Q4 2020 Tencent Holdings Ltd Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to Tencent Holdings limited 2024th quarter and annual results announcement conference call well at this time all participants are in a listen only mode.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to Tencent Holdings Limited in 2020.

Operator: 4th Quarter and Annual Results Announcement Conference Call

Operator: Systems are in a listen-only mode. After the speaker's presentation, there will be

After the speaker's presentation, there will be a question and answer session.

Operator: There will be a question and answer session.

Operator: To ask a question today, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Ms. Wendy Huang.

You asked the question today, you would need to press star one on your telephone. Please be advised that today's conference is being recorded on.

I'd like to hand, the conference over to MS. Wendy Huang from Tencent Investor Relations. Thank you. Please go ahead.

Wendy Huang: and Tencent Investor Relations. Thank you. Please go ahead.

Wendy Huang: Thank you. Thank you, operators. Good evening.

Thank you operator, good evening welcome to our 2024th quarter and annual results conference call on.

Wendy Huang: Welcome to our 2020 fourth quarter and annual results conference call. I'm Wendy Huang from the Tencent IR team. Before we start the presentation, we would like to remind you that it includes four forward-looking statements, which are underpinned by a number of risks and uncertainties, and they 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. For a detailed discussion of risk factors and non-IFRS measures, please refer to our disclosure documents in the IR section of our website.

When do you want from Tencent IR team.

Before we start the presentation, we would like to remind you that it includes forward looking statements, which are underlined by a number of risks and uncertainties and it may not be realized in the future for various reasons.

Information about general market conditions is coming from a variety of sources outside of Tencent.

This presentation also contains some on OTT no I as far as 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 <unk>.

For a detailed discussion of risk factors in it now I have artist measures.

Please refer to our disclosure documents on the IR section of our website.

Let me now introduce the management team on the call Tonight.

Wendy Huang: Let me now introduce the management team on call tonight. Our Chairman and CEO, Pony Ma, will kick off with a short overview, including ESG initiatives. President Martin Lau will discuss the strategy review. Chief Strategy Officer James Mitchell will speak about the business review, and Chief Financial Officer John Lowe will conclude with a financial discussion before we open the flow for questions. I will now turn the call over to Pony.

Our chairman and CEO Pony MA will kick off with a short overview, including ESG initiatives.

President Martin Lau will discuss strategy review.

Chief Strategy Officer, James Mitchell will speak to business review and Chief Financial Officer, John Lowe will conclude with financial discussion before we open the floor for questions.

I will now turn the call over to Pony.

Okay.

Okay. Thank you.

Good evening, everyone and thank you for joining us.

Huateng Ma: Good evening, everyone. Thank you for joining us. 2020 was unprecedented yet with many challenges. Having said that, we delivered a solid result. We believe our robust operating and financial results testify to our focus on user value and technological innovation. Let me walk you through some of our key achievements.

Tons, you told you was on pass it on to many.

Many challenges.

The insight that we have delivered a solid result.

We believe our operating and financial results testify to our focus on it.

The value and technology innovation.

Let me walk you through some of our key achievements.

Yes, so sure.

The strength of same thing, we say its value.

Pearl position for users and enterprises.

Huateng Ma: Proposition for Users and Enterprises. Our new feature, Video Accounts, enables public sharing of informative and educational content in video format. Many programs continue to deepen penetration in more user cases, with annual transaction volume more than doubling year-on-year. For QQ, we increase stickiness among young users by enriching the shared experience and catering to their entertainment and e-learning needs. In GANS, our worldwide revenue grew 36% year-on-year, with increasing contribution from international markets. We reinforced our leadership across mobile and PC by expanding new services for major games and launching successful new games.

Our new feature video accounts enabled Republic, shouting informative and educational content.

V deal format.

Mini programs continue to have deepened penetration in more use cases.

With annual transaction volume more than doubling year on year.

For QQ increased stickiness among younger users by enriching share experiences and casually towards their entertainment.

Pete.

And James Oliver worldwide.

<unk> 36 per se yeah, yeah.

With increasing contributions from international markets.

Enforces our leadership across mobile and PC by expanding user bases.

Major games and launching successful new games.

Mhm content weight.

Huateng Ma: In content, we extend IP value across literature, literature, animated games, and long-form video to create unique and appealing content. We became number one in China's video subscription market. In advertising, we integrate advertising platforms, strengthening Tencent's own properties, as well as the mobile ad network, as preferable choices for advertisers. Infinex services. Payment users engaged, and commercial payment volume increased healthily. We will continue to work closely with the regulator and industry partners to deliver compliant FinTech products while prioritizing risk management over scale.

And I P value.

Of course, literally we culture and he made a games and long form video to create a unique and appealing content.

We became clear number one in China video sufficient market.

U S housing, we integrate to advertising platforms stinker 10 cents on properties, so that a small ball at an hour plus.

Polyphony choices for advertisers.

Fintech services.

Hey man used to engage and commercial payment volume increased housekeeping.

We will continue to work closely with the record interest Chicago took deliver comprise food type products.

While prioritizing lease commencement over scale.

In business services Tencent.

Huateng Ma: In business services, Tencent Meeting has become the largest and first stand-alone app for cloud conferencing in China. Innovations such as our customized Star Lake server solution and self-developed T-block data center technology enhance our cloud services performance and cost efficiency. Now, let me go through the headline numbers for the fourth quarter.

The meeting has become the largest stand alone apps for cloud comfort zone.

China.

Innovation, such as our customized Skylake server solution and self developed acute block data center technology enhance our cloud services performance and cost efficiency.

No let me go through the headline number.

Huateng Ma: Total revenue was 134 billion RMB, up 26% year-on-year and 7% quarter-on-quarter. Gross profit was 59 billion RMB, up 28% year-on-year and 4% quarter-on-quarter. Non-IFRS operating profit was 38 billion RMB, up 26% year-on-year and stable, quote-unquote. Non-IFRS net profit achievable to equity holders was 33 billion R&B, up 30% year-on-year and 3% quarter-on-quarter. Moving to key services, in social, the combined MAU of WeChat and WeChat Messenger further rose to $1.23 billion. Smart devices MAU of QQ was $595 million. Martin and James will speak to each of our other key services later.

Fourth quarter total revenue was wanted your thought defaulted on beef up 26% year on year and 7% quote unquote.

Gross profit was 59 P M on B.

<unk> 28 per se, yeah, yeah, 4% growth on a quota.

On operating profit.

A bit on beef up 26% stable quote unquote non.

Net profit attributable to equity holders.

Good day suite, a breathing on be up 30% on three.

3% quote unquote.

Moving on to acute services in social combined operation and we share further rose to a one point to sleep eat it.

And May you all skilled care was 595 made it on.

On market and James will speak to each of our other key services.

In terms of your turnkey, we continued to implement initiatives around our mission of tech for good.

Huateng Ma: In 2020, we continue to implement various initiatives around our mission of Tech for Good. As the world navigates through COVID-19, technology plays a more significant role in restoring normal life and business activity. We provide users with convenient access to healthcare, education, and public services via our products and technologies. We help enterprise clients to maintain business continuity with various tools and products, mini programs, and WeChat Pay facilitating consumer spending during the lockdown and expertise digitalization of offline retailers and brands after that.

Uh huh.

Navigate through COVID-19 technology play a more significant role in restoring normal life and business activity.

Total by user.

With the convenient access to health care.

Education and public services.

Our product and technology.

Our enterprise clients to maintain business continuity with our balance tools and products.

Mini programs are reaching PE facility.

Consumer spending during the lockdown.

On an exercise they took hold ization of offline retailer and plan after that.

Well, it's relative we have built an efficient online fundraising platform.

Huateng Ma: For charities, we have built an efficient online fundraising platform and utilize technology to assist their digital upgrade. In 2020, our flagship event, Double-Nigving Day, engaged over 18 million users and 10,000 charities, raising 3 billion R&B in three days. For inclusion, we are bridging the digital divide for the elderly and the disadvantaged. Raising relative cards enables senior users to enjoy the benefits of digital payment without hassle. An image-to-speech feature in QQ helps visually-impaired users interact with friends.

And utilize technology to assist the digital upgrades.

In 2020, our friendship you've done a couple of nice gave you they.

Engaged over 18 million users and 10 solves on charter to learn.

The only thing so we'd be there on the shrink days.

For inclusion we are bridging the digital divide, Florida, alchemy, and a piece of antigen.

What are you seeing relative caught enables senior users to enjoy the benefits of digital payments with all hustle.

Imaging tools speech in QQ helps visually impaired users interacting with defense we.

We are also exacerbating a ruler better lives.

Huateng Ma: We are also facilitating rural vitalization with the WeCounty initiative. As for other ESG commitments, we are moving toward carbon neutrality. By leveraging AI, big data, and cloud computing, we adhere to privacy by design and deploy advanced security technology to safeguard users' data, to advocate digital well-being for teenagers. For users in China, we continuously upgrade our healthy gameplay system. Looking forward, we will continue to integrate social responsibility into our operations, products, and services, creating long-term value for all stakeholders. I will now invite Martin to discuss the strategy review. Thank you, Pony, and good evening and good morning to everybody.

Nation with there'll be content initiative.

Well other ESG commitment, we are moving to a wall carbon neutrality.

By leveraging AI big data and cloud computing.

At year tool, a privacy by design and deploy advanced security technology to safeguard use this data.

So we're advocates of digital wellbeing for Tinder users in China, we continuously upgrade our healthy cash pay system.

Looking forward, we will continue to integrate our social responsibility into our operations products and services.

Creating long term value for all stakeholders.

I don't know if my Martin to discuss Cherokee Cherokee.

Thank you Pony and good evening.

Morning to everybody.

In this section I will discuss our strategic investment in innovation, which we believe is the main driver of our business performance in the past.

Martin Lau: In this section, I will discuss our strategic investment in innovation, which we believe is the main driver of our business performance in the past and for the future. With a focus on user experience, we pursue continuous innovation to enhance our platform. We invest in incremental innovation to enrich the existing product experience, and we also invest in transformative innovation to create new products to serve new user needs. Many of these innovations have taken years of patient investment to yield results.

The future with a focus on user experience, we pursue continuous innovations and hands on platforms, we invest in incremental innovation to enrich existing product experiences and we're also investing in transformative innovation to create new products to certain new user needs.

These innovations have taken years of patient investment to yield results income.

Martin Lau: In communication and social networking, for example, we started with mobile chat and added social networking, official accounts, payments, and mini programs over the years. At the present time, we are incubating video accounts as a new innovation. In the area of games, we create new and exciting titles internally and through partnerships, as well as continuously upgrade our game tag. In SAS, we identified this emerging opportunity in China when we announced our strategic upgrade to the industrial internet in 2018.

Communication and social for example, we started with mobile chat and edit social networking official accounts payments mini programs over the years.

At the present time, we are incubating video accounts has a new innovation.

On the Arab games, we create new and exciting titles in China.

As well as continuously upgrade our game check in.

We identified this emerging opportunity in China, when we announced our strategic upgrades to the industrial Internet.

In 2018 over the past year.

Martin Lau: Over the past year, we achieved breakout growth in productivity and communication. In health tech, we are utilizing our AI, mini programs, and communication tools to solve problems in the industry. In ecosystem, we support innovative companies via capital investment and business partnerships to better serve users and enterprises. For the rest of this section, I'll discuss how innovation has driven each one of these areas and how it will continue to drive our sustainable, long-term growth.

Cheap to pick up growth and productivity on communications software.

In health Tech we are utilizing.

On your programs and communication tools to solve industry pinpoint an ecosystem with innovative companies via capital investment and business partnerships to better serve users and enterprises.

For the rest of this section I will discuss how innovation has driven each one of these areas.

Continue to drive sustainable long term growth.

Let's first start with ovation video accounts, which represents a recent innovation into communications and social space.

Martin Lau: Let's first start with Vation Video Accounts, which represents our recent innovation in communications and social services. Videoization of content for easy consumption is a key global trend. We saw a significant increase in uploads and sharing of short videos within recent moments and chat. Hence, Video Accounts were created as a separate ID-based short-form content creation platform within Weixin. Video Accounts enable video uploads and sharing, as well as live streaming to the

Utilization of content from <unk>.

<unk> is a key global trend, we saw a significant increase in uploads and sharing of short videos with inflation moments and yet.

Hence video accounts, what's created a separate idea based short form content creation platform with inflation.

New accounts enabled video uploads and Sherry as well from life's premium into the public audience.

So we're aggregating content providers digital assets within ration such as official accounts mini programs video accounts help reinforce their branding and facilitate the user engagement and transactions in.

Martin Lau: Through aggregating content providers' digital assets within Weixin, such as official accounts and mini-programs, video accounts help reinforce their branding and facilitate user engagement and transactions. In addition, the unique strength of video accounts lies in linking public domain to private domain, which provides an unparalleled channel for businesses to acquire and manage their own customers. Video accounts are attracting an increasing number of high-quality content providers who generate both informative as well as educational and entertainment content. We recommend content to users based on social graphs, interest graphs, and Albertham, which can help diversify the mix of users' content consumption.

In addition, the unique strength on the video accounts in Lincoln public domain to private domain, which.

Provides.

Paralleled channel for businesses to acquire and manage their own customers.

Video is attracting increasing the number of high quality content providers, who generate both informative as well as educate educational and entertainment content.

We recommend content to users based on social interest graph.

In Alberta.

<unk> diversified the mix of users' content consumption.

Turning to games during the year 2020, we launched several new and exciting titles and made a breakthrough in newer technology applications such as gaming.

Martin Lau: Turning to Games, during the year of 2020, we launched several new and exciting titles and made breakthroughs in new technology applications such as gaming AI and Cloud Gaming. For new games, we released Valorant on PC for the international markets, as well as Moonlight Blade Mobile and Call of Duty Mobile in China. Each game offers a unique experience by innovating in character abilities, environmental design, gameplay, and controls, thereby achieving best-in-class performance. Valorant, a team-based tactical shooter which Riot Games spent over six years developing, was the most successful Neo-PC game internationally.

And cloud gaming.

For new games, we released them.

Martin Lau: In China, Moonlight Blade Mobile was the best performing new MMLPG for the year, and was supported by our proprietary game engine honed through 10 years of dedicated development. Call of Duty Mobile, the highest DAU game launched in 2020 in China, is a high quality complement to the franchise. Console, and PC version.

On PC for the international markets as well as Moonlight blade mobile and call of duty mobile in China.

Each game offers unique experience by innovating in cabinets.

And my mental design game plays and controls, thereby achieving best in class performance.

Element a team based tactical shooter, which Ray gave you spent over six years to develop with the most successful new PC games internationally.

In China, one light blade mobile was the best performing new MMORPG.

A year and was supported by our proprietary game engine holdings to a 10 years of dedicated development.

The beauty of mobile the highest EBITDA in your game launched in 2020 in China as a high quality complement to the franchise.

So N P C versions.

For existing titles will continuously innovate and games actually refresh user experience for example on at Kings as an early adopter of next generation rendering and high dynamic range imaging technologies in China, which enhances the visual effects and animation.

Martin Lau: For existing titles, we're continuously innovating game tech to refresh user experience. For example, Honor of Kings is an early adopter of next-generation rendering and high-dynamic-range imaging technologies in China, which enhances the visual effects and makes animation more realistic, detailed, and now. Oliver King's was the top-grossing mobile game in China for the fourth consecutive year and worldwide for the second consecutive year. We also tested AI Wukong in Honor of Kings, which attracted over 50 million player participants within four days of trial. Wukong is the first AI agent able to play a full MOBA game with deep reinforcement learning.

Stick detailed and natural on other things, what's the total top grossing mobile game in China for the fourth consecutive year and worldwide for the second consecutive year.

We also test the game day, I won't call them in honour of Kings, which attracted over 15 million players participants within four days of trial.

<unk> is the first AI agent able to play food mobile game with deep reinforcement learning and it will be applied to more game genres and he has the PV experience.

Martin Lau: And it will be applied to more game genres to enhance the PvE experience. In Cloud Gaming, we're the first mover to launch platforms and games, providing high-quality in-game experiences across different devices, among which the Start platform is cooperating with leading TV manufacturers to offer MMO games on Smart TV. Xianyou platform offers more than 100 mobile games, including Lord of Kings and Peacekeeper Elite, to play even on low-end devices.

And cloud gaming, what it first moving into launch platforms and games, providing high quality in game experiences across different devices, among which stopped platform is cooperating with leading TV manufacturers to offer MMO games on smart TV channel platform offers more than 100 mobile games, including.

Honour of Kings and Peacekeeper elite to play EBIT on low end phones.

Moving on to communication and productivity, we achieved breakout growth in 2020, especially if a week on Tencent music eating and Tencent dogs.

Martin Lau: Moving on to Communication and Productivity SaaS, we achieved breakout growth in 2020, especially for Wecome, Tencent Meeting, and Tencent Docs. We strengthened interoperability between WECOM and WeChin, allowing an increasing number of retailers, service providers, and teachers to connect to over 400 million users. There's also boosted the WECOM's customer base to 5.5 million enterprises. We uphold an open strategy and introduced multiple cooperation models to rapidly grow partnerships with OA application vendors in order to better sign up enterprises clients together.

We strengthened interoperability between the lead from ambition allowed increasing number of retail as service providers and teachers to connect to over 400 million users.

Theres also boosted the <unk> customer base to $5 5 million other prices.

We uphold open strategy and introduced multiple cooperation model to rapidly growth partnerships with O E application vendors in order to better sign up enterprises clients together.

<unk> bye.

Martin Lau: Besides, By leveraging synergies with Tencent Cloud Salesforce, WECOM successfully increased its penetration in the K-12 education market. In view of growing needs for virtual meetings, we launched Tencent Meeting in 2020, which accumulated over 100 million users and has become the most used standalone app for cloud conferencing in China.

Leveraging synergies with Tencent cloud sales force, we call them successfully increased penetration in K 12 education market.

In view of growth needs for virtual meetings, we launched Tencent meeting in 2020, which accumulated over 100 million users and has become the most used to stand alone apps for cloud conference in China.

Yeah, We launched enterprise version for key accounts.

Martin Lau: During the year, we launched the enterprise version for key accounts and enhanced the in-meeting capability, delivering a superior experience for enterprise customers. We developed new solutions, rooms, and connectors in order to expand Tencent Media's compatibility with the client's existing devices, saving costs for them and facilitating adoption for us. Our signature productivity solution, Tencent Docs, is the first mover in China to provide online solutions that efficiently generate tables based

Hence imaging capabilities.

Moving superior experience for enterprise customers.

We develop new solutions rooms and connector.

In order to expand Tencent meeting compatibility with the client's existing devices saving costs for them and facilitating adoption for us.

Oh signature productivity solution Tencent dogs as the first mover in China provide online solutions that efficiently generate tables based on collaborated data entry.

Yeah, we continue to add new features such as AI supported optical character and speech recognition input to enhance user experience and productivity.

Martin Lau: During the year, we continued to add new features, such as AI-supported optical character and speech recognition input, to enhance user experience and productivity. Through extensive integration with other software such as QQ, QQ browser, and other SaaS products, Tencent DOCS expanded use cases and recorded over 100 million active users in 2020, more than double the number of quadri-bolts, Nixon Health Tech. Our product matrix includes Tencent Health, Tencent Mediapedia, and Healthcode, providing innovative solutions to digitize offline healthcare services and benefit the entire industry. Tencent Health, an all-in-one entry point for online healthcare services, has added more COVID-19-related services, such as appointments for testing and vaccination.

Through extensive integration with other software such as QQ, <unk> QQ browser and other SaaS products Tencent Docs expanded use cases and recorded over 100 million monthly active users in 2020 more than double our quadrupled year on year.

It makes on the health Tech.

Our product matrix includes Tencent held Tencent <unk> and held coat.

Providing innovative solutions to digitize offline health care services and benefit the entire industry.

Tencent health and all in one entry point for online Health care services has added more COVID-19 related services, such as appointment for testing and destination.

Total active users exceeded 400 million.

Martin Lau: Total active users exceeded 400 million. We also included a medical insurance e-certificate and electronic health card within Tencent Health. Users can bundle medical insurance e-certificates with their social basic medical insurance accounts to conduct mobile payment in more than 10,000 hospitals and 200,000 pharmacies across 200 plus cities.

We also include it to medical insurance E Certificate and electronic health card.

Within Tencent health.

Users can bundle medical insurance certificate with their social basic medical insurance accounts to conduct mobile payment and more than 10000 hospitals 200000 pharmacies across 200 plus cities.

Oh electronic health Todd served as a health information management tool for users and their families and now it's available online and more than 2000 hospitals.

Martin Lau: Our electronic health card serves as a health information management tool for users and their families. And now, it's available online in more than 2,000 hospitals. Tencent Medipedia, a reliable medical information source, extended the number of medical terms to over $120,000, leading in China. We utilized AI technology to enhance medical experts' efficiency in reviewing content.

Tencent Medicaid a reliable medical information source extended the number of medical terms to over 120000.

Being in China when.

We utilized AI technology to enhance medical experts efficiency in reviewing content with enriched content formats from text picture to short video and live streaming.

Martin Lau: We're enriched content formats from text, picture, to short video and live streaming. Tencent Media PDF content is distributed via self-owned and third-party platforms, attracting over 7 billion page views and video views in the year of 2019. Health code is an easy entry point for users to get their E-pass automatically based on health information they fill in.

10, centimeter PDA content is distributed via cell phones, and third party platforms, attracting over 7 billion page views and video views into Europe 2020.

Health coaches, an easy entry point for users.

The EZ pass automatically based on health information if you didn't.

During the pandemic health coach facilitated people with efficient movement in and out of public areas nationwide within the year health coach at a 1 billion users with over 65 billion total visits.

Martin Lau: During the pandemic, health codes facilitated people's efficient movement in and out of public areas and nations. Within a year, Health Code served a billion users with over 65 billion total visits, becoming the most used e-pass for verifying health and travel status in China. Finally, complementary to our investment in innovation to drive our core business, investment in the ecosystem is also our strategic focus. Through investments, we support innovation for our partners and investees, which ultimately better serve users and enterprises.

Becoming the most used to eat paths for verifying health and travel status in China.

Finally complementary to our investment in innovation to drive our core businesses.

That's been an ecosystem is also our strategic focus.

Through investments, we support innovation for our partners and Investees, which ultimately together better serve users and enterprises.

In consumer Internet, we identify investments, which capture emerging opportunities arising from technological advancements and user behavior changes.

Martin Lau: In consumer internet, we identify investments that capture emerging opportunities arising from technological advancements and user behavior changes. User value and product experiences are top priorities for us. Our key investment areas include content games, fintech services, e-commerce, O2O, and education. In industrial internet, we seek to build close relationships with value chain players to support the evolution of various industries. Leveraging our technology strength, we assist digital upgrading sectors such as education, healthcare, transportation, and retail.

As a value from product experiences are top priorities for us.

Our key investment areas include content games, Fintech services E Commerce and education.

In industrial Internet, we seek to build close relationships with value chain players to support the evolution of various industries.

Leveraging our technology strength, we assist there.

Digital upgrade in sectors, such as education health care transportation and retail.

In that process, how communication and social services can also connect users with more services inconvenient and efficient manner.

Martin Lau: In that process, our communication and social services can also connect users with more services in a convenient and efficient way. Our investment principles are to invest in high-quality management teams and best-in-class companies which have deep industry know-how and core competence in their respective fields. We aim to support the investee's innovation while enabling them to grow and operate independently.

Our investment principle is to invest in high quality management teams and best in class companies, which are deep industry know, how and core competency in their respective fields.

We aim to support the Investees innovation, while enabling them to grow and operate independently.

Throw on investments, we do not only net sure nurture the growth of startups, but also create synergies that are value added to users.

Martin Lau: Through our investments, we do not only nurture the growth of startups but also create synergies that are value-added to users. An additional benefit of our investment strategy is that we can then focus our internal resources, be it developers, people, and bandwidth, on driving innovation within our core business. This two-pronged strategy has been pivotal in driving sustainable development for the company and the industry as a whole. Now, with that, I'll pass to James to talk about our business review. Thank you, Martin.

An additional benefit of our investment strategy is that we can then focus our internal resources.

Approved people and bandwidth on driving innovation within our core businesses. This.

This two pronged strategy has been pivotal in driving sustainable development for the company and the industry as a whole.

Now with that I'll pass to James to talk about our business review.

James Gordon Mitchell: For the fourth quarter of 2020, our total revenue grew 26% year-on-year. EAS represented 50% of our revenue, within which online games for 2019..., and Social Networks 21. Online Advertising was 18%, and FinTech and Business Services represented 29% directly.

For the fourth quarter of 2020, our total revenue grew 26% year on year, Yeah, Yes represents a 50% stock revenue within which online games for 29% and social networks, 21% on on that.

Advertising was 18% from Fintech and business services represented 29%.

The value added services segment revenue was 67 billion renminbi from the fourth quarter up 20% year on year on.

James Gordon Mitchell: For value-added services, segment revenue was 67 billion renminbi for the fourth quarter, up 28% year-on-year and down 12% quarter-on-quarter. Social network revenue was 28 billion renminbi, representing 27% year-on-year growth, primarily driven by live streaming services and in-game item sales, but this was offset by a revenue decline from in-game IT. Total VAS subscription accounts grew 22% year-on-year to 219 million subscriptions, increasing 17% year-on-year to $123 million. We strengthened our market leadership through self-commissioned animation. Deeper cooperation with Channel Partners and an expansion of OTT

On downhole second quarter on.

Water.

Social network revenue was 28 billion renminbi, representing 27% year on year on.

Primarily driven by live streaming services.

Themselves.

Once a day.

On a content services was offset by revenue declines from in game item sales.

Subscription accounts grew 22%.

219 million subscriptions.

Subscriptions increased 17% year on year to 123 million subscriptions.

<unk> market leadership through self commissioned animated series deepen a deeper cooperation with channel partners.

OTT user base.

On music subscriptions grew 40% year on year to 56 million subscriptions benefiting from improved user retention and on table strategy.

James Gordon Mitchell: Music subscriptions grew 40% year-on-year to 56%, benefiting from improved user retention in our paywalls. Online games revenue increased 29% year-on-year to 39%, driven by more smartphone game players and a higher paying user base; revenue decreased, reporter on quarter to normalize. Smartphone games total revenue grew 41% year-on-year to 37%, reflecting robust growth from in-house titles, including Peacekeeper, Elite, Honor of Kings, and PUBG Mobile, as well as our new massively multiplayer role-playing game, Moonlight Blade.

Online games revenue increased 29%.

9 billion renminbi, driven by more smartphone games.

Hi.

<unk> revenue decreased 6% quarter on quarter normalized user activity and seasonality.

For smartphone games total revenue grew 41% year on year.

97 billion renminbi perfect from robust growth from in house titles, including Peacekeeper Elite honor of Kings and pop T mobile as well as on you might seem on sites.

On a role playing game.

On.

For PC client games revenue decreased 1% year on year to 10 billion renminbi.

James Gordon Mitchell: Client gains revenue decreased 1% year-on-year to $10 billion due to softness at Dungeon Fighter, Offset Growth, and League of Legends, and from Valour. Focusing on Weixin, Martin has already discussed our video account strategy and product, but I will touch briefly on live streaming and video accounts, which facilitate real-time one-to-many. Contact creators and brands can use live streaming to engage with users via red packets, co-hosting, and audience dials. Additionally, we're going to launch the start of, allowing users to share their current emotions or videos and connect with like-minded friends, and Animated Emojis allow users to express themselves.

Yes.

Can you give that tencent from salaries.

Focusing on <unk> Matson, who has already discussed on video accounts strategy on product, but I will touch briefly on live streaming and video accounts, which facilitates real time once many interactions content creators and brands can be slight streaming to engage with users by red pocket.

And audience styling.

Additionally equation to interest the startups feature a lot of use.

As to share their currency motion pictures.

Pictures or videos and connect with Likeminded friends and animated emojis enabled users to express themselves more vividly on line.

Moving to Q2, we focused on enhancing interactive experiences within the medical community.

James Gordon Mitchell: Moving to QQ, we focused on enhancing interactive experiences within vertical communities; content-oriented, we introduced the Hatch Trending Topics Within MiniWorld, which resonated with Generation Z, and Increased Mini-Web Data User Engagement. For game communities, we launched joint promotions and celebrity esports. Games such as Honor of Kings and Court of Duty Mobile, users can discuss game-related topics within programs while obtaining in-game incentives. For learning communities, we partnered with educational publishers to offer quizzes, challenges, and question and answer. Fostering a Vibrant Study Environment

Our content oriented communities, we introduced the hashtag feature on <unk>.

Trending topics within many well, which resonated the generation Z users and increase many day to user engagement.

The game communities, we don't strength promotions celebrity esports competitions, but games, such as honour of Kings and quite a few Cmos.

Users can discuss game related topics within interest groups on mini programs, while obtaining and gain incentives.

So 90 communities, we partnered with educational institutions to offer quick challenges from question on services fostering a vibrant study environment.

Looking at that game activities within China and bought the arena games honour of Kings released its biggest update in January with the new heroes skins and user interface, we upgraded the game's rendering technologies from enhanced visual effects with minimal performance I've ever had.

James Gordon Mitchell: Looking at our game activities within China, in Battle Arena Games, Honor of Kings released its biggest ever update in January, with a new hero. We upgraded the game's rendering technology to enhance visual effects with minimal performance. For shooting games, Call of Duty Mobile attracts hardcore players with its fast-paced and competitive gameplay. For role-playing games, Aurora Studio extended the Moonlight Blade idea to Mobile. And the mobile game is the top-grossing Master Key multiplayer role-playing game on iOS. By the end of 2020, we'll have distributed over a million. Pony mentioned that the healthy game, which helps parents manage younger users' in-game playtime.

We're shooting games quite a few T mobile it attracts hardcore plans with his thoughts.

Yes experience from <unk>.

Thank games Aurora studio extended the Moonlight blade IP from PC to mobile and on mobile game ranks the top pricing message.

Game on iOS during the fourth quarter.

By the end of 2020 with distributed over a million switch console from China.

Tony mentioned, the healthy gameplay system, which helps parents non into younger users in game play time and spending.

During the fourth quarter.

James Gordon Mitchell: During the fourth quarter, players aged under 18 years old accounted for 60% of the total Game Gross Receipts and players aged under 16. Internationally, our game revenue rose 43% year-on-year in 9.8. The League of Legends World Championship Finals attracted over 45 million peak concurrent players, a record high. The League of Legends mobile version of Wild Rift is further expanded. Huffy Mobile Ranks is the most popular smartphone game by monthly action, Executive. Thank you.

Seniors all day.

Percentage gain gross receipts.

Class eight on the 16th of three 2%.

Internationally, our game revenue rose, 43% year on year to $9 8 billion renminbi.

And he gave that guidance while championship finals attracted over $45 million pizza on current users are record high viewership for esports League of legends mobile question.

This does speak of lessons franchise user base.

Hi, T mobile ranked as the most popular smartphone game by monthly active users for a second.

And its flagship tournament was the most viewed esports competition among on mobile games.

James Gordon Mitchell: Flagship Tournament was the most. [inaudible] We're interestingly seeking to create games with global appeal by collaborating with renowned console game and anime artists and bring our new mobile games to a wider audience. We're investing in PC and console studios that are leaders in emerging channels that can introduce a nudge to fan bases worldwide. Moving to online advertising, our advertising revenue was 25 billion renminbi in the fourth quarter, up 22% year-on-year and up 15% quarter-on-quarter. We experienced increased demand for the training, such as for e-commerce staff.

We are increasingly thinking to create games from global appeal by collaborating with Renault on console game on.

We can bring on your mobile games to wider global accounts.

And we're investing in PC and console studios that are leaders in it.

Any future not sure why.

Yeah.

Moving to online advertising.

Hi, Congrats on you with 25 billion renminbi in the fourth quarter up 22% year on year.

Up 15% quarter on quarter.

We experienced increased demand from the educate.

Second e-commerce platforms, and fast moving consumer goods at the price.

James Gordon Mitchell: Parts We Think Consumer Goods Advertisement, Auto-related ad revenue benefited from a domestic car sales recovery and from consolidation. Our social and other advertising revenue is 20 billion renminbi, up 25% year-on-year and 15% quarter-on-quarter, driven primarily by moments in our mobile advertising. Moments revenue will maintain growth as we enable performance-oriented advertisers to link their ads with their mini-products, so, boosting their transactions

<unk>.

Also related to AD revenue benefited from a domestic car sales recovery and from consolidation it on time.

Ah searched on others advertising.

EBIT in renminbi up 25% year on year on 15% quarter on quarter.

Driven primarily by movements in on my bought off net.

Moments revenue maintained price because we in April.

Starting with advertisers to link their assets with their mini programs.

So existing debt transactions and sales conversion.

By offering customized cannot advertising solutions on mobile.

James Gordon Mitchell: By offering customized in-ad advertising solutions, our mobile ad network has attracted more ads, especially from external gain; in-game ad revenue on our mobile ad network more than doubled. Media Advertising Revenue for the quarter was RMB4 billion, up 8% year-on-year in 2019, reflecting increased video art revenue in music.

Net loss to attract more ad spend, especially from external companies and Internet services.

In game revenue on on mobile App.

More than doubled year on year.

Our media advertising revenue for the quarter was 4 billion renminbi up 8% year on year on 19% quarter on quarter.

Reflecting increased video revenue on music App monetization.

Looking at Fintech and business services revenue was 38 billion renminbi in the fourth quarter.

James Gordon Mitchell: Looking at FinTech and business services revenue, 38 billion RMB in the fourth quarter, up 29% year-on-year and up 16% quarter-on-quarter. Within fintech services, revenue grew year-on-year and quarter-on-quarter as our payments and wealth management services were increasingly adopted by consumers in the market. Total payment volume grew healthily year-on-year, driven by more daily active consumers and higher payment frequency in verticals, including retail, public services, and grocery. However, payment commercial take rates are generally stable.

29% year on year on a 16% quarter on quarter.

Within Fintech services revenue grew year on year on quarter on quarter as a payments from wealth management services for increasingly adopted by consumers and merchants.

Total payment volume grew healthily year on year, driven by more day to consumers from higher payment frequency in virtual computing retail topic services and groceries.

On the commercial take rates were generally stable.

For our wealth management business aggregated customer assets grew robustly year on year.

James Gordon Mitchell: For our wealth management business, aggregated customer assets grew robustly year-on-year, and looking forward, we'll focus on investor education and helping users to identify quality products selected by our investors. Within business services, we expanded our customer base in key verticals and increased our platforms of service revenue robustly, contributing to a faster year-on-year revenue growth in the fourth quarter compared to the third quarter. We also deployed more on this project. For the Infrastructure as a Service, we developed our Starlake SA3 server architecture, powered by the latest generation AMD EPYC processor.

Looking forward, we will focus on investor education, and helping users to identify quality products selected by our independent research team.

Within business services, we expanded our customer base in key verticals and increased our platform as a service revenue robustly contributing to a faster year on year revenue growth rate in the fourth quarter compared to the third quarter.

We also deployed more on premises projects during the period.

The infrastructure as a service we developed a star Lake Phase III suffer architecture powered by the latest generation AMD ethic processes. This new architecture provides better AI security storage and network capabilities with lower energy consumption from constant Tencent cloud services cost efficiency.

James Gordon Mitchell: This new architecture provides better AI, security, storage, and network capability. Lower Energy Consumption, Thomson Tencent Cloud. Software as a Service, Tencent Muting Enterprise Version Penetrated Key Accounts in Energy, Healthcare, and Education. Our conference room solutions, Tencent Media Rooms and Connector, facilitate high-quality real-time communication, and others, and with that, I'll pause. Thank you, Jane. Hello, everyone.

The software as a service Tencent music enterprise fashion penetrated key accounts in the energy health care and education sectors.

On a conference room solutions, Tencent meeting rooms, and connect to facilitate high quality real time communication on a compatible with customers existing audio visual equipment.

And with that I'll pass to John.

Thank you Jane and Hello, everyone.

John Lowe: For the fourth quarter of 2020, total revenue was 133.7% of RMB, an increase of 26% year-on-year or 7% quarter-on-quarter. Gross profit was $38.9 billion RMB, up 28% year-on-year or 4% quarter-on-quarter. Net other gains was $32.9 billion RMB. This mainly comprised iBuyers, such as an item representing increased valuations of services invested in social media, e-commerce, and online game verticals, as well as Nat Gaines on DIMM Disposal of Certain Investments.

For the fourth quarter of 2020 total revenue was 133 seven.

An increase of 26% year on year on 7% quote unquote.

Gross profit was $38 9 billion renminbi up 28% year on year on a 4% quota on quota net other gains was pretty cheap on 9 billion renminbi is mainly comprised on a virus. That's just an item representing increased valuations of certain if that's easy and social media e-commerce and on non gaming verticals.

As well as net gains on them disposal of sitting in that piece.

Operating profit was $63 7 billion renminbi up 123% year on year on 45% quarter on quarter net.

John Lowe: Operating profit was 63.7 billion renminbi, up 123% year-on-year or 45% quarter-on-quarter. Net finance costs were $2.3 billion RMB, down 19% year-on-year or up 16% quarter-on-quarter. The year-on-year decrease reflected lower interest expense as a result of the reduced average cost of funds.

Finance costs were to put a free but then renminbi, though 19% year on year or up 16% quarter on quarter year on year decrease reflected lower interest expense as a result of reduced average class a fun Q on Q increase was mainly driven by foreign exchange losses.

John Lowe: Q-on-Q increase was mainly driven by foreign exchange losses. Shea profit of associates and John Ventures was $1.6 billion remand-b compared to share of losses for fourth quarter 2019. The year-on-year difference mainly reflected on iVirus is just an item of certain associates and the improved performance of certain e-commerce and online games associated with it, on an on-in-h-h-rass basis. Share profit was 2.7 billion remand-b for the quarter versus 1.3 billion remand-b a year ago. Income tax expense was RMB3.7 billion, and the effective tax rate was 5.9% for the quarter.

<unk> profit of associates and joint ventures was $1 6 billion renminbi compared to share of losses for fourth quarter 2019, you're on.

On your difference mainly reflected on I have already adjusted items offset in associates and improved performance are the E Commerce and online games associates.

And then on I have I'll ask basis share of profit was $2. Seven day, then rather than before the quarter was this one for free but I'd, rather be a year ago.

Income tax expense was $3 seven day, then renminbi and effective tax rate was stuck on 9% for the quarter.

The profit attributable to equity holders was 59 per se, but I'd, rather be up 175 per cent year on year on 54% quarter on quarter.

John Lowe: I have RFS profit attributable to equity holders was 59.3 billion renminbi, up 175% year-on-year or 54% quarter-on-quarter. For the full year of 2020, total revenue was $482.1 billion, up 28%. Gross profit was R$221.5 billion, up 32%, and operating profit was R$184.2 billion, up 55%. I-RF's net profit attributable to equity holders was R$159.8 billion, up 71%, and the effective tax rate for the year was R$11.1. Now, I'll share with you our non-IRIS financial figures.

For the full year 2020, total revenue was $482 one day, they run them via up 28 per cent.

Gross profit was $221 5 billion, rather it'd be up 32% operating profit was $184 2 billion renminbi up <unk> 55 per cent I've RF net profit attributable to equity holders was $159 8 billion renminbi up 71% on an effective tax rate for the year was $11 one per cent.

Now I'll share with you all know that Elias.

Financial figures for the fourth quarter operating profit was 38 per 1 billion renminbi up 26% year on year.

John Lowe: For the fourth quarter, operating profit was $38.1 billion RMB, up 26% year-on-year or flat quarter-on-quarter. Net profit attributable to equity holders was $33.2 billion RMB, up 30% year-on-year or 3% quarter-on-quarter. For the full year of 2020, operating profit was RMB149.4 billion, up 30%. Net profit attributable to equity holders was RMB122.7 billion, up 30%. Moving on to segment gross margins, gross margin for bad weather services was 51.5%, up 1.4 percentage points year-on-year or down 1.1 percentage points quarter-on-quarter. On a year-on-year basis, we continue to benefit from revenue growth from higher-margin self-developed smartphone games.

Quarter on quarter net.

Net profit attributable to equity holders was $43 2 billion and then they'll be up 30% year on year on free to same quarter on quarter.

For the full year of 2020 operating profit was $149 4 billion renminbi, 30% net profit attributable to equity holdings was $122 7 billion renminbi, a 30 per cent.

Moving on to segment gross margin gross margin for bad weather services was 51 five per cent up one four percentage points year on year or down one on one percentage points quarter on quarter on.

On year on year basis, we continue to benefit from revenue growth of higher margin self developed smartphone games.

John Lowe: sequentially, margin decrease was primarily driven by revenue mixture from higher margin PC client games to lower margin digital content services. Gross Margin for Online Advertising was 53.3% lower by percentage points year-on-year, or 2.4% points quarter-on-quarter. Year-on-year decrease was due to higher revenue contributions from mobile ad network business, which carries global margins. Margin increased, reflecting lower related content cost due to delays of spots event broadcast.

The margin decrease was primarily driven by revenue mix shift from higher margin PC client games to lower margin digital content services.

Gross margin for online advertising was $53 three per cent that one percentage points year on year on $2 four percentage points quarter on quarter year on year decrease was due to higher revenue contribution from mobile at where bad debt.

Which carries lower margin.

Sequentially margin increase reflects it.

Related content costs, DTC lays up plus event from test.

Gross margin for Fintech business emphasis was $28 five per cent up slightly year on year and quarter on quarter.

John Lowe: Growth margin for fintech and business services was 28.5%, up slightly year-on-year and quarter-on-quarter. For the full year of 2020, VAS gross margin is expected to increase 1.1 percentage points to 54.1%. Over online advertising, gross margin increased 2.4 percentage points to 51.4%. Gross Margin for FinTech and Business Services increased 1.1% each month to 28.3% on operating expenses. Selling and marketing expenses were 10 billion dollars, up 49% year-on-year or 12% quarter-on-quarter as a percentage of revenues.

For the full year 2020, but gross margin increased one one percentage points to 54, 1% over on that advertising gross margin increased two four percentage points to $51 four per cent.

Gross margin for Fintech emphasis emphasis increased one one percentage point to 28, 3%.

On the operating expenses.

Selling and marketing expenses were 10 billion, rather the up 49% year on year on a 12% quarter on quarter as a percentage of revenues selling and marketing expenses represented seven five per cent for the quarter both quarter on quarter on year on year increase reflected greater marketing spend on the on the games business emphasis on digital content services.

John Lowe: Selling marketing expenses represented 7.5% for the quarter. Both quarter and quarter and year-on-year increased reflected creative marketing spend on online games, business services, and digital content services, including those associated with the consolidation impact of BitOto and Huya.

Including those associated with consolidation impact on state auto labs, who yacht.

G&A expenses was $19 8 billion renminbi up 24 per cent year on year, and 15% quarter on quarter, mainly reflected greater R&D and sales force.

John Lowe: G&A expenses were $19.8 billion RMB, up 24% year-on-year and 15% quarter-on-quarter, mainly reflected greater R&D and sales growth. Within GNA, R&D expenses were 11.2 billion RMB, up 26% year-on-year or 13% quarter-and-quarter. GNA and R&D represented 14.8% and 8% and 8.4% of revenues respectively. As a quarterland, we had approximately 86,000 employees, up 37% year-on-year or 11% quarter-on-quarter. For the full year of 2020, selling market expense was 33.8 billion RMB, up 58% and represented 7% of revenue. They increased primary, reflected greater marketing spend for online gains and recent consolidations, as well as marketing spend to support long-term strategic initiatives, including short-term video, crowd-based healthcare solutions, online education, and remote work.

Within G&A R&D expenses was our 11th on 2 billion renminbi up 26% year on year on.

13% quarter on quota share.

N D represented 14, 8% an $8 four per cent of revenues respectively.

Quota that we had approximately 86000 employees up 37 per cent year on year or 11% quarter on quarter.

For the full year 2020 same bucket on expense plus 40, Threep on 8000, rather them be up 58 per cent and represented 7% of revenues increased from me reflected greater marketing spend for online games on recent consolidations as well as marketing spend to support long term strategy.

<unk>, including short term video crowd based health care solutions online education and remote work.

<unk> expense was 59 billion rather on the up 28% and represented eight one per cent of revenues.

John Lowe: I and the expense was 39 billion renminbi, up 28% and represented 8.1% of revenue. GNA expenses excluding R&D were 28.6 billion renminbi, up 24% and represented 5.9% of revenue. For the fourth quarter of 2020, gross margin was 44%, largely stable year-on-year, or down 1.2 percentage points quarter-on-quarter. The sequential decrease reflected lower bias gross margin compared to the previous

G&A expenses, excluding R&D was $28 6 billion renminbi up 24 per cent and represented five 9% of revenues.

For the fourth quarter 2020, gross margin was 44% largely stable year on year or down one two percentage points quarter on quarter sequential decrease reflected the oil pads gross margin compared to the previous quarter on that.

John Lowe: Non-IR virus operating margin was 28.5%, largely stable year-on-year, or down 1.9 percentage points quarter-on-quarter. Non-IR virus net margin was 25.8%, largely stable year-on-year and quarter-on-quarter. For the full year 2020, gross margin was 46%, up 1.6 percentage points. Non-IR virus operating margin and net margin were 31% and 26.3%, respectively. Both remained broadly stable

Operating margin was $28 five per cent that should be stable year on year or down one nine percentage points quarter on quarter. Non I allowed us that margin was 25, 8% largely stable year on year on quarter on quarter for the full year 2020 gross margin.

<unk> 46 per set up one six percentage points on.

<unk> operating margin at that margin.

31% and 26, 3%, respectively, both remain broadly stable.

Let's move on to earnings per share at an annual dividend.

John Lowe: Let's move on to earnings per share and annual dividends. For 2020, on an iVirus basis, basic EPS was 16.844 Rem-NB, and diluted EPS was 16.523 Rem-NB. Non-iVirus basic EPS was 12.934 Rem-NB, and diluted EPS was 12.689 Rem-NB.

For 2020 on.

I have IRS basis basic EPS was $16 84 for renminbi and diluted EPS was $16 five Q3s and indeed, no non virus basic EPS was $12 93 for Renminbi, and then said EPS was 12 689 renminbi.

Subject to the approval of shareholders at the AGM to be held on 20 years of May 2021, we are proposing an annual dividend of $1 six Hong Kong dollars per share payable to shareholders on the seventh of June 2021.

John Lowe: Subject to the approval of the shareholders at an AGM to be held on the 20th of May 2021, we are proposing an annual dividend of HK$1.6 per share payable to shareholders on the 7th of June 2021. This represents an increase of 33.3% from last year. Finally, total capex was $9.7 billion RMB, down 43% year-on-year or up 11% quarter-on-quarter. Operating capex increased by 13% year-on-year to $8 billion RMB as we continue to ramp up investment in servers and network equipment to augment our business growth.

This represents an increase of 33, 3% from last year.

Finally, total Capex was $9 seven day, then renminbi 33, 43% year on year on up 11% quarter on quarter upgrade on Capex increased by 13% year on year to eight then ran the day as we continue to ramp up if that's any servers and network equipment to offline business growth.

So on the operating Capex decreased 83% year on year to $1 6 billion renminbi, mainly due to higher basically in fourth quarter 2019 for office land purchase.

John Lowe: Operating capex decreased 83% year-on-year to 1.6 billion RMB, mainly due to a high base in Q4 2019 for office land purchase. Free cash flow was $27.7 billion RMB, down 11% year-on-year or down 2% quarter-on-quarter. The net cash position was at $11.1 billion RMB, which increased sequentially due to free cash flow generation and foreign exchange defects partially offset by net cash outflow for M&A activities. The fair value of our shareholdings and listed investments excluding subsidiaries was approximately 1.2 trillion renminbi or $185 billion.

Free cash flow was 27 seven day, then remedied down 11% year on year on down 2% quarter on quarter net cash position was at 11 1 billion renminbi, which increased sequentially due to a free cash flow generation and foreign exchange effects, partially offset by a net cash outflow from M&A activity.

Fair value of our share holdings, and let's say that these excluding subsidiaries was approximately $1 two trillion renminbi or 185, but then you on.

John Lowe: and earns 85 million U.S. dollars at the end of the year.

All of this is at the end of the year.

Thank you we'll now.

Operator: Thank you. We will now open the floor for questions. Operator, we will take one main question and one follow-up question each time. Please ask the first...

Now open the floor for questions.

Operator, we will take one question and one follow up question. Each time. Please invite the first question. Thank you.

Operator: Operator, we will take one main question and one follow-up question each time. Please ask the first question.

Operator: Thank you. Operator? Operator. Thank you. Your first question comes from Robin Zhu from Bernstein. Please go ahead.

Okay.

Operator.

Operator.

Thank you. Your first question comes from Robyn <unk> from Bernstein. Please go ahead.

Robin Zhu: Thank you. Thank you for the opportunity to ask a question. Could I ask you two questions?

Thank you and thanks for the opportunity to ask a question.

Good day.

Two questions Firstly, good manners and give some examples of how you plan to accelerate the growth on video accounts in terms of for example number of creators depths of video comes on.

Robin Zhu: Firstly, could Manarshan give some examples of how you plan to accelerate the growth in video accounts in terms of, for example, number of creators, depth of video content, and user engagement? And if you have any quantitative targets, for example, time spent or users by the end of 2021? Second question, if I look at the deferred revenue balance, it seems to imply that cash game billings showed quite a meaningful deceleration in Q4, despite the launch of Call of Duty.

User engagement.

If you had any.

Quantitative targets first for example time spent on.

Our users by the end of 2021 second question, if I look at the deferred revenue balance it seems to imply the cash getting billings showed a quite a meaningful day.

Celebration in Q4, despite the launch of Golar Judy.

I just wanted to get your thoughts on why that was if anything what else happens on your.

Robin Zhu: I just wanted to get your thoughts on why that was, if anything went wrong happened, and your expectations for growth in the first half of 21, and if you had any color on the launches, like, for example, DNF or League of Legends, what your expectations were. Thank you.

For growth on the first of all from 'twenty one.

And if you had any color on the launches like the.

For example, <unk> or.

On the diligence what are your expectations on thank you.

Okay.

Martin Lau: OK, I'll take the first question. In terms of video accounts, I think you have actually hit on the important points, which is that you need to have a double-flying view. You need to have more content. And as such, you actually need to attract more content developers, as well as help them to be more active on our platform. And at the same time, you actually need to have more viewership, and they actually serve as a service. So it is mutually reinforcing.

Your first question are you in terms of video accounts.

Actually you hit on the important point, which is you.

You need to have.

Double flying vehicle.

You need to have more content.

As such it you actually sort of get me to attract more content developers as well as help them to be more active on our platform and at the same time, you actually need to have more.

More viewership.

They actually.

So mutually.

Reinforcing.

Martin Lau: Now in terms of how we actually sort of keep on increasing the amount of content, and on that front, the key thing is we actually already have a very good set of content creators, and some of these content creators are actually new creators, and they are converted from our official accounts. In the past, they have been writing articles, and now they are transforming themselves into content creators on the video side.

In terms of how do we actually sort of keep on increasing the amount of content.

And so on on.

On that front.

The key thing is we actually already have got a very good.

Net of content creators and decent on content creators part of them I actually knew creators and they are converted from official accounts.

In the past they have been writing articles and now the convert themselves into content creators on the video side there are new.

Martin Lau: There are new creators as well who come in, and at the same time, we have seen existing content creators on other platforms also join us. And the main reason that they actually join us is because of the fact that there is the distinction that our platform provides, which is... essentially an ability for them to build their private domain viewership. So on other platforms, when you have content, you actually subject yourself to algorithmic recommendation, and after that, you basically lose your viewership, and then the next content you actually have to build up again. But on our platform, we actually have a very strong set of tools and connections so that you can actually convert the public domain traffic into a private domain.

Creators as well who come in and at the same time, we have seen existing content creators on other platforms as opposed to join us.

And the main reason that they actually join US is because of the fact that there is the distinction that our platform provides which is.

Essentially.

Bill it's easier for them to build their price.

Pivot domain.

So in other platforms. When you have the content, you're actually sort of new subject yourself to how could we make a recommendation and after that you basically lose your viewership and then the mix content.

To build up again, but in our platform, we actually have a very strong set of tools and connection. So that you can actually convert to the public domain traffic into private domain and at the same time revenue from a lot of the existing book.

Martin Lau: And at the same time, for a lot of existing Open Access content creators, we actually provide a lot of touch points for them to connect their video accounts with other assets such as official accounts, live streaming, and media programs. So basically, one key objective and initiative that we're doing is to keep on increasing these touch points and providing the tools so that there's a much better connection between the public domain and the private domain so that we create a very unique platform for these content providers.

Content creators.

We actually provide a lot of touch points for them to connect their video accounts with other assets such as official accounts like streaming media programs until basically on your one key objective and initiative that we're doing is keep on increasing these touch points and providing the tools so that day.

Much better connection between the public domain and private domain. So that we create a very unique platform for these content providers.

Martin Lau: And then on the viewership side, we will continue to improve the algorithmic recommendation, which is very important. And at the same time, as you can see, we're actually providing pretty unique content on our platform. These are content not just for entertainment purposes but also for educational as well as informational purposes. And a lot of the content providers are first-time short video creators, and these are all unique supplies which would help us to attract users. And finally, when we actually provide content, we not only use the algorithmic recommendation, but we also have social signals, which actually help the viewer to see a different kind of world.

And then on the viewership side right now we would continue to improve the algo big recommendation, which is very important too and at the same time as you can see we are actually providing pretty unique content on the platform right.

Not just for entertainment purposes, but also for education as well as informational purposes, and a lot of the content providers are first time short video creators and these on all unique supplies, which would help us to attract the users and finally, when we actually provide content we not only.

Use the <unk>.

Rhythmic recommendation revenue because we also have.

Social.

Sigma, which actually I hope.

To see a different kind of world.

Right.

James Gordon Mitchell: And with all these together, we felt we could, on one end, increase the supply; on the other end, we could increase the consumption, and they would self-reinforce themselves over time. I can say the video accounts, in terms of both users as well as user time, have been increasing pretty healthily, but we're not in a position to talk about specific numbers. Robin, thank you for that second question as well around game billing. So you're correct to observe that both game billing and game revenue declined quarter on quarter in the fourth quarter. And there are, you know, three points to make around that.

With all these together we felt we can on one hand, increasing on the supply on the other end, we can increase on the consumption and with sell through reinforced themselves overtime I can say the video accounts in terms of both users as well as the use of time had been increasing pretty healthily.

But we're not in a position to talk about specific numbers yet.

Robyn. Thank you for that second question as well around game billing. So you are correct.

Game billings on the game revenue declined quarter on quarter in the fourth quarter.

That's three points, perhaps to make around that one is that as.

James Gordon Mitchell: You know, one is that, as you know, for China, the work from home period was very pronounced in the first half of last year and then relaxed as people returned to offices in the second half of last year. So that tended to boost billings in the first half of last year. And then because we convert our billings into reported revenue with a time lag, that flowed through into lower reported revenue in the fourth quarter of last year. So that's just a sort of natural unwind of the work-from-home period benefit, at least in China. We haven't seen that yet internationally.

As you know China well.

From time period.

You know quite pronounced in the first half of last year.

Relax as people return to offices in the second half of last year, so not tended to boost the billings in the first half that's not yet and then because we convert operating since their reported revenue with a time lag that from.

Going through into lower reported revenue in the fourth quarter of last year. So that's just a natural on online to the work from home period benefit at least in China, we haven't seen that yet internationally on the.

The second point is.

James Gordon Mitchell: The second point is that, for us, the fourth quarter is historically a low season for revenue billings. Now, you don't see that every year in our history, usually due to one-time events. So, for example, if you look at the fourth quarter of 2019, you didn't see the normal seasonal decline in billings, in part because we consolidated Supercell, which added many billions of renminbi to our deferred revenue, moving from 3Q19 to 4Q19.

On the fourth quarter is historically, a low season for game billings now.

Didn't see that every year in our history, usually Q2, one time events or for example, if you don't have the fourth quarter of 2019, you didn't see the normal seasonal decline in biddings impart because we consolidated supercell without as many billions of renminbi.

Yep.

Moving from <unk>, 19% to 14 19, but this period, we didn't have E on.

James Gordon Mitchell: But this period, we didn't have any unusual benefits, and so the usual seasonality became more apparent. And then, third, and finally, the seasonality was more pronounced than in the normal year this year because of the late Chinese New Year. So, for some of our biggest gains in China, we began running our Chinese New Year activities around 30 days before the Chinese New Year holiday itself.

Mutual benefits from Saudi usual seasonality I became more apparent and in fact can find on the seasonality was more pronounced.

In a normal year this year because of the late Chinese CES I from some of our biggest games in China, We began running our Chinese new year activities around 90 days before the Chinese new year holiday itself.

<unk>.

James Gordon Mitchell: And for the 2019 to 2020 period, that meant the activities commenced in late December. You also asked about the outlook for the first half, but as you know, we don't provide guidance. I think that if you look back at the first half of 2020, then the work-from-home conditions resulted in higher game revenue than would otherwise have been the case and lower revenue for some of our other activities, in particular payments and fintech.

2019 to 2020 period that met the activities commenced in late December from semi.

Our balance sheet for us.

At December 31st.

This 2000 twenty's going into 2021 on the activities commenced in January.

It came on to our balance sheet.

In the first quarter you also asked about the outlook for the first half.

As you know we don't provide guidance I think if you look back at the first half of 2020 and the work from home.

Conditions.

Adjusted in high on game revenue otherwise have been the case.

On a reference to some of our other activities in particular, our payments and Fintech.

All else equal on it.

James Gordon Mitchell: So, all else equal, if this year we're back in a work-from-office mode, which we seem to be, then I think it would be natural to expect those two trends to temporarily reverse. But that's very much a short-term phenomenon for people who are focused on the next quarter.

We're backing away from.

Slide, which we seem to be and I think it would be not too, which we expect those.

Two trends.

Temporary pretty robust, but that's very much a short term phenomenon.

Who are focused on the next quarter or if you are focused on the next several years I think the more important takeaway is the walk from time period really expand.

James Gordon Mitchell: If you're focused on the next several years, I think the more important takeaway is that the work-from-home period really expanded the audience for games and expanded Online Education and Healthcare for sustained multi-year growth once we've worked through the slightly tougher comparisons in the first half of this year. So I hope that answers both parts of your question. Thank you. Your next question comes from Alicia Yap from Citigroup.

The audience gains and expanded the social acceptability of spending money within games, which positions the game industry on alongside several other interest rates were active in such as online education and health care.

Sustained commodity prices.

Once with what three D B E.

Tougher comparisons from the first half of this year. So I hope that answers part of your question.

Yes.

Thank you. Your next question comes from Alicia Yap from Citigroup. Please ask your question.

Alicia Yap: Group. Please ask your questions. Hi, thank you. Good evening, management. Thanks for taking my questions. Congratulations on the solid set of results.

Hi, Thank you good evening management, Thanks for taking my questions. Congrats on the site set on what we thought.

I have two questions first question.

Alicia Yap: I have two questions. The first question is, as we see increasing overlap of internet service among all these internet companies in China, so in addition to users, which is, you know, the core assets for most of these companies, proprietary content and also the content IP actually seems to be the key differentiated asset. So, actually, Tencent does have both of these users and also content. Could management share your thoughts on how Tencent could further capitalize on these various digital entertainment content portfolios that you have to enhance the user experience and also further expand the monetization potential?

I think from increasing overlap on internet.

There'll be some on the internet.

Internet companies in China. So in addition to us Richard.

Our core assets on market.

The proprietary content and also the content IP is actually it seems to be the key differentiator.

So actually Tencent do have box office users and also content.

Sure.

On how Ken.

Tencent.

Florida capitalize on these various student Utah Entertainment content portfolio that you have to enhance the user experience and also a foot spend day monetization potential and then the second question.

Alicia Yap: And then the second question is, roughly, very quickly on the Tencent Cloud. I'm just curious to see what some of the key challenges that the Tencent Cloud is facing when trying to penetrate different enterprises. Is that related to the lack of IT talent at this enterprise, or is it the IT budget constraint, or is it related to the vertical solutions that are available and how Tencent actually helped to support this enterprise to further adopt the cloud service?

Rafi.

Alicia Yap: Thank you.

Quickly on the Tencent cloud I'm, just curious to see what are some of the key challenges that day.

Tencent cloud is facing when tried to penetrate to the different enterprises is that related to the lack of the IP patent at this price or do you think the I T bucket on stream well is it related to the <unk> solutions.

Paul and how Tencent actually help to support these enterprise two further on top to top study. Thank you.

Perhaps I'll answer the first question, so I think that over time.

Martin Lau: Alicia, perhaps I'll answer the first question. So, you know, I think that over time there is a general trend for value to migrate from traffic towards content. And, you know, that's something that we're very aware of, and, you know, really, for the past decade, we've been investing aggressively in swimming upstream to get closer to the content. And you can see that in our game business, where we've moved from being a distributor to a publisher and, most recently, to primarily a studio-centric game business. [inaudible] You can see that right here.

That's a general trend for value to Mike right from from traffic towards content and that's something that we're very aware of.

Really.

On the past decade, we've been investing aggressively in swimming upstream to get closer to the content and you can see that in a.

Game business.

Being a distributor to a publisher.

Yeah.

Upstream naval coverage in China as a on a state level.

Leaders, such as Universal music with Warner Music.

See that right commodity on literature.

Martin Lau: So, you know, that's a trend that we really embrace, and we think... We will validate the strategy we've been embarking on for the past decade. And, you know, one interesting thought experiment is if you look at the world of traditional video linear entertainment, then, you know, while there are many excellent companies competing in this space, you know, one company, Disney, pretty consistently enjoyed outside success, both with its organically developed IPs, such as Frozen, and also with acquired IPs. Kars or Star Wars?

That's a trend that would be really embrace and it would be.

That.

Validate the strategy, we've been embarked on for.

On the past decade, and one interesting thought experiment is if you look at the world.

Traditional.

Video linear entertainment.

There are many excellent companies competing in this space one company Disney.

Martin Lau: And there are many reasons, but I think one key reason is that Disney has an unparalleled ability to not only provide linear video entertainment but also to provide an interactive experience in the form of its theme park that really deepens the engagement between the users and the IP. They're actually interacting as opposed to just patting. Now, of course, the bottleneck to that business model is that theme parks are expensive and rare.

Pretty consistently.

Joyce outs.

Outside spoke with its organically.

It's about the IP such as frozen all sit with acquired IP such as.

Cost of poor on.

Star Wars.

Many reasons, but I think one one key reason is debt.

Disney.

Yes.

And on Paramount ability to not only provide the.

Denny on video entertainment, but also to provide an interactive experience on the phone.

On parts really deepens the engagement between the users.

On the IP because.

Interacting as opposed to just passively consuming now post the bottleneck to that job.

Business model is.

In parts.

Sensitive on rare and so on the limited number of consumers can enjoy them at any point in time.

Martin Lau: Only a limited number of consumers can enjoy them at any point in time. Compared to, you know, we're in a world where we're providing interactive entertainment for our games that is universally available, very cheaply, and expensively available to users. But what we see is increasingly that games serve the same role as a theme park would in terms of deepening the engagement between the user and the IP and heightening the user's appetite to consume the IP in other linear forms.

As you know, we're in a world, where providing interactive entertainment experiences through on games, which are universally available very cheeky and expense to be available to users but.

But what we see is increasingly that the games.

At the same relevant in thought in terms of deepening the engagement between the user on the IP and heightening the uses appetite to consume the IP and not the linear format I'm sorry, If you look for example on us.

Martin Lau: So if you look, for example, at our intellectual property, Soland in Douluo Dalu, then that, and into a card-based mobile game, all of which are successful, and each... I'm going to feed the general interest in the IP and drive it to a higher level than would otherwise be the case. Okay, I'll take the second question with respect to the key challenges that Tencent Cloud is facing when penetrating enterprises, right? You know, I would say...

Our intellectual property sold on it don't knocked on new then.

And then I guess that's.

China, Detroit shop novel itself being involved into a comic book into.

On an animated TV series into a live action television series.

From a cost base.

All of which is success and each which feeds the general interest in India and price it to a higher level than what otherwise.

Okay.

Okay.

The second question with respect to the key challenges that Tencent Tencent cloud is facing on penetrating.

Enterprises right.

The number one.

Martin Lau: The number one challenge is really the business reason for them to adopt cloud solutions, right? And that is actually, sort of, a lot of times, the most important question. They may give you the fact that, oh, it may be expensive. They may give you, oh, there's no time, and all these other reasons.

The challenge is really the business reason for them to adopt cloud solutions.

That is actually sort of a lot of times that the most important question on they may give you. The fact that you may be expensive Oh, there's no time and all these other reasons, but the fundamental reason is okay. What is the key business proposition before converting themselves into.

Martin Lau: But the fundamental reason is, okay, what is the key business proposition for converting themselves into a cloud service? And, and I think the evolution of the mobile Internet has really sort of continuously provided this kind of key reason, the key business proposition. Because when the customers of businesses get online and are increasingly engaged online, then the businesses have to go online. And when the businesses go online, their suppliers have to go online, too. So there's a chain reaction that's happening initially pretty slowly, but now with increasing speed, especially as accelerated by the pandemic.

Cloud service.

And I think.

The.

The evolution of the mobile Internet has really sort of continuously provide this kind of a key.

Key reason the key business proposition because when the customers of the businesses get online and increasingly engaged on line then.

Businesses have to go on line.

And the business is when the business cycle in mind their suppliers have to go on line. So theres a chain reaction that's.

Happening.

Initially pretty slowly, but now with increasing speed, especially it's accelerated by the pandemic.

Martin Lau: In the past, when retailers looked at e-commerce, it was nice to have. It's an additional business. But during the pandemic, they realized it's actually a must-have.

When retailers.

Look at E Commerce, it's a nice to have it's an additional business, but during the pandemic. They realize it's actually you must have so.

Martin Lau: So having the key business proposition for them to move online and to adopt cloud solutions is number one. Number two is really the inertia, especially more organizational inertia. All businesses have their existing practices, and suddenly you say, oh, you have to move online. Yes, it's more efficient.

Moving the.

Business proposition for them to move online and to adopt cloud solutions I think index number one.

Number two is really.

Inertia, especially more on the organizational inertia.

All the businesses out there existing practices and suddenly you say on your at the more on line, yes, it's more efficient it's more cost effective over time, but.

Martin Lau: Yes, it's more cost-effective over time, but it involves the change of behavior of a lot of internal procedures and people's behavior. I think in order to overcome that, the number one reason has to be very strong, and at the same time, when we can actually create examples and role models, you know, through which a certain case has been created within an industry, then it's much easier to replicate that case in other clients.

It involves the change of behavior.

Internal procedures and People's behavior and.

I think in order to overcome that the number one reason has to be very strong and.

At the same time, when we actually can create examples and role model through.

<unk> a certain.

Case.

Have been created within the industry, then it's much easier to.

Replicate that case in other.

So that's exactly what we're doing we're trying to create the role models and then trying to make them into a more common set of solution and then populated to other players within the industry.

Martin Lau: So you know, that's exactly what we're doing, right? We're trying to create the role models, and then trying to make them into a more common set of solutions, and then spreading them to other players within the industry. The third one is about IT resources within those enterprises, right, you know, and that's the reason why we have been working with a lot of ISBs and system integrators, so that they can actually help the companies once they have the key reason and value proposition to move online, and at the same time, they have a clear blueprint to do that, and then the IT resources can actually be found in the third-party world.

One is about IP resources within the within enterprises and that's the reason why we have been working with motive.

Isps and system integrators, so that they can actually help the companies once they have the key reason and value proposition to move on line.

At the same time day.

A clear blueprint to do that and then the it resources actually if they can find.

In the third party world.

And I think that's addressing one set of issues.

Martin Lau: And I think that's addressing one set of issues. The other set is about, oh, Tencent Cloud in particular. As a challenger, I think we face many challenges, and we are tackling them one by one. The first one being just building relationships with enterprises. That's not easy, and we have been making good traction in the year of 2018, 19, especially after our organizational upgrade. But it was actually interrupted during the pandemic, because during the pandemic, it's very hard to build new relationships.

It's about Tencent cloud in particular.

Challenger I think we do face many challenges and we on.

Tackling them one by one.

On that.

The first one being just building relationship with.

With the enterprises, that's not easy.

And yes.

We have been making good traction.

In the year of 2018 19, especially after our our organisation upgrade but it was actually interrupted during the pandemic because.

During the pandemic, it's very hard to build new relationships and even though you have signed on new contracts is hard to implement so that's the reason why our cloud growth was a little bit impacted on in the first half in the third quarter of last year, but that in no.

Martin Lau: And even though you have signed new contracts, it's hard to implement them. So that's the reason why our cloud growth was a little bit impacted in the first half and the third quarter of last year. But then, as the world returned to normal, we have seen that the relationships and the implementation projects are back on track.

S S.

On the World returned to normal we have seen that's.

The relationships and implementing projects back on track and as a result, our growth rate in the fourth quarter on the cloud business is much stronger now.

Martin Lau: And as a result, our growth rate in the fourth quarter on the cloud business is much stronger now. And the other thing is just sort of continuously building up our technologies, whether our product is actually competitive, and whether our cost is competitive. And that's the reason why we have invested in a lot of new technologies, such as AMD servers, such as our T-block architecture, so that we can make our solutions cost competitive.

And the other thing that is just sort of continuously building on our technologies on our product is actually the competitive cost competitive and that's the reason why we're investing in a lot of the.

New technologies, such as AMD servers, such as our T block RK.

Architecture, so that we can make our solutions cost competitive and I would say finally.

Martin Lau: And I would say, finally, Tencent has got a lot of SaaS solutions on the communications and productivity side, which are market leaders. And in the future, when we can actually connect our cloud service with these SaaS solutions, I think that's the time when we can really leverage our competitive advantage and overcome a lot of these challenges. I hope that answers your question.

Tencent has got a lot of on SaaS solutions on the communications from productivity side, which on our market leading and in the future. When we can actually connect cloud services with these SaaS solutions I think that's the time when we can really leverage.

Competitive advantage and overcome a lot of these challenges I hope that answers your question.

Thank you. Our next question comes from Han Joon Kim from Macquarie. Please ask your question.

Hyungwook Choi: Thank you. Our next question comes from Hyun Joon Kim from Macquarie. Please ask your question.

Hyungwook Choi: Great, thank you very much management for your time today. The first one is just touching upon, I think, the relationship between Alibaba and Taobao Deals that I think the media has talked about. And please correct me if I'm wrong.

Great. Thank you very much on management first on saying I do have.

First one is.

Just touching upon I think the relationship with I think Alibaba on top on deals that I think on media has talked about and please correct me if I'm wrong I think it's we've probably not had too much engagement with them I think since 2016 so.

Martin Lau: I think it's because we've probably not had too much engagement with them, I think since 2016. So should we just view this as something in isolation? Or kind of, should we see that there's more room for collaboration with other ecosystems out there in China? And how do we think about the shifting dynamics in that kind of scenario, where, you know, on one hand, I guess we have to kind of make sure we protect our user kind of experience and the integrity of the experience within WeChat, while also kind of thinking about how we remain an open platform and collaborate with other ecosystems out there.

Should we just view this as something in isolation or kind of should we see that there's more room for collaboration with other ecosystems out there in China and how do we think kind of the the shifting dynamics in that kind of scenario where.

On one hand, I guess, we have to kind of make sure we protect our user experience.

Experience and then integrity of the experience within Wechat.

While also kind of thinking about how we remained open platform in collaboration with other ecosystems out there.

Martin Lau: And then the second question I want to touch upon is in regards to your investment in Rakuten. Mikitani-san, you know, did host a call, and I think, you know, he kind of elaborated that he would want to work with you guys a little bit more deeply, and even in areas, I think, like games. So I mean, and for you guys, is it more of a passive role if they want something like games, you're happy to kind of give it to them? Or is that kind of a more strategically minded initiative, where we kind of see the ability to export some of our key resources and services to other geographies? Thank you.

And then the second question I wanted to touch upon is in regards to your investment into Rakuten Viki.

Thank you Tony on.

Did host a call and I think.

Can you kind of elaborate that he would want to work with you guys on little bit more deeply.

Even in areas like games and for your guidance is it more of a passive role if they want something like games are you happy to kind of give it to them or is that kind of more.

Historically minded initiative, where we kind of see the ability to export some of our key kind of resources.

Services to other geographies. Thank you.

So.

Martin Lau: So in terms of the first question, without going into a lot of details, I would say our general principle is that we are open in nature; we have an open platform that encourages organic cooperation with other platforms, but at the same time, we act as a platform.

In terms of the first question.

Going into a lot of details I would say our general.

Principle is that we opened in nature we.

Have an open platform, which encourage organic cooperation with other platforms, but.

But at the same time as per.

Platform.

Manage manager, we actually need to look after the user experience as well as protect our.

Martin Lau: We actually need to look after the user experience, as well as protect our users' privacy with a lot of focus. So there's a dual responsibility there, and our responsibility for the users is actually much higher. And as a result, we actually have to..., have to protect our users' experience and, in a lot of cases, prevent spamming, especially encourage spamming of our users. And if we actually sort of see a violation of user privacy, we'd actually sort of step in, and we stop the service.

Users are private and see with a lot of focus right. So so.

Theres, a dual responsibilities and our responsibility for the use is actually is actually much higher.

And as a result, we actually have two.

How to protect our users' experience and in lot of cases.

Ah prevent spamming, especially encouraged to spending of our users and if we actually sort of see validation of user privacy, we'd actually sort of stepped in and.

We stopped the service and that principle actually extends not only to third parties, but also investing companies and sometimes our.

Martin Lau: And that principle actually extends not only to third parties but also to our investing companies and sometimes even to our own services. If we see our own services actually spamming users in an unscrupulous way, we actually sort of impose penalties, too. And finally, I think the relationship with any large company has to be mutually constructive. So I think these are sort of the principles that we adhere to when we look at these relationships in the industry.

On the services revenue, if you see our own services actually spending on users.

Unscrupulous weighted we actually sort of putting in penalties too.

Finally, the relationship with any.

Large company has to be mutually constructive so desire.

Net of the principles that we adhere to when we look at these relationships on the.

Industry and.

Now in terms of our investment in <unk>.

Martin Lau: Now, in terms of our investment in the international market right now, I would say, I would refer you to, you know, in the particular case of Rakuten, you know, refer to the press release as well as what Mickey said. You know, I think, you know, this is a company that is a champion, a local champion in Japan.

The international market.

Say.

I would refer you to.

On the particular case of rockets on there and you referred to the.

Our press release as well as what.

Mickey.

This is a company, which.

As a champion local champion in Japan, it's very innovative and it also has a very strong franchise in the area of E Commerce and Fintech and on.

Martin Lau: It's very innovative and it also has a very strong franchise in the area of e-commerce in the telecom space, and we are very honored to be able to work with them. We felt that by working with them, we could actually sort of, you know, help to download some of the know-how that we have. We can help them with their capital, but at the same time, they are a very competent company who can operate very independently, and we feel we can actually help them to operate even more competitively in the local market as well as internationally.

Emerging in the.

In the telecom space and we are very.

On there to be able to work with them and we felt debt.

By working with them, where they can actually sort of.

The help too.

Download some of the know how that we have we can help them with their capital at the same time, there you know would be on.

Very.

Competent company, who can operate very independently and we felt we can actually.

Help them to offer it to even more competitive in the local market as well as internationally.

And in terms of thinking about.

Martin Lau: And in terms of thinking about working with international partners, I think that the approach is very similar, right? We look for... very competent management teams and passionate entrepreneurs. We look for companies that have a very strong presence within the local market, they have good support by the government, and they have good reports with the consumers in the market.

Working with International partners I think that the approach is very similar idea, we we look for.

Very competent management teams and.

On a passionate entrepreneurs.

We look for companies, which has a very strong presence within the local market.

Good support by the government debt.

Reported with the consumers in the market and what we do is that we provide.

Martin Lau: And what we do is that we provide our resources, basically know-how as well as some capital, and maybe, in some cases, some access to the Chinese market. And, by and large, these companies, with some help from us, would be able to perform brilliantly in penetrating their local market and sometimes the international market. And by engaging in these kinds of partnerships, we felt that it helped us to get access to: Thank you. The next question comes from Gary Yu from Morgan Stanley. Please ask me a question.

Our resources.

Basically knowhow as well as some capital and maybe in some cases, some axis to the Chinese market.

By and large the companies with some help from us would be able to perform.

In a prudent way and in penetrating their local market and sometimes in the international market and by engaging in these kind of partnerships. We felt that it help us to get access to exciting new markets exciting teams exciting products around the world.

Thank you and next question comes from Gary You from Morgan Stanley. Please ask your question.

Hi, Thank you for the opportunity to ask questions I have two questions from my side.

Gary Yu: Hi, thank you for the opportunity to ask questions. I have two questions from my side. The first one is on fintech. Correct me if I'm wrong, but I think the majority of our Tencent credit business is being conducted under the WeBank subsidiary. Just wanted to check the new kind of fintech regulation on forming a financial holding company.

Gary Yu: How does it affect the way Tencent conducts credit business in the future, if at all? And how does it affect our revenue financially? And the second question is related to video accounts.

One is on Fintech.

Ah correctly, you've brought on I think majority of Tencent credit business is being conducted under the.

We bank subsidiary.

Just wanted to check.

Do you kind of regulation on <unk> financial holding company, how does it affect the way Tencent conduct credit business in the future if at all.

And how does it affect out.

Rapidly financially.

On the second question is related to the veto accounts.

Just a follow up question on this <unk> from content also diverting traffic between kind of private domain in public domain.

Martin Lau: Just a follow-up question on, you know, the unique feature of content and also diverting traffic between a kind of private domain and a public domain. Given these unique features compared to other short-form video platforms, do we expect the future kind of monetization opportunity will also be a lot more different compared to what we've seen out there in other platforms, you know, in the form of advertising, e-commerce, and live-stream Are we expecting, you know, more kinds of different forms of monetization opportunities going forward? And if that's the case, what kind of timing are we looking at in terms of monetization? Thank you. Yeah, on WeBank, it's an affiliate.

Given these unique compared to auto shop on PDL platform do we expect the future kind of monetization opportunity.

Also be a lot more different compared to what we see out there in all the platforms.

Up advertising e-commerce less shoemaker.

Are we expecting more kind of different from monetization opportunities going forward.

If that's the case, what kind of timing on we're looking at in terms of monetization. Thank you.

Yes on.

Martin Lau: And the vast, vast, vast majority of our loan business is actually conducted through WeBank. And WeBank is a licensed bank, subjected to the much more stringent banking regulation measures of CBIRC, as opposed to the microloan license. And you're good.

We think it's an affiliate.

Uh huh.

Net vast vast majority of our lending business is actually conducted through re bank and we think it's a licensed bank subject to much.

Much more stringent banking regulation meshes from CBI.

As opposed to the micro loan.

License and.

Yes.

Well, there's a lot of nuances in your question right. So maybe I just tried to sort of answer it in two.

Martin Lau: Good. Well, there are a lot of nuances to your question, right? So maybe I just try to sort of answer it in full. There is the question of, what is, and the impact of financial holding companies right now, and I would say, as a concept, it is an important concept put forth by the regulators in managing the risk within the financial system. And we have been paying very close attention to the relevant developments.

There is a question of.

What is.

What does it impact on financial holding company right now.

I would say financial holding company.

As a concept.

As an important cause.

On Sept put forth by the regulators in <unk>.

Managing the risk within the financial system, and we have been paying very close attention to the relevant development.

And we would be completely compliant.

Martin Lau: And, you know, we would be completely compliant, right, if it's required to, but, from our understanding, the financial coding company in itself is neutral in nature. It does involve organizational change, but it doesn't really impact the business.

It's required to but from our understanding the financial equivalent <unk> company in itself, it's neutral in nature.

It does involve organizational change, but it doesn't really impact the businesses what impacted real fintech businesses are really the regulations from happening.

Martin Lau: What has impacted real fintech businesses are really the regulations that have been gradually put in place to regulate loan practice. And if you look at what happened in the past few months, right, there have been a number of, a number of regulations that have been put in place. But I have to say, because of the way that we conduct our fintech business and the loan business, which is, I would say there are a few principles, right, you know, that we have continuously emphasized in terms of our approach to fintech businesses. And I would like to reiterate them once again.

Gradually put in place to regulate loan practices and if you look at what happened.

In the past few months there have been a number of.

A number of regulations that have been put in place, but I have to say because of the.

The way that we conduct our fintech business.

The loan business, which is.

I would say.

Principal interest rate that we.

Continuously emphasize in terms of our approach to fintech businesses, and I would like to reiterate.

Then once again number one is we.

Martin Lau: Number one is that we operate in strict compliance with rules and regulations, and that's both in form as well as in substance. We are very prudent in our risk management. We have been, and have always been, optimizing for quality and risk management rather than pursuing scale.

Operating in strict compliance with rules and regulations and that's both in film as well as in substance.

We are very prudent in our risk management, we have been have always been optimizing food quality and risk management rather than pursuing scale.

We focus on product and services net benefits consumers and merchants.

Martin Lau: And we focus on products and services that benefit consumers and merchants. And we also emphasize cooperation with financial institutions as opposed to disruption. So with that in mind, and especially the compliance point as well as the focus on risk management and the fact that we have been very self-restrained in terms of pursuing the scale of our loan business. So when you look at some of the key regulations that have been put in place in the past few months, including a 30% self-funding ratio, including no loans to students, including a clamp down on high interest rates, including a max loan size of 200,000 And I hope this actually shows that for our FinTech business, we have been prudent all along the way. And as a result, we...

And we also emphasize cooperation with financial institutions as oppose to disruption so with that in mind, when they get especially in.

The compliance point as well as the focus on risk management and the fact that we have been very self restraint in terms of pursuing the scale of our loan business.

Yeah.

So when you look at some of the.

Key regulations that had been put in place in the past few months, including a 30% self funding ratio, including no loans to students, including trend on on the high interest rate, including Max loan size of 200000 RMB.

Each and every single one of them we have been compliant even before these regulations come around and I hope. This actually shows that four four our fintech business, we have been prudent all on the way and as a result, we.

Sure.

I actually sort of less affected by all these regulations and in the way, we actually sort of embraced the risk is regulations that will be completely compliant whatever regulations that will be coming place because we felt that with new regulations with this more healthy regulations at the end of the day the entire.

Martin Lau: I am actually less affected by all these regulations. And in a way, we actually sort of, you know, embrace these regulations that will be completely compliant, whatever regulations that will be coming in place, because we feel that with new regulations, with these more healthy regulations, at the end of the day, the entire industry will be healthier, and it will be sustainable for longer. And then in terms of just the video accounts, right, I would say monetization is probably sort of, you know, too big a question for us to answer at this point in time.

Industry will be healthier and it would be sustainable for longer term growth.

And then in terms of just the video accounts right I would say.

Monetization is probably sort of too far a question for us to answer at this point in time.

We have always seen.

Martin Lau: We have always seen that when we get users, when we get user engagement, over time, there is going to be monetization. But number one, at this point in time, we are very focused on building the ecosystem of content providers as well as viewership, and we prioritize the user experience over any monetization. And number two, even when monetization comes around, right? You know the practice of Tencent has always been much more self-restrained in terms of monetization. It will only come on a gradual basis.

When we get users when we get our user engagement over time, there is gonna be a monetization, but number one at this point in time, we are very focused on building the ecosystem of content providers as well as the viewership.

And we prioritize user experience.

Any monetization and number two even when monetization comes around and I know you know the practice of Tencent has always been much more self restraint in terms of monetization. It will only come on a gradual basis. So I think that's the answer on your question.

Your next question comes from Eddie Leung from Bank of America. Please go ahead.

Unknown Executive: So I think that's the answer on your part. Your next question comes from Eddie Leung from Bank of America. Please go ahead.

Good evening, Thank you for taking my questions.

Unknown Executive: Good evening. Thank you for taking my questions. It is a pretty straightforward question, but perhaps quite important.

It is a pretty straightforward question.

That's on quite important just saw one given the decent data.

Martin Lau: I just wonder, given the recent development in antitrust regulation, what are some of the things that Tencent can do to stay competitive in the industry while still able to address the concerns of the regulators? And then, just a follow-up question on the Waysan ecosystem. Any target or strategic goal for Waysan's transaction ecosystem in 2021? For example, any more initiatives to facilitate the commercialization of your merchants and service providers? Thank you.

Antitrust regulation on one off from.

The things that Tencent can do to stay competitive in the industry.

<unk> top dress the concern of the regulators.

Just a follow up question on <unk>.

Ecosystem.

We target our stretch goal a full we smoothed out transaction ecosystem.

As from 'twenty. One for example in <unk> to facilitate <unk>.

Commercialization Osceola embedded inside the scope I guess thank you.

Okay, well in terms of the first question.

Martin Lau: Okay, well, in terms of the first question, right, I would say. You know, there is more and more focus on government regulations. And I think, you know, this is something which, to be honest, is actually quite natural.

I would say.

They are.

More and more focus on on.

Government regulations and.

I think this is something which.

To be honest right now, it's actually quite natural yeah, I think in the past, we actually talked about this.

Martin Lau: Yeah, I think, you know, in the past, we actually have talked about this view, and we want to reiterate it, which is that as companies become large and as Internet services become more and more a part of people's lives, then companies need to be much more responsible both to the users, to the government, to society, and socially. It signifies the importance of the industry that we are. And in order to navigate this, I think it's a boring answer.

And this is we wanted to reiterate which is.

As companies become.

Large and.

Internet services become more and more a part of people's life than companies needs to be much more responsible.

Both to the users to the government to society and socially right. You know this is just something that needs to be done and to some extent.

Hum.

It signifies the importance of the industry that we operate.

In order to schuh.

Navigate this revenue I think.

It's a boring answer I know this is basically doing.

Martin Lau: This is basically sort of doing a lot of the things that we have been doing, but with a very strong focus on communication with the government and compliance. So if you look at the operating principles of Tencent, we have always emphasized that we would be fully compliant with rules and regulations. And now, I think it's important for us to understand even more about what the government is concerned about, what society is concerned about, and be even more compliant.

A lot of the things that we have been doing but with the.

Very strong focus on.

Communication with the government and compliance. So if you look at the operating principle with a 10 center I know we have always emphasized that we would be fully compliant with rules and regulations and now I think it's important for us to understand even more about what what the.

Government is concerned about what the society is concerned about and be even more complaint.

<unk>.

Maybe even sort of deal with with the.

Martin Lau: Maybe even sort of, you know, with a futuristic approach, so you anticipate what is needed and try to be even more compliant in the businesses in anticipation of any rules and regulations changes. We want to focus on user value and innovation. I think this is essentially what answers your question.

With its futuristic approach. So you anticipate what is needed and then try to be sort of EBIT more compliant in the businesses.

Anticipation of any rules and regulations change.

We want to focus on user value and innovation I think this is.

Essentially what.

You answered your question.

The ultimate competitiveness has actually come from.

Martin Lau: The ultimate competitiveness actually comes from you providing more and more user value, and you come up with exciting and innovative products that deliver more user value, but not only to the users but also to industry partners. And when that's done, then I think it also complies with what the government, what society, and what the users expect of you. We are very self-restrained in terms of monetization and our business practices, and I think, you know, a lot of people comment that, oh, you know, there's one way that you can actually supercharge your revenue.

You, providing more and more user value and you.

Come up with exciting on innovative products that.

Deliberate more user value, but not only to the users, but also to industry partners.

And when that's done then.

I think.

It also complies with with what the government what the society with the users expect to view.

We're very self with strength in terms of monetization.

And our business practices and.

I think you know a lot of people comment that I'll add there is one way that you can actually turbocharge your revenue I think we had.

Martin Lau: I think, you know, we sometimes get criticism for being too much in self-control, but, you know, that's something that, you know, we'll continue to do, and we think it's going to be beneficial for us in the current environment. We embrace open platform, and we provide our open platform to a lot of industry partners and help them to grow. We embrace competition, yes, but in a fair way.

Sometimes getting criticism on being too.

So much in self control, but that's something that we'll continue to do and we think it's going to be beneficial for us in the current environment.

We embrace open platform.

I mean, we provide open platform to a lot of our industry partners and help them to grow we embrace competition right.

On a fairway.

Martin Lau: We embrace fair competition even within our own company, right? You know, because we think that fair competition actually makes the teams better, and when the teams are better, they provide good products and innovation that create a lot of user value. And finally, we engage in partnerships while respecting our partners' independence, and this has been our principle in our investments, in our business partnerships, and we'll continue with that. So, with all these existing practices, you know, and we continue to put in our efforts in exercising them, right, you know, I think, you know, over time, we will be able to comply with the rules and regulations and also present ourselves as a partner, a healthy voice in the industry, and also fulfill the expectations of society at large. So, the second question is about... Oh, the Weixin GMB. I don't think we have any targets right now.

Embracing fair competition, even within our own company right and because we think Thats a fair competition actually makes the teams better and when the teams are better they provide good products and the innovation that create a lot of user value and finally, we engaged in partnerships.

While respecting our partners' independence and this has been our principle in our investments in our business partnerships.

And we'll continue with that so with all these.

Existing practices.

We continue to.

Put through our efforts in exercising them right.

Overtime, we would be able to comply with the rules and regulations and also present ourselves as a.

Healthy force in the industry and also fulfilled the expectation of the society as a whole.

So the second question is about.

Oh, the <unk> I don't think we have any target radio we shouldn't.

Martin Lau: The Weixin GMB has been increasing, and I think the reason is... You know, because of the fact that more and more merchants, as well as service providers, look at online as important. And the importance was especially heightened during the pandemic. In the past, they looked at online as an additional channel. Now they look at online as a dispensable channel. The second one is more and more.

Jimmy has been increasing and I think the reason.

Is.

Because of the fact that.

The more and more merchants as well as service providers look at online as important.

The importance was especially heightened during the.

The pandemic in the past they look at online as an additional channel now they look at online as in dispensed per channel.

The second one is more and more.

Companies in each.

Martin Lau: Companies and e-commerce players and service players now value private domains more and more. In the past, when they looked at the internet, they said it was an additional channel. It's okay for them to host their users on the public domain. But over time, when they feel that the internet is an indispensable part of their future, then they want to engage with their users like the way that they engage with their users in their shops.

E Commerce players in service players now value private domain more and more in the past day.

When they look at on line.

Additional channel, it's okay for them to host their users on the public domain.

And over time, one day.

We feel that online is indispensable part of their future than they want to engage with their users like the way that they engage with their users.

Their shops on the private domain and this could be coming more and more important and mini programs actually allow them to.

Martin Lau: So the private domain is becoming more and more important, and many programs actually allow them to engage with their users in a private domain. We have also added a lot of tools for them to engage with these users, right, you know, that's the third reason. You know, we have had official accounts. We have had wage and payment, but now we're adding mini shops, we're adding video accounts, and we're adding live streaming. And a lot of these tools are actually helping them to manage their customers online on the private domain better and better.

Engage with their users in a private domain and now.

We had also.

Added a lot of tools for them to engage with these uses radio thats. The third reason we have had.

Official accounts, we have had we should payment, but now we are adding a mini shops, adding video accounts, adding live streaming and a lot of these tools are actually helping them to manage their customers online on the private domain.

Better and better.

Martin Lau: And, you know, with all these factors and also a continuous education process and the establishment of role models within the industries, the, you know, ecosystem of many programs is getting more and more vibrant, and we're very happy to see that.

With all these factors.

Also a continuous education process and establishing a flow models within the industries.

Yes.

The ecosystem of mini programs is keep on getting more and more vibrant and wherever that had very happy to see debt.

Okay.

Operator, we will take two more questions. Thank you.

Certainly your next question comes from John Choi from Daiwa Capital markets. Please go ahead.

Martin Lau: Certainly. Your next question comes from John Choi from Taiwan.

Hyungwook Choi: All capital markets, please go ahead. Thank you for taking my question. I have two questions. First of all, I think on the international part of online games. Imagine I mentioned that you guys were

Thank you for taking my question on off two questions on first of all on I think on the online games International part.

I imagine you mentioned that you guys will continue to collaborate with Renaud on the console gaming and it keeps on.

Hyungwook Choi: continue to collaborate with renowned console and game and anime IPs going forward. So would this be another strategy for both the domestic and international market?

Going forward. So would this be another strategy for both the domestic and international market and just quickly a follow up also on that is in terms of the investment. It seems like you guys are stepping up more on the PC and console studio. So could you kind of share your thoughts on whether you are going to be more serious in these two geographies going forward.

James Gordon Mitchell: And just quickly, a follow-up on that is, in terms of the investment, it seems that you guys are stepping up more on the PC and console studios, so could you kind of share your thoughts on whether you're going to be more serious in these two genres going forward? And a quick follow-up on your online advertising, given that some verticals, such as online education, have been seeing some challenges. What are the trends?

Quick follow up is on your online advertising.

Given that some vertical such as online education has been seeing some challenges.

James Gordon Mitchell: What are the trends that you're seeing despite all the changes in the industry? Thank you.

The trends that Youre seeing despite all the changes in the <unk>.

Thank you.

So on the game question, Yes, we absolutely.

James Gordon Mitchell: So on the game question, yes, we absolutely seek to work with intellectual property to create games that we think resonate both internationally, as well as in China. And yes, we have been very actively investing in studios that are active on console and PC, but, you know, we've also been very active investing in studios that focus on mobile, and, you know, in reality, our mental framework is not that, you know, we want to invest in a certain number of console studios, a certain number of PC studios, a certain number of mobile studios, it's that we want to invest in the best or the future best studios within each genre of game.

We work with our intellectual property to create games that we think.

It resonates.

And actually as well as in China, and yes, we have been actively investing in.

Studios that are active on console and PC, but we've also been very active investing in studios that focus on mobile and in reality op margin.

On the framework is not that you'd be willing to invest in a certain number of constant studios a set number of PC Studios a set number of mobile studios that we want to invest in the past or the future of that.

Yes within each genre of games.

And sometimes that genre of games is particularly well to balance in China in which case the best studio will often not always but often.

James Gordon Mitchell: And, you know, sometimes that genre of games is particularly well-developed in China, in which case the best studio will often, not always, but often be mobile-centric. You know, sometimes... That studio might be in Japan or the United States, where the best studios are often console-centric. And quite often, for the sort of smaller, deeper genres, the best studios are in Europe, where they'll typically be PC-centric. But our view is that, over time, it's becoming easier to cross platforms, and so we're much less interested in whether a studio has mobile or console or PC expertise and much more interested in whether it has simulation expertise or card game expertise or role-playing expertise that can move across different hardware platforms over time.

Mobile centric sometimes.

That studio might be in Japan on the United States, where the best studios often console centric.

Awesome for that sort of smaller decent genres, the best studios or in Europe, while debt.

Typically be a PC centric.

Our view is that over time, it's becoming easier to cross platforms.

We're much less interest.

Studio as mobile or constant LTC expertise and much more interested in whether it has.

Relation expertise on coffee expertise a lull tank expertise.

Now moving across the different hardware platforms over time.

James Gordon Mitchell: So that's on the gaming front, and then on the advertising side, I mean, I think any time you look at the advertising market, the short term is always murky because it's sensitive to GDP growth, which is unknown at the moment, as it always is. It's sensitive to regulatory changes, and right now, we have some uncertainty globally around the impact of Apple's IDFA changes, although in China that will be mitigated by the fact that Apple is only a teeny percentage of mobile traffic.

So that's on the game fronts, and then on the advertising side.

I mean.

Yeah, I think anytime you look at the advertising market. The short time, he is away marquee because it's sensitive to GDP growth, which is unknown at the moment as it always is sensitive to regulatory changes right. Now we have some uncertainty globally around the impact to Apple's IBSA changes so that in China that will be mitigated.

I was on the percentage of mobile traffic.

Traffic.

It is also sensitive to changes within specific advertiser industries.

For example from China as possible without B.

Rules around appetite from by the education industry.

It has a net negative impact on the advertising industry as a whole. So I think at any point in time in the next few months rapid high single weighted.

James Gordon Mitchell: It's also sensitive to changes within specific advertiser industries. So, for example, in China, it's possible there will be rules around advertising by the education industry, which could have some negative impact on the advertising industry as a whole. So I think at any point in time, the next few months for advertising always look cloudy and confusing. Over the longer term, advertising is a function of GDP growth, and so if you're an optimist and you believe that economies tend to grow over time, which we do, then advertising will tend to grow over time.

Claudia and confusing but over the longer term.

It's a function of GDP growth and sorry, if you are not suggesting your belief that economies tends to over time, which we do and advertising tends to go out over time and I think what you can see very clearly from 2020 is that whatever the advertising industry growth rate.

James Gordon Mitchell: And I think what you can see very clearly from 2020 is that whatever the advertising industry's growth rate is, for a number of reasons, we tend to outgrow the industry because we have more activity, more traffic, more tools, more resources, and less monetization than the industry as a whole. So in good times, like 2019, and in bad times, like 2020, we tended to outgrow the overall advertising industry, and over the long term, we think advertising... (inaudible)

From a number of reasons, we tend to outgrow the industry because we have more.

More activity more traffic more tools more resources, that's monetization than the industry in aggregate.

In good times like 2019, and in bad times by 2020.

<unk> tended to outside of Europe on advertising industry in a long time, we think advertising.

Across the industry in and of itself.

Yes.

Thank you. Your last question comes from William Packer from Exane BNP Paribas. Please go ahead.

William Henry Packer: Thank you. Your last question comes from William Packer from Acclaim BNP Paribas. Please go ahead.

Hi management, Thanks for taking my questions and congrats on strong numbers.

William Henry Packer: Hi Management, many thanks for taking my questions and congratulations on the strong numbers. Last quarter on this call, you gave some helpful initial perspectives on the draft announcement regarding antitrust and platform rules. Could you provide an updated view now that we've had a bit more information? That would be helpful.

William Henry Packer: Time Management

Last quarter on this call.

Some helpful initial perspectives on the draft announcements regarding antitrust and platform boots.

Could you provide an updated view now.

Now we've had a bit more information.

So that'll be that'll be helpful. On is it still right to think that your video games with digital entertainment business.

William Henry Packer: And is it still right to think that your video games and digital entertainment businesses are not likely to be a focus? And then, as a follow-up, in terms of acquisitions, both stakes and larger deals, should we expect the pace of your investing to change as new systems of oversight are established? Thank you.

To be a focus.

And then as a follow up in terms of acquisitions. Both stakes on Volta deals should we expect the pace of your investing to change as new systems of leukocytes or established thank.

Thank you.

So perhaps I'll start with the second question.

James Gordon Mitchell: So perhaps I'll start with the second question. For better or worse, the pace of our investing activity has been relatively unusually intense during the past six months. And that's not because of regulation; that's just because COVID has provided a glimpse of the future. So, as you know, historically, the very vast majority, over 95, 99% of our investments are minority investments rather than mergers or outright acquisitions. And that will remain true going forward.

So better on what the pace of our investing activity has been.

Relatively on unusually intense strength.

Months.

That's not because of regulation not just because COVID-19 has provided a glimpse of the future thickness on.

Interest rates like games education, health care, and especially on <unk>.

At this on.

With really.

Utilize that glimpse into the future.

Step up our support independent companies.

Those spaces, particularly enterprise software as a service in China.

As you know historically the right.

James Gordon Mitchell: And for that very vast majority, then a different antitrust regime will not, we believe, impact the desirability of us investing in and supporting startups and helping them to grow into businesses. Yeah, in terms of the last question, I would say because the gaming and entertainment business is, by nature, much more competitive, and there are many more players in the market. Essentially, they're free of all competition, so it's less relevant for the antitrust regulations.

Boston majority.

90, 599% of our investments minority investments rather than march's or outright acquisitions on that will remain true going forward and for that vast majority then.

Different antitrust regime will not be believe impacts.

Our ability of us investing in and supporting start ups and helping them to flow into into bigger battery companies over time, So we remain.

Active investors.

It's actually on this was especially in China.

Yeah in terms of the last question.

I would say.

Because the gaming and the entertainment business is by me.

Nature much more competitive.

So there are many more players in the market and it's essentially free for.

All competition.

So it's less revenue.

For the antitrust.

Regulations and.

James Gordon Mitchell: And in terms of what we should be doing, I would refer you back to the answer that I provided to Eddie, which is that we continue with our focus on compliance as well as our business practices and work very closely with the regulators and navigators.

In terms of what what we should be doing right now I think I would refer you back to the answer that it provides to Eddie right.

We'll continue with our focus on compliance as well as our business practices and work very closely with the regulators and navigate this.

Thank you.

Operator: Thank you. Thank you, operator. 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.

Thank you operator, we are closing the Cornell if you wish to check out all price related and other financial information. Please visit the IR section of our company website at Www Dot Tencent Dot com.

Operator: The replay of this webcast will also be available soon. Thank you, and see you next call. Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.

Play on this webcast will also be available soon.

Thank you and see you next quarter.

Thank you, ladies and gentlemen that does conclude our conference for today. Thank you for participating you may all disconnect.

[music].