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 ...

Financial Data and Key Metrics Changes - Total revenue for the second quarter was RMB185 billion, representing a 15% year-on-year increase [7] - Gross profit reached RMB105 billion, up 22% year-on-year [7] - Non-IFRS operating profit was RMB69 billion, an 18% increase year-on-year [7] - Non-IFRS net profit attributable to equity holders was RMB63 billion, up 10% year-on-year [7] - Excluding associated profit contributions, underlying net profit would have increased by 20% year-on-year [7][30] - Overall gross margin improved to 57%, up four percentage points year-on-year [31] Business Line Data and Key Metrics Changes - Value-added services (VAS) revenue was RMB91 billion, up 16% year-on-year [12] - Social networks revenue increased by 6% year-on-year, driven by app-based game item sales and music subscriptions [13] - Domestic games revenue grew by 17% year-on-year, supported by titles like Delta Force and Honor of Kings [14] - International games revenue surged by 35% year-on-year, driven by Supercell's games and PUBG Mobile [15] - Marketing services revenue grew 20% year-on-year to RMB36 billion, benefiting from AI-powered ad tech upgrades [23] - FinTech and business services revenue was RMB56 billion, up 10% year-on-year [24] Market Data and Key Metrics Changes - Combined monthly active users (MAU) of Weixin and WeChat reached 1.4 billion, showing growth year-on-year and quarter-on-quarter [8] - GMV facilitated by Mini Programs grew by a teens percentage year-on-year [15] - Mini games' total gross receipts increased by 20% year-on-year [15] - Weixin search revenue grew around 60% year-on-year due to enhanced ad relevance [24] Company Strategy and Development Direction - The company is focusing on integrating AI across its platforms to enhance user experience and drive revenue growth [5][6] - There is a strong emphasis on developing evergreen games and expanding the gaming portfolio to reduce volatility [18][82] - The company aims to leverage AI capabilities to improve advertising performance and user engagement [23][39] - The strategy includes enhancing the functionalities of AI-native applications like Yanbao and improving the overall ecosystem [17][47] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of advertising revenue, driven by AI enhancements [39] - The company noted that the gaming market in China is evolving, with increasing demand for both live service and AAA games [58][96] - Management highlighted the importance of maintaining a balance between AI investment and cost management [61][104] - The company anticipates sustained growth in commercial payment volume, driven by improved transaction dynamics [91] Other Important Information - The company reported a significant increase in operating CapEx, reaching RMB19.1 billion, up 119% year-on-year, primarily due to investments in AI capabilities [33] - Free cash flow was RMB43 billion, up 7% year-on-year, driven by growth in games gross receipts [34] - The net cash position was RMB74.6 billion, down 17% quarter-on-quarter due to dividend payments [34] Q&A Session Summary Question: Potential of marketing services and advertising growth - Management believes there is a long runway for advertising revenue growth, driven by improved click-through rates and traffic [38][39] Question: Consumer behavior changes with AI features - Management noted that AI features enhance user satisfaction and efficiency, with minimal negative impact on traditional content consumption [45][46] Question: Impact of new advertising law on gaming companies - Management does not expect a meaningful impact from the new advertising regulations, citing broad-based growth in advertising revenue [70] Question: Business services revenue growth and GPU allocation - Management indicated that business services revenue growth is broad-based and not solely dependent on GPU availability [76] Question: AAA gaming growth in China - Management sees potential for AAA games in China but believes live service games will remain the majority of the market [58][96]

Financial Data and Key Metrics Changes - Nexteer achieved record first half revenue of $2,200,000,000, increasing by 6.8% compared to the prior year [25][27] - EBITDA grew year over year by 16.8%, with margins expanding by 90 basis points [26][33] - Net profit reached $63,000,000, which is four times higher year over year, with margins improving by 210 basis points [27][33] - Free cash flow for 2025 was positive at $37,000,000, compared to a slight cash use last year [28][41] Business Line Data and Key Metrics Changes - In the first half, Nexteer launched 31 new programs, with 23 representing new or conquest businesses [6][9] - The company secured $1,500,000,000 in new business bookings, with nearly 40% coming from Chinese OEMs [12][14] - 69% of bookings were in the EPS product line, with 47% secured in the APAC region [14][30] Market Data and Key Metrics Changes - APAC revenue increased by 17%, outperforming the market by 9%, driven by significant new and conquest program launches with Chinese OEMs [30][31] - North America revenue was $1,138,000,000, which is 1.7% higher than last year [31] - EMEA revenue increased by 9.4%, reflecting improved operating efficiency and revenue growth [32][38] Company Strategy and Development Direction - Nexteer is focused on technology leadership and operational efficiency, with a commitment to expanding its manufacturing footprint and enhancing supply chain resilience [7][8] - The company is investing in motion by wire technologies, including steer by wire and brake by wire, to align with industry megatrends [15][19] - Strategic expansions in Changshu and Riozhou are aimed at meeting growing demand and enhancing operational efficiencies [23][24] Management's Comments on Operating Environment and Future Outlook - Management expects to achieve the full year booking target of $5,000,000,000, despite a flat forecast for global OEM production volumes [42] - The company is closely monitoring the U.S. tariff environment and geopolitical tensions that may impact production volumes [42][43] - Management remains optimistic about the adoption of steer by wire technology in the Chinese market, anticipating significant growth opportunities [53] Other Important Information - Nexteer is committed to becoming tariff cost neutral by working collaboratively with customers and suppliers to mitigate tariff impacts [62][64] - The company has introduced the Motion IQ software suite to enhance vehicle dynamics and streamline development processes for OEMs [21][70] Q&A Session Summary Question: Booking slowdown in North America - Management noted that bookings depend on customer product planning cycles, and while there was a slowdown, they remain confident in achieving the annual booking goal of $5,000,000,000 [48][50] Question: Adoption of BiWire technology in China - Management expressed optimism about the increasing interest and adoption of steer by wire technology among Chinese OEMs, with expectations for significant growth in the coming years [52][53] Question: Delays in EV program launches in the U.S. - Management acknowledged some delays in EV program development in North America but emphasized that their products are compatible with various powertrains, allowing them to capture market share [56][58] Question: Guidance on tariff impact and restructuring costs - Management confirmed that the net tariff costs incurred in the first half were not fully passed through to customers and outlined plans to mitigate these costs in the second half [62][64][66]

Financial Data and Key Metrics Changes - The company's net profit after tax reached USD 566 million, with USD 340 million attributable to equity shareholders, marking an increase of over 600% compared to the same period last year [6][7] - EBITDA reached USD 1.54 billion, up 98% year on year, while net operating cash flow increased to USD 1.185 billion, up 130% year on year [7][16] - The gearing ratio dropped from 41% at the end of the previous year to 33%, the lowest level since the acquisition of Las Bambas [7][22] Business Line Data and Key Metrics Changes - Total copper production in the first half of the year reached approximately 260,000 tons, a significant increase of 64% year on year [8] - Total zinc production reached about 110,000 tons, achieving stable operations [8] - Copper revenue accounted for 78% of total revenue, driven by increased production and higher prices [8] Market Data and Key Metrics Changes - The company benefited from rising prices of key metals such as copper, gold, silver, and zinc, which contributed to its strong performance [6][7] - The EBITDA margin increased to 55%, ranking among the top globally for similar companies [17] Company Strategy and Development Direction - The company focuses on copper and other base metals critical to a low carbon future, with expectations of strong demand for metals like copper, zinc, and nickel [26][28] - The company aims to enhance operational value and maximize asset growth potential while exploring diversification opportunities across different regions and commodity sectors [29] - Total copper production is projected to reach up to 520,000 tons this year, with Las Bambas expected to contribute 400,000 tons [29] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of maintaining a strong safety culture and proactive safety measures [4][5] - The company is aware of potential risks related to road blockades at the Las Bambas mine, especially with the upcoming presidential election in Peru [41][42] - Management expressed confidence in the company's ability to maintain stable production and operational stability despite external challenges [45][46] Other Important Information - The company plans to adjust its capital expenditure estimation for 2025 to USD 1.1 billion to USD 1.25 billion, covering maintenance, development projects, and capitalized mining expenditures [23][24] - The acquisition of the Nickel Brazil asset is progressing and expected to be completed by the end of the year with an initial consideration of USD 350 million [24] Q&A Session Summary Question: What are the reasons behind the cost increase for the Las Bambas mine in the second half of the year? - Management stated that the full year cost guidance remains unchanged to allow for risk control, and if production volumes remain high, cash costs will continue to be low [34] Question: Have all inventory issues been cleared due to road blockades at Las Bambas mine? - Management confirmed that road blockages occurred for 15 days, but the issues have been resolved, and efforts are being made to clear inventory [36] Question: What is the outlook for finance costs in the second half of the year? - The finance cost for the first half was USD 139 million, a decrease from the previous year, and management aims to lower the finance cost to USD 320 million for the whole year [39] Question: What measures are in place to guard against potential disruptions due to the upcoming presidential election in Peru? - Management highlighted the importance of community relationship rebuilding strategies to maintain stable production and operational stability [43][45] Question: What is the long-term guidance for the gearing ratio? - Management indicated that the gearing ratio has decreased significantly, and they will continue to focus on optimizing the balance sheet and managing debt levels [42][46]

Financial Data and Key Metrics Changes - The company's net profit after tax reached USD 566 million, with USD 340 million attributable to equity shareholders, marking an increase of over 600% compared to the same period last year [7][8] - EBITDA reached USD 1.54 billion, up 98% year on year, while net operating cash flow increased to USD 1.185 billion, up 130% year on year [8][17] - The gearing ratio dropped from 41% at the end of the previous year to 33%, the lowest level since the acquisition of Las Bambas [8][24] Business Line Data and Key Metrics Changes - Total copper production in the first half of the year reached approximately 260,000 tons, a significant increase of 64% year on year, with copper revenue accounting for 78% of total revenue [9][18] - Las Bambas mine produced over 210,000 tons of copper, with cash costs reduced to nearly USD 1 per pound, positioning it near the top of the global copper cost curve [19] - Khoemakau mine achieved an EBITDA of USD 90 million, a year-on-year growth of 167%, while Kinsevere's EBITDA decreased by 27% to USD 30 million due to power supply instability [20][21] Market Data and Key Metrics Changes - The company benefited from rising prices of key metals such as copper, gold, silver, and zinc, which drove performance [7] - The demand for metals like copper, zinc, and nickel is expected to remain strong due to the global energy transition and urbanization trends [28][29] Company Strategy and Development Direction - The company focuses on enhancing operational value and maximizing asset growth potential while exploring diversification opportunities across different regions and commodity sectors [30] - Total copper production is projected to reach up to 520,000 tons this year, with Las Bambas expected to contribute 400,000 tons [30][31] - The company is committed to sustainable development, as demonstrated by community initiatives linked to the Las Bambas project [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the potential risks of road blockades at Las Bambas due to political instability in Peru, especially with upcoming presidential elections [39][44] - The company aims to maintain operational stability and has implemented measures to strengthen community relationships to mitigate risks [45][47] - The financial management strategy includes optimizing the balance sheet and enhancing shareholder returns, with a focus on maintaining a manageable debt level [50][66] Other Important Information - The company plans to adjust its capital expenditure estimation for 2025 to USD 1.1 billion to USD 1.25 billion, covering various investments [25][26] - The acquisition of the Nickel Brazil asset is progressing and is expected to be completed by the end of the year [26] Q&A Session Summary Question: Cost of Las Bambas mine - The C1 cost was USD 1.06 in the first half, with full-year guidance unchanged to allow for risk control [34][35] Question: Road blockade at Las Bambas mine - There were 15 days of road blockage, but the situation has improved, and inventory clearance is ongoing [36][39] Question: Finance cost outlook - The finance cost decreased to USD 139 million, with expectations to lower it to USD 320 million for the year [41] Question: Impact of upcoming presidential election on Las Bambas - Previous elections caused disruptions, but measures have been taken to maintain stable operations [44][46] Question: Long-term guidance of gearing ratio - The company aims to continue reducing the gearing ratio, focusing on debt repayment and shareholder returns [44][50] Question: Profit sharing mechanism - The mining industry is required to share 8% of profits, which is included in the C1 cost [52][53] Question: Kinsevere mine power supply - A new 12-megawatt diesel generator is being procured to stabilize power supply, expected to cover 40% to 45% of capacity during disruptions [56][57] Question: CapEx increase - CapEx for the second half is expected to catch up due to previous delays, with a focus on supporting development [62][63]

Financial Data and Key Metrics Changes - The company reported a revenue of 1.2 billion, representing a 15% increase year-over-year [1] - Net profit for the first half of 2025 was 200 million, up from 150 million in the same period last year, indicating a 33% growth [1] - Gross margin improved to 45%, compared to 40% in the previous year [1] Business Line Data and Key Metrics Changes - The apparel segment saw a revenue increase of 20%, contributing significantly to overall growth [1] - E-commerce sales grew by 30%, reflecting a shift in consumer purchasing behavior [1] - The wholesale business, however, faced a decline of 5% due to increased competition [1] Market Data and Key Metrics Changes - The domestic market accounted for 70% of total sales, with a growth rate of 18% [1] - International sales increased by 10%, driven by expansion in Southeast Asia [1] - The company noted a 25% increase in online customer engagement metrics [1] Company Strategy and Development Direction - The company plans to enhance its digital marketing efforts to capture a larger online market share [1] - There is a focus on sustainability initiatives, aiming to reduce carbon footprint by 30% over the next five years [1] - The management highlighted the importance of innovation in product design to stay competitive in the market [1] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of consumer spending post-pandemic [1] - The company anticipates continued growth in the e-commerce sector, projecting a 25% increase in online sales for the next year [1] - Concerns were raised regarding potential supply chain disruptions due to geopolitical tensions [1] Other Important Information - The company announced a share buyback program worth 50 million to enhance shareholder value [1] - A new product line targeting younger consumers is set to launch in Q4 2025 [1] Q&A Session Summary Question: What are the expectations for the second half of 2025? - Management expects revenue growth to continue at a similar pace, with a focus on expanding e-commerce capabilities [1] Question: How is the company addressing supply chain challenges? - The company is diversifying its supplier base to mitigate risks associated with supply chain disruptions [1] Question: What are the plans for international expansion? - The company aims to enter new markets in Europe and North America, with targeted marketing strategies [1]

Financial Data and Key Metrics Changes - In 2025, total revenue decreased to RMB3.2 billion from RMB4.2 billion in 2024 [21] - Online business revenues increased by 2.3% to RMB1.99 billion, driven by growth in self-owned platform products [21][22] - Net profit attributable to shareholders increased by 68.5% to RMB850 million, while non-IFRS net profit decreased to RMB508 million from RMB702 million in 2024 [28] Business Line Data and Key Metrics Changes - Revenue from self-owned platform products increased by 3.1% to RMB1.7 billion, while revenues from Tencent products decreased by 25.6% to RMB97 million [22] - Revenue from IT operations decreased by 46.4% to RMB1.2 billion, primarily due to a lack of new TV series or film releases [25][26] - The IT merchandise business achieved significant growth with GMV reaching RMB488 million in the first half, nearing last year's total of RMB500 million [13][26] Market Data and Key Metrics Changes - The number of newly signed works generating over RMB1 million in revenue increased by 63% year over year, and the number of newly signed writers with over 10,000 average subscribers per chapter rose by 45% [54] - The average monthly active users (MAUs) decreased to 141.3 million from 176 million in 2024, with a decline in several platform products [23] Company Strategy and Development Direction - The company aims to capitalize on the rapid growth of China's IP industry, focusing on premium IP, short dramas, and physical merchandise [5][6][19] - The strategy includes enhancing the online reading platform, expanding the IP library, and leveraging AI technologies across business lines [17][18][19] Management's Comments on Operating Environment and Future Outlook - Management highlighted the explosive growth of China's IP industry and the importance of premium IP and short dramas in driving future growth [5][6] - The company is committed to becoming a key architect of China's IP ecosystem evolution, focusing on creative transformation and premium IP development [19] Other Important Information - The company has integrated AI across its business lines, enhancing content creation and user engagement [17][18] - The merchandise business is expanding with a focus on product development, channel distribution, and user engagement [13][15][37] Q&A Session Summary Question: Current progress of IP merchandise business and future development priorities - Management discussed the successful IP merchandise initiatives, including events like the King's Avatar tournament in Zurich, and plans to expand product categories and distribution channels [31][33][35][38] Question: Top priorities and KPIs for classic IPs - Management emphasized the importance of releasing new content for classic IPs and enhancing their commercial value through diversified adaptations and merchandise [40][42][43] Question: Commercialization potential of top IPs and future plans - Management expressed confidence in the commercialization potential of IPs, highlighting the need to adapt to evolving user demands and trends in the merchandise market [46][51][52] Question: Content pipeline for Newcastle Media and AI deployment - Management outlined the upcoming content releases for the second half of the year and discussed the integration of AI technologies to enhance content production and user engagement [57][60][61]

Financial Data and Key Metrics Changes - Total revenue for the first half of 2025 was RMB 3.2 billion, a decrease from RMB 4.2 billion in 2024 [23] - Online business revenues increased by 2.3% to RMB 2 billion, driven by growth in self-owned platform products [23][24] - Net profit attributable to shareholders increased by 68.5% to RMB 850 million, while non-IFRS net profit decreased to RMB 508 million from RMB 702 million in 2024 [29] Business Line Data and Key Metrics Changes - Revenue from self-owned platform products increased by 3.1% to RMB 1.7 billion, while revenues from Tencent channels decreased by 25.6% to RMB 97 million [24] - Revenue from IT operations decreased by 46.4% to RMB 1.2 billion, primarily due to a lack of new TV series or film releases [26][27] - The IT merchandise business generated GMV of RMB 488 million, nearing last year's total of RMB 500 million [16][27] Market Data and Key Metrics Changes - The average monthly active users (MAUs) decreased to 141.3 million from 176 million in 2024, with a decline in MAUs from Tencent channels [25] - Average monthly paying users (MPUs) grew by 4.5% to 9.2 million, reflecting growth in membership users [26] Company Strategy and Development Direction - The company aims to capitalize on the rapid growth of China's IP industry, focusing on premium IP, short dramas, and physical merchandise [7][9] - Plans to enhance the IP commercialization strategy by expanding product categories and improving distribution channels [16][39] - Commitment to integrating AI across business lines to enhance content creation and user engagement [19][62] Management's Comments on Operating Environment and Future Outlook - Management highlighted the explosive growth of China's IP industry and the company's unique position to leverage this trend [7][9] - The focus will be on enhancing the emotional connection between IP and users, as well as exploring new technologies like AI and VR [46][62] - The company anticipates strong growth momentum driven by diverse content types and consumption patterns [20][21] Other Important Information - The company introduced an AI-powered knowledge base for online literature, significantly increasing interactions between writers and AI [19][62] - Revenue from AI-translated works on the international reading platform grew by 38% year over year, accounting for over 35% of total novel revenue [20][62] Q&A Session Summary Question: Progress of IP merchandise business and future development priorities - Management discussed the successful IP merchandise initiatives, including events like the King's Avatar tournament and plans for customized merchandise [33][35][40] Question: Top priorities and KPIs for classic IPs - Management emphasized the importance of releasing new content and enhancing merchandise offerings for classic IPs to maintain their popularity [42][45] Question: Commercialization potential of top IPs - Management expressed confidence in the commercialization potential of IPs, highlighting the need to adapt to evolving user demands [48][53] Question: Content pipeline for Newcastle Media - Management outlined the upcoming content releases, including six drama series and a movie project scheduled for the second half of the year [59][61] Question: Deployment of AI technologies - Management provided insights into the integration of AI in content creation, enhancing efficiency and user engagement [62]

Financial Data and Key Metrics Changes - In H1 2025, revenue increased by 11.2% year-over-year, reaching RMB 3,192 million [3] - The gross profit margin grew by 2.4%, reaching 65.6% [6] - Operating cash flow was significantly decreased, but the company expects it to exceed RMB 1 billion for the year [11][37] - The company reported a significant reduction in losses from RMB 280 million in the same period last year to RMB 98 million this year [9] Business Line Data and Key Metrics Changes - Cloud subscription revenue grew by 22.1% year-over-year, contributing over 50% of total revenue [4][16] - The annual recurring revenue (ARR) grew by 80.5% [13] - The contract liability of cloud subscriptions increased by 24.7% [13] - The company aims to outsource product implementation to third parties to maintain reasonable presence in overall revenue [5] Market Data and Key Metrics Changes - The company has contracted over 500 corporate clients in H1 2025, indicating strong market demand [17] - The net total retention rate for the corresponding constellation subscription was 108% [15] - The company is focusing on large enterprises, which are integrating different business lines for better supply chain management [44] Company Strategy and Development Direction - The company is adjusting its strategy to seek more opportunities while controlling internal risks, particularly in the context of persistent macroeconomic challenges [2] - The focus is on transforming from a traditional one-time license model to a cloud subscription model, with an emphasis on AI integration [16][23] - The company plans to strengthen its SaaS business and expand its AI capabilities, targeting a 30% contribution from AI revenue by 2030 [38][68] Management's Comments on Operating Environment and Future Outlook - The external environment is described as volatile, with management expressing cautious optimism about future growth [12] - The company expects to maintain a double-digit growth rate annually, aiming for 15% growth in the coming years [68] - Management is confident in achieving an operating cash flow of over RMB 3 billion by 2030 [37] Other Important Information - Employee expenses are a key component of overall expenses, and the company has reduced its team size by 9% [3][4] - The company has made significant investments in R&D, despite a decrease in overall expenses by 3.8% [7] - The introduction of AI patents is expected to enhance business efficiency and reduce costs [8] Q&A Session Summary Question: What is the trend of demand for large, medium, and small enterprises? - Management noted that large enterprises are integrating their business lines for better supply chain management, while medium-sized enterprises seek faster deployment and lower costs [42][44] Question: What is the pricing model for AI products and customer feedback? - The company received positive feedback for its AI products, including the recruitment AI assistant and Gold Key financial report analytics app, with a backlog of RMB 150 million [43][45][48] Question: How will team optimization impact project implementation? - Management clarified that team optimization aims to enhance efficiency without sacrificing customer experience, with implementation services being outsourced to certified partners [54][58] Question: What is the sustainability of the cloud business transformation? - Management expressed confidence in sustainable growth, with a target for subscription business to account for 80% to 90% of total revenue [70][72] Question: What are the plans for international business growth? - The company aims for international revenue to reach 5% to 10% of total revenue in the next three to five years, focusing on Southeast Asia and the Middle East [103]

Financial Data and Key Metrics Changes - In H1 2025, revenue increased by 11.2% year-over-year, reaching RMB 3,192 million [4] - The gross profit margin grew by 2.4%, reaching 65.6% [7] - Operating cash flow was significantly decreased, but the company expects it to exceed RMB 1 billion for the year [10][38] - The loss from the same period last year was reduced from RMB 280 million to RMB 98 million [10] Business Line Data and Key Metrics Changes - Cloud subscription revenue grew by 22.1% year-over-year, with an annual recurring revenue (ARR) growth of 80.5% [13] - The contract liability of cloud subscriptions increased by 24.7% [13] - The gross profit margin for cloud subscriptions was 96.2%, a 0.9 percentage point increase compared to last year [13] Market Data and Key Metrics Changes - The company reported that cloud subscription revenue now accounts for over 50% of total revenue, with a significant contribution from the Kinky Cloud and Constellation platforms [16][23] - The net total retention rate for Constellation subscriptions was 108% [15] Company Strategy and Development Direction - The company is adjusting its strategy to seek more opportunities while controlling internal risks, particularly in the context of persistent macroeconomic challenges and the rise of artificial intelligence [3] - The focus is on transforming from a traditional one-time license model to a subscription-based model, emphasizing cloud services and AI integration [21][24] - Future plans include strengthening SaaS offerings and expanding AI capabilities, with a goal for AI revenue to account for 30% of total revenue by 2030 [39][68] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatility of the external environment but expressed confidence in achieving profitability and strong cash flow growth in the coming years [12][96] - The company aims for a sustainable margin of around 8% and expects to maintain a high gross profit margin due to the growth of the subscription business [97] Other Important Information - The company has introduced various AI-powered products, receiving positive feedback from clients, particularly for the Gold Key financial report analytics app [48][49] - The company is actively expanding its international presence, with plans to consolidate its foothold in Southeast Asia and the Middle East, and aims for international revenue to reach 5% to 10% of total revenue in the next three to five years [104] Q&A Session Summary Question: What is the trend of demand for large, medium, and small enterprises? - Management noted that large enterprises are integrating their business lines for better supply chain management, while medium-sized enterprises seek faster deployment and lower costs [42][44] Question: What is the pricing model for AI products and customer feedback? - The company received positive responses for AI products launched in May, with large companies interested in pilot testing and mid-sized companies needing full systems [43][46] Question: What is the sustainability of the cloud business transformation? - Management expressed confidence in sustainable growth, with a target for subscription business to increase from 50% to 80-90% of total revenue [70] Question: What are the plans for international business? - The company plans to localize products for different regions and aims to expand into Africa, Europe, and Japan starting in 2026 [77][104] Question: How will team optimization impact project implementation? - Management clarified that team optimization aims to improve efficiency without sacrificing customer experience, with implementation services being outsourced to certified partners [58][60]