Tencent (00700) Q2 2025 Earnings Call August 13, 2025 08:00 AM ET Company ParticipantsWendy Huang - IROPony Ma - Chairman & CEOMartin Lau - PresidentJames Mitchell - Chief Strategy Officer & Senior EVPJohn Lo - SVP & CFOThomas Chong - Managing DirectorAlex Yao - Co-Head of Asia Technology, Media & TelecommunicationsKenneth Fong - Managing DirectorRonald Keung - Managing DirectorCharlene Liu - Managing Director - Head of Internet & Gaming, Asia - PacificYuan Liao - Internet Media Research AssistantWilliam Pa ...

Core Viewpoint - Tencent's revenue in Q4 2024 grew by over 11% year-on-year, reaching 172.5 billion RMB, marking the fastest growth since the end of 2022, with net profit doubling year-on-year [1][3] Group 1: Financial Performance - Tencent announced a share buyback plan of at least 80 billion HKD and proposed a 32% increase in the annual dividend for 2025 [3] - The company's market capitalization has increased by approximately 30% or 140 billion USD this year, driven by a broader rebound in tech stocks following the rise of DeepSeek [4] Group 2: AI Investment Strategy - Tencent plans to allocate a low double-digit percentage of its 2025 revenue towards capital expenditures, including AI infrastructure, which is expected to exceed 10 billion USD based on analysts' revenue forecasts [3][4] - The company aims to leverage AI across its services, from core WeChat functionalities to content offerings, and has increased procurement of AI chips to meet growing demand [4] Group 3: Competitive Landscape - Tencent's AI ambitions are a focal point for investors, especially in light of competition from Alibaba, which has committed over 50 billion USD for AI and cloud computing over the next three years [4][5] - Tencent is integrating DeepSeek's open-source models into its services, including WeChat search and its chatbot, which briefly became the most downloaded free app on iPhones in China [5] Group 4: Core Business and Growth Engines - WeChat remains Tencent's core growth engine, with ongoing efforts in advertising, gaming, and e-commerce [4][5] - The company emphasizes a dual-core technology strategy, balancing self-developed and licensed games to enhance user experience [4] Group 5: Future Outlook - Tencent has successfully launched several games, including titles from Nexon and its own PC shooting game, aiming to develop a portfolio of evergreen titles that generate stable cash flow [6] - Despite the strong product lineup, there are no guarantees that Tencent can replicate its past successes by 2025, as it, along with global peers, has reduced development positions and refocused on fewer key projects [6]