TENCENT(00700)2022-11-16 12:00Financial Data and Key Metrics Changes - Total revenue for the third quarter was 140 billion RMB, down 2% year-on-year but up 5% quarter-on-quarter [2][3] - Gross profit was 62 billion RMB, down 1% year-on-year but up 7% quarter-on-quarter [2][3] - Non-IFRS operating profit was 41 billion RMB, flat year-on-year and up 12% quarter-on-quarter [2][3] - Non-IFRS net profit attributable to equity holders was 32 billion RMB, up 2% year-on-year and 15% quarter-on-quarter [2][3] Business Line Data and Key Metrics Changes - Value-added services segment revenue was 72.7 billion RMB, down 3% year-on-year [3] - Social network revenue decreased by 2% year-on-year to 29.8 billion RMB [3] - Domestic game revenue was down 7% year-on-year to 31.2 billion RMB [3] - International games revenue increased by 3% year-on-year to 11.7 billion RMB [4] - Online advertising revenue was 21.5 billion RMB, with a year-on-year decline narrowing from 18% to 5% [4] Market Data and Key Metrics Changes - Combined MAU of WeChat and QQ was 1.3 billion, with QQ's mobile devices MAU at 574 million [2] - Mini-programs surpassed 600 million daily active users, representing a year-on-year increase of over 30% [3] - Daily mini-program activations grew by over 50% year-on-year [3] Company Strategy and Development Direction - The company is focused on improving efficiencies, developing new revenue streams, and reviving profit growth [2][3] - Investments are being made in growth areas such as video accounts, international games, and SaaS products [2][3] - The company is returning capital to shareholders, with a special interim dividend of Meituan shares worth approximately 20 billion RMB [2][3] Management Comments on Operating Environment and Future Outlook - Management noted that the minor protection measures and lack of new game licenses have hindered growth in domestic gaming [7] - There are expectations for more new game licenses to be issued, which could positively impact revenue growth [7] - The regulatory environment is trending towards supporting the healthy development of the industry [11] Other Important Information - Free cash flow amounted to 15 billion USD after accounting for capital expenditures and lease liabilities [2] - The company has total gross cash of 44 billion USD and stakes in listed companies valued at 75 billion USD [2] Q&A Session Summary Question: Cost progress and one-off restructuring costs - Management confirmed that one-off restructuring costs are included in G&A and R&D under staff costs, with a low single-digit year-on-year increase [6][7] Question: Domestic gaming revenue growth - Management indicated that a return to growth may depend on new game licenses or macroeconomic improvements [7] Question: Development strategy for existing games - The company is focusing on fewer, higher-impact games and upgrading existing titles to maximize lifetime value [8] Question: Advertiser feedback on video accounts - Advertisers appreciate the differentiated audience of video accounts, leading to robust eCPM [8] Question: Online advertising budget allocation - Management noted that the online advertising market is shifting, with performance ads becoming more significant [9] Question: Regulatory environment updates - Management highlighted a trend towards a more normalized regulatory environment, supporting the digital economy [11]