【Earnings Highlights and Outlook】
- Total revenue reached 180 billion RMB, up 13% year-on-year
- Gross profit was 100.5 billion RMB, up 20% year-on-year
- Non-IFRS operating profit was 69.3 billion RMB, up 18% year-on-year
- Non-IFRS net profit attributable to equity holders was 61.3 billion RMB, up 22% year-on-year

【Q&A Highlights】

Q1: What are the key KPIs for Tencent's e-commerce strategy, and are there plans for shelf-based offerings?

A:
1. E-commerce Strategy:
- Focus on long-term growth rather than short-term KPIs
- Key priorities:
a) Improving basic shopping experience (product quality, return policy, customer service, pricing)
b) Increasing supply of good products and brands
c) Growing traffic through live streaming and other channels

2. Unique Ecosystem Approach:
- Connecting users to products through various WeChat modules (mini programs, mini shops)
- Leveraging social components (gifting, moments, official accounts)

3. Current Performance:
- Strong growth in mini shop transaction GMV continues

Q2: How is Tencent addressing the potential impact of U.S. licensing requirements for GPUs on AI development?

A:
1. Dynamic Situation:
- Recent H100 ban and new BIS guidelines create a fluid environment

2. Current Strategy:
- Leveraging existing inventory of chips for immediate AI applications
- Focusing on software optimization to improve efficiency
- Exploring alternative chip options and customized models for different use cases

3. Priorities for GPU Usage:
- Immediate return applications (advertising, content recommendation)
- Training of large language models
- Inference needs, with a focus on improving efficiency

4. Long-term Outlook:
- Shift from scaling law concept to more efficient training methods
- Exploring domestic chip options and ASICs for smaller model inferences

Q3: Can you elaborate on the narrowing gap between revenue and operating profit growth due to AI investments?

A:
1. Timeline:
- Expect a 1-2 year period for cultivation before monetization, based on past experiences

2. Magnitude:
- Narrowing gap expected, but not negative operating leverage

3. Cost Factors:
- Depreciation from capital expenditures is the most significant factor
- Some incremental marketing expenses for AI products
- Higher salaries for AI specialists, but not a significant increase in overall headcount

Q4: How much more growth can be expected from AI integration in advertising, and what are the latest metrics for video ads and WeChat search?

A:
1. AI Impact on Advertising:
- Significant improvement in click-through rates (from 0.1% for banner ads to potentially 3.0% with AI)
- Upper limit of improvement still unknown

2. Video Accounts Metrics:
- Ad load stable at 3-4% for the past six months
- Strong eCPM due to high click-through rates and advertiser competition

3. WeChat Search:
- Query share on an upward trend (specific numbers not disclosed)
- Early stages of AI search integration, blending traditional and AI-powered results

Q5: What is driving the strong performance in domestic games, particularly in the first-person shooter (FPS) genre?

A:
1. Market Convergence:
- Chinese gamer behavior aligning with global trends, where FPS games represent 40-50% of game time and revenue

2. Demographic Shift:
- Younger Chinese gamers showing increased interest in FPS games

3. Game Mode Evolution:
- New modes like battle royale and extraction shooter expanding the overall audience

4. Strong Performance:
- Multiple FPS games (e.g., Peacekeeper Elite, CrossFire Mobile, Call of Duty Mobile, Valorant, Delta Force) showing growth
- Potential for "evergreen" status for multiple games within the FPS vertical

Q6: How is Tencent's AI chatbot "Hunyuan" (元宝) progressing, and what are the future plans for AI integration?

A:
1. Current Status:
- Significant user base growth in the past quarter
- Strong user retention achieved

2. Next Stages of Development:
- Adding more functionalities to improve user retention and attraction
- Leveraging Tencent's unique ecosystem (social, content, mini programs) for differentiation
- Continuous upgrading of the underlying AI model

3. Future Product Evolution:
- Exploring different form factors beyond chat for complex tasks
- Customizing user experience based on specific functionalities

The management emphasized the long-term approach to AI integration and business growth, focusing on extending the "runway" for sustained performance across various business lines, particularly in advertising and gaming.
Disclaimer: This earnings call summary is generated by AI and is for informational purposes only. Due to technical limitations, inaccuracies may exist. It does not constitute investment advice or commitments.