Core Viewpoint - Tencent Holdings reported better-than-expected Q1 2025 results, with Non-IFRS net profit of 61.3 billion yuan (up 22% year-on-year) and revenue of 180 billion yuan (up 13% year-on-year) [2][3] Financial Performance - Q1 2025 operating profit was lower than expected due to one-time restructuring impacts, while gross margin improved more than anticipated at 55.8% compared to the expected 53.9% [3] - General and administrative expenses were 33.7 billion yuan, worse than the expected 28.4 billion yuan, including a one-time share-based compensation of 4 billion yuan related to restructuring [3] - Non-IFRS adjustments included share-based compensation of 10.8 billion yuan, exceeding the expected 6.6 billion yuan, but the restructuring costs had a minimal impact on Non-IFRS net profit [3] - Capital expenditures (capex) reached 27.5 billion yuan (up 91% year-on-year), higher than the expected 21.5 billion yuan, but down 25% quarter-on-quarter [3] Business Segments - Marketing services revenue was 31.9 billion yuan (up 20% year-on-year), driven by strong demand for advertising on video accounts, mini-programs, and search ads [4] - Domestic game revenue was 42.9 billion yuan (up 24% year-on-year), boosted by flagship games and new titles [4] - Overseas game revenue reached 16.6 billion yuan (up 23% year-on-year), with strong performances from titles like "Brawl Stars" and "PUBG Mobile" [4] - Social network revenue was 32.6 billion yuan (up 7% year-on-year), supported by growth in mobile game virtual items and music subscription services [4] - Financial technology and enterprise services revenue was 54.9 billion yuan (up 5% year-on-year), driven by growth in wealth management and cloud services [4] - Monthly active accounts for WeChat and WeChat reached 1.4 billion (up 3% year-on-year), indicating healthy user engagement [4]

Core Viewpoint - The article discusses Tencent's recent financial performance and strategic direction in the gaming industry, highlighting its growth in both domestic and international markets, as well as its focus on long-lasting games and internal restructuring to enhance operational efficiency [2][3][10]. Group 1: Financial Performance - In Q4 2024, Tencent reported revenue of 1724.5 billion RMB, a year-on-year increase of 11%, with adjusted net profit rising by 30% to 553.1 billion RMB [2]. - For the full year 2024, Tencent achieved total revenue of 6602.57 billion RMB, up 8% year-on-year, and net profit of 1940.73 billion RMB, reflecting a 68% increase [2]. - The gaming segment generated revenue of 492 billion RMB in Q4 2024, with domestic gaming revenue growing by 23% to 332 billion RMB and international revenue increasing by 15% to 160 billion RMB [5]. Group 2: Gaming Business Growth - In 2024, Tencent's total gaming revenue reached 1977 billion RMB, a 9.9% year-on-year increase, with domestic revenue at 1397 billion RMB (10% growth) and international revenue at 580 billion RMB (9% growth) [6]. - Key contributors to domestic growth included titles like "Valorant," "Naruto," "Teamfight Tactics," and "League of Legends Mobile," along with new revenue from "Dungeon & Fighter: Origin" and "Delta Force" [6]. - The game "Teamfight Tactics" maintained strong growth, with Q4 revenue increasing by 30% year-on-year, achieving double-digit growth for eight consecutive quarters [6]. Group 3: Strategic Initiatives - Tencent's "Evergreen Game" strategy, which focuses on games with annual revenue exceeding 4 billion RMB and high daily active users, has expanded from 12 to 14 titles [11]. - The company is restructuring its internal organization to enhance operational efficiency and focus on long-lasting games, with adjustments made to various departments [13][14]. - Tencent's gaming division has seen a rise in daily active users for its top five games during the recent Spring Festival compared to the previous year, indicating increased popularity [14]. Group 4: International Market Performance - Tencent's international gaming revenue growth was driven by strong performances from "PUBG MOBILE" and Supercell games, with Supercell reporting a total revenue of 2.8 billion euros (approximately 3 billion USD) in 2024, a 77% year-on-year increase [9]. - The acquisition of Supercell nine years ago for 8.6 billion USD has laid a solid foundation for Tencent's subsequent international expansion [9]. Group 5: Social Network and Other Business Growth - Tencent's social network business, including music streaming and video services, saw a 2% revenue increase due to growth in mini-game platform service fees and mobile game in-app purchases [15]. - The number of paid members for Tencent Video reached 113 million, maintaining its leading position in China's long video market, while Tencent Music's subscription revenue grew by 25.9% to 15.23 billion RMB [15].