Ladies and gentlemen, thank you for standing by and welcome to Tencent 2019 Fourth Quarter and Annual Results Announcement Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker host today, Ms. Jane Yip. Thank you. Please go ahead ma'am.

Thank you. Good evening. Welcome to our 2019 fourth quarter and annual results conference call. I'm Jane Yip from the IR team of Tencent. Before we start the presentation, we would like to remind you that it includes forward-looking statements, which are underlined by a number of risks and uncertainties, and may not be realized in the future for various reasons. Information about general market conditions is coming from a variety of sources outside of Tencent. This presentation also contains some unaudited non-IFRS financial measures that should be considered in addition to, but not as a substitute for, measures of the company’s financial performance prepared in accordance with IFRS. Non-IFRS measures formerly referred as non-GAAP measures are intended to reflect our core earnings by excluding certain one-time or non-cash items. For a detailed discussion of risk factors and non-IFRS measures, please refer to our disclosure documents on the IR section of our website. Let me introduce the management team on the call tonight. Our Chairman and CEO, Pony Ma, will kick-off with a short overview. President, Martin Lau, will discuss the strategic review. Chief Strategy Officer, James Mitchell, will speak to the business review; and Chief Financial Officer, John Lo, will conclude with financial review, before we open the floor for questions. I’ll now turn the call over to Pony.

Thank you, Jane. Good evening, everyone. Thank you for joining us. During 2019, we reinforced our leadership in Consumer Internet and extended our presence in Industrial Internet, while sustaining healthy operating and financial metrics. Let me update you on our key achievements in our four strategic areas. In social, Weixin ecosystem became increasingly vibrant and better connected users with services; annual transaction volume via Mini Programs crossed RMB800 billion. As it’s related to QQ, we branded the product with enhanced chat features and friend recommendation, as well as expanded entertainment use cases via Mini Programs, increasing QQ’s popularity among young generation. In online games, we extended our China leadership, while expanding internationally via popular games, including PUBG Mobile, Brawl Stars and Call of Duty Mobile. Our international revenue rose to 23% of online game revenue in the fourth quarter of 2019. In content and advertising, video subscriptions exceeded 100 million milestone in the year. We innovated our business model and increased operating efficiency of our long-term video business, significantly reducing its 2019 operating loss to below RMB3 billion, much lower than industry peers. Despite macro headwinds, we achieved robust advertising revenue growth, progressively realizing the long-term potential in Moments and expanding our mobile ad network. In FinTech and business services, average daily commercial payments transactions exceeded 1 billion in the fourth quarter as we deepened penetration among offline merchants. We consistently expanded our market share in cloud with revenue crossing RMB17 billion in 2019; numbers of paying customers surpassed 1 million. Now, let me go through the headline financial numbers, and John will provide more detailed discussion in the financial section. Total revenue was RMB160 billion, up 25% year-on-year and 9% quarter-on-quarter. Quarterly revenue for the first time exceeded RMB100 billion, both including and excluding Supercell contribution. Gross profit was RMB46 billion, up 31% year-on-year and 9% quarter-on-quarter. Our non-IFRS operating profit was RMB30 billion, up 35% year-on-year and 6% quarter-on-quarter. Non-IFRS net profit attributable to equity holders was RMB25.5 billion, up 29% year-on-year and 4% quarter-on-quarter. Moving to platform update, in social, combined MAU of Weixin and WeChat increased 6% year-on-year to 1.165 billion. Smart devices MAU of QQ declined 7.5% year-on-year to 647 million as we proactively cleaned up spamming and bot accounts. In games, we solidified our number one position in China with Peacekeeper Elite's popularity and extended our international success with the launch of Call of Duty Mobile and Teamfight Tactics during the year. In media, music subscription growth accelerated, benefiting from the pay-for-streaming model. In FinTech, we operate the largest mobile payment platform in China by DAU and transaction volumes. In cloud, we continue to outgrow peers with increasing scale and higher operating efficiency. In utilities, we maintained our industry leadership in mobile security, mobile browser and Android app store in China. I will invite Martin to discuss strategy review.

Thank you, Pony. And good evening and good morning, everybody. As we headed into the year of 2020, I believe all of us are facing the massive challenges of the coronavirus pandemic, which is profoundly impacting China as well as globally. I’d like to say our hearts go out to the people, the families that are affected, and we hope their conditions will improve and their difficulties will go away soon. Now at Tencent, we rose up to the challenge, and we tried to provide relief and help to people in need in a number of different ways. We established an emergency fund of RMB1.5 billion to prepare and donate medical supplies and equipment, to offer relief, support and sponsor pandemic related programs’ development, as well as to sponsor medical research to try to solve this problem. At individual level, our employees volunteer to help deliver donated resources on the ground to the troubled area of Hubei. Thousands of our employees also worked around the clock to develop a number of pandemic related online products to serve over 1 billion users in China. To help efficiently combat the outbreak, our technologies and smart solutions play a crucial role to digitalize public services rapidly, generating over 1,000 related Mini Programs in municipal services, healthcare and education. Leveraging our high DAU platforms, authorities can deliver pandemic related news and timely information, promoting public awareness and educating preventive measures. A reliable and smooth live broadcast system enabled schools to move courses online and helped students to resume their studies. For enterprises, we upgraded our remote working and collaboration solutions to help mitigate interruptions to their business. We also helped retailers to leverage Mini Programs to move online in order to recover sales. Successful retailers have seen their sales through Mini Programs increasing by tenfold, and some even more. For Internet users, our free online courses and rich digital content enriched their leisure time at home. Our communication and social platforms connect users with their friends and family including when they are under quarantine. We believe these efforts fully embody our mission, which is “Value for Users, Tech for Good.” Now, the outbreak also presented short-term impacts to some of our businesses, which I would like to summarize for all of you. For mobile payment, offline commercial transactions and revenue declined significantly as many restaurants and stores did not open up the Chinese New Year but volume rebounded quickly after work resumes. During this time, we reduced marketing expenses, and therefore, net-net, we expect limited negative impact of mobile payments on our profitability. For online advertising, despite some advertisers reduced spending during this period, our performance based advertising is sustaining robust year-on-year growth rates, driven by our high ROI, as well as a healthy and diversified advertising mix. For cloud services, there's a short-term negative impact on revenue due to delayed implementation of projects. However, we believe the coronavirus outbreak capitalize to the expansion in industry demand and addressable market for long-term as enterprises embrace digital upgrades. For smart industries, increased adoption by consumers and enterprises led to growth in users and traffic to our WeChat Work, Tencent Meeting, Tencent Health and Tencent Education services. For Mini Programs, as an easy to deploy digitization tool, it is used by many merchants and institutions to move their services online rapidly. Therefore, DAU, daily visits and number of Mini Programs surged, especially in fresh food and grocery delivery services, municipal services, remote working, online healthcare services and online education. For digital entertainment, it is not only an alternative to out-of-home activities, but also help to reduce people’s anxiety during such a difficult time. Users are increasing their time spent on a whole range of digital content services, including our online games, video and reading services. We believe challenges are transitory, but user behavior and enterprise mindset change are structural. We are well positioned to accelerate the digitization of industries for the future. So that concludes the discussion focused on the COVID outbreak. Now let's move on to some strategic areas that we are pioneering the industry evolution and also facilitating the digital upgrades. In the area of smart healthcare, leveraging our AI and cloud technologies, we're committed to bringing convenient and professional healthcare services to users and institutions. During the outbreak, our Tencent Health, Tencent Medipedia and Health Code services helped prevent the spread of coronavirus and also acquired a large number of users. First on Tencent Health, it is our all-in-one entry point for online medical services. Over 300 million Weixin users used it as an important access to real time data and information, as well as conduct online consultation. During the outbreak, we launched AI-powered tools to enable users to self diagnose via chatbot. These services and tools were also built into our smart solution, facilitating 40 medical institutions to deliver prompt and timely services to help contain the spread of coronavirus. Second, Tencent Medipedia provides reliable and professional medical information resource covering knowledge graph of over 10,000 diseases. We developed pandemic-related content and distributed via our multiple high traffic platforms such as Weixin and Tencent News, attracting over 600 million page views. We also launched free online consultation to enable access to over 10,000 doctors from our ecosystem partners such as WeDoctor and Doctorwork. Third, Health Code becomes the most used ePass for verifying health and travel history during the outbreak. Leveraging our extensive reach of Weixin and easy-to-use Mini Programs, Health Code rapidly covered 900 million users across more than 300 cities and counties with 8 billion total visits since early February. Now moving on to remote working, which has gained a strong momentum recently as more users and organizations are using remote working as their main type of working. Tencent Meeting which is our dedicated business video conference app has reported over 10 million DAU within two months since launch in last December, and has become the largest standalone app for cloud conferencing in China. In particular, we saw strong demands from business, government and educational sectors, and helped employees work from home and student resume their studies. Our product delivers secure, stable and high definition video experience, leveraging our advanced security, cloud and AI technologies. Users can join meeting via multiple channels across platforms and devices, such as mobile app, Weixin, Mini Programs, PC and phone calls. Our team responded swiftly to customer feedback and upgraded the product frequently releasing 14 versions in the recent 40 days. With infrastructure and sales team support from Tencent Cloud, we're able to enhance Tencent Meeting’s performance and efficiency. For WeChat Work, it has become a leading hub for teamwork in China, with millions of enterprises adopting it to resume work and usage surged tenfold recently. Our unique proposition lies in integration with Weixin, which facilitates business, customers’ management and sales conversion via Weixin Moments, Mini Programs and Weixin Pay, in addition to providing a collaboration tool for the employees internally. This helped us attract clients and increased engagement. Meanwhile, as we expanded our client base, we encountered differentiated needs from some industries. For example, government and financial institutions prefer private cloud deployment because of the security. Therefore, WeChat Work now can be deployed flexibly on both public and private cloud to cater to different customer needs. Our customers can also select and configure specialized solutions among our rich office tool offerings provided by over 20,000 SaaS providers, allowing tailor made system to better serve business operations. Now moving to Consumer Internet, our mini video app Weishi achieved rapid growth and presented strong momentum, leveraging our social platforms. Using Weishi, users can create and share 30 second videos to Weixin Moments. They can also use Weixin and QQ plug-ins to discover talk-of-the-town videos in a timely basis. These initiatives contributed to the quarter-on-quarter growth of more than 80% in daily active users, and over 70% in daily uploads for the fourth quarter for Weishi. To engage users, we made Weishi attractive and fun by introducing certain innovative and interactive features. For instance, we launched Weishi Challenge, a 30 second challenge for interesting act led by celebrities and imitated then by users. Tens of millions of users participated and upload video to compete with both KOLs and friends during the past half year. We also creatively added red envelope feature in Weishi which can be shared to Weixin and QQ. During the spring festival of 2020, users exchanged 1.6 billion Weishi video red envelopes. We also constantly enhance technologies for content creation, curation and recommendation. We provide AI-powered cameras for Weishi users to lower difficulties in creating content. Our advanced video recognition system accurately tags and classifies the content to be ready for recommendation to users. And by deep learning users’ interest graph, the smart recommendation engine is able to facilitate content discovery for them. In terms of content, we leverage our rich in-house IPs to expedite unique content creation by KOLs and MCNs. For example, we allow KOLs and MCNs to repurpose our high quality content from Tencent Video and Tencent Sports to produce clips and highlights for mini video. We encourage star players of Honour of Kings and other Tencent games to share their weekly moments on Weishi. In addition, Weishi and Tencent Animation & Comics also produced popular mini drama series TongLingFei, which was converted into unique mini videos for Weishi by MCNs and KOLs and has attractive large number of video views. Moving on to our online games business, especially on online mobile games. We have made significant breakthroughs in self-developed games for international markets. For example, PUBG Mobile has become the most popular international mobile game in terms of DAU and MAU. Call of Duty Mobile was the largest new launch by downloads and was crowned as the Best Mobile Game of the Year in 2019 by TGA, The Game Awards. Moreover, Supercell’s Brawl Stars was one of the best performing original IP mobile titles in 2019. If you look at the global chart we developed 5 of the top 10 most popular international mobile games. The proven success globally demonstrate our accumulated capabilities built up over many years. First, our knowhow in mobile game development. Our in-house studio group Timi and Lightspeed & Quantum representing the highest level of mobile game development capability have delivered authentic PC and console game quality on mobile. Second, advanced technological knowhow. Leveraging our strategic partnership with Epic Games, we have deep technical experience in the industry leading game engine. And our heavy investment in AI and cloud technology over the years ensure a good in-game experience as well as reliable and high speed access to our games. Thirdly, our long-term business cooperation with partners over the years has paved the way for a smooth and in-depth communication, along the topics of IP development, game play design, international user insights, global publishing, as well as operational experiences exchange. Last but not least, expertise in operating large-scale social networks and games. We're experiencing curating social experiences for players to promote their enjoyment and engagement. We also organize top global eSports tournaments to further popularize our games. Going forward, we’ll strengthen our technology, service and platform to position ourselves to capture the opportunities from an expanding addressable game market, and long-term digital upgrades in various industries. So with that, I'll pass to James to talk about our business review.

Thank you, Martin. Good evening or good morning, everyone. For the fourth quarter of 2019, our total revenue grew 25% year-on-year. VAS represents 50% of our revenue, within which online games 29% and social network is 21%. FinTech and business services represented 28% of total revenue, and online advertising 19%. The Value Added Services segment revenue was RMB52.3 billion in the quarter up 20% year-on-year and up 3% quarter-on-quarter. In social networks, our total VAS subscriptions were 180 million at the end of 2019, up 12% year-on-year. Growth in video and music subscriptions was driven by self-commissioned Chinese animated series, our paid music content library, and bundled subscription offerings. Total video subscriptions were 106 million up 19% year-on-year. Our social network revenue increased 13% year-on-year to RMB22 billion, among which live broadcast services and music subscriptions revenue grew strongly year-on-year. Social network revenue was flat quarter-on-quarter as the seasonal decline in game item sales offset digital content revenue growth. Turning to online games, revenue grew 25% year-on-year, increased 6% quarter-on-quarter to RMB30.3 billion. Non-China markets contributed 23% of our game revenue, benefiting from key titles such as PUBG Mobile and Call of Duty Mobile as well as the consolidation of Supercell. The smartphone games total revenue rose 37% year-on-year to RMB26 billion driven by titles such as Honour of Kings and Peacekeeper Elite, as well as rapid growth in international markets. Sequentially, smartphone games revenue increased 7% as consolidation of Supercell offset soft seasonality in China. The PC client games revenue decreased 7% year-on-year and fell 10% quarter-on-quarter to RMB10.4 billion and users in DnF declined while global revenue from League of Legends increased. Diving into social networks, within our Weixin ecosystem we focused on facilitating service and commerce connections. After the outbreak of COVID-19 we added a dedicated healthcare section within Weixin Pay’s Public Service entry point, which is being used by more than 300 million people. We are beta testing live broadcasting Mini Programs and launch tools which enable merchants to increase sales conversion and encourage social sharing of their shows in Mini Programs. For QQ, we enabled AI-based recommendation for stickers and elevated the entertainment experience within QQ Mini Programs. As a result, QQ user engagement increased and daily messages sent per QQ user grew at a mid teens percentage year-on-year and the quarter. We optimized features for QQ school-plus-home groups, which have served over 120 million users since the COVID-19 outbreak began. Schools can attend or students can attend live broadcast curriculum courses and online tutoring programs with leading educational content providers. We offer online classroom management tools for teachers to handle school routines, such as homework assignment. For online games, in China, we enhanced the vitality of our key smartphone game franchises with high quality content updates, such as the inclusion of Auto Chess mode in Honour of Kings, and new gameplay systems for Peacekeeper Elite. For PC client games, a record number of viewers watched League of Legends World Championship in Paris. High end marketing activities and items sales increased League of Legends paying users and revenue quarter-over-quarter. However, Dungeon & Fighter paying users decreased in the fourth quarter due to content challenges. And Martin has already quote out some highlights of our international game business. Moving to online advertising, our total advertising revenue was RMB20.3 billion in the quarter, up 19% year-on-year and up 10% quarter-on-quarter. Our social and others advertising revenue was RMB16.3 billion, up 37% year-on-year and up 11% quarter-on-quarter underpinned by healthy demand from verticals including e-commerce, education and games. We believe our Weixin Moments advertising provides highly attractive ROIs. And we added a 4th ad unit per user day in Weixin Moments during the e-commerce promotional periods in the fourth quarter, which generated positive advertising sell-through and consumer engagement. We permanently implemented the 4th ad load from mid-February. For our mobile ad network, we signed up high traffic media partners such as entertainment and social media services, and added more rewarded video ad inventories. Our mobile ad network revenue more than doubled year-on-year in the quarter, and was the largest contributor to our sequential advertising revenue growth, which we believe testifies to our increasing ad tech capabilities even on non-Tencent sites. Our media advertising revenue for the fourth quarter was RMB4 billion, down 24% year-on-year and up 8% quarter-on-quarter. While we generated less video advertising revenue around NBA basketball games in the fourth quarter, our video and news advertising revenue each increased quarter-on-quarter. Looking at FinTech and business services, revenue was RMB29.9 billion in the fourth quarter, up 39% year-on-year and up 12% quarter-on-quarter. FinTech services revenue grew robust year-on-year and quarter-on-quarter as our platforms and services are increasingly adopted by consumers, merchants and wealth management partners. As Pony mentioned, commercial payments actually recorded a new high with over 1 billion average commercial transactions per day, exceeding the major global card networks and average value per transaction also increased. The wealth management customer base more than doubled year-on-year as we expanded into the mass market and our aggregated customer assets increased over 50% year-on-year. And for lending, WeiLiDai originated loan balances increased. Within business services, our cloud services revenue sustained rapid growth, driven by increased volumes of key contracts and clients. Gross margins improved as we continue to optimize supply chains and expand our business scale. We exceeded 1 million paying cloud customers as we expanded sales teams for different regions and industries and deepened our partnerships with systems integrators. And we enhanced our enterprise software-as-a-service offerings via our first-party products, notably Tencent Meeting and WeChat Work, as well as partnerships with third-party software providers. And I'll now pass to John to discuss the financial metrics.

Thank you, James. Hello, everyone. For the fourth quarter of 2019, total revenue was RMB105.8 billion, up 25% year-on-year or 9% quarter-on-quarter. Excluding the impact from consolidating the Supercell consortium group, I’ll refer it as Supercell afterwards for simplicity, total revenue would have been 21% year-on-year or 6% quarter-on-quarter. Gross profit was RMB46.1 billion up 31% year-on-year or 9% quarter-on-quarter. Net other gains was RMB3.6 billion compared to a net loss -- other losses of RMB2.1 billion in the fourth quarter of 2018 and up 289% quarter-on-quarter. The year-on-year change was mainly due to non-IFRS items, including one-off expenses relating to share issuance to TME strategic partner in quarter four last year and net fair value gain from certain investee companies. Sequentially, the increase was mainly due to the increase in fair value gains of certain investees which were also non-IFRS adjustments. Operating profit was RMB28.6 billion up 65% year-on-year or 11% quarter-on-quarter. Net finance costs were RMB2.8 billion up 102% year-on-year or 58% quarter-on-quarter. The year-on-year increase was mainly due to greater interest expense resulted from higher amount of indebtedness. Share of losses of associates and joint ventures for the fourth quarter 2019 was RMB1.3 billion compared to share of profits in the fourth quarter of 2018 and the third quarter on a non-IFRS basis. Share of profit decreased from RMB1.9 billion a year ago and RMB2.1 billion a quarter ago to RMB1.3 billion this quarter, partly due to consolidation of Supercell, which was done in associates. Income tax [Technical Difficulty].

Ladies and gentlemen, your speaker is currently experiencing some technical difficulties with the line. Please stand by while we address the situation. Your lines will be placed on musical until the conference resumes. Ladies and gentlemen, thank you all for staying on the line. We will now resume the call.

Hi. Let me walk you through non-IFRS financial numbers. For the fourth quarter, operating profit was RMB30.3 billion, up 35% year-on-year or 6% quarter-on-quarter. Net profit after NCI was RMB25.5 billion, up 29% year-on-year or 4% quarter-on-quarter. For the full year of 2019, operating profit was RMB114.6 billion, up 24%. Operating margin was 30.4%, up 0.8 percentage point. Net profit after NCI was RMB94.4 billion, up 22%. Turning to segment gross margin. Gross margin for VAS was 50.1%, down 3.3 percentage points year-on-year or 1.7 percentage quarter-on-quarter. The year-on-year decrease was primarily impacted by continuous revenue mix shift from high margin PC client games to lower margin platform games. The Q-on-Q decrease was mainly due to increased costs from major eSports tournament in the quarter. Gross margin for online advertising was 54.3% up 17.7 percentage points year-on-year or 5 percentage points quarter-on-quarter -- 5.5 percentage points for the quarter. Fourth quarter year-on-year and quarter-on-quarter increases primarily reflected lower content costs for video advertising, as well as revenue mix shift on media advertising to higher margin social and other advertising. Gross margin for FinTech and business services was 28.1% up 3.6 percentage points year-on-year or 0.4 percentage points quarter-on-quarter. The year-on-year increase was mainly driven by revenue mix shift on social payments to higher margin commercial payments. Benefiting from increased loyalty, users were more willing to retain funds in our ecosystems and increasingly utilizing more FinTech services, such as wealth management and micro loan services on our platform. This led to improved margin year-on-year. On operating expenses, selling and marketing expenses were at RMB6.7 billion, up 17% both year-on-year and quarter-on-quarter. The year-on-year increase mainly reflected greater marketing spending on FinTech and cloud services, smartphone games and digital content services. As a percentage of revenues, selling and marketing expense decreased from 6.7% in the fourth quarter of 2018 to 6.3% in the quarter mainly due to the reduction of advertising and promotional expenses as a result of internal initiatives to reduce less effective marketing campaigns. Sequentially, increase in selling and marketing expenses mainly reflect a seasonally higher marketing spending on smartphone games and digital content services, as well as expenses attributable to Supercell commencing this quarter. G&A expense were RMB16 billion up 41% year-on-year or 18% quarter-on-quarter, mainly due to increases in R&D expenses, staff costs as well as expenses attributable to Supercell commencing this quarter. Within G&A, R&D expenses were RMB8.9 billion up 49% year-on-year or 12% quarter-on-quarter. G&A and R&D represented 15.1% and 8.4% of revenues respectively. As at quarter end, we had approximately 53,000 employees up 16% year-on-year or 3% quarter-on-quarter. For the whole year 2019, selling and marketing expenses were RMB21.4 billion down 12% and represented 5.7% of revenues. R&D expenses were at RMB30.4 billion up 32% and represented 8.1% of revenue. Total G&A expenses excluding R&D expenses was RMB23 billion up 24% and represents 6.1% of revenue. Let's take a look at the margin ratios. For the fourth quarter 2019 gross margin was 43.6% up 2.2 percentage point year-on-year or broadly stable quarter-on-quarter. Non-IFRS operating margin was 28.7% up 2.3 percentage points year-on-year or down 0.7 percentage points quarter-on-quarter. Non-IFRS net margin was 25.2% up 1.4 percentage point year-on-year or down 0.6 percentage point quarter-on-quarter. For the full year 2019, gross margin was 44.4%, down 1.1 percentage point. Non-IFRS operating margin was 30.4%, up 0.8 percentage point. Non-IFRS net margin was 25.9% up 0.2 percentage point. For 2019, on IFRS basis, basic EPS was RMB9.856 and diluted EPS was RMB9.643. Non-IFRS basic EPS was RMB9.966 and diluted EPS was RMB9.729. Subject to the approval of shareholders at the Annual General Meeting should be held on 13th of May 2020, we are proposing an annual dividend of HKD1.2 Hong Kong per share payable to shareholders on 29th of May 2020. This represents an increase of [20%] from last year. Finally, I'll now share with you several key financial metrics for the quarter. Total CapEx was RMB16.9 billion an increase of 270% year-on-year and 154% quarter-on-quarter. Within which, operating CapEx almost doubled to RMB7.1 billion mainly due to advanced procurement on servers for business growth in 2020. Non-operating CapEx increased significantly to RMB9.8 billion mainly reflected the land use rights acquired for new project. For 2019, total CapEx was RMB32.4 billion, up 35%. Within which operating CapEx was up 6% year-on-year. As at quarter end, free cash flow was RMB37.9 billion up 27% year-on-year or stable quarter-on-quarter. For 2019 free cash flow was RMB120.3 billion up 37%. Net debt position was RMB15.6 billion. The sequential increase primary reflected payments for M&A initiatives and media and content and consolidation of Supercell’s indebtedness, partly offset by strong free cash flow generation. The fair value of shareholdings in listed investee companies excluding subsidiaries was approximately US$60.2 billion at year-end compared to roughly US$50 billion last quarter and roughly US$34.7 billion last year. Thank you. We shall now open the floor for questions.

Thank you. And we’re sorry for the technical -- the system technical problem that we just encountered. We shall now open the floor for questions. Operator, we will take one main question and one follow-up question each time. Please invite the first question.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from the line of Binnie Wong from HSBC. Please go ahead.

My question is on the advertising. We see the revenue from social network actually further reaccelerate to 37% since 2Q. With this reacceleration and also considering the competition, do you see that -- what is the competitive edges in Tencent’s ad network versus peers and what are the drivers to propel us into 2020? And then with that, can I also ask a question about the short form video? Given that -- I think in the press release you mentioned that we are in the early stage of a multiyear investment. And you said that experience from overcoming a later start of a long form video give you the confidence. What are the applicable experience you learn and the challenges you see? Thank you.

Binnie, thank you for the question. So I think your first question was around social advertising revenue growth and what do we see as competitive advantages. People looking at Tencent from the outside are often at the view that our key competitive advantages -- we have a large amount of traffic for our applications. And that's certainly true. But if you look at the biggest contributors to the quarter-on-quarter revenue growth, it was actually our ad network business which is ads on other people’s applications. So I think that speaks to the fact that we're increasingly competitive from a technology perspective because of the investment we've made across the platform. We're obviously very competitive from a targeting perspective, because of the data we aggregate on users. We're also competitive in terms of conversion, specifically conversion from the impression to the transaction. I think that there's many different services in China that can convert traffic impression into a click or even an app download. But because we integrate the advertising platform and the payment platform together, we're actually quite capable of converting the impression into a transaction. And so that's why if you look at the advertiser categories that are doing particularly well for us, it includes businesses like -- activities like e-commerce, education and games. And all of which really -- when they're buying ads they’re less focused on the impression or even on the app, and still -- they’re most focused on the actual and revenue generation. And we think that over the long-term, more and more advertisers will feel the same way. And that will pay more and more to our benefit. So anyway, that's some of the reasons why our ad network business is doing particularly well. More broadly, our social advertising business benefits from all of the factors above, plus the fact that we have roughly 1 billion daily active users across our properties, which is uniquely broad in China, plus the fact that we have content information on our users because we serve them in video, music, newsfeed, literature and so forth, better games, as well as serving them for communication, social and commerce. So, all-in-all, we think that our social ad -- social and other advertising is a very strong portfolio of properties, a very strong technology platform. We've seen particularly good growth, and continuing to see very good growth from segments such as e-commerce, games and education and we believe that we will strongly outperform the market.

In terms of Weishi and short video, I would say, if you look at Tencent's history, right, there have been a few products that we came from behind and then we actually became the absolute industry leader. And I would say games is such a category and our news and our payments platform, and most recently, the long form video. And I think in each one of these instances, we have -- first of all, have to build up the capability that's specific to that product vertical. And after that, we can actually start leveraging our unique Tencent resources and capabilities. So in this short video, right, what are our unique Tencent advantages? And I would say -- in the prepared remarks, we have pointed to some of them, including our product innovation, on the product side, integration with our social network that can bring traffic as well as sharing experiences for our users, as well as our longstanding investment in various kinds of content, be it games and long video, and literature or the IP-related content. I think these are all important Tencent advantages that we can bring to bear in the future. And well so far we have been doing that but then in the future we can actually do it even more. But what are the key important vertical expertise that we need to build? I would say, it's mainly the recommending engine for -- the recommendation engine for these kind of short and mini videos, as well as a system that would actually bring in a very large number of content providers, which is somewhat different from the long form video, right, in which you have a small number of very professional providers of content. Now, I think this is something that we have to build over time. I think we have achieved some success. And at the same time, if you look at the recent success of what James talked about, which is our ad tech, right, and that is actually a tech which is very similar to the recommendation engine of mini videos. And if you look at the large number of content providers that we need to manage, so that's actually somewhat similar to the official accounts, as well as Mini Programs that we're curating. So I think we have pockets of expertise in each one of these areas. It’s just an important time for us to bring it into the Weishi product and integrate it in such a way that we can actually build up the vertical expertise within that product. And at the same time, start leveraging our unique resources in a more prominent way. So that's why we believe this is a battle that we would definitely continue to play in and we're actually quite confident that over time we'll make a significant headway into that industry.

Thank you. Next question please.

Your next question comes from the line of Eddie Leung from Bank of America. Please go ahead.

Yes. Thank you for taking my question. I wish everyone well. I have a question on your Consumer Internet strategy. So Tencent is developing more use cases about services, so that's pretty obvious, not just about entertainment. So obviously that’s a competitive advantage. But on the other hand, it seems like some leading video traffic platforms are entering more and more digital entertainment services. We have seen news about games, literature, music, live broadcast et cetera. So just wonder how would that offset your strategy and perhaps that industry’s our cost structure in running digital entertainment? Thanks.

Yes, I will take that question. And I think every now and then you would see this kind of news, right. And if you track the evolution of the China in the Internet industry history, this is something that repeats every few years, right? And in each one of the sector that you talk about, there have been many, many players in market, take an example of games, for example, right, where there have been many different players and it's far from being a winners take all market. And so I think it's actually completely fine for different players to want to go into these different verticals. But I think the important thing is actually, what do we do, right? I think what we try to do is actually to be the best-in-class player in each one of these verticals. So, I would take games as an example, right? So games, it has always been a market with many, many different players and Tencent actually came from the very behind and step-by-step now became the leader in the market in China and now expanding our presence all around the world. And I would say, there are a number of things that we have to do right. We have done right in the past and we will continue to do and invest in those areas in the future. And then this includes one, I would say just we have a very strong franchise over some of the most important genres. If you look at mobile as an example, if you look at tactical tournament as an example, these are game genres in which we have an absolute leadership position in and they have essentially become both genre-defining as well as smart social networks for such type of gamers, right? So I think that has a very strong franchise and we will continue to be the innovator in those genres. Secondly, I would say in the game industry, it's about development capability. And development capability rests both within creativity as well as technical knowhow. And I think we have gone pretty deep into describing what are the technical knowhows that we have. And over the years by being successful in different genres, I think we have demonstrated our creativity and I think those are the things that we have to continue to do well and do better on. And thirdly I would say is the relationship that we have with game, IP and game companies around the world. And a lot of the leading game companies are our partners or our investee companies. And these are built over a very, very long-term. And as a result, we can actually work with the other game companies and bring exciting new games in different formats to the market. And I would say we also have a very strong presence in social network and that has a strong synergy with our game business because games by nature -- especially online games, and mobile online games by nature are social networks. So you want to play with your friends or you want to play with your game mate, right? So by having a social network that actually can connect with all your friends as well as new friends from the games, it actually give us a very specific advantage. And I would say finally, we actually have a very strong ancillary ecosystem around games. If you look at eSports, if you look at streaming platforms, all these are places where people discover games and engage with KOLs on games, as well as with their friends. So I would say these are all the advantages that we have and we have invested for a long time in this vertical to be the leader and we'll continue to do better. If we have new comers into the market, it will actually incentivize us to do even better.

Our next question comes from the line of John Choi from Daiwa. Please go ahead.

My first question is actually on your recent remote working initiative. It seems like we’re seeing very strong momentum as you mentioned. How does the management see the long-term [momentum] of revenue? And what current receptiveness from the users when it comes to subscription or billing? And a follow up on the online video content costs for 2020, how does the management view it and how will this impact the profitability? Thank you.

What was the product you're referring to when you say it's doing well.

The remote working products like Tencent Meeting and WeChat Work.

Okay, well. I'll take that question. So, I think we have actually talked quite a bit about this category of products. And I would say, one, the fact that we have actually invested in this category is that, we feel that there is a trend for increasing digitization of various businesses and institutions. This is definitely the future trend. But I think because of the coronavirus pandemic, it actually expedited -- that necessitates that conversion, right? So during the time when nobody goes to work on location, as well as schools are not open, then clearly there's only online solutions that is available for people. I think when the market actually reopens, then a lot of the use cases will shift back to offline but then I think this consumer habit education have already taken place and people would shift a part or retain a part of their usage habit online. So -- and they also discover the efficiency, right? If you don't have to travel two hours to attend one hour of class meeting, maybe that's a better and more efficient way of doing. So, I think this does capitalize our longstanding vision on the trend within a short period of time. Now, with respect to the products that we talked about, right, so we have been building WeChat Work for a while. And I would say WeChat Work is a product which works with established organizations. So if you have a company or you have an organization, if it's a school, then you can adopt that solution and then it can actually help you to do internal collaboration, and you can actually start stacking in other kinds of [star] solutions on to and help that organization to be more online. Now, what we discover as an additional, important and pretty unique feature of our WeChat Work, in addition to just being an internal collaboration tool is that with integration to Weixin, right, it actually allows a lot of the companies not only to engage in internal communication, but also it can become a good CRM tool for them to engage with their consumers over WeChat. So I think that is an additional advantage of WeChat Work. Now, with respect to Tencent Meeting, right, it's a completely different proposition. It's actually very easy to use application, then anybody can form a group and start video conferencing. So, it actually covers use cases in which it -- like people within different organizations can actually convene a meeting very conveniently. So, as a result you can see during the coronavirus, that adoption of Tencent Meeting is actually very high, especially in terms of signup new users. I think for a product like WeChat Work and also a product like Ding Ding, right, you can cater to the internal needs of enterprises and for the enterprises you have already signed up, you actually suddenly can have more activity within those signup accounts. But then for Tencent Meeting, it actually allows people to download the app and immediately be able to connect it to each other. So they cover different use cases, and the both of them are going to be our flagships for enterprise collaboration development for the future. At this point in time, I think we're very focused on market coverage and we're not worried about monetization yet. We felt that it gets a lot of users in the same line of logic that we have been using as Tencent, right, in many, many of our products that we invest initially to get to users, and eventually the monetization would come.

On the Tencent Video content cost question, so 2019 was obviously a challenging year for all long form video services, including our own. But we actually feel that we've made substantial efficiency gains. If you look at the full year results out of all of the long form video platforms, we’re the leader by revenue. We also lost far less than our peers. Our full year operating loss was under RMB3 billion and that speaks partly to the fact that we have been quite disciplined about content spending. Now, looking forward, we think it remains a growth market. Therefore, we'll continue to invest aggressively and invest more each year in long form video content. One of the reasons we're comfortable doing that is that we're uniquely vertically integrated. A substantial chunk, not only our own drama series but also of our competitors’ drama series derives from other companies within the Tencent Group. And it could be intellectual properties based on novels from China literature, it could be drama series that are produced by new classic media. In the fourth quarter of 2019, I think the most popular drama series both on our own platform and on our competing platform was actually both. It was China literature, IP and a new classic media, [T-drama] series. So in a given we are currently the most efficient in the industry, and given we’re the most vertically integrated and given we think that the value of content will appreciate over time, we'll continue to invest hopefully intelligently in growing our long form video content portfolio. Perhaps we can take the next question.

Our next question comes from the line of Alicia Yap from Citigroup. Please go ahead.

A couple of questions. Number one is on the FinTech business, you mentioned it will be negatively impacted by the outbreak. While we believe there are offline transaction is impacted but we also see the increasing online transaction like the smart retail and also the online grocery purchase. That should help to offset the decline in the offline transactions. So I think directionally how serious is the sequential decline of the FinTech transaction. If you could help us frame the magnitude of the impact in the first quarter that will be helpful? And the second question is related to the strong demand on Tencent Meeting and also the WeChat Work. I understand it’s a limited opportunity short-term in terms of monetization, but then any big picture outlook that you could help us to think about in terms of the future opportunity, how that would translate our enterprises think about the IP demand, IP operate, and how that will help your cloud and business services growth opportunity in the future years to come. And just quickly on cost component, any spike of these bandwidth we that will be concerned about?

Alicia, we will cap it at two questions.

Okay.

So why don't I answer the first question on the FinTech impact? So I think is the heart of your question was, there’s a substantial chunk of payment transactions online and therefore that should mitigate the negative impacts from lower offline transactions. So I want to be clear about this. We generate over 1 billion payment transactions per day. That's a gigantic number. It's more than Visa and MasterCard put together. Within that 1 billion plus, there is a number of online transactions, e-commerce transactions, movie ticketing transactions, travel transactions, and so forth. But it's far from a majority. When you're handling 1 billion transactions a day, almost by definition the majority are offline transactions. And so what we saw in February and the early part of March is that there was a very substantial negative impact on offline transactions, both from a supply perspective, meaning that the merchants, particularly the smaller merchants who accept QR code payment were not actually at work and therefore not accepting payment. And then in addition, from the demand side consumers are generally staying at home and so not out and about making payments. As we moved into March, we've seen that festival -- the POS merchants recovered relatively quickly as consumers began to work and began to go out and about again. And then more recently, we've seen the QR code transaction volume also picking up as the small and medium sized merchants returned to work. So we are seeing a recovery. But I want to emphasize that the negative impact in the period after Chinese New Year was quite substantial. Now, when I talk about the negative impact, I'm really talking about the negative impact on revenue. From a profit perspective, A, as Martin mentioned, we optimize marketing and other expenses during the downtime. So the lost revenue was not necessarily flowing through into lost profits. And then B, within our FinTech portfolio, one chunk of the profits flows from the payment business, but another chunk flows from the asset management and lending businesses. And the asset management business, in particular the wealth management has continued to grow at quite a healthy pace. And that's naturally a relatively profit generating business, so more of an impact on revenue than on profits.

So on the business solutions, I will answer the three questions. One is, in terms of monetization, there's actually very little monetization at that time with Tencent Meeting and WeChat work. Now, in terms of the future, I think I should dedicate the whole page as well as I talked pretty much at length on what we feel holds in the future, right. We felt basically Tencent Meeting as a great way for people to have across organization business type of video collaboration and video conference versus WeChat for work, host a future for helping internal collaboration for enterprises as well as for consumer facing enterprises to do CRM. So there's actually a very bright future for both applications. And I think we're just at the beginning of this big wave of digital transformation for enterprises and institutions. And finally, because there's no revenue at this point in time, we do carry costs in terms of human capital investment, as well as the bandwidth and especially the bandwidth for Tencent Meeting actually quite a bit because the usage traffic is actually quite a lot. But on the other hand, right, we do have a very strong CDN capability built over the years to optimize the cost associated with this kind of traffic. And to some extent relative to what we spend on content, this is a small amount of money on a relative basis. So that's why we'll take it, and I think it's worthy investment for the future.

Next question comes from the line of Thomas Chong from Jefferies. Please go ahead.

Thanks management for taking my questions and congratulation on a solid set of results. My question is about the FinTech business, given the coronavirus, can management comment about our strategy in terms of the take rate improvement? Would we actually slow down the take rate improvement to help the merchants to passing through this challenging period? And also on the wealth management side, James just mentioned that it's going healthily. Can we understand about the different wealth management products like insurance, micro lending, money products, how we should think about the product innovations for this year? And a very quick follow-up is on the overseas gaming strategy, given the fact that we have over 20% of the gaming revenue from overseas, what's the long-term goal that we are looking into and our strategies in ramping up the overseas contribution, would be great? Thank you.

So in terms of the FinTech business, I think during the coronavirus, we see a lot of the offline businesses that we serve, have seen their business basically shuttered due to the lockdown. So I think what we are trying to do our best at is actually to help alleviate their difficulties. And some of it is basically helping them to try to get some businesses online, right. I think in some cases, some merchants have been able to leverage Mini Programs, as well as other means or even forming a group for example to sell their products online and some of them actually achieved quite encouraging results. And at the same time, I think over time, we’ll try to build tools so that merchants can actually manage their operations more efficiently and at the same time try to get more users to do online and offline transactions. So those are going to be the focus for us. We never wanted to run our FinTech payment business based on heavy monetization model, and has never been our vision, right? And what we want to do is actually make it convenient. And at the same time, we try to be able to add value to the people, the merchants we serve. And over time, we're able to get some monetization out of the additional values that we provide. So that's our strategy. Now in terms of wealth management, as you talk about, well, in terms of our FinTech solutions, there's wealth management, there is our loan and consumer loan, micro-loan business. And then over time, we are going to build some more presence in insurance. I think in each one of these services, right, we have always tried to bring some innovations, as well as additional value proposition for our users. I think a big part of it is centered around just reducing the entire customer acquisition cost and engagement cost in the industry. And along the way, right, pass some of the savings back to the consumers. Another broad stroke strategy is in terms of leveraging technologies and our data analytics to get better in terms of risk management, right? So when the risk is actually reduced, again, there's some savings that we can actually create. And that can be shared with the users, as well as with our partners. So I think a lot of the innovations will be around these principles and we actually find a lot of opportunities to have innovation, we can't go through one-by-one. But I think in broad strokes, these are the areas that we find we can add most value on.

For our international game strategy, I think Martin spoke about that in some detail in six slides. I'd refer you back to that slide. But I just want to emphasize that ultimately it is kind of product driven business and the best product comes from the best studios. And we believe within the Tencent family now there's a number of really extremely successful studios. Just to pick one at random, if you look at Riot Games, that pipeline, including games like Valorant, including games like Runeterra, including games like Wild Rush, it’s been one of the best pipelines of any game studio in the world, and their existing product League of Legends is the biggest and best PC game in the world. But it's not just Riot, it’s Timi which has global success with Call of Duty Mobile. It's Quantum that has global success with PUBG Mobile, it's Supercell that has had the recent success with Brawl Stars and other products coming out this year. So, there's a number of elements to the strategy that people sometimes forget the importance we place on the core studio expertise. And the four studios I just mentioned are best-in-class studios globally. Next question please.

So due to the time constraint we have the last question please.

Thank you. Last question comes from the line of Gregory Zhao from Barclays. Please go ahead.

Hi, good evening management, thanks for taking my question. So just a quick follow-up on the COVID-19. So we think some of your investment companies also see some impacts during the epidemic situation. So just want to understand what kind of support you can provide to these companies. For example, traffic or technology support? Understand the dynamics of entertainment related services such as live streaming, music, literature and long or short video services, and how shall we think about COVID-19’s impact and how would that reshape users’ long-term behavior? Thank you.

So the second question on the long-term impact of -- potential long-term impact of COVID-19 on the digital entertainment industry, clearly people who are under quarantine situation or people who can't go to school or work are spending more time at home and that's unfortunate, but it's unnecessary reality. And when they're at home, there's a number of activities they can partake -- in a limited number of activities they can partake in. And some of those you mentioned, including music, watching films, watching short video content, playing games. Therefore, see increased usage. Now as and when the COVID-19 situation normalizes, then one would expect people to venture out-of-home and participate more in out-of-home activities once again. But I think that said even with the SARS crisis, which was on a much lesser scale, there was clearly a structural change in consumer behavior where pre-SARS compared to post-SARS people spent more time on digital entertainment. And that may again be the case here. But I want to emphasize that from our perspective that's probably the lesser structural change. The greatest structural change will be enterprises recognizing the importance of remote working and recognize the importance of being able to stay in contact with their consumers, even if their storefronts offline or closed. And that's why it's so important for us that we invest the money and invest time in really making enterprise facing apps, be all that they can be and we gave the example of the Tencent Meeting, video conference service that’s enjoyed spectacular growth. And that's partly because it's in the right place at the right time and serving a real need. But that's also partly because I think we rushed out 14 updates in 40 days, which is incredibly fast in update pace for any app and difficult to get through the app stores actually. So anyway, we think that there will be some temporary changes in consumer behavior, revert to normal relatively quickly, but there will also be some structural changes to consumer and especially enterprise behavior that will be longer lasting.

On your first question, it took me a little bit to think about it. Because certainly, I have to say, we actually work with our investee companies and providing the support throughout their lifecycle. And there are all kinds of different technologies and management expertise, as well as traffic and product cooperations that we actually do with them during normal times. So our support for them has always been sort of ongoing. But in relation to the pandemic right now, I actually felt we have not provided any specific support to our investee companies. And the reason I think about it is basically I think all of our investee companies are actually best-in-class companies in their own right. And instead of asking for help, I think they're offering help. So all of us during this difficult time actually not think about what incrementally we can do better for ourselves, but more thinking about how we can do to help the general society. So I have to say, I can think about our investee companies basically spending their effort in trying in their own industries provide support to their business partners or their users or government entities that need help. In a way the people who need help are not our investee companies, it’s actually the general public. And I think I'm proud to say a lot of our investee companies have rise to that challenge and dedicate their resources to help them and play an important role in fighting against the coronavirus.

Thank you and we are closing the call now. If you wish to check out our press release and other financial information, please visit the IR section of our company website at www.tencent.com. A replay of this webcast will also be available. Once again, we apologize for the disruption caused by the system technical problems for tonight. And we hope everybody stay healthy. Look forward to connecting with you again next quarter.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.