currently experiencing some technical difficulties with the line. Please standby while we address a situation your lines of it plays on music hold onto the conference resumes.

unknown: [inaudible]

[music].

Ladies and gentlemen, Thank you also seeing on July we would now be seem to coal.

Operator: Ladies and gentlemen, thank you all for staying on the line. We will now resume the call.

Let me walk you through Oh, no and I have virus financial numbers for the fourth quarter operating profit was 40.3 billion brand to be up 35% year on year, all 6% quadrant quota that probably <unk> of the N. C. I was 25.5 billion rather than be up 29% you on yell fault.

John Loh: Hi, let me walk you through our non-IRS financial numbers. For the fourth quarter, operating profit was $30.3 billion RMB, up 35% year-on-year or 6% quarter-on-quarter. Net profit after NCI was $25.5 billion RMB, up 29% year-on-year or 4% quarter-on-quarter. For the full year 2019, operating profit was $114.6 billion RMB, up 24%. Operating Margin was 30.4%, up 0.8 percentage points. Net profit after NCI was 94.4 billion renminbi, up 22%. Turning to segment gross margin, gross margin for VAS was 50.1%, down 3.3 percentage points year on year or 1.7 percentage points quarter on quarter.

John Lo: Hi. Let me walk you through our non-IFRS financial numbers. For Q4, operating profit was CNY 30.3 billion, up 35% year on year or 6% quarter on quarter. Net profit after NCI was CNY 25.5 billion, up 29% year on year or 4% quarter on quarter. For the full year 2019, operating profit was CNY 114.6 billion, up 24%. Operating margin was 30.4%, up 0.8 percentage point. Net profit after NCI was CNY 94.4 billion, up 22%. Turning to segment gross margin. Gross margin for VAS was 50.1%, down 3.3 percentage points year-on-year or 1.7 percentage points quarter-on-quarter.

The second quarter on quarter.

For the full year 2019, operating profit was 114.6 billion renminbi up 24%.

Operating margin was pretty 0.4% of 0.8 percentage point.

Net profit of to ask me I was 94.4 billion renminbi up 22%.

Turning to settle on gross margin gross margins will boss was 50.1% all 3.3 percentage points year on year or 1.7 percentage points quarter over quarter.

John Loh: The year-on-year decrease was primarily impacted by a continuous revenue mix shift from higher-margin pre-seed client games to lower-margin platform games. The queue-on-queue decrease was mainly due to increased costs from major esports tournaments in the quarter. Cross-margin for our advertising was 54.3%, up 17.7 percentage points a year, or 5 percentage points. Quarter-and-quarter, 5.5% equals a quarter.

John Lo: The year-on-year decrease was primarily impacted by continuous revenue mix shift from higher margin PC client games to lower margin platform games. The Q-on-Q decrease was mainly due to increased costs from major esports tournament in the quarter. Gross margin for Online Advertising was 54.3%, up 17.7 percentage points year-on-year or 5 percentage points quarter-on-quarter, 5.5% in Q1. Both the year-on-year and quarter-on-quarter increases primarily reflected lower content costs for video advertising, as well as revenue mix from media advertising to higher margin social and other advertising. Gross margin for FinTech and Business Services was 28.1%, up 3.6 percentage points year-on-year or 0.4 percentage points quarter-on-quarter. The year-on-year increase was mainly driven by revenue mix shift from social payments to higher margin commercial payments.

Are you on the increase was primarily impacted by continuous revenue mix Shapell biologic PC client games to go about just bought them games.

The Q on Q degrees was mainly due to increased cost from major sports and show them in the quarter.

Gross margin for.

Advertising, what some people plus 3% up 17.7 percentage points year on year or five percentage points.

Water in quarter, four or 5% of was quoted book, what a year on year quote unquote increases prime being reflected lower content costs or video advertising as well as revenue mix shift for media about talking to you I imagine she'll shop, others advertising.

John Loh: Both the quarter, year-on-year, and quarter-and-quarter increases primarily reflected lower content costs for video advertising as well as revenue mixture for media advertising to higher-margin social and other advertising. Gross margin for fintech and business services was 28.1%, up 3.6 percentage points year-on-year, or 0.4 percentage points quarter-on-quarter. The year-on-year increase was mainly driven by a revenue makeshift from social payments to higher-margin commercial payments. Benefiting from increased loyalty, users were more willing to retain funds in our ecosystems and increasingly utilize more fintech services, such as Wealth Management and Micro Loan Services on our platform.

Gross margin so things like that business others. This was 28.1% up 3.6 percentage points year on year or 0.4 percentage points quarter on quarter.

A year on year increase was mainly driven by revenue mix shift from social payments to high margin commercial payments.

John Lo: Benefiting from increased loyalty, users were more willing to retain funds in our ecosystems and increasingly utilizing more Fintech services such as wealth management and micro-loan services on our platform. This led to improved margin year-on-year. On operating expenses, selling and marketing expenses were CNY 6.7 billion, up 17% both year-on-year and quarter-on-quarter. The year-on-year increase mainly reflected greater marketing spending on Fintech and cloud services, platform games, and digital content services. As a percentage of revenues, selling and marketing expense decreased from 6.7% in Q4 2018 to 6.3% in the quarter, mainly due to the reduction of advertising and promotion expenses as a result of internal initiative to reduce less effective marketing campaigns.

Benefiting from increased loyalty uses were more willing to retain funds you know ecosystems and increasingly utilizing motion Tech services, such wealth management and micro loan services on our platform.

John Loh: This lab is to improve marketing year on year. On operating expenses, selling, and marketing expenses, we're at 6.7 billion renminbi, up 17%, both year-on-year and quarter-on-quarter. The year-on-year increase mainly reflected the greatest marketing spending on Syntech and Cloud services, smartphone games, and digital content services as a percentage of revenues. Selling market expense decreased from 6.7% in the fourth quarter of 2018 to 6.3% in the quarter, mainly due to the reduction of advertising and promotion expenses as a result of internal initiatives to reduce less defective marketing campaigns. sequentially, the increase in selling and marketing expenses mainly reflect seasonally higher marketing spending on smartphone games and digital content services, as well as expenses attributable to Supercell for managing this quarter.

Led to improved margin year on year.

Operating expenses, selling and marketing expenses were 6.7 billion renminbi up 17%, both you and your in quarter and quota.

The year on year increase mainly reflected grid bucketing spending on fintech and cloud surfaces.

Film games and digital content services.

As a percentage of revenues.

Selling bucketing expense decreased from 6.7% into fourth quarter of 2018 to six along 3% in the quarter.

Mainly due to the reduction of advertising and promotion expenses says every so often curnow initiative to reduce that effective marketing campaigns.

Sequentially increase in selling Bucketing extends its mainly reflect a seasonally higher marketing spending on spots on games and digital content services. That's was expenses attributable to supercell commencing this quarter.

John Lo: Sequentially, increase in selling and marketing expenses mainly reflect a seasonally higher marketing spending on platform games and digital content services, as well as expenses attributable to Supercell commencing this quarter. G&A expense were CNY 16 billion, up 41% year-on-year or 18% quarter-on-quarter, mainly due to increases in R&D expenses, staff costs, as well as expenses attributable to Supercell commencing this quarter. Within G&A, R&D expenses were CNY 8.9 billion, up 49% year-on-year or 12% quarter-on-quarter. G&A and R&D represented 15.1% and 8.4% of revenues respectively as at quarter end. We had approximately 63,000 employees, up 16% year-on-year or 3% quarter-on-quarter. For the whole year 2019, selling and marketing expenses were CNY 21.4 billion, down 12% and represented 5.7% of revenues.

She had age bands, where 16 billion reminbi, a 41% year on year or 18% quarter on quarter, mainly due to increases in R&D expenses stop horse. It's was expenses attributable to supercell commencing this quarter.

John Loh: G&A expands for a 16 billion RMB increase of 41% year-on-year or 18% quarter-on-quarter, mainly due to increases in R&D expenses, staff training, as well as expenses attributable to supercell commentary this quarter. Within G&A, R&D expenses were $8.9 billion RMB, up 49% year-on-year or 12% quarter-on-quarter. GNA and R&D represented 15.1% and 8.4% of revenues, respectively, at quarter end. We had approximately 63,000 employees, up 16% year-on-year or 3% quarter-on-quarter.

Then gen eight.

R&D expenses were 8.9 billion, rather than be up 49% year on year or 12% quarter and go to.

Yeah, and <unk> and R&D represented 15.1% and 8.4% Oh revenues, respectively. As at quarter end, we had to put somebody 63000 employees up 16% year on year or 3% quarter on quarter.

For the whole year.

John Loh: For the whole year 2019, selling and marketing expenses were 21.4 billion renminbi, down 12% and represented 5.7% of revenues. R&D expenses were 30.4 billion renminbi, up 32% and represented 8.1% of revenues. Total GNA expenses excluding IMD expenses were 23 billion renminbi, up 24% and represented 6.1% of revenues. Let's take a look at the Margin Ratio.

2019, Prelim Bucketing expenses were 21.4 billion renminbi down, 12% and represented 5.7% of revenues.

John Lo: R&D expenses were CNY 30.4 billion, up 32% and represented 8.1% of revenue. Total G&A expenses excluding R&D expenses was CNY 23 billion, up 24% and represented 6.1% of revenue. Let's take a look at the margin ratios. For Q4 2019, gross margin was 43.6%, up 2.2 percentage points year-on-year or broadly stable quarter-on-quarter. Non-IFRS operating margin was 28.7%, up 2.3 percentage points year-on-year or down 0.7 percentage point quarter-on-quarter. Non-IFRS net margin was 25.2%, up 1.4 percentage point year-on-year or down 0.6 percentage point quarter-on-quarter. For the full year 2019, gross margin was 44.4%, down 1.1 percentage point.

R&D expenses were 30.4 billion renminbi up 32% and represented 8.1% of revenue.

Total old Gen. Eight expenses, excluding R&D expenses was 23 billion running be up 24% and represents a six fund what percent of revenue.

Let's take a look at the modern racial.

John Loh: For the fourth quarter of 2019, gross margin was 43.6%, up 2.2 percentage points year-on-year or broadly stable quarter-on-quarter. Non-IR virus operating margin was 28.7%, up 2.3% once a year and a year or down 0.7% quarter-on-quarter. Non-IR virus net margin was 25.2%, up 1.4 percentage points year-on-year or down 0.6 percentage point quarter-on-quarter. For the full year 2019, gross margin was 44.4%, down 1.1 percentage point. The non-IR virus operating margin was 30.4%, up 0.8 percentage points.

For the fourth quarter 2019, gross margin was 43.6% up 2.2 percentage points year on year or broadly stable corner corridor.

And I have virus operating margin was 28.7% up 2.3 percentage points year on year old, Ontario plant seven percentage points quarter on quarter.

No and I have iris not margin was 25.2% up 1.4 percentage points year on year old down 0.6 percentage point quote unquote it.

For the full year 2019, gross margin was 44.4% down 1.1 percentage point.

John Lo: Non-IFRS operating margin was 30.4%, up 0.8 percentage point. Non-IFRS net margin was 25.9%, up 0.2 percentage point. For 2019, on IFRS basis, basic EPS was CNY 9.856 and diluted EPS was CNY 9.643. Non-IFRS basic EPS was CNY 9.966 and diluted EPS was CNY 9.729. Subject to the approval of shareholders at the annual general meeting to be held on 13 May 2020, we are proposing an annual dividend of 1.2 HKD per share, payable to shareholders on 29 May 2020. This represents an increase of 20% from last year.

No and I have hours operating margin was 50.4% up it's 0.8 percentage point.

John Loh: So an IFRS net margin was 25.9%, up 0.2 percentage points. For 2019, on an IFRS basis, basic EPS was 9.856 RMB and diluted EPS was 9.643 RMB. Non-IFRS virus basic EPS was 9.966 RMB, and diluted EPS was 9.729 RMB.

No and I have arent that margin was 20, 519% upstream upon two percentage points.

For 2019, or I have Rs basis, basically p. as was 9.856 renminbi and diluted EPS was 9.64 free renminbi.

No and I ever Us basic EPS was 9.966, Reminbi and diluted EPS was 9.7 to nine renminbi.

John Loh: Subject to the approval of shareholders at the Annual General Meeting to be held on 13 May 2020, we are proposing an annual dividend of HK$1.2 per share payable to shareholders on 29 May 2020. This represents an increase of 40% from last year. Finally, I will now share with you several key financial metrics for the quarter. Total CapEx for $16.9 billion RMB and an increase of 270% year-on-year and 154% quarter-on-quarter within VUH. Operating CapEx almost doubled to $7.1 billion RMB, mainly due to advanced procurement on servers for business growth in 2020.

Subject to the approval shareholders at the annual general meeting to be held on for team. So may 2020, we're proposing an annual dividend of one point $200 per Shia paying two payable to shareholders. On 29 is on May 2020.

This represents an increase of 20% from last year.

Finally, I will now share with you a civil chief financial metrics for the Florida.

John Loh: Non-operating cutbacks increased significantly to 9.8 billion RMB, mainly reflecting the land use right acquired for a new project. For 2019, total capex was 32.4 billion RMB, up 35%, within which operating capex was up 6% year-on-year. At the quarter end, free cash flow was $37.9 billion RMB, up 27% year-on-year of stable quarter-on-quarter growth for 2019 free cash flow. 120.3 billion renminbi, up $37 billion. The net debt position was 15.6 billion renminbi due to the sequential increase of primary refractive payments for M&A initiatives and median content and consolidation of supercells indebtedness.

John Lo: Finally, I will now share with you several key financial metrics for the quarter. Total CapEx was CNY 16.9 billion, an increase of 270% year-on-year and 154% quarter-on-quarter, within which operating CapEx almost doubled to CNY 7.1 billion, mainly due to advanced procurement on servers for business growth in 2020. Non-operating CapEx increased significantly to CNY 9.8 billion, mainly reflected the land use rights acquired for a new project. For 2019, total CapEx was CNY 32.4 billion, up 35%, within which operating CapEx was up 6% year-on-year. At quarter end, free cash flow was CNY 37.9 billion, up 27% year-on-year or stable quarter-on-quarter.

Total Capex was 16.9 been in renminbi and increase.

270% year on year, and 154% quota and quota.

Within village operating cutbacks almost doubled to supplement 7.1 billion reminbi, mainly due to advance with human on servers for business grew up in 2020.

Non operating cut backs increases are getting you to 9.8 billion reminbi mainly reflected.

The land use rights a quite for new project.

For 2019 total Capex was 32.4 billion renminbi up 35% within which operating peptide operating capex was up 6% year on year.

As a quarter in free cash flow was 37.9 billion renminbi up 27% year on year or stable quarter on quarter.

John Lo: For 2019, free cash flow was CNY 120.3 billion, up 37%. Net debt position was CNY 15.6 billion. The sequential increase primarily reflective of payments for our M&A initiatives and media content and consolidation of Supercell's indebtedness, partly offset by strong free cash flow generation.

For 2019 free cash flow.

[laughter] wash.

220.3 billion renminbi up 37%.

Not that position was 15.6 billion Reminbi. This sequential increase a primary restrictive payments, while I am many initiatives and media and contents and consolidation of supercell the adopted it.

John Loh: Partly offset by strong free cash flow generation. The fair value of our shareholdings in listed investing companies, excluding subsidiaries, was approximately $60.2 billion at year-end, compared to roughly $50 billion U.S. dollars last quarter and roughly $34.7 billion U.S. dollars last year.

Partly offset by strong free cash flow generation.

The fab I do have a shareholdings in listed.

Martin Lau: The fair value of our shareholdings in listed investee companies, excluding subsidiaries, was approximately $60.2 billion at year-end, compared to roughly $50 billion last quarter and roughly $34.7 billion last year. Thank you. We shall now open the floor for questions.

John Lo: The fair value of our shareholdings in listed investee companies, excluding subsidiaries, was approximately $60.2 billion at year-end, compared to roughly $50 billion last quarter and roughly $34.7 billion last year. Thank you. We shall now open the floor for questions.

The Companys, excluding subsidiaries was approximately 61 too but in the U.S. dollar so yeah.

Compared to roughly 50 had been in U.S., all those last quarter and roughly 34.7 billion U.S. told us last year. Thank you, we should not we're going to pull for questions.

Operator: Thank you. We shall now open the floor to questions. Thank you. We are sorry for the technical problems that we have just encountered. We shall now open the floor for questions. Operator, we will take one main question and one follow-up question. Please ask the first question. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced.

Thank you and I mean, I'm, sorry for all the technical assistance technical problems at weekends and content.

Jane Yip: Thank you. We are sorry for the system technical problem that we just encountered. We shall now open the floor for questions. Operator, we will take one main question and one follow-up question each time. Please invite the first question.

We should now open the floor no question.

Operator, we'll take one main.

One follow up question each time we.

We think like has question.

Thank you.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask your question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Thank you. Our first question comes from the line of Binnie Wong from HSBC. Please go ahead.

Ladies and gentlemen, we will now begin the question answer session.

If you wish to ask your question. Please press star one on your telephone and wait for your name to be announced.

Operator: Thank you. If you wish to cancel your request, please press the pound or hash key.

If you we should cancel your Reclass. Please press the pound Oh hash key.

[noise] [noise] [noise] [noise] [noise].

Thank you I'll first question comes from the line it Bini Wong from HSBC. Please go ahead.

Operator: Thank you all. The first question comes from the line of Beanie Wong from HSBC. Please go ahead.

Hi, guys any management and my question is on the advertising <unk> revenue from social network actually so it'll be a salary to 67% Q2, Q Oh, well Ccps automation and also considering that the competition do you see that what they said a competitive edges intensive network.

Beanie Wong: Hi, good evening, management. My question is on advertising. We see the revenue from social networks actually further re-accelerate to 37% since 2Q. With this re-acceleration and also considering the competition, do you see what the competitive edges are in Tencent's ad network versus peers? And what are the drivers to propel us into 2020?

Binnie Wong: Hi, good evening, management. My question is on the advertising. We see the revenue from social network actually further accelerate to 37% since Q2. With this acceleration and also considering the competition, do you see that what is the competitive edges in Tencent's ad network versus peers? What are the drivers to propel us into 2020? With that, can I also ask question about the short-form video? Given that, I think in the press release you mentioned that we are in the early stage of a multi-year investment, and you said that the experience from overcoming a later start of a long-form video give you the confidence. What are the applicable experience you learned and the challenges you see? Thank you.

This is Peter and wonder to tries to propel us into 20, trendy and then but that's okay last question about the shelf on V deal given that I think the press release, you mentioned that we had in early stage over a multiyear investment and you said that experienced some overcoming a need to start off with long form video I'll give you the confidence I wonder if you like <unk>.

Beanie Wong: And then with that, I can also ask a question about the short form video. Given that, in the press release, you mentioned that we are in the early stage of a multi-year investment, and you said that experience with overcoming a late start of a long form video gives you confidence. What are the applicable lessons you learned and the challenges you see? Thank you.

Even as you look at the challenges you see thank you.

Hi beneath thank you for the questions. So I think your first question was around social advertising revenue growth and.

James Gordon Mitchell: Binny, thank you for the question. So I think your first question was around our social advertising revenue growth and what we see as our competitive advantages. You know, people looking at Tencent from the outside are often of the view that our key competitive advantage is that we have a large amount of traffic for our applications. And, you know, that's certainly true.

James Mitchell: Binny, thank you for the question. I think your first question was around our social advertising revenue growth and what do we see as our competitive advantages. You know, people looking at Tencent from the outside are often of the view that our key competitive advantage is we have a large amount of traffic for our applications. You know, that's certainly true. If you look at the biggest contributors to the quarter-on-quarter revenue growth, it was actually our ad network business, which is ads on other people's applications. I think that speaks to the fact that you know, we're increasingly competitive from a technology perspective because of the investment we've made across the platform.

James Gordon Mitchell: But if you look at the biggest contributors to the quarter-on-quarter revenue growth, it was actually our ad network business, which is ads on other people's applications. And so I think that speaks to the fact that, you know, we're increasingly competitive from a technology perspective because of the investment we've made across the platform. We're obviously very competitive from a targeting perspective because of the data we aggregate on users. We're also competitive in terms of conversion, specifically conversion from the impression to the transaction. I think that there are many different services in China that can convert traffic impressions into a click or even an app download.

So we see as a competitive advantage is.

You know people looking at Tencent from the outside are often if the views that our key competitive advantages we have a large amount of traffic for applications and that's certainly true.

If you look at the biggest contributor to the quarter on quarter revenue growth. It was actually are out network business, which is a ads on on the other people's applications and so I think that speaks to the fact that.

We were increasingly competitive from a technology perspective, I because of the investment we've made across the platform. We're obviously very competitive from a targeting perspective, because if the data.

James Mitchell: We're obviously very competitive from a targeting perspective because of the data we aggregate on users. We're also competitive in terms of conversion, specifically conversion from the impression to the transaction. I think that there's you know many different services in China that can convert traffic impression into a click or even an app download. Because we integrate the advertising platform and the payment platform together, we're actually quite capable of converting the impression into a transaction. That's why if you look at the advertiser categories that are doing particularly well for us, it includes businesses like activities like e-commerce, education, and games.

Aggregate on use as well.

We're also.

Compared to Dave in terms of confession, specifically conversion from the impression actually the transaction I think that as you.

You know many different services in China that can come about traffic a impression into a click or even an app download, but because a we integrate the advertising platform into payment platform together, we're actually quite capable of converting impression into a transaction and so that's why if.

James Gordon Mitchell: But because we integrate the advertising platform and the payment platform together, we're actually quite capable of converting the impression. And so that's why, if you look at the advertiser categories that are doing particularly well for us, it includes businesses like, activities like e-commerce, education, and games, and all of which, really, when they're buying ads, they're less focused on the impression or even on the app installed; they're most focused And we think that over the long term, more and more advertisers will feel the same way, and that will work more and more to our benefit.

There could be a advertised the categories that are doing particularly well for us. It includes businesses like activities like ecommerce education and games and all of which really when that buying assets get them less focused on on the impression or even on the Oh can still with that most focused on the actual.

James Mitchell: All of which really, when they're buying ads, that they're less focused on the impression or even on the app install. They're most focused on the actual end revenue generation. We think that over the long term, more and more advertisers will feel the same way, and that will play more and more to our benefit. Anyway, that's, you know, some of the reasons why our ad network business is doing particularly well. More broadly, our social advertising business benefits from all of the factors above, plus the fact that we have roughly 1 billion daily active users across our properties, which is uniquely broad in China.

And revenue generation, and we think that over the long term more and more advertisers will feel the same way and that will play more and more to up benefit. So anyway. That's you know some of the reasons why off network businesses is doing particularly well more broadly our social advertising business benefits from all of the fact is above plus the fact.

James Gordon Mitchell: So anyway, those are some of the reasons why our ad network business is doing particularly well. More broadly, our social advertising business benefits from all of the factors above, plus the fact that we have roughly a billion daily active users across our properties, which is uniquely broad in China. Plus the fact that we have content information on our users because we serve them video, music, news feed, literature, and so forth, games as well as serve them for communication, social, and commerce.

We have a roughly a billion daily active users across our properties, which is a unique he brought in China.

James Mitchell: Plus the fact that we have content information on our users because we serve them in a video, music, newsfeed, literature, and so forth, games, as well as serving them for communication, social, and commerce. You know, all in all, we think that our social and other advertising is a very strong portfolio of properties, a very strong technology platform. We've seen particularly good growth and continuing to see very good growth from segments such as e-commerce, games, and education. We believe that we will strongly outperform the market.

Plus the fact that we have content information on our users because we saw them out in a video music news feed literature, and so forth games.

As well as something themselves communication, social and calling us.

James Gordon Mitchell: So, you know, all in all, we think that social and other advertising is a very strong portfolio of properties, a very strong technology platform. We've seen particularly good growth and are continuing to see very good growth from segments such as e-commerce, games, and education, and we believe that we will strongly outperform the market. In terms of Weishi and short videos, I would say, If you look at Tencent's history, right, you know, there have been a few products that we came from behind and then we actually became the absolute industry leader, and I would say games are in such a category, and our news and our payment platform, and most recently, long form video. And I think, you know, in each one of these instances, right, you know, we have to, first of all, build up the capability that's specific to that product vertical.

So you know all you know what we think that up a social doctors notion and other advertising is very strong portfolio of properties with very strong technology platform that we've seen particularly good gross and continuing to see very good growth front from a segment such as E Com us games and education and.

We believe that we will strongly outperform the market.

In terms of we shoot and short Btwob I would say.

Martin Lau: In terms of Weishi and short video, I would say if you look at Tencent's history, right, you know, there have been a few products that we came from behind and then we actually became the absolute industry leader. I would say games is in such a category, and our news, and our payment platform, and most recently the long-form video. I think, you know, in each one of these instances, right, you know, we have, you know, first of all, to build up the capability that's specific to that product vertical.

If you look at 10 cents history right. There has been a few products that we came from behind and then a we actually became the absolute.

Industry leader and <unk> I would say games is ER in such a category and Oh news.

And or payment platform and most recently the long form video I think meal in each one of these instances where do we.

Uh huh.

<unk>.

Well first of all have to build up or do you capability, if that's specific to.

Ah that product vertical and after that or we can actually start leveraging our unique tencent resources and capabilities. So.

Martin Lau: After that, we can actually start leveraging our unique Tencent resources and capabilities. In this short video, right, you know, what are our unique Tencent advantages? I would say, in the prepared remarks, we have pointed to some of them, including our product innovation on the product side, our integration with our social network that can bring traffic as well as sharing experiences for our users, as well as our longstanding investment in various kinds of content, be it games and long video and literature, or the IP related content. I think these are all important Tencent advantages that we can bring to bear in the future.

Martin Lau: And after that, we can actually start leveraging our unique Tencent resources and capabilities. So, in this short video, right, you know, what are our unique Tencent advantages? I would say in the prepared remarks, we have pointed to some of them, including our product innovation on the product side, integration with our social network that can bring traffic, as well as sharing experiences for our users, as well as our longstanding investment in various kinds of content, be it games and long videos, and literature or IP-related content.

Martin Lau: I think these are all important Tencent advantages that we can bring to bear in the future. And while, so far, we have been doing that, in the future, we can actually do it even more. But what are the key important vertical expertise that we need to build? I would say it's mainly the recommendation engine for these kinds of short and mini videos, as well as a system that would actually bring in a very large number of content providers, which is somewhat different from the long form video, right? You know, in which you have a small number of very professional providers of content.

In in this short video right what are a unique tencent advantages I would say in the prepared remarks, we would point to some of them, including Oh product innovation on the product side, Oh integration with a social network.

That can bring traffic as well as a sharing experiences for our users as well as a a longstanding investment in various kinds of content or be it games and long video and literature, Oh, the IP related a content I didn't give us a whole.

Important tencent advantages that we can bring to bear in the future.

Martin Lau: Well, so far, we have been doing that, but then in the future, we can actually do it even more. What are the key important vertical expertise that we need to build? I would say it's mainly the recommendation engine for these kind of short and mini videos, as well as a system that would actually bring in a very large number of content providers, which is somewhat different from the long form video, right, you know, in which you have a small number of very professional providers of content. Now, I think, you know, this is something that we have to build over time. I think, you know, we have achieved some success.

And well so far we had been doing that but then in the future or we can I should do it even more but what are the key.

Important vertical expertise that we need to be oded I would say a it's mainly their recommendation engine for the recommendation engine for these kinds of.

Short and Oh Amelie videos.

As well as the system that would actually bring in a very large number of content providers, a which is somewhat different from the long form video, where I know in which you have a small number of very professional providers of content, though I think you know this is something that we have.

Martin Lau: Now, I think, you know, this is something that we have to build over time. I think, you know, we have achieved some success. And at the same time, if you look at the

To build overtime I think you know we have achieved some success and at the same time, if you look at the.

Martin Lau: At the same time, if you look at the recent success of what James talked about, which is our ad tech, right? You know, that is actually a tech which is very similar to the recommendation engine of mini videos. If you look at the large number of content providers that we need to manage, that's actually somewhat similar to the official accounts as well as Mini Programs that we're curating. I think, you know, we have pockets of expertise in each one of these areas.

Martin Lau: I. The recent success of what James talked about, which is our ad tech, and that is actually a tech that is very similar to the recommendation engine for mini-videos. And if you look at the large number of content providers that we need to manage, that's actually somewhat similar to the official accounts, as well as the mini-programs that we're curating. So I think we have pockets of expertise in each one of these areas.

The recent success of what James talk about which is our AD Tech radio and that is actually a a tech which is very similar to the recommendation engine of Muni videos.

And if you look at the large number of content providers that we need to managed care, that's actually a somewhat similar to the official accounts as well as many programs that we're creating so I didn't know we have pockets of expertise. Each one of these areas is just an important time for us to bring it into the way sure.

Martin Lau: It's just an important time for us to bring it into the Wayshare product and integrate it in such a way that we can actually build up the vertical expertise within that product and, at the same time, start leveraging our unique resources in a more prominent way. So that's why we believe this is a battle that we would definitely continue to play in, and we're actually quite confident that over time, we'll make significant headway into that industry. All right, thank you. Your next question comes from the line of Katie.

Martin Lau: It's just an important time for us to bring it into the Weishi product and integrate it in such a way that we can actually build up the vertical expertise within that product, and at the same time start leveraging our unique resources in a more prominent way. That's why we believe this is a battle that we would definitely continue to play in. You know, we're actually quite confident that over time we will make a significant headway into that industry.

Product and integrated in such a way that we can actually.

ER build up the vertical expertise within that product and at the same time to start leveraging our unique resources in a more prominent way so.

That's why we believe this is a battle that though we would definitely continue to play in and no. We actually I'm quite confident that over time, we'll make a significant halfway into the industry.

Alright. Thank you next question. Your next question comes from the line is key to learn from Bank of America. Please go ahead.

Operator 2: All right. Thank you. The next question, please. Your next question comes from the line of Eddie Leung from Bank of America. Please go ahead.

Jane Yip: All right. Thank you. The next question, please.

Operator: Your next question comes from the line of Eddie Leung from Bank of America. Please go ahead.

Operator: From the line of Katie Leung from Bank of America, please go ahead.

Katie Leung: Good evening. Thank you for taking my question. I wish everyone well.

Good evening. Thank you for taking my question I wish everyone, well I progression.

Eddie Leung: Good evening. Thank you for taking my question. I wish everyone well. I have a question on.

Operator 2: Sorry. We have some static.

Operator: Sorry. We have some static.

Accordingly.

Sorry.

Eddie Leung: Sorry? Yes, I have a question on consumer internet.

I guess, how they questions on a.

unknown: [inaudible] Yes, I have a question on... have a question about our consumer internet?

Hi, Good question on our consumer Internet is asking question or what.

unknown: Somebody is asking a question, or what? So is it a problem with the person asking the question, or is it our fault?

Martin Lau: Somebody is asking a question or what? Is it a problem with the person asking a question or it's our line? Can we figure out?

Is it the problem with the person asking question really tower light.

If you grow.

unknown: I know, but there must be a line that's too easy for a lot of interference, so which one is it? If it's us, then we should draw from that and bow in again. If it's somebody else, then we should ask another person to ask the question.

I know, but there must be line. Thanks.

Operator 2: I think it's the technical.

Operator: I think it's the technical.

unknown: I know, but there must be a line that's experiencing a lot of interference, right? So which one is it? If it's us, then we should draw from that and dial in again. If it's somebody else, then we should ask another person to ask the question.

Martin Lau: I know, but there must be a line that's with a lot of interference, right? Which one it is? If it's us, then we should drop and then dial in again.

So which one it is.

If it's Austin, we should.

<unk> thousand a day.

If somebody else then.

Operator 2: I think it's us.

Operator: I think it's us.

Martin Lau: If it's somebody else, then we should ask another person to ask the question.

You should ask another person to ask the question.

[noise] [noise] [noise].

[noise].

No.

Eddie Leung: Hello? Hey, guys.

Hey, guys seem good.

Operator 2: Please go-

Operator: Please go-

Yes, thank you for.

unknown: Yes, thank you for...

Eddie Leung: Yes. Thank you for taking my question. I wish everyone well. I have a question on your consumer internet strategy. Tencent is developing more use cases about services, so that's pretty obvious, not just about entertainment. Obviously that's a competitive advantage. On the other hand, it seems like some leading video traffic platforms are entering more and more digital entertainment services. We have seen, you know, news about games, literature, music, live podcast, et cetera. Just wonder how would that affect your strategy and perhaps the industry's cost structure in running digital entertainment? Thanks.

I think if it could be my question I wish everyone well.

unknown: Thank you for taking my question. I wish everyone well. I have a question about your consumer Internet strategy. So Tencent is developing more use cases for services, so that's pretty obvious, not just about entertainment.

The question on York seemed like Internet Scratchy.

unknown: [inaudible]

So 10 cents developing more use cases.

So this is oh, sorry, all he is not just oh and opinion. So obviously, that's a competitive advantage on data center. It seems like some do you gain a video tropichop phones are entering more and more digital entertainment sizes or we have seen you know news.

unknown: video traffic platforms are entering more and more digital entertainment services. We have seen, you know, news about games, literature, music, live broadcasts, et cetera. So I just wonder how that would affect your strategy and perhaps the industry's core structure in running digital entertainment. Yeah, I would take that question.

About games like the trend me say like four topics that true. So just wonder how would that affect your scratchy and perhaps hobby industries, our cost structure in running digital entertainment all things.

Yeah, I would take that question and.

Martin Lau: Yeah, I would take that question. I think every now and then you would see this kind of news, right? If you track the evolution of the China internet industry history, this is something that repeats every few years, right? In each one of the sector that you talk about, there have been many players in a market. Take the example of games, for example, right? Where there have been many different players, and it's far from being a winner's take all market. I think it's actually completely fine for different players to want to go into these different verticals. I think you know, the important thing is actually what do we do, right?

Martin Lau: And, I think every now and then you would see this kind of news, right? And if you track the evolution of China's internet industry history, this is something that repeats itself every few years.

I think every now and then you would see this kind of me it was right and if you track the.

Evolution of the China in the inside the industry history.

This is something that's repeats every few years and each one off the sector you talk about there have been many many players in in a market to the example of games for example, like where there have been many different players and its.

Martin Lau: And each one of the sectors that you talk about, there have been many, many players in the market. Take the example of games, for example. There have been many different players, and it's far from being a winner's ticker market. So I think it's actually completely fine for different players to want to go into these different verticals.

Far from being a windows to go to market and.

So I think.

It's actually completely fine for.

Different players to to want to go into these different verticals, but.

Martin Lau: But I think, you know, the important thing is actually what we do, right? I think, you know, what we... have tried to do is actually to be the best in class player in each one of these verticals. So I would take games as an example, right, you know, games have always been a market with many, many different players. And Tencent actually came from behind and step by step became the leader in the market in China and is now expanding its presence all around the world.

But I think you know the important thing is actually what do we do or I know I think you know what what we.

Martin Lau: You know, I think, you know, what we try to do is actually to be the best-in-class player in each one of these verticals. I would take games as an example, right? You know, games, it has always been a market with many different players, right? Tencent actually came from way behind, and step-by-step now became the leader in the market in China, and now expanding our presence all around the world. I would say there are a number of things that we have done right in the past, and we will continue to do and invest in those areas in the future.

Try to do is actually to be that the best in class player. Each one of these verticals. So I went to games. As example, where I know so games. It has always been a play a a market with many many different players and Tencent actually came from the very behind and step by step now became the leader.

In the market in China, and no expanding our our presence or around the world and I would say a they are a number of things that we have to do right.

Martin Lau: But I would say there are a number of things that we have to do right. We have done them right in the past, and we will continue to do and invest in those areas in the future. And this includes one, I would say, just, you know, we have a very strong franchise in some of the most important genres. If you look at MOBA, as an example, if you look at tactical tournaments, as an example, as well as small social networks for such types of gamers, right?

We have done right in the past I know, we will continue to do a and invest in those areas in the future and this includes a one I would say just yeah. We have been very strong franchise over a somewhat the.

Martin Lau: This includes one. I would say just, you know, we have a very strong franchise over some of the most important genres. If you look at MOBA as an example, if you look at tactical tournament as an example, these are game genres in which we have an absolute leadership position in. They have essentially become both genre-defining as well as small social networks for such type of gamers, right? I think that has a very strong franchise, and we'll continue to be the innovator in those genres. Secondly, I would say in the game industry, it's about development capability. Development capability rests both within creativity as well as technical know-how.

Most important garners a if you look at MOBA as an example, if you look at a tactical turned them in engine. For example, with these game there's honors in what should we have an absolute leaders it pushes <unk> and they have essentially become.

Both John and defining as well as a.

As well as a small social networks for such like gamers right. So I think that's that's a has a very strong franchise and we will continue to be the innovator hidden dose or honors.

Martin Lau: So I think that it has a very strong franchise and will continue to be an innovator in those genres. Secondly, I would say in the game industry, it's about... development capability. And development capability rests both within creativity as well as technical know-how. And I think you have gone pretty deep into describing what the technical know-how that we have. And over the years, by being successful in different genres, I think we have demonstrated our creativity. And I think, you know, those are the things that we have to continue to do well and do better.

Secondly, I would say in the game industry, it's about.

Development capability and developed a couple easy Russ both within creativity as well as technical know, how and I think your web gone.

Martin Lau: I think, you know, we have gone pretty deep into describing what the technical know-how is that we have. Over the years, by being successful in different genres, I think we have demonstrated our creativity. I think, you know, those are the things that we have to continue to do well and do better on. Thirdly, I would say the relationship that we have with game IP and game companies around the world, and a lot of the leading game companies are our partners or our invested companies, right? You know, these are built over a very, very long term. As a result, we can actually work with the other game companies and bring exciting new games in different formats to the market.

Pretty deep into describing what are the technical know how is that we had off and over the years by being successful in different answers honors I think you have demonstrated how creativity and I think those are the things that we have to continue to do well and do better on and 30 I would say is.

Martin Lau: And thirdly, I would say, So the relationship that we have with game IP and game companies around the world, and a lot of the leading game companies are our partners or our investing companies, and these relationships have been built over a very, very long term. And as a result, we can actually work with other game companies and bring exciting new games in different formats to the market. And I think I would say we also have a very strong presence on social networks, and that has a strong synergy with our game business because games are, by nature, especially online games, mobile online games, by nature, social networks, right?

The the relationship that we have with a game IP and game companies around the world and a lot of the leading getting companies our partners or are you investee companies or you know and these are viewed over very very long term and as a result, which we can actually work with the other game come.

Anthony is and bring exciting new games.

In different formats to the market.

Martin Lau: I would say we also have a very strong presence in social network, and that has a strong synergy with our game business. Because games are by nature, especially online games and mobile online games, social networks, right? You know, you want to play with your friends or you wanna play with your game mate, right? So by having a social network that actually can connect with all your friends as well as new friends from the games, it actually give us a very specific advantage. I would say finally, we actually have a very strong ancillary ecosystem around games, right?

And I would say, we also have a very strong presence in social network and that has a strong synergy with our game business because games are by nature, especially online games and mobile online games are by nature, social networks or I know you want to play with your friends or you want to.

Martin Lau: You know, you want to play with your friends, or you want to play with your game mate, right? So by having a social network that can connect with all your friends as well as new friends from the games, it actually gives us a very specific advantage. And I would say finally, we actually have a very strong ancillary ecosystem around games, right? If you look at esports, if you look at streaming platforms, all these places where people discover games and engage with KOLs in games as well as with their friends.

With a youre youre getting made right. So so by having a social network the actually can connect.

With Oh, your friends as well as a new friends from the games it actually give us a very specific advantage.

And ER I would say finally, we actually have a very strong ancillary.

Ecosystem around games or if you look at you sports if you look at streaming platforms. So all these.

Martin Lau: If you look at esports, if you look at streaming platforms, all these are places where people discover games and engage with KOLs on games as well as with their friends. I would say these are all the advantages that we have, and we have invested for a long time in this vertical to be the leader and we'll continue to do better. You know, if we have new commerce into the market, it will actually incentivize us to do even better.

Places, where people discover games and engage with.

Okay, all else on games as well as with their friends. So I would say these are all the advantages that we have and will have invested for long time in this vertical.

Martin Lau: So I would say these are all the advantages that we have, and we'll have invested for a long time in this vertical to be the leader, and we'll continue to do better. If we have a new commerce platform into the market,

To be the leader and we'll continue to do better if we have a new conversion to market. It would actually incentivize us to do even better.

Hi, Thank you. Our next question comes from the line of Joe Choi from <unk>. Please go ahead.

Operator: Thank you. Our next question comes from the line of Joan Choi from Daiwa. Please go ahead.

Operator: All right. Thank you. Our next question comes from the line of Joe Choi from Daiwa. Please go ahead.

Hyungwook Choi: Thank you, Matthew, for taking my question about remote work [inaudible] long-term. Thank you all.

Joe Choi: Thank you, management, for taking my question. My first question is actually on your recent remote working initiative. It seems that we're getting very strong momentum, as you mentioned. How does the management see the long-term potential in terms of revenue? And what's the current acceptance from the users when it comes to subscription or billing? And a follow-up quickly on the online video content cost outlook for 2020, how does management see this, and how will this impact the profitability? Thank you.

John Choi: Thank you, management, for taking my question. My first question is actually on your recent remote working initiative. It seems that we're getting very strong momentum, as you mentioned. How does the management see the long-term potential in terms of revenue? And what's the current acceptance from the users when it comes to subscription or billing? And a follow-up quickly on the online video content cost outlook for 2020, how does management see this, and how will this impact the profitability? Thank you.

On your.

Very strongly.

Uh huh.

[laughter].

unknown: And what's the current receptiveness from users when it comes to subscriptions or, Follow up on the online video class and class outlets. How does, What was the product you are referring to when you say... doing it all on the remote working product? Okay, well, I'll take that question.

And then.

HM.

And then Oh.

Yes.

Oh.

Uh huh.

<unk>.

Really.

What was the product you are referring to when you say.

Martin Lau: What was the product you are referring to when you say it's doing well?

James Mitchell: What was the product you are referring to when you say it's doing well?

It's doing the though.

Joe Choi: The remote working products like Tencent Meeting and WeChat Work.

John Choi: The remote working products like Tencent Meeting and WeChat Work.

[laughter].

<unk>.

Okay, well I'll take that question. So so I think we have actually talk quite a bit about a this.

Martin Lau: So, I think we have actually talked quite a bit about this. This is a category of products. And I would say, One reason that we have actually invested in this category is that, you know, we feel that there is a trend. But increasing digitization of various businesses and institutions, I feel that this is definitely the future trend. But I think, you know, because of the coronavirus pandemic, it actually expedited that or necessitated that conversion.

Martin Lau: Okay. Well, I'll take that question. I think we have actually talked quite a bit about this category of products. I would say the fact that we have actually invested in this category is that, you know, we feel that there is a trend with increasing digitization of various businesses and institutions. I feel that this is definitely the future trend. I think, you know, because of the coronavirus pandemic, it actually expedited that or necessitated that conversion, right? You know, during the time when nobody goes to work on location as well as schools are not open, then clearly, there's only online solutions that is available for people.

James Mitchell: Okay. Well, I'll take that question. I think we have actually talked quite a bit about this category of products. I would say the fact that we have actually invested in this category is that, you know, we feel that there is a trend with increasing digitization of various businesses and institutions. I feel that this is definitely the future trend. I think, you know, because of the coronavirus pandemic, it actually expedited that or necessitated that conversion, right? You know, during the time when nobody goes to work on location as well as schools are not open, then clearly, there's only online solutions that is available for people.

This.

A category of products and I would say.

One or the fact that.

We have actually invested in this category is that yeah, we feel that.

There is a trend.

But to increasing digitization of various businesses and institutions.

With that this is definitely the future trends are but I think you because of the Coronado virus.

Pandemic, it actually expedited Ah that Oh necessitate that conversion idea. So during the time when nobody goes to work.

Martin Lau: So during the time when nobody goes to work on location, as well as when schools are not open, then clearly, there's only online solutions that are available for people. I think, you know, when the market actually reopens, then a lot of the use cases will be shipped back to offline. But then I think, you know, this consumer habit education has already taken place, and people would shift apart or retain a part of their usage habit online.

On location as well I said screws or not open done clearly, there's only online solutions that.

That is available for people I think you know when when the market actually agree opens and then a lot of the use cases was shipped back to off line, but then I think you know this consumer habit education or have already taken.

Martin Lau: I think, you know, when the market actually reopens, then a lot of the use cases will shift back to offline, but then I think, you know, this consumer habit education have already taken place, and people would shift a part or retain a part of their usage habit online. They also would discover the efficiency, right? You know, if you don't have to travel two hours to attend one hour of class meeting, maybe, right, that's a better and more efficient way of doing it. I think this does catalyze our long-standing vision on the trend within a short period of time. Now, with respect to the products that we talk about, right?

James Mitchell: I think, you know, when the market actually reopens, then a lot of the use cases will shift back to offline, but then I think, you know, this consumer habit education have already taken place, and people would shift a part or retain a part of their usage habit online. They also would discover the efficiency, right? You know, if you don't have to travel two hours to attend one hour of class meeting, maybe, right, that's a better and more efficient way of doing it. I think this does catalyze our long-standing vision on the trend within a short period of time. Now, with respect to the products that we talk about, right?

Taken place and people would ship to apart or retain a part of their.

Martin Lau: So, and they also would discover efficiency, right, you know, if you don't have to travel two hours to attend one hour of class meetings, maybe, right, that's, that's a better and more efficient way of doing it.

The usage habits online or so and they also what discover the efficiency ratio. If you don't have to travel two hours to attend one hour of class meeting maybe right. That's that's a better and more efficient way of doing it. So I think this does a capitalize our launch.

Martin Lau: So, I think this does catalyze our long-standing vision of the trend within a short period of time. Now, with respect to the products that we talked about, right, you know, we have been building WeChat Work for a while. And I would say WeChat Work is a product that works with established organizations. So if you have a company or an organization, if it's a school, then you can adopt that solution, and then it can actually help you to do internal collaboration.

And our vision on the trend within a short period of time now with respect to a products that we talk about radio so oh, we have been building.

Martin Lau: You know, we have been building WeChat Work for a while. I would say, WeChat Work is a product which works with established organizations. If you have a company or if you have an organization, if you have a school, then, you know, you can adopt that solution and then it can actually help you to do internal collaboration. You can actually start stacking in other kind of SaaS solutions onto it and help that organization to be more online.

James Mitchell: You know, we have been building WeChat Work for a while. I would say, WeChat Work is a product which works with established organizations. If you have a company or if you have an organization, if you have a school, then, you know, you can adopt that solution and then it can actually help you to do internal collaboration. You can actually start stacking in other kind of SaaS solutions onto it and help that organization to be more online.

ER, which at work for Awhile and.

Lets say a which at work is.

And product, which works with established organization. So if you have a company or your view it had an organization and at the school then.

You can adopt that solution and then it can actually helped you to internal collaboration ER and a you can actually started stacking in other kind of a star solutions onto and help that organization to be.

Martin Lau: And you can actually start stacking other kinds of staff solutions onto it and help that organization to be more online. Now, what we discovered as an additional important and pretty unique feature of our WeChat Work, in addition to just being an internal collaboration tool, is that with integration into WeChat, it actually allows a lot of companies not only to engage in internal communication but also it can become a good CRM tool for them to engage with their consumers over WeChat. So I think that is an additional advantage of Wechak's work. Now with respect to tens a meeting, right, it's a completely different proposition.

More online now what we discover as an additional important and pretty unique feature of our reach at work. In addition to just be internal collaboration tool is that a with integration to waste generate actually allows a lot of the company is not only to engage in internal.

Martin Lau: Now, what we discover as an additional important and pretty unique feature of our WeChat Work, in addition to just being an internal collaboration tool, is that with integration to Weixin, right, it actually allows a lot of the companies not only to engage in internal communication, but also it can become a good CRM tool for them to engage with their consumers over WeChat. I think, you know, that is an additional advantage of WeChat Work. Now, with respect to Tencent Meeting, right, it's a completely different proposition. It's actually a very easy-to-use application that anybody can form a group and start video conferencing. It actually covers use cases in which it, like, people within different organizations can actually convene a meeting very conveniently.

James Mitchell: Now, what we discover as an additional important and pretty unique feature of our WeChat Work, in addition to just being an internal collaboration tool, is that with integration to Weixin, right, it actually allows a lot of the companies not only to engage in internal communication, but also it can become a good CRM tool for them to engage with their consumers over WeChat. I think, you know, that is an additional advantage of WeChat Work. Now, with respect to Tencent Meeting, right, it's a completely different proposition. It's actually a very easy-to-use application that anybody can form a group and start video conferencing. It actually covers use cases in which it, like, people within different organizations can actually convene a meeting very conveniently.

No.

Communication, but also it can become a good CRM tool for them to engage with the consumers over we chat. So I think you what that is an additional.

No advantage of we checked a work now with respect to tends a meeting right. It's a completely different proposition it's actually.

Martin Lau: It's actually a very easy to use application; anybody can form a group and start video conferencing. So it actually covers use cases in which it, like people within different organizations can actually convene a meeting very conveniently. So as a result, you can see during the coronavirus, the adoption of Tencent meeting is actually very high, especially in terms of signing up new users. I think for a product like WeChat to work and also a product like Ding Ding, right?

A very easy to use application than anybody who can.

Form a group and start videoconferencing. So it actually covers use cases in which it like people within different organizations can actually a convenient me meeting very convenient news. So as a result, you can see during the call virus that.

Martin Lau: As a result, you can see, during the coronavirus, the adoption of Tencent Meeting is actually very high, especially in terms of sign-up new users. I think for a product like WeChat Work and also a product like DingTalk, right? You know, you can cater to the internal needs of enterprises. For the enterprises you have already signed up, you actually suddenly can have more activity within those sign-up accounts. For Tencent Meeting, right, it actually allows people to download the app and immediately be able to connect it to each other. We felt they cover different use cases, and both of them are gonna be our flagships for enterprise collaboration development for the future.

James Mitchell: As a result, you can see, during the coronavirus, the adoption of Tencent Meeting is actually very high, especially in terms of sign-up new users. I think for a product like WeChat Work and also a product like DingTalk, right? You know, you can cater to the internal needs of enterprises. For the enterprises you have already signed up, you actually suddenly can have more activity within those sign-up accounts. For Tencent Meeting, right, it actually allows people to download the app and immediately be able to connect it to each other. We felt they cover different use cases, and both of them are gonna be our flagships for enterprise collaboration development for the future.

Adoption of off tends a meeting a is actually very high especially in terms of sign up new users I do for a product like we checked work and are also a product like Ding Ding radio you you you can cater to the internal needs of enterprises and afford enterprises, you have already signed up.

Martin Lau: You know, you can cater to the internal needs of enterprises, and for the enterprises you have already signed up for, you can actually suddenly have more activity within those sign-up accounts. But then, for a Tencent meeting, right, it actually allows people to download the app and immediately be able to connect to each other.

Actually suddenly can have more activity with windows Signup account, but then for tens ameliorated actually allows people to download the app and immediately or be able to connected to each other so we felt a they cover a different use cases and both of them are gonna be our flagships for.

Martin Lau: So we felt that they covered different use cases, and both of them are going to be our flagships for enterprise collaboration development in the future. At this point in time, I think we're very focused on market coverage, and we're not worried about monetization yet. We felt that if it got a lot of users in the same line of logic that we have been using as Tencent, right? You know, in many, many of our products, we invest initially to get the users, and eventually, the monetization would be on the Tencent video content cost question.

Enterprise collaboration development for the future.

Martin Lau: At this point of time, I think we're very focused on market coverage, and we're not worried about monetization yet. We felt that if it gets a lot of users in the same line of logic that we have been using as Tencent, right? You know, in many of our products we invest initially to get the users and eventually the monetization would come.

James Mitchell: At this point of time, I think we're very focused on market coverage, and we're not worried about monetization yet. We felt that if it gets a lot of users in the same line of logic that we have been using as Tencent, right? You know, in many of our products we invest initially to get the users and eventually the monetization would come.

At this point I'm, sorry, I didn't were very focused on a market coverage and we're not.

Worried about a monetization yet we felt that if it gets a lot of users in the same.

A line of logic that we have been using a as 10 sender I know in many many of our products that we invest a initially to get the users and eventually the monetization would come.

Martin Lau: So 2019 was obviously a challenging year for all long-form video services, including our own, but we actually feel that we've made substantial efficiency gains. If you look at the full-year results out of all of the long-form video platforms, we're the leader by revenue, but we also lost, [inaudible] Invest aggressively and invest more each year in long-form video content. And one of the reasons we're comfortable doing that is that we're uniquely vertically integrated.

James Mitchell: On the Tencent Video content cost question. 2019 was obviously a challenging year for all long-form video services, including our own, but we actually feel that we've made substantial efficiency gains. If you look at the full-year results out of all of the long-form video platforms, we're the leader by revenue, but we also lost far less than our peers. Our full-year operating loss was under RMB 3 billion. You know, that speaks partly to the fact that we have been quite disciplined about content spending. Now, looking forward, we think this remains a growth market, therefore we'll continue to invest aggressively and invest, you know, more each year in long-form video content. One of the reasons we're comfortable doing that is that we're uniquely vertically integrated.

John Lo: On the Tencent Video content cost question. 2019 was obviously a challenging year for all long-form video services, including our own, but we actually feel that we've made substantial efficiency gains. If you look at the full-year results out of all of the long-form video platforms, we're the leader by revenue, but we also lost far less than our peers. Our full-year operating loss was under RMB 3 billion. You know, that speaks partly to the fact that we have been quite disciplined about content spending. Now, looking forward, we think this remains a growth market, therefore we'll continue to invest aggressively and invest, you know, more each year in long-form video content. One of the reasons we're comfortable doing that is that we're uniquely vertically integrated.

On the at 10 cents video content costs question, Sorry, 2019 was obviously a challenging year, Oh long form video services, including Iraq, but we actually feel that we've made substantial efficiency gains. If you took a full year results out of all of the long form video platforms. We're the leader by revenue, but we also look.

Thus far less than not yet so full year operating loss was under 3 billion Renminbi and you know that speaks pot. Each the fact that we have been quite disciplined about content spending now looking forward. We think this remains a growth market that we'll we'll continue to invest aggressively and invest more each year.

In a long form video contents and one of the reasons, we're comfortable doing that is that way a uniquely vertically integrated.

Martin Lau: You know, a substantial chunk, not only of our own drama series but also of our competitors' drama series derives from other companies within the Tencent Group, and they could be intellectual properties based on novels from Chinese literature. It could be drama series that are produced by New Classic Media. In the fourth quarter of 2019, I think the most popular drama series, both on our own platform and on our competing platform, was actually both.

James Mitchell: You know, a substantial chunk not only of our own drama series, but also of our competitors' drama series derives from other companies within the Tencent group. It could be intellectual properties based on novels from China Literature. It could be drama series that are produced by New Classics Media. In Q4 2019, I think the most popular drama series, both on our own platform and on our competing platform, was actually both. It was China Literature IP and New Classics Media TV drama series.

John Lo: You know, a substantial chunk not only of our own drama series, but also of our competitors' drama series derives from other companies within the Tencent group. It could be intellectual properties based on novels from China Literature. It could be drama series that are produced by New Classics Media. In Q4 2019, I think the most popular drama series, both on our own platform and on our competing platform, was actually both. It was China Literature IP and New Classics Media TV drama series.

Substantial top not only with our own drama series, but also about competitors drama series derives from other companies within the sense that group I know it could be intellectual properties based on a novel stripped from China literature it could be.

Drama series that are produced by New classic media in the fourth quarter of 2019, I think the most popular drama series, both dawn on our own platform and what not competing platform was actually thought it was a China literature, IP and a new media TV drama series. So in a given we win.

Martin Lau: It was China Literature IP and... [inaudible] So, you know, given we're currently the most efficient in the industry, and given we're the most vertically integrated, and given we think that the value of... will appreciate over time, we'll continue to invest, hopefully, intelligently growing our long-form video content portfolio. Perhaps we can take the next step

James Mitchell: You know, given we're currently the most efficient in the industry, and given we're the most vertically integrated, and given we think that the value of content will appreciate over time, we'll continue to invest, you know, hopefully intelligently in growing our long-form video content portfolio. Perhaps we can take the next question.

John Lo: You know, given we're currently the most efficient in the industry, and given we're the most vertically integrated, and given we think that the value of content will appreciate over time, we'll continue to invest, you know, hopefully intelligently in growing our long-form video content portfolio. Perhaps we can take the next question.

R&D to must fishing in the industry and given where the most vertically integrated and give them. We think that the value of content will appreciate overtime well continue to invest.

Hopefully intelligently in acquiring all long form video content [laughter].

Perhaps we can take next question.

James Gordon Mitchell: Thank you. Our next question comes from a line of Alicia Yap from Citigroup. Please go ahead.

Operator: Thank you. Next question comes from the line of Alicia Yap from Citigroup. Please go ahead.

Thank you and next question comes from your line of Alicia Yap fan Citigroup. Please go ahead.

Alicia Yap: Hi, good evening, management. Thanks for taking my questions and congratulations on finishing a solid 2019. A couple of questions. Number one is,

Alicia Yap: Hi. Good evening, management. Thanks for taking my questions, and congratulations on finishing a solid 2019. A couple questions. Number one is on the FinTech business. You mentioned it will be negatively impacted by the outbreak. While we believe, you know, the offline transactions is impacted, but we also see the increase in online transaction, like the smart retail and also the online grocery purchase. That should help to offset the decline in the offline transaction. I think directionally on how serious is the sequential decline of the FinTech transaction, if you could help us frame the magnitude of the impact in Q1, that will be helpful. Second question is related to the strong demand, you know, on the Tencent Meeting and also the WeChat Work.

Hi, Good evening management, Thanks for taking my questions out and contract congratulation on finishing a solid cadaver night <unk>. A couple of question number one if I understand it's nice you mentioned a it will be markedly impact that like an outbreak Oh Wow, we believe.

Alicia Yap: On the FinTech business, you mentioned it will be negatively impacted by the outbreak.

Alicia Yap: Uh... while we believe uh... you know offline transactions are impacted, we also see uh... an increase in online transactions like this

Got it offline transactions.

He also.

The increase in online transaction like a slot retail or not for the online grocery pickup that should help to offset the decline in offline transaction. So I think on Directionally, how Cvs Easter cequent should be quite off the fintech transaction, a if you could help us frame.

On the money to off the impact in first quarter Thatll be helpful. And then second question is related to the strong demand you know I on the Tencent meeting and also to recap what I understand you suddenly make the opportunity a short time I in comes on monetization, but then any picture outlook.

Alicia Yap: I understand it's a limited opportunity in terms of monetization, but then there is any big picture outlook that you could help us with...

Alicia Yap: Understand it's a limited opportunity, short-term, in terms of monetization, but then, any big picture outlook that you could help us to think about in terms of the future opportunity, how that would translate, enterprises think about their IT demand, IT upgrade, and how that will help your cloud and business services growth opportunity in the future years to come. Just quickly on cost component, any spike of these bandwidth that we'll be concerned about with all the

That you could help us to think about it comes off the future opportunities.

Alicia Yap: in terms of the future opportunity, how that would translate enterprises, think about their IT demand, IT upgrade, and how that will help your cloud and business services growth opportunity in the future years to come. Just quickly on the cost component, any spike of these boundaries that we'll be concerned about? I think we'll go to Alicia. We'll pass it on two questions.

That would translate enterprises think about yes, I P. Vietnam I T weight, and how that will help your cloud and business services growth opportunities into the future yet to come on just quickly on cost component any biopsies are bad leaf.

Well costs I hope all people want to understand well.

James Mitchell: I think we'll go. Alicia, we'll cap it at two questions.

Martin Lau: I think we'll go. Alicia, we'll cap it at two questions.

Two questions. Okay. Okay, yeah, so unless you're why don't I opposite of fast question on the Fintech impacts so.

Martin Lau: Okay.

Alicia Yap: Okay.

James Mitchell: Yeah. Alicia Yap, why don't I answer the first question on the FinTech impact? I think the heart of your question was that a substantial chunk of payment transactions are online and therefore that should mitigate the negative impact from low offline transactions. I want to be, you know, clear about this. We generate over 1 billion payment transactions per day. That's a gigantic number. It's, you know, more than Visa and Mastercard put together. Within that 1 billion plus, there is a number of online transactions, e-commerce transactions, movie ticketing transactions, travel transactions, and so forth. But it's far from a majority. You know, when you're handling 1 billion transactions a day, almost by definition, the majority are offline transactions.

John Lo: Yeah. Alicia Yap, why don't I answer the first question on the FinTech impact? I think the heart of your question was that a substantial chunk of payment transactions are online and therefore that should mitigate the negative impact from low offline transactions. I want to be, you know, clear about this. We generate over 1 billion payment transactions per day. That's a gigantic number. It's, you know, more than Visa and Mastercard put together. Within that 1 billion plus, there is a number of online transactions, e-commerce transactions, movie ticketing transactions, travel transactions, and so forth. But it's far from a majority. You know, when you're handling 1 billion transactions a day, almost by definition, the majority are offline transactions.

James Gordon Mitchell: Okay. So Alicia, why don't I answer the first question on the fintech impact. So I think the heart of your question was that a substantial chunk of payment transactions are online, and therefore that should mitigate the negative impact from low offline transactions. So I want to be... (inaudible) But it's far from a majority.

The hot if your question what was that a substantial chonko stops payment transactions online and that's what I should mitigate the negative impact from low offline transaction, so I want to be.

No clear about this we generate over a billion payment transactions today that that's a gigantic number it. It's you know more than visa and Mastercard put together within that billion plus there is a number of online transactions ecommerce transactions movie ticketing transactions traveler transactions and so forth.

Got it is far from a majority when you're handling a billion transactions today almost by definition. The majority offline transactions I'm sorry, what we saw in February and DRD part of March is that there was a very substantial negative impact on offline transactions, both from a supply perspective, meaning to.

James Gordon Mitchell: You know, when you're handling a billion transactions a day, almost by definition, the majority are offline transactions. And so what we saw in February and the early part of March is that there was a very substantial negative impact on offline transactions, both from a supply perspective, meaning that the merchants, particularly the smaller merchants who accept QR code payment, were not actually at work and, therefore, were not accepting payment. And then, on the demand side, consumers were generally staying at home and so not out and about making payments.

James Mitchell: What we saw in February and the early part of March is that there was a very substantial negative impact on offline transactions, both from a supply perspective, meaning that the merchants, particularly the smaller merchants who accept QR code payment, were not actually at work, and therefore not accepting payment. In addition from the demand side, consumers were generally staying at home and so not out and about making payments. As we moved into March, we've seen that first of all, the POS merchants recovered relatively quickly as consumers began to work and began to go out and about again. More recently, we've seen the QR code transaction volume also picking up as the small and medium-sized merchants return to work.

John Lo: What we saw in February and the early part of March is that there was a very substantial negative impact on offline transactions, both from a supply perspective, meaning that the merchants, particularly the smaller merchants who accept QR code payment, were not actually at work, and therefore not accepting payment. In addition from the demand side, consumers were generally staying at home and so not out and about making payments. As we moved into March, we've seen that first of all, the POS merchants recovered relatively quickly as consumers began to work and began to go out and about again. More recently, we've seen the QR code transaction volume also picking up as the small and medium-sized merchants return to work.

The much sense chiquita smaller much since you, except QR code payment or whatnot, we're not actually out walk and definitely not accepting payment and then in addition from the demand side to consumers would generally staying at home and so no doubt in about making payments as we moved into much we've seen that festival the.

James Gordon Mitchell: As we moved into March, we saw that, first of all, POS merchants recovered relatively quickly as consumers began to work and began to go out and about again, and then more recently, we saw the QR code transaction volume also picking up as small and medium-sized merchants returned to work. So we are seeing a recovery, but I want to emphasize that the negative impact in the period after Chinese New Year was, you know, quite substantial.

POS much since recovered a relatively quickly as consumers I began to work and began to go out and about again and then more recently, we've seen the QR code transaction volume also picking up as the small and medium sized much. Its return to work. So we are seeing a recovery, but I want to emphasize that the negative impact.

James Mitchell: We are seeing a recovery, but I wanna emphasize that the negative impact in the period after Chinese New Year was, you know, quite substantial. Now, when I talk about the negative impact, I'm really talking about the negative impact on revenue. From a profit perspective, A, as Martin mentioned, we optimized our marketing and other expenses during the downtime. So the lost revenue was not necessarily flowing through into lost profits. And then B, within our FinTech portfolio, one chunk of the profits flows from the payment business, but another chunk flows from the asset management and lending businesses. And the asset management business, in particular, the wealth management, has continued to grow at quite a healthy pace, and that's naturally a relatively profit generative business.

John Lo: We are seeing a recovery, but I wanna emphasize that the negative impact in the period after Chinese New Year was, you know, quite substantial. Now, when I talk about the negative impact, I'm really talking about the negative impact on revenue. From a profit perspective, A, as Martin mentioned, we optimized our marketing and other expenses during the downtime. So the lost revenue was not necessarily flowing through into lost profits. And then B, within our FinTech portfolio, one chunk of the profits flows from the payment business, but another chunk flows from the asset management and lending businesses. And the asset management business, in particular, the wealth management, has continued to grow at quite a healthy pace, and that's naturally a relatively profit generative business.

In the period after Chinese new year, what was was.

Quite quite substantial now when I talk about the negative impact I'm really talking about the negative impact on revenue from a profit perspective, as Martin mentioned, we optimize stops marketing and other expenses during the downtime.

James Gordon Mitchell: Now, when I talk about the negative impact, I'm really talking about the negative impact on revenue. From a profit perspective, A, as Martin mentioned, we optimized our marketing and other expenses during the downtime, so the lost revenue was not necessarily flowing through into lost profits, and then B, within our fintech portfolio, one chunk of the profits flows from the payment business, but another chunk flows from the asset management and lending businesses. And the asset management business, in particular wealth management, has continued to grow at quite a healthy pace, and that's naturally a relatively So it has more of an impact on revenue than on profits. So on business solutions, I would answer three questions.

So the lost revenue was was not a sorry flying through into lost profits and then be within our Fintech portfolio. One chunk of the profits flows from the payment business, but another chunk flows from the asset management and lending businesses and the asset management business in particular, the wealth management has continued to grow at quite a healthy.

So that's naturally a relatively profit generated business so more of an impact on revenue to nonprofits.

James Mitchell: More of an impact on revenue than on profits.

John Lo: More of an impact on revenue than on profits.

Martin Lau: On the business solutions, I would answer the three questions. One is, in terms of monetization, there's actually very little monetization at that time with Tencent Meeting and WeChat Work. Now in terms of the future, I think, you know, I've actually dedicated a whole page, as well as I've talked pretty much at length on what we see ahead in the future, right? We felt basically Tencent Meeting is a great way for people to have, you know, across organization business type of video collaboration and video conference, versus WeChat Work holds the future for helping internal collaboration for enterprises as well as for consumer-facing enterprises to do CRM. There's actually sort of, you know, a very bright future for both applications.

So on the business solutions.

I would answer the three questions I want one is in terms of monetization, there's actually a their little monetize decision at that time with tens and meeting and which at work.

Martin Lau: One is, in terms of monetization, there's actually very little monetization at that time with Tencent meeting and which at work. Now, in terms of the future, I think, you know, I actually dedicated a whole page, as well as I've talked pretty much at length on what we feel hosts in the future, right, and we felt, basically, Tencent Meeting is a great way for people to have, you know, a cross-organization business type of video collaboration and video conference, versus WeChat for Work hosts the future for helping internal collaboration for enterprises, as well as for consumer facing enterprises to do CRM.

Now in terms of the future I think it's actually dedicated a whole page as well as I talked a pretty much at length on what we feel hosts into future I knew felt basically tends a meeting is a great way for people to have a.

Across organization business type of Ah Ah video collaboration and Videoconference versus a we checked for work host a future for helping our internal collaboration for enterprises as well as for consumer facing on devices to do CRM. So.

Martin Lau: So there's actually a very bright future for both applications. And I think, you know, we're just at the beginning of this big wave of Digital Transformation for enterprises and institutions. And finally, because there's no revenue at this point in time, you know, we do carry a cost in terms of human capital investment, as well as bandwidth. And especially the bandwidth for Tencent Meeting is actually quite a bit because the usage traffic is actually quite a lot.

So there's actually sort of do a very bright future for both applications.

Martin Lau: I think, you know, we're just at the beginning of this big wave of digital transformation for enterprises and institutions. Finally, because there's no revenue at this point in time, you know, we do carry costs in terms of human capital investment as well as the bandwidth, and especially the bandwidth for Tencent Meeting is actually quite a bit, because the usage traffic is actually quite a lot. But on the other hand, right, you know, we do have a very strong CDN capability built over the years to optimize the cost associated with this kind of traffic.

I think you know we're just at the beginning of this a big.

Wafer off.

Digital transformation for enterprises and institutions and finally, because there's no.

Revenue at this point of time, no we do carry cost in terms of human.

Capital investment as well as a depend with and Ah, especially the bandwidth for tens and.

Meeting is actually quite <unk> quite a bit because.

The usage traffic is actually quite a lot but on the other had on your we do have a very strong CDN capability built over the years to.

Martin Lau: But on the other hand, right, you know, we do have a very strong CDN capability built over the years to optimize the cost associated with this kind of traffic. And to some extent, relative to what we're spending on content, this is a small amount of money on a relative basis. So that's why we'll take it. And I think it's a worthwhile investment for the future. Thank you.

Optimized to cost associated with this kind of traffic and to some extend relative to what we spending on content. This is a small amount of money on the relative basis. So that's why we're ticket and I think it's worth the investment for the future [noise].

Martin Lau: To some extent, relative to what we're spending on content, this is a small amount of money, on a relative basis. That's why we'll take it, and I think, you know, it's a worthy investment for the future.

<unk>.

Alicia Yap: Thank you.

Thank you next question please.

James Mitchell: Next question, please.

Martin Lau: Next question, please.

Operator 2: Thank you. Next question comes from the line of Thomas Chong from Jefferies. Please go ahead.

Operator: Thank you. Next question comes from the line of Thomas Chong from Jefferies. Please go ahead.

Thank you.

Operator: Our next question comes from the line of Thomas Chung from Jefferies. Please go ahead. Hi, good evening.

Next question comes from the line of tennis channel from Jefferies. Please go ahead.

Hi, I wouldn't evening banks management novel, taking my questions and congratulation on I saw this that's all I'll be solved my question you asked about the Finpac business.

Thomas Chong: Hi, good evening. Thank management for taking my questions and congratulations on a solid set of results. My question is about the FinTech business. Given the coronavirus, can management comment on our strategy in terms of the tick weight improvement? Would we actually slow down the tick weight improvement to help the merchants to pass through this challenging period?

Thomas Chong: Hi. Good evening. Thanks management for taking my questions, and congratulations on a solid set of results. My question is about the FinTech business. Given the coronavirus, can management comment about our strategy in terms of the take rate improvement? Or would we actually slow down the take rate improvement to help the merchants to pass through this challenging period? And also on the wealth management side, James, you just mentioned that it's growing healthily. Can we understand about the different wealth management products like insurance, micro-lending, money products, how we should think about the product innovations for this year? And a very quick follow-up is on the overseas gaming strategy.

Given the coal no virus, Okay management comments about our strategy in terms of the pick weight improvement of will be after these bolt on the take rate.

Improvement will help the merchants to popping up all these challenging period and also on the wealth management inside our James you just mentioned that is when healthy and me understand about different wealth management products like in zoo and its Michael lending money product, how we should think about.

Thomas Chong: And also on the wealth management side, James just mentioned that it's going healthily. Can we understand the different wealth management products like insurance, micro-lending, money products, and what should we think about the product innovations for this year? And a very quick follow-up on the overseas gaming strategy. Given the fact that we have over 20% of our gaming revenue from overseas, what's the long-term goal that we are looking into? And our strategies for ramping up the overseas contribution would be great. Thank you.

The product innovations for this year and I'll be quick follow up is on the overseas a gaming strategy.

Thomas Chong: Given the fact that we have over 20% of the gaming revenue from overseas, what's the long-term goal that we are looking into and our strategies in ramping up the overseas contribution? That would be great. Thank you.

Given the fact that are we have over trips and all the gaming revenue from overseas Oh. The long term goal that we are looking into it and in our strategies a in ramping up the overseas contribution how that would be great. Thank you.

Martin Lau: Okay, we will address your question first. So in terms of the FinTech business, I think during the coronavirus, you know, we see a lot of offline businesses that we serve have seen their business basically shuttered due to the lockdown. So I think you know what we are trying to do our best at is actually to help alleviate their difficulties, and some of it is basically helping them to try to get some businesses online.

Jane Yip: Okay. We will address your question first. Thank you.

Well I just want to thank you.

So in terms of the thin type business I think during the current provider. So we see.

Martin Lau: In terms of the fintech business, I think during the COVID-19, you know, we see a lot of the offline businesses that we serve have seen their business basically shuttered due to the lockdown. I think, you know, what we are trying to do our best at is actually to help alleviate their difficulties. You know, some of it is basically helping them to try to get some businesses online, right? I think, you know, in some cases, some merchants have been able to leverage Mini Programs as well as other means, right?

Yeah, a lot of the offline.

Businesses that we serve a have.

Seen their business basically shuttered due due to.

The locked down so I didn't know what we are trying to do our best debt is actually to help alleviate a there.

Difficulties or and.

Some of it is basically a helping them to.

Two.

Martin Lau: I think, you know, in some cases, some merchants have been able to leverage mini-programs, as well as other means, right, you know, even forming a group, for example, to sell their products online. And some of them have actually achieved quite encouraging results.

I try to get some businesses online I I think you know a in in some cases, some merchants have been able to leverage Muni program I mean, it meaning programs as well as a other meetings right you know even forming a group for example to sell their products online and and Ah Ah some of them actually a chip.

Martin Lau: You know, even forming a group, for example, to sell their products online, some of them have actually achieved quite encouraging results. At the same time, I think over time, we try to build tools so that the merchants can actually manage their operations more efficiently, and at the same time, try to get more users to do online and offline transactions. Those are gonna be the focus for us. We have never wanted to run our fintech payment business based on a heavy monetization model. You know, that has never been our vision, right? You know, what we wanna do is actually make it convenient, and at the same time, we try to be able to add value to the people, the merchants we serve.

Martin Lau: And at the same time, I think, over time, we should try to build new tools so that merchants can actually manage their operations more efficiently and, at the same time, try to get more users to do online and offline transactions. So those are going to be the focus for us. We have never wanted to run our fintech payment business based on a heavy monetization model, you know. That has never been our vision, right? What we want to do is actually make it convenient.

Quite encouraging result.

And at the same time, a I think overtime, we will try to be tools. So that the merchants can actually managed care operations, some more efficiently and at the same time I try to get more users to do online and offline transaction. So those are the gonna be the focus for US we have never wanted to run our fintech a payment.

Business based on how do you monetize intermodal has never been our Oh vision I know, what we want to do is actually make it a convenience and at the same time, we try to be able to add value to the people. The merchants, we serve and over time, we're able to get someone antisense out at the additional value there.

Martin Lau: And at the same time, we try to be able to add value to the people, the merchants we serve. And over time, we're able to get some monetization out of the additional value that we provide. So that's our strategy.

Martin Lau: Over time, we're able to get some monetization out of the additional value that we provide. That's our strategy. Now, in terms of wealth management, as you talk about, the... You know, well, in terms of our fintech solutions, right? You know, there's wealth management, there is our loan and consumer loan, micro loan business. Then, over time, we are going to build some more presence in insurance. I think each one of these services, right, you know, we have always tried to bring some innovations, as well as additional value proposition for our users. I think a big part of it is centered around just reducing the entire customer acquisition cost and engagement cost in the industry. Along the way, right?

We provide.

So that's our strategy is not in terms of wealth management as you talk about.

Martin Lau: Now, in terms of wealth management, as you talk about... The, Well, in terms of our FinTech solutions, there's wealth management, there is our loan and consumer loan, micro loan business, and then over time, we are going to build some more presence in insurance. I think each one of these services, we have always tried to bring some innovations, as well as an additional value proposition for our users.

Yeah, well in terms of our Fintechs illusions right you know, there's a wealth management a there is our loan and consumer loan micro loan business and then a overtime we are going to build some more presence in insurance I think each one of.

These services right you know, we have always try to bring some innovations as well as additional value proposition for users.

Martin Lau: I think a big part of it is centered around just reducing the entire customer acquisition cost and engagement cost in the industry and, along the way, right, passing some of the savings back to the consumers. Another broad stroke strategy is to leverage technologies and our data analytics to get better in terms of risk management. So when the risk is actually reduced, then again, there's some savings that we can actually create, and that can be shared with the users, as well as with our partners.

I think a big part of it is centered around.

Just reducing the entire or a customer acquisition cost and engagement cost in the industry.

And along the way right pass some of the savings back to the consumers.

Martin Lau: Pass some of the savings back to the consumers. Another broad stroke strategy is in terms of leveraging technologies and our data analytics to get better in terms of risk management, right? When the risk is actually reduced, then again, there's some savings that we can actually create, and that can be shared with the users as well as with our partners. I think, you know, a lot of the innovations would be around these principles. We actually find a lot of opportunities to have innovation. We can't go through one by one, but I think in broad stroke, these are the areas that we find we can add most value on.

And not a broad strokes strategy is a in terms of leveraging technologies and our data analytics to get better in terms of risk management right. So when the risk is actually reduced it done again, there's some savings that we can actually create and that can be shared.

With the users as well as with our partners. So I think you know a lot of the innovations would be around these principles.

And ER, we actually find a lot of opportunity just to have innovation. We can't go through one by one but I think in bras choke. These are the areas that we find that we can at most value on <unk>.

Martin Lau: For our international game strategy, I think Martin spoke about that in some detail in his sixth slide, so I'd refer you back to that slide, but I do just want to emphasize that ultimately, it is to some extent a product-driven business, and the best products come from the best studios, and we believe that within the Tencent family now there are a number of really, extremely successful studios. Just to pick one at random, if you look at Rio But it's not just Riot, it's Timmy, which had global success with Call of Duty Mobile, it's Quantum that had global success with PUBG Mobile, it's Supercell that had very recent global success with Brawl Stars and other products coming out this year. So there are a number of elements to the strategy, but people sometimes forget the importance we place on the core studio expertise, and the four studios I just mentioned are best-in-class studios globally.

James Mitchell: For our international game strategy, I think Martin spoke about that in some detail in his sixth slide. I'd refer you back to that slide. But I do just wanna, you know, emphasize that, you know, ultimately it is in some sense a product-driven business, and the best products come from the best studios. You know, we believe that within the Tencent family now there's a number of really extremely successful studios. You know, just to pick one at random, if you look at Riot Games, you know, their pipeline, including games like Valorant, including games like Runeterra, including games like Wild Rift, is, you know, one of the best pipelines of any game studio in the world. Their existing product, League of Legends, is, you know, the biggest and best PC game in the world.

For our international game strategy, I think Matson spoke about that in some detail in up his six slide. So I'd refer you back that side I just want to emphasize that ultimately it is something to product driven business and the best product something the best Studios and you know we believe that's within the Tencent family now that's enough.

Really extremely successful studios side, you know just to pick one at random if you look at riot games, you did that pipeline, including games like father into getting games like written terror, including games like Wild Rush is going to want to best pipelines of any game studios in the world and our existing product League of legends. It is you know the biggest best PC game in the world, but it's.

James Mitchell: You know, it's not just Riot. It's TiMi, which has global success with Call of Duty: Mobile. It's Quantum that has global success with PUBG Mobile. It's Supercell that has had, you know, very recent global success with Brawl Stars and other products coming out this year. So, you know, there's a number of elements to the strategy, but, you know, people sometimes forget the importance we place on, you know, the core studio expertise. The four studios I just mentioned are, you know, best-in-class studios globally. Next question, please.

I'll just ride it it's it's hemi, which has global successive quarter beauty mobile it's constant has like what success with our T. Mobile it supercell. That's hottie right recent global success would grow starts and other products coming out this year.

So that's a number of elements to the strategy, but but I'm not people, sometimes forget the importance we place on on it of course studio backs, but cheese and under four studios I guess mentioned besting saw studios globally.

Okay.

Next question please.

So I do due to time constraint even have to last question.

Jane Yip: Sorry, due to the time constraint, may we have the last question, please?

James Gordon Mitchell: Due to the time constraints, may we have the last question? Thank you. The last question comes from the line at Gregory Chauffeur at Buckley's. Please go ahead. Hi, good evening management. Thanks for taking my question. So just a quick follow-up on COVID-19. We think some of your investment companies will also see some impacts during the epidemic situation.

Operator 2: Thank you. Last question comes from the line of Gregory Zhao from Barclays. Please go ahead.

Operator: Thank you. Last question comes from the line of Gregory Zhao from Barclays. Please go ahead.

Thank you last question comes from the line if Gregory Chow from Barclays. Please go ahead.

Hi, Good evening regimen for taking my question. So just a quick follow up on the Koby Nike. So we think some of your investment company. So once we see some impacts during happy dynamic situation, which I thought I understand what kind of supports our you can provide to this company for example traffic or technologies.

Gregory Zhao: Hi. Good evening, management. Thanks for taking my question. Just a quick follow-up on the COVID-19. We think some of your investee companies will also see some impact during the epidemic situation. I just want to understand, what kind of support you can provide to these companies, for example, traffic or technology support, to the

Operator: and so on. So that's the one to understand. So what kind of support can you provide to these companies so that they can be able to be successful?

Ports [laughter] yeah.

Gregory Zhao: To understand the dynamics of the entertainment related services such as live streaming, music, literature, and long or short video services, and how shall we think about COVID-19's impact, and how will that reshape our users' long-term behavior? Thank you.

Yeah the dynamics of.

All right after team and I really couldn't [laughter] trying to live streaming music literature, and long or short of video services and how shall we think about koby nikes impact and how we're proud to reshape our users long term I behavior. Thank you.

<unk>.

[laughter].

James Mitchell: The second question on the potential long-term impact of COVID-19 on the digital entertainment industry. You know, clearly, people who are under quarantine situation or people who can't go to school or work, you know, are spending more time at home, and that's, you know, unfortunate, but it's a necessary reality. You know, when they're at home, there's a limited number of activities they can partake in. You know, some of those you mentioned, including music, watching films, watching short video content, playing games, therefore see increased usage.

So the second question on the.

Longtime impact of a potential long term impact just kind of at 19 on.

The.

Digital entertainment industry, Yeah clearly.

People, who a and quarantine situation or people, who can't go to school walk you know spending more time harm and that's you know unfortunate, but it's a unnecessary reality and you know when they're at home that's a number of.

Activities that composite taking a limited number of activities they can partake in.

And some of those you mentioned, including music watching films watching short video content, saying games, you know that for see increased usage now as and when the Ur Cobot 19 situation.

James Mitchell: Now, as and when the COVID-19 situation normalizes, then, you know, one would expect people to venture, you know, out of home and participate more in out-of-home activities once again. You know, I think that said, even with the SARS crisis, which was on a much lesser scale, there was clearly a structural change in consumer behavior, where, you know, pre-SARS compared to post-SARS, people spent more time on digital entertainment. You know, that may again be the case here. I wanna emphasize that, you know, from our perspective, that's probably the lesser structural change. The greater structural change will be enterprises recognizing the importance of remote working and recognize the importance of being able to stay in contact with their consumers, even if their storefronts offline are closed.

Normalized does and one would expect people to venture out of home and participate more in out of time activities. Once again, but you know I think that said.

Even with the SaaS crisis, which was on a much less scale that was city a structural change in consumer behavior, what Wagner precise compared to post SaaS people spent more time on digital entertainment and you know that may again be the case here, but it but I want to the.

Besides the you know from our perspective, that's probably the last of structural change the greatest structural change will be and surprise is recognizing the importance of.

Remote working and recognize the importance of.

Being able to chips in contact with that would that consumers, even if that storefronts offline to close done you know that's why.

James Mitchell: You know, that's why it's so important for us that you know, we invest the money and invest time in really you know, making enterprise-facing apps be all that they can be. You know, we gave the example of the Tencent Meeting video conferencing service that's enjoyed spectacular growth. That's partly because it's in the right place at the right time and serving a real need, but that's also partly because I think you know, we've rushed out 14 updates in 40 days, which is an incredibly fast update pace for any app and you know, difficult to get through the app stores actually.

So important for us we invest.

The money and invest a time in really a you know, making a and surprise facing a apps b or that they can be and you know we gave the example, Dusty Tencent meeting video conferencing stuff is that that's enjoyed a spectacular growth then that's partly because it's in the right place at the right time and stuff.

In your real need, but that's also partly because I think you know what was rushed out 14 update and seen in 40 days would virtusa incredibly fast uptake pace for any of the engine is difficult to get through the app stores actually Ah. So anyway. We think that you know that will be up you know some temporary changes in consumer behavior [noise] River.

James Mitchell: Anyway, we think that, you know, there will be, you know, some temporary changes in consumer behavior revert to normal relatively quickly, but there'll be some structural changes to consumer and especially enterprise behavior that will be longer lasting.

To normal relatively quickly, but that also be some structural changes in consumer and especially enterprise behavior.

That will be a longer lasting.

If you're on your first question. It took me a little bit to think about it because ER.

Martin Lau: Okay. On your first question, it took me a little bit to think about it because, frankly, I have to say, we actually work with our investee companies and provide them the support throughout their life cycle. You know, there are all kinds of different technologies and management expertise, as well as traffic and product cooperations that we actually do with them during normal times. You know, our support for them has always been sort of ongoing. In relation to the pandemic right now, I actually felt we have not provided any specific support to our investee companies. The reason I think about it is basically, I think, you know, all of our investee companies are actually best-in-class companies in their own right.

Exactly I have to say, we actually work without investee companies and providing the supports a throughout their lifecycle and ER.

All kinds of Ah different technologies and management.

Expertise as long as Tropic and and product cooperations that we actually do with them.

During normal times, so our support for them has always been sort of ongoing but in relation to the pandemic right. You I actually felt we have not provided any specific support to our investee companies and and.

And the reason I I think about it is basically I think you know all of our Investee companies are actually a best in class companies in their own right and instead of asking for help there I think they're offering help.

Martin Lau: Instead of asking for help, right? I think they are offering help. All of us during this difficult time actually not think about, you know, what incrementally we can do better for ourselves, but more thinking about how we can do to help the general society. I have to say, you know, I can think about all our investee companies basically spending their effort in trying to, in their own industries, provide support to their business partners, or just their users, or government entities that need help, in a way that the people who need help are not our investee companies. It's actually the general public.

So all of us during this difficult time is actually not think about what what a incrementally we can do better off for ourselves, but more thinking about how we can do to help the general society. So I I have to say, yeah, I can think about or investee companies basically spending the African trying to in the end.

The streets provide support to.

Their business partners or the their users or government entities that need help.

In a way that the people who need help are not all you must be companies is actually the general public and I think I'm proud to say a lot of I must be compensated rise to that challenge and dedicate their resources to help dumb and play important roles in fighting against the Colo virus.

Martin Lau: I think I'm proud to say a lot of our investee companies have rise to that challenge and dedicate their resources to help them and play an important role in fighting against the coronavirus.

[laughter]. Thank you.

Jane Yip: Thank you. We are closing the call now. 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. The replay of this webcast will also be available soon. Once again, we apologize for the disruptions caused by the system technical problems for tonight, and we hope everybody stay healthy. We look forward to connecting with you again next quarter.

We are something that core now if we if you wish to approximately another financial information. Please visit the especially know how company website at Www Dot isn't dot com replay of this webcast will also be available.

Okay, we apologize for any disruption.

Okay, and technical problems, but Tonight.

I hope everybody, Hey, healthy look like.

Okay.

Ladies and gentlemen that does conclude our conference for today. Thank you. So but this meeting you may all disconnect.

Operator: Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect. Ladies and gentlemen, thank you for standing by, and welcome to Tencent 2019 Q4 and Annual Results Announcement Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question today, you need to press star one on your telephone. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker host today, Miss Jane Yip. Thank you. Please go ahead, ma'am.

Operator: Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.

[music].

Ladies and gentlemen, thank you for standing by welcome to tests into tells a 19 fourth quarter and annual results announcement conference call.

unknown: [inaudible]

At this time.

With that this then sat in listen only mode. After the speakers presentation, there will be a question and that's a session.

So lots of question today, you need to press Star one on your telephone please be advised that today's conference is being recorded.

James Gordon Mitchell: Thank you. So, the second question on the potential long-term impact of COVID-19 on the digital entertainment industry. Clearly, people who are in a quarantine situation or people who can't go to school or work are spending more time at home. And that's, you know, unfortunate, but it's a necessary reality.

I'd like to have the conference over to your Speaker Jose Mary Jane. Thank you. Please go ahead Matt.

Thank you good even a welcome to you all trued up in a 19 full quota and anyway. So its conference call again, if somebody came up 10 cents.

Jane Yip: Thank you. Good evening. Welcome to our 2019 Q4 and Annual Results Conference Call. I'm Jane Yip from the IR team of Tencent. Before we start the presentation, we would like to remind you that it includes forward-looking statements, which are underlined by a number of risks and uncertainties and may not be realized in the future for various reasons. Information about general market conditions is coming from a variety of sources outside of Tencent. This presentation also contains some unaudited non-IFRS financial measures that should be considered in addition to, but not as a substitute for, measures of the company's financial performance prepared in accordance with IFRS. Non-IFRS measures, formerly referred to as non-GAAP measures, are intended to reflect our core earnings by excluding certain one-time or non-cash items.

He's got the presentation, we would like to remind you that includes forward looking statements, which underlined by number of risk and uncertainties and may not be willing to be true for variance. We send information about general market conditions. It's kinda tell me if I could affect.

Outside of cancer.

Presentation also contain some UN audited.

I am all financial measures.

Should be considered in addition to but not at the subject careful matches up the company financial performance, but that in accordance with Oh.

No I F. R. S lashes, so many thought that's what we thought.

Non-GAAP lashing out in time to with <unk> our core.

Excluding certain onetime or non cash items.

Jane Yip: For a detailed discussion of risk factors and non-IFRS measures, please refer to our disclosure documents on the IR section of our website. Let me introduce the management team on the call tonight. Our Chairman and CEO, Pony Ma, will kick off with a short overview. President Martin Lau will discuss our strategy review. Chief Strategy Officer James Mitchell will speak about the business review. Chief Financial Officer John Lau will conclude with financial review before we open the floor for questions. I will now turn the call over to Pony.

Our discussion off with subject.

No I Oh its mission.

So it's hard to other Scotia documents on the assessing a halt website.

I mean should be used the management team all the coach night.

C O Pony law will kick off with a shot overview puxin mocking all will discuss our strategy will be.

Chief strategy Officer, James that show will speak about the business with Bill.

Chief Financial Officer, John though will conclude with a national appeal before we open to so question.

I would now trying to call that your Tony.

Pony Ma: Thank you, Jane. Good evening, everyone. Thank you for joining us. During 2019, we reinforced our leadership in consumer Internet and extend our presence in industrial Internet while sustaining healthy operating and financial metrics. Let me update you on our key achievement in our four strategic areas. In social, WeSing ecosystem became increasingly vibrant and better connected users with services. Annual transaction volume via mini-programs crossed CNY 800 billion. As it related to QQ, we branded the product with enhanced chat features and friend recommendation, as well as expanded entertainment use cases via mini-programs, increasing QQ's popularity among young generations. In online games, we extend our China leadership while expanding internationally via popular games including PUBG Mobile, Brawl Stars, and Call of Duty Mobile.

Thank you okay.

James Gordon Mitchell: And, you know, when they're at home, there's a number of activities they can partake in, a limited number of activities they can partake in. And some of those you mentioned, including music, watching films, watching short video content, playing games, therefore see increased usage. Now, as and when the COVID-19 situation normalizes, then one would expect people to venture, you know, out of the house and participate more in out-of-home activities once again. But, you know, I think that said, even with the SARS crisis, which was on a much lesser scale, there was clearly a structural change in consumer behavior where, you know, pre-SARs compared to post-SARs, people spent And, you know, that may, again, be the case here. But I want to emphasize that, from our perspective, that's probably the lesser structural change.

Everything everyone. Thanks for joining us.

James Gordon Mitchell: The greater structural change will be enterprises recognizing the important. of, you know, remote working and recognize the importance of being able to stay in contact with their consumers, even if their storefronts offline are closed. And, you know, that's why it's so important for us that, you know, we invest, uh... that that the money and invest uh... time in in really uh... you know making uh... enterprise facing uh... apps uh... be all that they can be and and you know we we gave the example of the Tencent meeting video conferencing service that's enjoyed spectacular growth and that's partly because it's in the right place at the right time and serving a real need but that's also partly because i think you know what we've rushed out fourteen updates in in forty days which is uh... incredibly fast uh... update pace for any app and difficult to get through the app stores actually uh... so anyway uh... we think that uh... you know there will be uh... you know some uh... temporary changes in uh... consumer behavior revert to normal relatively quickly but there will also be some structural changes uh... to consumer and especially enterprise behavior uh... that will be uh... longer lasting, Okay, on your first question, it took me a little bit to think about it because, frankly, I have to say, we actually work with our investing companies and provide them the support throughout their life cycle.

Brent what all that nitrogen, we'd reinforces our leadership in consumer Internet and extend our past the industrial Internet.

Oh, so standing healthy operating and financial metrics.

James Gordon Mitchell: And there are all kinds of different technologies and management expertise, as well as traffic and product cooperations that we actually do with them during normal times. So our support for them has always been sort of ongoing.

Let me update you on all key achievements in Oh for circuitry era.

Martin Lau: But in relation to the pandemic, I actually feel we have not provided any specific support to our investing companies. And the reason I think about it is basically that I think, you know, all of our investing companies are actually top-of-class companies in their own right. And instead of asking for help, right, I think they are offering help. So all of us, during this difficult time, should actually not think about, you know, what we can do better for ourselves but more think about how we can do to help the general society.

Martin Lau: So I have to say, you know, I can think about all our investing companies basically spending their effort and trying to, in their own industries, provide support to their business partners or their users or government entities that need help. In a way, the people who need help are not our investing companies. It's actually the general public, and I think I'm proud to say a lot of our investing companies have risen to that challenge and dedicated their resources to help them and play an important role in fighting the coronavirus. Thank you, and we are closing the call now if you wish to continue.

Being soldier, we shouldn't ecosystem became increasingly vibrant back her conductor uses we the services.

And your transaction volume you I mean it programs.

Call 800 feet in Colombia.

Oh, the lights to kill we basket that pulled out Weve has kept features and then they'll come in they should.

So let us expand it at the time and use cases.

I mean your program.

Increasing cuckoos popularity among young generation.

Yeah, all like games, we expect our China leadership, while expanding internationally.

Good luck in including put your mobile.

Boss balls and calc go T mobile.

Pony Ma: Our international revenue rose to 23% of online game revenue in Q4 2019. In content and advertising, video subscriptions exceed 100 million milestone in the year. We innovated our business model and increased operating efficiencies of our long-form video business, significantly reducing its 2019 operating loss to below CNY 3 billion, much lower than industry peers. Despite macro headwinds, we achieved robust advertising revenue growth, progressively realizing the long-term potential in moments and expanding our mobile ad network. In fintech and business services, average daily commercial payment transactions exceed 1 billion in Q4 as we deepened penetration among offline merchants. We consistently expand our market share in cloud, with revenue crossing CNY 17 billion in 2019. Number of paying customers surpassed 1 million.

Our international revenue rose to 23% off all aren't getting revenue in the fourth quarter after southern Nigel.

Yeah content and advertising.

Dealer subscription exceed the 100 million miles fall into your.

<unk> innovative our business model and increased operating efficiency all are long form video business.

They extend the they do think its 2000 <unk> operating loss to be low hobbies sleep beat it.

Much lower than industry peers.

Despite macro headwinds.

Achieve low plus the advertising revenue growth.

Well with if they are realizing the long term potential moment and expanding our mobile AD network.

Yeah, Fintech and business services.

Richard Daily commercial payment transaction.

The 1 billion in the fourth quarter.

Absolutely deepening penetration a mall off line.

Okay.

Well you consistently expand our market share called.

With that Neil crossing 17, beating heart beat in 2019.

Nimble paying coupled with the park one meeting.

Now let me go through the line.

Operator: To check out our press release and other financial information, please visit the IR section of our company website at www.tencent.com. The replay of this webcast will also be available soon. Once again, we apologize for the disruptions caused by...

Pony Ma: Now let me go through the headline, financial numbers, and John will provide more detailed discussion in the financial section. Total revenue was RMB 106 billion, up 25% year-on-year and 9% quarter-on-quarter. Quarterly revenue for the first time exceeds RMB 100 billion, both including and excluding Supercell contributions. Gross profit was RMB 46 billion, up 31% year-on-year and 9% quarter-on-quarter. Our non-IFRS operating profit was RMB 30 billion, up 35% year-on-year and 6% quarter-on-quarter. Non-IFRS net profit attributable to equity holders was RMB 25.5 billion, up 29% year-on-year and 4% quarter-on-quarter. Moving to platform update. In social, combined MAU of Weixin and WeChat increased 6% year-on-year to 1.165 billion.

Financial numbers and John will provide more detailed discussion into financial section.

Operator: by the Assistant Technical Problems 49. And we hope everybody stays healthy. Look forward to connecting with you.

Operator: Thank you for connecting with you again. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.

Total revenue was 160, the beat up 25% year on year at night, but same quarter on quarter.

Quarterly revenue for the first part exceed 100 beat it ought to be.

Both including and excluding supercell contribution.

[noise] WASC Poppy was 46 billion on be.

Got the 1% young yet and I put that quote unquote, though.

All along.

Higher operating coffee was 38 billion on be up 35% year on year and 6% quarter on quarter.

No I am.

Net profit attributable to equity holder was 25.5 billion on beat up 29% year on year at 4%.

What kind of quota.

Moving to perform update.

Soulja combine it may you off we shall we chat increased 6% year on year to 1.16 spot.

The law devoted and they you off cupule declined 7.5% year on year to 647 million Bucks, we proactively cleaned up spamming and bought accounts.

Pony Ma: Smart devices MAU of QQ declined 7.5% year-on-year to 647 million as we proactively cleaned up spamming and bot accounts. In games, we solidified our number one position in China with Peacekeeper Elite's popularity and extend our international success with launch of Call of Duty Mobile and Teamfight Tactics during the year. In media, new

In games with solidifies, our number one position in China with piece of paper elite [laughter] popularity and extend our international success with the launch all call do T mobile and Kim five tactics during the year.

The media Neil.

[music].

Operator: ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Music Music Music Music Music Music Music Music Music Music Music Music Music, and so on the same, and so much, Thank you. Thank you. Thank you. I'm going to I'm going to I'm going to

Operator: Ladies and gentlemen, thank you for standing by, and welcome to Tencent's 2019 fourth quarter and annual results announcement conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question today, you need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker host today, Ms. Jane Epp. Thank you. Please go ahead, ma'am.

Alicia Yap: Thank you. Good evening. Welcome to our 2019 fourth quarter, in any way.

Alicia Yap: Before we start the presentation, we would like to remind you that it includes forward-looking statements, which are underpinned 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. 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 company's financial performance prepared in accordance with IFRS. Non-IFRS measures, formerly referred to as

Alicia Yap: Non-Gap Matches are intended to reflect our core earnings by excluding certain one-time or non-cash items. For a detailed discussion of risk factors and known IFRS measures, please refer to our disclosure documents in the IRS section of our website.

Alicia Yap: Let me introduce the management team on the call tonight. Our chairman and CEO, Pony Ma, will kick off with a short overview. President Martino will discuss our strategy review. Chief Strategy Officer, James Mitchell, will speak about the business review, and Chief Financial Officer, John Loh, will conclude the financial review.

Operator: Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?

Huateng Ma: Financial Review Before we open the floor for questions, I will now turn the call over to Tony. Thank you, Jane. Good evening, everyone.

Huateng Ma: Thank you for joining us. During 2019, we reinforced our leadership in consumer Internet and extended our presence in industrial Internet, while sustaining healthy operating and financial margins. Let me update you on our key achievements in our four strategic areas. In social, the racing ecosystem became increasingly vibrant and better connected users with services. The annual transaction volume in mini-programs of close to 800 billion RMB. As related to QQ, we revamped the product with enhanced chat features and friend recommendation, as well as expanded entertainment use cases via mini programs, increasing QQ's popularity among young generations.

Huateng Ma: In online games, we extend our China leadership while expanding internationally via popular games including PUBG Mobile, for All Stars, and Call of Duty Mobile. Our international revenue rose to 23% of online game revenue in the fourth quarter of 2009, mainly from content and advertising. We deal with subscriptions exceeding 100 million milestones in a year. We innovated our business model and increased operating efficiency of our long-form video business, significantly reducing its 2019 operating loss to below RMB 3 billion, much lower than industry peers.

Huateng Ma: Despite macro wins, we achieved robust advertising revenue growth, progressively realizing the long-term potential in moments and expanding our mobile ad network, in fintech, and business services. Average daily commercial payment transactions exceeded $1 billion in the fourth quarter as we deepen penetration among offline merchants. We consistently expand our market share in the cloud, with revenue crossing 17 billion RMB in 2019, and our number of paying customers surpassed 1 million. Now, let me go through the headline financial numbers, and John will provide more details for the discussion in the financial section.

Huateng Ma: Total revenue was 106 billion RMB, up 25% year-on-year and 9% quarter-on-quarter. Quarterly revenue for the first time exceeded 100 billion RMB, both including and excluding supercell contributions. Gross profit was 46 billion RMB, up 31% year-on-year and 9% quote-unquote. Our non-IFRS operating profit was 30 billion RMB, up 35% year-on-year and 6% quarter-on-quarter. Non-IFRS net profit attributable to equity holders was 25.5 billion RMB, up 29% year-on-year and 4% quota and quota. Moving to platform updates in social, the combined MAU of WeChat and WeChat Messenger increased 6% year-on-year to 1.165 billion.

Huateng Ma: On smart devices, MAU of QQ declined 7.5% year-on-year to 647 million, but we proactively cleaned up spamming and bought accounts. In games, we solidified our number one position in China with peacekeeper elite popularity and extended our international success with the launch of Call of Duty mobile and team fight tactics during the year. [inaudible]

[music].

Q4 2019 Earnings Call

Request a DemoDemo

TCE

Tencent

Earnings