The meeting reviewed Tencent's financial performance in the second quarter of 2025, focusing on the driving role of AI technology in games, advertising, and enterprise services. Revenue reached 185 billion yuan, a year-on-year increase of 15%; operating profit under non-IFRS was 69 billion yuan, a year-on-year increase of 80%. In the gaming sector, classic games such as "Honor of Kings" and "Peace Elite" have performed well in terms of users and revenue through AI upgrades. At the same time, Tencent's progress in advertising technology has improved advertising effectiveness. In the future, the company will focus on transforming AI advantages into more applications for consumers and enterprises, increasing the usage rate of AI native applications such as Yuanba, and enhancing the capabilities of the HunYuan basic model.

In the second quarter, total revenue increased by 15% year-on-year, with value-added services contributing 50%, including social networking and international gaming, which grew by 6% and 35% respectively. Marketing services and financial technology business services achieved year-on-year growth of 24% and 21% respectively. In terms of value-added services, music subscriptions increased by 17%, while video subscriptions decreased by 2%. Additionally, the company continues to innovate in AI technology, social e-commerce, and mini-game fields, driving user interaction and brand partnerships.

Delta Force ranks in the top five in terms of DAU in the Chinese market, and top three in terms of revenue. New features such as underwater battles and dynamic weather systems have improved the game experience. Peacekeeper Elite has seen a year-on-year growth of over 30% in DAU, thanks to the popularity of the shooting mode. Pubg Mobile has transformed into a platform, with user-generated content on the rise and record-breaking revenue. Internationally, Flash Royale has seen an increase in DAU due to updates, while Awakening survival game ranked high in its Steam debut. AI technology is widely used in content production, user interaction, and marketing, driving growth in the gaming business.

Tencent's performance report shows significant revenue growth, benefiting from the application of AI technology in the advertising technology field and the promotion of closed-loop marketing solutions, with marketing service revenue increasing by about 50% year-on-year. Financial technology service revenue grew to high single digits, with outstanding performance in commercial payment services and consumer loan services. Cloud service revenue accelerated growth, driven by increased demand for GPUs and APIs, with significant growth in international cloud revenue. Tencent Cloud has achieved significant success in assisting large international clients in migrating IT systems, such as the successful implementation of the Gojek and Hunyuan projects.

The report emphasizes the improvement of 3D models in data quality and diversity, as well as their applications in game development, 3D printing, and design fields. Financially, the total revenue in the second quarter of 2025 reached 18.45 billion RMB, a year-on-year increase of 15%; despite facing challenges such as reduced subsidies and increased accounts receivable provisions, net profit still achieved an annual growth rate of 10%, reaching 6.31 billion RMB. In addition, operating profit increased by 18% to 6.92 billion RMB.

The report detailed the financial situation of the company in the second quarter, including an increase in gross profit margin driven by higher gross profit from domestic gaming revenue and growth in music subscription services. The gross profit margin of marketing services and financial technology services also increased. Operating expenses increased, but the proportion of marketing expenses decreased. Free cash flow increased, although it fluctuated slightly due to seasonal effects. Capital expenditure increased significantly, primarily for the enhancement of AI capabilities.

The dialogue focuses on the future growth potential of the advertising business, emphasizing the role of AI in improving click-through rates, increasing advertising demand, and optimizing ad loading. It discusses the traffic growth brought by video accounts, search traffic, and AI native experiences, as well as the positive impact of e-commerce closed-loop transactions on ad revenue. The growth in advertising revenue in the second quarter is mainly due to the increase in revenue per thousand impressions, especially the increase in click-through rates, rather than ad loading being the main driving factor.

Discussed the integration of AI features in mobile Internet applications, observed changes in consumer behavior, including higher satisfaction and efficiency, but did not see any significant negative impact on the search ecosystem. To address the issue of rising costs, it is suggested to control costs by using smaller models and optimizing software efficiency. Although it may be difficult to directly charge for AI features in the short term, the contribution of AI to the growth of existing business can be seen as an indirect subsidy. In the future, it may be possible to explore outsourcing as a way to commercialize AI features.

The conversation revolves around the growth potential of China's AAA game market on PC and gaming consoles, discussing whether it signals the opening of a new market or a transformation of existing markets. At the same time, it explores capital allocation strategies, especially investments in the AI field, and debates whether capital investment should be accelerated to establish a dominant position.

Discussed the future trends of the Chinese gaming market, pointing out that long-lasting service games like Delta Force will continue to dominate the market because they can provide sustained growth in users and revenue. At the same time, the emergence of AAA paid games like Black Myth Wukong, while not occupying the mainstream market, has provided economic viability for high-quality game projects. The two complement each other instead of mutually excluding each other.

Discussed investment strategies in the field of AI, emphasizing cautious investment in innovative products like Ima to avoid early mass marketing; for mature products like Yuanbao, integration of existing platform resources is key, focusing on improving user experience to solidify and expand user base. In the future, efforts will be increased in product promotion, while leveraging existing platform advantages to achieve more efficient market expansion.

The impact of the new advertising law on marketing expenses of game companies was discussed, particularly the additional 25% tax that needs to be paid when marketing expenses exceed 15% of revenue. The company stated that, despite decreases in advertising expenses in certain areas such as food delivery and e-commerce, advertising revenue still achieved a 20% year-on-year growth thanks to the application of AI technology. The company anticipates limited overall impact of the new regulations on advertising revenue and emphasizes that the deployment of AI is a key variable.

Discussed the reasons for the accelerated growth of Tencent Cloud service revenue, including increased GPU leasing and API token usage, as well as possible future resource allocation strategies. Additionally, for the advertising business, the potential of AI technology to improve conversion rates and CPM was explored, indicating that the current growth rate is satisfactory and there are no plans to accelerate advertising monetization at the moment.

Discussed the gaming industry's stable growth through expanding the portfolio of eternal game titles and powerful pipelines, and discussed the potential application of AI model families, especially in multi-modal and 3D agent capabilities, in WeChat.

Discussed platformization of games to reduce revenue fluctuations, through continuous optimization and support to drive growth in games again, while also emphasizing the continuous improvement of large-scale language models, including enhancing data quality, pre-training efficiency, post-training process optimization, and infrastructure improvements, to reduce service costs and enhance AI services, especially in search and productivity tools.

The dialogue emphasized the importance of enhancing the model's multimodal transformation capability in order to support a variety of activities for users in Yuanba, such as converting speech to images, images to text, etc. At the same time, it discussed optimizing the encoding agent environment to provide higher quality encoding support for individual and corporate users, as well as improving agent instruction execution capability to build a more personalized user assistant.

Discussed how government anti-monopoly measures will affect the commercial payment industry, pointing out that the growth of commercial payments is mainly due to the increase in transaction frequency and the decrease in the amount of each transaction. It is expected that these changes will have short-term and long-term impacts on business lines, and at the same time, the growth of commercial payments is expected to continue and even accelerate.

The discussion on the success factors of FPS games in the Chinese market includes structural demographic changes and game differentiation. At the same time, it is mentioned that the company plans to increase investment in content-driven games, which perform well domestically and abroad, and can bring higher revenue per active user. In the future, the company will continue to expand its range of games, attract different user groups, and achieve revenue growth.

Discussed the impact of chip supply uncertainty on capital expenditures, emphasizing the importance of software optimization to increase efficiency. At the same time, analyzed the impact of App Store fee adjustments on international business gross profit margins, as well as progress in the Chinese market. In the development of AI, detailed the indicators for evaluating the progress of AI projects and discussed supply chain challenges and merger opportunities.