Thomas Chong

Thomas Chong from Jefferies asked about JD.com's overseas expansion strategy for the next few years and the strategic rationale behind its proposed acquisition in Europe.

Answer

Sean Zhang, Head of IR, clarified that JD's international strategy focuses on leveraging its supply chain capabilities, distinct from typical cross-border models. The approach involves both helping Chinese brands expand globally and building localized retail operations. The proposed European acquisition is seen as synergistic, combining the target's market position with JD's online operational expertise. He also noted the planned launch of the 'JoyBuy' e-commerce platform in Europe later in the year.

Thomas Chong asked about the outlook for the smartphones and home appliances categories given the government's trade-in programs and requested an update on shareholder returns, specifically share buybacks.

Answer

CEO Sandy Xu stated that government stimulus policies are having a positive effect and that she expects the strong momentum in the electronics and home appliance categories to continue into the second quarter. CFO Ian Shan provided a detailed update on capital returns, noting that year-to-date, the company has repurchased approximately USD 1.5 billion in shares and completed a USD 1.44 billion dividend payment in April, reaffirming the commitment to shareholder returns.

Thomas Chong asked for management's perspective on the latest consumer sentiment and government policies, given the strong performance of trade-in programs alongside mixed broader retail sales data. He also inquired about the earnings outlook for 2025 and the margin trend over the next few years.

Answer

CEO Sandy Xu expressed long-term optimism about consumer sentiment, citing supportive government policies and observed demand momentum on JD's platform, despite short-term macro challenges. CFO Ian Shan added that for 2025, the company will focus on supply chain efficiencies to expand profit while investing with discipline. He reiterated the long-term high single-digit margin target, which will be driven by supply chain improvements, margin uplift in categories like supermarkets, and an increasing mix of the 3P business.

Thomas Chong from Jefferies asked for management's view on the earnings and margin outlook over the next few years and requested an update on shareholder return activities, including share repurchases and dividends.

Answer

CFO Ian Shan reiterated the company's mid-to-long-term goal of achieving a high single-digit net profit margin, driven by platform ecosystem growth and category mix optimization. He detailed the significant shareholder returns in H1 2024, including $3.3 billion in buybacks and a $1.2 billion dividend payment. He confirmed JD's commitment to continue repurchases and maintain dividend payments to return value to shareholders.

Thomas Chong inquired about the future plans for the successful game 'Escape from Duck Hof: Tao Li Ya Ke Fu', including potential mobile game development and lessons for future game development. He also asked about the beta test results and expected launch of 'Three Kingdoms: Hundred Battles Card', other anticipated games, and 'FanMo's' Q3 performance and one-year outlook.

Answer

Rui Chen, Chairman and CEO of Bilibili, and Juliet Yang, Executive Director of Investor Relations, highlighted 'Escape from Duck Hof: Tao Li Ya Ke Fu's' success due to its fun and relaxing gameplay, confirming plans for console and mobile versions. They stated 'Three Kingdoms: Hundred Battles Card' had positive beta feedback and is expected to launch in Q1 2026, aiming for large user adoption. For 'FanMo', Q3 performance met expectations, with a focus on long-term operation and international expansion starting with Hong Kong, Macau, and Taiwan in Q1 2026.

Thomas Chong inquired about the future business plans for the successful game "Escape From Duckov," specifically asking about potential mobile game development. He also sought updates on the monetization testing and expected release date for "San Guo End Card," details on the overall game pipeline, and the Q3 performance and one-year outlook for "San Mou."

Answer

Chairman and CEO Rui Chen, through Executive Director of Investor Relations Juliet Yang, detailed the remarkable success of "Escape From Duckov," attributing it to fun, relaxing gameplay and a niche strategy. He confirmed plans for console and mobile adaptations. Regarding "San Guo End Card," Mr. Chen stated that closed beta testing is smooth, with an expected Q1 next year release, focusing on DAU growth and innovation for casual players. For "San Mou," Q3 performance met expectations, with a focus on longevity and international expansion planned for Q1 and H2 next year.

Thomas Chong asked about MoMo's financial performance in the first half of 2025 compared to expectations, the sustainability of this trend into the second half, and the company's strategy and future plans for AI application.

Answer

CEO Tang Yan and Director of Investor Relations Ashley Jing discussed MoMo's second-half outlook, noting potential pressures from consumer sentiment and new tax regulations affecting agents and broadcasters, while emphasizing internal policy adjustments for compliance. Tang Yan detailed AI integration into existing social products for user experience enhancement (icebreaking, chat assistance), the launch of a standalone AI character chat app in Japan, and significant investments in underlying AI technology and large model applications based on MoMo's data corpus.

Thomas Chong asked about the sustainability of MoMo's better-than-expected first-half performance into the second half of 2025, and the company's strategy and plans for AI application in the latter half of the year.

Answer

Ashley Jing (Director of IR) translated that MoMo's H2 outlook is relatively controllable, dependent on consumer sentiment and agency/broadcaster enthusiasm, with new tax regulations potentially impacting revenue and gross margin. Regarding AI, the group is integrating AI into existing social products to enhance user experience (e.g., AI greetings, chat assistants) and has launched a standalone AI character role-playing app in Japan. Significant investment is also being made in underlying AI technology and infrastructure, leveraging MoMo's data to build social-specific large models.

Thomas Chong asked about the sustainability of MoMo's improved financial performance in the second half of 2025 compared to earlier expectations, and the company's strategy and future plans for AI applications, including AI greetings and chat assistants.

Answer

CEO Tang Yan and Director of Investor Relations Ashley Jing (translating for Tang Yan) explained that MoMo's second-half outlook is relatively controllable, depending on consumer sentiment and agency/broadcaster enthusiasm, which might be affected by new tax regulations. They are adjusting operational policies to enhance compliance while maintaining income. Tang Yan also detailed the group's AI strategy, including integrating AI into existing social products like MoMo for icebreaking and chat assistance, launching a standalone AI character chat app in Japan, and significant investments in underlying AI technology and large model applications based on MoMo's corpus to enhance user connection efficiency for MoMo, Tang Tang, and overseas products.

Thomas Chong from Jefferies questioned the 2025 outlook for the domestic Momo and Tantan businesses following changes in 2024, and asked for the revenue forecast for the China segment for the full year.

Answer

COO Sichuan Zhang highlighted product enhancements like AI-powered tools to stabilize the user base. CFO Cathy Peng provided specific financial guidance, projecting a low-teens percentage YoY decline for Mainland China revenue in Q2 and a decline of approximately 10% for the full year 2025. She noted this represents a significant moderation from 2024 and suggested the overall group top-line could see positive growth in the second half of the year.

Thomas Chong asked for details on the overseas business, specifically the key markets, revenue, and earnings for the Soulchill app. He also inquired about the strategic positioning of the two new apps, Yaha Live and AMAR, their current scale, and the overall overseas revenue and growth expectations for 2025.

Answer

COO Sichuan Zhang stated that Soulchill's revenue grew 50% in 2024 to nearly RMB 1 billion, driven by localization in Turkey, Egypt, and Gulf countries. She introduced Yaha Live and AMAR as new, promising apps in the MENA region. CFO Cathy Peng projected total overseas revenue to grow from RMB 1 billion in 2024 to a range of RMB 1.7 billion to RMB 2 billion in 2025, emphasizing that scaling with a focus on ROI is the priority over immediate profitability.

Thomas Chong of Jefferies asked for an update on Tantan's product upgrades, the timeline for completion, and the outlook for its user scale and revenue in Q4 and 2025, given its soft performance.

Answer

CEO Tang Yan explained Tantan's focus is on fixing core product experience issues, namely user authenticity and post-match interaction rates, with the current upgrade round expected to conclude in H1 2025. He anticipates user and revenue declines will continue for the next two quarters. CFO Cathy Peng added that while Tantan is profitable in 2024, cost controls will be a priority in 2025 to prevent it from returning to a loss as the top-line remains under pressure.

Thomas Chong of Jefferies inquired about the ongoing revamp of the Tantan app, asking about its current status, ultimate goals, and the expected impact on the segment's revenue and profitability.

Answer

CEO Yan Tang stated that the Tantan revamp aims to fundamentally improve the core dating experience by focusing on user authenticity and better match quality, even if it requires short-term financial sacrifices. CFO Cathy Peng added that the Tantan team has been given flexibility on financial targets to prioritize this user experience overhaul. She projected that Tantan's revenue decline in the second half might mirror the Q2 rate, but the company intends to maintain marketing spend and expects Tantan to remain profitable for the full year 2024.

Thomas Chong from Jefferies asked about the sustainability of Alibaba Cloud's accelerated 26% year-over-year revenue growth, the expected pace of monetization compared to U.S. peers, and the future margin outlook. He also inquired about performance across different industry sectors and the outlook for capital expenditures.

Answer

Alibaba Management attributed the cloud business's accelerated growth to robust AI demand for both training and inference workloads, particularly from industries like automotive, education, and multimedia. Management stated that the strategic priority is on growing user numbers and expanding use cases rather than short-term margin improvement. They reaffirmed their commitment to the three-year, RMB 380 billion investment plan for cloud and AI infrastructure, noting they have contingency plans to manage potential supply chain disruptions.

Thomas Chong asked about the investment strategy for the Taobao and Tmall Group (TTG), the resulting outlook for its EBITDA, and the potential user and GMV growth from the recent payment interoperability with WeChat Pay.

Answer

Executive Yongming Wu explained that TTG is in a heavy investment phase, focusing on user experience, diversified merchant supply, and technology. Consequently, he expects EBITDA to fluctuate in the coming quarters. Wu expressed high expectations for user growth from WeChat Pay integration, particularly in boosting Monthly Active Consumers (MACs), viewing it as a crucial long-term investment to drive incremental GMV.

Thomas Chong asked for an update on the status of Alibaba's Hong Kong primary listing and its inclusion in the Stock Connect, and also inquired about the long-term revenue contribution goal for AI within the cloud business.

Answer

CFO Toby Xu stated the company aims to complete its Hong Kong primary listing conversion by the end of August, pending shareholder approval. CEO Eddie Wu addressed the AI question, projecting that AI products will drive over half of the cloud segment's expected double-digit external revenue growth in the second half of the fiscal year due to strong demand for GPU-based computing.

Thomas Chong of Jefferies inquired about the recent price trends for hotels and air tickets, and asked for the company's projections for the remainder of the year.

Answer

CEO Jane Sun explained that in Q2, domestic hotel and air prices faced pressure despite healthy volume growth. She noted that domestic hotel prices are now stabilizing, with summer declines narrowing. For outbound travel, air ticket prices are softening year-over-year due to capacity recovery but remain above pre-pandemic levels, while hotel prices have been stable.

Thomas Chong of Jefferies inquired about Trip.com's perspective on vertical versus general AI agents in travel and the future development roadmap for its AI technologies.

Answer

Executive Chairman James Liang explained that vertical agents excel in real-time data and service integration, while general agents rely on OTAs for booking. He highlighted Trip.com's AI tools like TripGenie and Trip.Best, noting increased user engagement and a commitment to continuous enhancement to remain a reliable one-stop platform.

Thomas Chong from Jefferies asked for details on the domestic Average Daily Rate (ADR) trend during the summer, the factors contributing to price softness, and the expected impact on business performance.

Answer

CFO Xiaofan Wang explained that while summer prices improved sequentially, the year-over-year decrease in domestic ADR was due to a significant increase in hotel supply (up 20% YoY) and the diversion of high-end travelers to outbound destinations. She expects this pricing pressure to ease in Q4 and views the expanded supply as a long-term benefit for the platform.

Thomas Chong from Jefferies asked about the recent decline in domestic hotel average daily rates (ADR) and airfares, questioning if it signals weakening consumer spending, and also inquired about pricing trends for outbound travel.

Answer

CFO Xiaofan Wang confirmed the domestic price decline but attributed it to a shift in travel preferences towards outbound destinations and lower-tier cities, coupled with increased hotel and flight supply, rather than a downgrade in consumer spending. For outbound travel, she noted that air ticket prices are normalizing to about 15% above 2019 levels, while outbound hotel prices have remained stable year-over-year.

Thomas Chong of Jefferies inquired about the long-term development trend for JOYY's live streaming business following its stabilization in Q2 and asked for the group-level revenue outlook for the second half of the year.

Answer

Ting Li, Chairperson and CEO, explained that Q1 was the bottom and Q2's recovery was driven by paying user growth, particularly in Europe. She expects the sequential recovery to continue in H2, driven by operational activities and new products, with the business returning to steady year-over-year growth in 2026. For H2, she anticipates continued double-digit growth in ad tech and sequential growth at the group level, with both year-over-year and quarter-over-quarter growth expected in Q4.

Thomas Chong of Jefferies inquired about the business outlook for the second half of 2025, focusing on monetization trends for Bigo Live and the trajectory for cost optimization, operating expenses, and margins.

Answer

Chairperson and CEO Ting Li stated that live streaming revenue is expected to stabilize and resume quarter-over-quarter growth from Q2, while non-live streaming revenue growth should accelerate. VP of Finance Alex Liu added that BIGO's operating profit is anticipated to see positive QoQ growth in Q2, and the group's overall non-GAAP operating profit is expected to show an improving trend for the full year 2025.

Thomas Chong of Jefferies inquired about the business outlook for the second half of 2025, focusing on monetization trends for Bigo Live and the trajectory for cost optimization, operating expenses, and margins.

Answer

Chairperson & CEO Ting Li explained that the company now reports by revenue type (live streaming vs. non-live streaming). She anticipates live streaming revenue will stabilize in Q2 and resume quarter-over-quarter growth, while non-live streaming revenue growth will accelerate in the second half. VP of Finance Alex Liu added that Q1 margins improved due to cost optimizations and a favorable revenue mix shift. For the full year, he expects the group's non-GAAP operating profit to show an improving trend, with BIGO's profit remaining stable or growing and losses narrowing in other segments.

Thomas Chong of Jefferies inquired about the business outlook for the second half of 2025, focusing on monetization trends for Bigo Live and the trajectory of cost optimization, operating expenses, and margins for the full year.

Answer

Chairperson and CEO Ting Li addressed the monetization outlook, explaining a shift in reporting to focus on live streaming vs. non-live streaming revenue. She anticipates live streaming revenue will stabilize in Q2 and resume quarter-over-quarter growth, while non-live streaming revenue growth is expected to accelerate in the second half. VP of Finance Alex Liu discussed margins, noting Q1 improvements in both BIGO and other segments. He projected that for the full year 2025, the group's non-GAAP operating profit will show an improving trend.

Thomas Chong from Jefferies asked about the tangible business changes and financial impacts observed since launching the RMB100 billion support program, and its long-term effect on monetization. He also questioned the company's strategy for the Duo Duo grocery business, particularly as competitors exit the market.

Answer

Executive Director and Co-CEO Zhao Zhao Zhen explained that the support program has lowered merchant costs and driven efficiencies, with early positive effects in agriculture and manufacturing. Financially, this investment has led to slower revenue growth and a profit decline, a trend he expects to continue. Regarding Duo Duo grocery, he affirmed it is a difficult but meaningful business where PDD will increase investment, viewing it as a natural extension of its e-commerce operations that creates unique value in the fresh produce supply chain.

Thomas Chong of Jefferies inquired about the progress and outcomes of Dingdong's '4Gs strategy' (good users, good products, good services, and good mindshare) following its first six months of implementation.

Answer

Founder and CEO Changling Liang detailed the strategy's success, highlighting a comprehensive restructuring of product development divisions and a shift in performance metrics away from GMV towards quality indicators. Mr. Liang noted that 'good users' now constitute nearly 30% of users and 58% of GMV, with a high repurchase rate of at least eight orders monthly. He also stated that 'good products' now represent 40% of SKUs and contribute to 47% of GMV, demonstrating significant growth since the strategy's launch.

Thomas Chong from China International Capital Corporation inquired about Dingdong's '4G strategy,' asking for details on its execution and long-term competitive advantages.

Answer

Founder and CEO Liang Changlin explained that the 4G strategy (good users, good products, good services, good mind share) shifts the company's focus from price competition to superior quality. He detailed significant internal changes, including adjusting performance metrics to prioritize product quality and user satisfaction over pure GMV, and restructuring product development teams into independent business units. While acknowledging short-term impacts on growth and margins, Mr. Liang asserted this inside-out transformation will build genuine, lasting core competitiveness.

Thomas Chong inquired about the strategic importance of high-quality products for Dingdong and the specific strategies implemented for their development, requesting examples of successful supplier collaborations.

Answer

Founder and CEO Liang Changlin explained that Dingdong is moving beyond traditional supplier relationships to foster deeper partnerships. This involves opening key categories for collaboration, sharing IT capabilities, and providing financial support. He cited a partnership with a chicken supplier since 2019, which led to a 30% year-over-year sales increase for a customized free-range chicken product, demonstrating their model of mutual growth and value creation.

Thomas Chong inquired about the key drivers behind Dingdong's strong Q3 performance and the specific operational achievements from its recent summer campaign.

Answer

CEO Liang Changlin attributed the success to several operational improvements. He highlighted the rapid ramp-up of 80 new frontline fulfillment stations, an enhanced product structure with over 400 new SKUs in key categories, and significant gains in end-to-end efficiency from improved forecasting and delivery systems, which boosted order conversion rates. He also noted strong GMV growth of over 40% in lower-tier cities within the Jiangsu and Zhejiang regions.

Thomas Chong of Jefferies inquired about Apollo Go's long-term differentiation in the competitive autonomous driving landscape, the strategic role of its partnerships with Uber and Lyft, and its roadmap to profitability.

Answer

Co-Founder, Chairman & CEO Robin Li highlighted Apollo Go's leadership in both left- and right-hand drive markets, its validated business model with unit economic breakeven in low-fare cities, and its cost-efficient, purpose-built RT6 vehicle. He explained that partnerships with Uber and Lyft are key to an asset-light global expansion into higher-fare markets.

Thomas Chong of Jefferies asked for an elaboration on Baidu's overall capital allocation trends and key investment priorities for 2025.

Answer

Interim CFO Junjie He affirmed Baidu's commitment to increasing its AI investments in 2025. Key priorities include: 1) scaling AI Cloud infrastructure to meet rising demand, 2) advancing ERNIE foundation models, 3) expanding Apollo Go's autonomous driving operations, and 4) accelerating the AI transformation of Baidu Search. He also emphasized a continued focus on shareholder returns, noting the accelerated share repurchase program ($445 million since the start of Q1) will maintain a similar pace throughout the year.

Thomas Chong of Jefferies Financial Group Inc. asked for an elaboration on Baidu's overall capital allocation trend and its key investment priorities for 2025.

Answer

Interim CFO Junjie He affirmed Baidu's commitment to increasing AI investment in 2025, covering both CapEx and operating cash flow. Key priorities include scaling AI Cloud infrastructure, advancing ERNIE models, expanding Apollo Go, and accelerating the AI transformation of Search. While acknowledging near-term margin pressure from these investments, He emphasized their importance for long-term growth. He also highlighted shareholder returns as a priority, pointing to the accelerated share repurchase program, which bought back $445 million since the start of Q1.

Thomas Chong asked about Baidu's strategic investment focus for 2025 across its key segments: search, autonomous driving, cloud services, and foundation models. He also sought the outlook for full-year capital expenditures and shareholder returns.

Answer

Interim CFO Junjie He confirmed that capital allocation will prioritize advancing AI capabilities across all key segments, with a focus on disciplined ROI management. Regarding shareholder returns, He highlighted the significant acceleration of the buyback program, with over $1 billion repurchased since the start of 2024, and affirmed the plan to continue this pace under the existing $5 billion authorization.

Thomas Chong of Jefferies inquired about the competitive dynamics in the robotaxi market, how Apollo Go differentiates itself, and the company's future plans for spending and scaling the service.

Answer

Co-Founder and CEO Yanhong Li emphasized Baidu's competitive edge from over a decade of investment, leading to technological leadership and operational scale, with Apollo Go surpassing 8 million cumulative rides. He noted the cost-effectiveness of the RT6 vehicle (under $30,000 for mass production) as a key differentiator. Li stated that Baidu is actively exploring international expansion and asset-light strategies to enhance operational efficiency.

Thomas Chong of Jefferies requested more details regarding the company's debt management plan.

Answer

CFO Wang Jing responded, clarifying that the company's capital structure is healthy. She noted the outstanding balance of the 2028 convertible notes is now only $8 million, with sufficient cash to meet obligations. Furthermore, the domestic debt profile has improved to a 50/50 split between long-term and short-term loans, supporting both operations and future growth.

Thomas Chong from Jefferies asked for details on the applications of the AI Ad Placement Optimizer and its potential financial impact.

Answer

President Lei Jin detailed that the AI Ad Placement Optimizer automates the entire advertising process, from demand analysis and strategy to data analytics and optimization. He stated that in the medium to long term, the tool is expected to drive advertising revenue growth by improving advertiser ROI and enhance segment profitability by identifying high-quality, cost-efficient traffic.

Thomas Chong from Jefferies questioned when management anticipates a reacceleration in revenue growth for the Online Marketing Services segment, which has remained flat for six consecutive quarters.

Answer

President Lei Jin projected stronger growth momentum in the second half of the year, contingent on stable market conditions. He cited three key drivers: accelerated overseas advertising through new partnerships with Google and TikTok; the launch of AI-powered solutions like Youdao MagicBox; and deepened collaboration with NetEase Group, particularly in gaming promotions. He added that the impact from potential tariffs on e-commerce clients is expected to be minimal.

Thomas Chong of Jefferies inquired about the strategic priorities for the Learning Services segment in the upcoming year.

Answer

VP of Strategy and Capital Markets Peng Su explained that Youdao Lingshi is the core strategic priority for Learning Services in 2025, with expectations for continued growth in revenue and gross billings. Key initiatives include a comprehensive upgrade of AI services within Lingshi using DeepSeek for more personalized learning and implementing a data-driven feedback loop to update instructional videos based on student performance. He also noted that the ongoing structural adjustments in the segment are expected to conclude in the second half of 2025, leading to revenue stabilization.

Thomas Chong of Jefferies asked whether the resumed year-over-year growth in the smart devices segment during Q3 is sustainable for the future.

Answer

CEO Feng Zhou attributed the 25% YoY growth to a strategic focus on fewer, better products, particularly the successful Dictionary Pen X7 series, which now includes offline LLM features. He noted the team's enhanced capabilities and resilience after facing previous pressures. Dr. Zhou confirmed strong Double 11 sales and a product pipeline with new launches in Q4 and Q1, expressing confidence in continued growth and profitability for the segment.

Thomas Chong of Jefferies asked about the potential synergies from the recent deal with Ximalaya, focusing on cost optimization, product enhancements, and benefits for SVIP offerings.

Answer

Management stated that they could not comment in detail on the Ximalaya deal as it is still awaiting regulatory approval. However, they reiterated their belief in the strategic value of long-form audio as a complement to their music business, noting positive progress in their existing audio content. They expressed confidence that a successful deal would create opportunities to grow both subscription and advertising revenue.

Thomas Chong of Jefferies questioned the potential synergies from the proposed deal with Ximalaya, focusing on cost optimization, product enhancements, and benefits for SVIP offerings.

Answer

Management responded via a moderator, stating they could not comment in detail due to the deal pending regulatory approval. However, they affirmed their belief in the strategic value of long-form audio as a complement to music. They noted that if the deal proceeds, it is expected to help grow both subscription and advertising revenues, building on the progress of their existing audio content.

Thomas Chong from Jefferies asked about the outlook for operating expenses and margin trends into 2025, seeking color on potential cost levers and the trajectory for S&M and G&A spending.

Answer

An executive explained that the strong Q3 gross margin was driven by music revenue growth, disciplined cost management (ROC), self-commissioned content, and better social entertainment margins. For 2025, these drivers will persist, though GP margin growth may moderate. Operating expenses (S&M, G&A) are expected to grow at a much lower rate than revenue, supporting continued adjusted net profit margin expansion.

Thomas Chong asked about the performance of games other than Free Fire, such as Delta Force, and inquired how AI is specifically benefiting the gaming business by driving user time spent and monetization.

Answer

Founder, Chairman & Group CEO Forrest Li responded that new games like Delta Force are still in the early, fine-tuning stages. He expressed excitement about AI's impact on gaming, noting it already improves development productivity. For player engagement, he highlighted the potential for AI-powered teammates to boost retention and the exploration of generative AI to allow gamers to create their own content, making gameplay more immersive.

Thomas Chong from Jefferies asked about the impact of AI on the business, seeking to understand whether the primary benefit is coming from cost efficiencies, such as reduced labor costs, or from improved monetization and revenue generation.

Answer

Group CFO Hou Tianyu confirmed that AI is delivering benefits on both fronts. For revenue, AI-powered search and recommendation tools have improved conversion rates. For cost savings, he highlighted that AI chatbots now handle 80% of customer service queries, and AI models are making faster, more accurate decisions on return/refund cases, which significantly reduces the need for manual agent intervention and lowers operational costs.

Thomas Chong asked for commentary on Free Fire's life cycle and new game pipeline, as well as an update on logistics investment spending and its impact on e-commerce EBITDA margins.

Answer

Forrest Li, Chairman and CEO, described Free Fire as a service with 'evergreen' potential, highlighting its continued user growth as a sign of its longevity. On logistics, he clarified that investments are primarily opex-driven rather than capex-heavy and are already factored into EBITDA calculations, thus not expected to have a significant future impact on margins.

Thomas Chong from Jefferies inquired about the outlook for Sohu's marketing services revenue, the impact of macro uncertainty on advertising sentiment, the application of AI in operations, and the company's capital return strategy beyond its share buyback program.

Answer

Chairman & CEO Charles Zhang acknowledged that marketing revenue is weak due to the macroeconomic environment and consumption downgrades, with the auto sector remaining the largest category. He explained that AI improves productivity in gaming and enhances search within media apps, using open-source models. Regarding capital returns, Zhang stated there are no plans for dividends as the company needs a 'war chest' to fund user growth for its social network platforms.

Thomas Chong of Jefferies inquired about recent trends and the second-half outlook for marketing services across key advertiser categories, and also asked how AI is benefiting Sohu's advertising and online games operations.

Answer

Chairman and CEO Dr. Charles Zhang responded that in marketing services, the auto sector performed well while luxury goods declined. He noted the overall economic weakness makes the second-half outlook uncertain. Regarding AI, Dr. Zhang explained that Sohu's social network focus lessens its exposure to AI disruption, with benefits being marginal efficiency gains. For gaming, an executive confirmed AI is heavily used to improve efficiency in art, UI, and audio design.

Thomas Chong from Jefferies inquired about the drivers behind the soft Q1 brand advertising guidance, the wide range in the online gaming forecast, and the potential integration of DeepSeek AI technology across Sohu's platforms.

Answer

Chairman and CEO Dr. Charles Zhang attributed the soft advertising outlook to a weak macroeconomic situation causing advertisers to reduce spending. An executive clarified that Q1 gaming performance is expected to be flat quarter-over-quarter. Dr. Zhang also detailed current and future AI applications in media and gaming, including content generation, editing efficiency, and social interaction aids, while noting they are exploring DeepSeek possibilities.

Thomas Chong from Jefferies asked about the outlook for Sohu's online games business in 2025 and the expected trend for the company's operating margin over the next few years.

Answer

Changyou CEO Dewen Chen addressed the 2025 games outlook, stating the goal is to maintain stability in existing games while developing a pipeline of around 10 new titles, including 'NBA Absolute Superstar' and 'Hero: Three Kingdoms'. He also noted a new version of the TLBB PC game would begin testing soon. The question regarding the long-term operating margin trend was not addressed before the call concluded.

Thomas Chong of Jefferies inquired about the outlook for Autohome's media services revenue in the second half of 2025 and the company's expectations for this segment.

Answer

Management, via a moderator, stated that the media services business outlook is tied to OEM advertising budgets, which are expected to recover as the industry price war stabilizes. They expressed a more bullish view for the second half of the year, anticipating increased ad spending during the traditional 'golden September and silver October' peak season. Autohome aims to capture this recovery through its integrated online and offline service offerings.

Thomas Chong inquired about the Q1 2025 auto industry performance, its implications for Autohome, the full-year outlook, and the progress and future plans for the company's new retail business.

Answer

CEO Song Yang addressed the questions, noting that while overall auto sales grew, NEV growth slowed and industry profit margins compressed. She highlighted new government trade-in policies and a market shift from price wars to tech competition. For Autohome, the strategy involves leveraging intelligent tools like the 'starting price tool' and expanding its new retail network, which currently has nearly 200 locations. The company aims to exceed 500 total locations by the end of 2025, focusing on lower-tier markets to drive future growth.

Thomas Chong of Citigroup Inc. asked about the strategic rationale for the transaction with CARTECH, its future business impact, and the management's outlook for the 2025 auto market in light of recent government policies.

Answer

CEO Song Yang explained that Haier's strategic investment recognizes Autohome's market potential and will inject new vitality, creating synergies in user experience, smart hardware, and new retail by leveraging CARTECH's operational systems. He noted that Ping An will remain a key shareholder. Regarding the market, Mr. Yang attributed the Q4 2024 recovery to year-end sales efforts and policy incentives. For 2025, he projects stable and positive growth for the auto market, forecasting a 2% increase in retail sales, driven by favorable policies, NEV growth, and continued, albeit stabilizing, price competition.

Thomas Chong of Jefferies requested an update on the AI-related CapEx and OpEx breakdown, asked if the U.S. chip ban would affect Q2 CapEx momentum, and questioned how the industry trend towards smaller, distilled models might impact cloud revenue.

Answer

CFO Haijian He stated Q1 CapEx was RMB 605 million and detailed a diversified financing strategy including leasing and bank loans to manage cash. CEO Zhou Tao, via a translator, addressed the other points, stating that while the chip ban will have a long-term impact, the company is prepared with inventory and a strategy to substitute with domestic resources. He argued the trend toward smaller models is a net positive, creating incremental revenue from new customer segments and potentially shifting more of the Xiaomi ecosystem's inference workloads onto Kingsoft Cloud's platform.

Thomas Chong requested commentary on the revenue trends for each business segment in 2025 and the company's overall profitability outlook.

Answer

CFO Wang Han stated that 2025 is a year of business model optimization. For Marketing Services, low-quality content is down while client mix and AI products are improving. Paid Membership is expanding its content mix. Vocational Training is shifting to a more social, knowledge-sharing model. He expressed confidence that due to these operational refinements, the company's financial performance will exceed initial expectations for the year.

Thomas Chong of Jefferies requested commentary on the revenue trends for each of Zhihu's business segments in 2025 and the company's overall profitability outlook.

Answer

CFO Wang Han described 2025 as a pivotal year for business model optimization. He detailed that marketing services are improving client mix, paid membership is broadening its content offerings, and vocational training is shifting to a more community-integrated, knowledge-sharing model. He concluded by expressing confidence that financial performance for the year will exceed initial expectations.

Thomas Chong from Jefferies asked about the key drivers for the strong performance in brand and performance-based advertising during the 618 shopping festival and Zhihu's main competitive advantages in this area.

Answer

CFO Wang Han attributed the success to Zhihu's unique ability to help brands build value among a high-quality audience within a professional discussion environment. He highlighted successful case studies with Toshiba and Vivo, which demonstrated how Zhihu's trusted community can drive both positive word-of-mouth and strong sales for high-value products, establishing this as a natural path for commercialization.

Thomas Chong from Jefferies asked about the revenue outlook and long-term strategy for Zhihu's marketing services business.

Answer

CFO Wang Han acknowledged an expected decrease in CCS revenue due to a strategic focus on community trustworthiness, but noted that brand advertising grew 40% year-over-year. The long-term strategy is to shift focus from in-platform traffic to leveraging Zhihu's brand premium, where brands use the platform to establish credibility and professional market awareness, validating the endorsement value of Zhihu's content.

Thomas Chong of Jefferies asked about the primary drivers for the 51.5% year-over-year growth in transaction service revenue and the company's commission strategy focus for the quarter.

Answer

Chief Financing and Investment Officer Chong Cai attributed the growth to expanding business scale and improving order quality. He highlighted the increase in commission order coverage to 85% and a 12% YoY rise in monetization per order to RMB 25.5. The strategy is shifting from a city-based to a more refined order-based exemption model.

Thomas Chong asked for an overview of the company's overall development strategy for the upcoming year, 2025.

Answer

CFO Chong Cai outlined a strategy focused on steady business growth, with an expected order volume increase of at least 15%. Financially, the focus will be on optimizing the revenue structure by reducing the freight brokerage business's share and elevating the transaction service business to be the core engine for revenue and profit growth. This shift is intended to significantly enhance overall profit margins and shareholder returns.

Thomas Chong asked for management's outlook on advertising spending sentiment for Q2, including expectations for different industry verticals, and requested an update on the company's current advertising products and strategies.

Answer

CEO Gaofei Wang stated that Q2 ad trends are expected to be similar to Q1, with strong performance anticipated from the automotive and handset sectors, the latter expected to rebound. The gaming vertical remains challenged. The core ad strategy continues to focus on leveraging Weibo's strength as a platform for new product launches and content marketing. He also highlighted ongoing investment in performance-based ads and the use of AI to enhance information-feed ad products to capture more budget.

Thomas Chong of Jefferies inquired about recent consumer sentiment, the monthly GMV trend in Q2, the full-year 2025 outlook for revenue and earnings, and the strategy for the upcoming June 18th shopping festival.

Answer

CEO Eric Shen (interpreted by Jessie Fan) noted improving sales momentum in March and April and reaffirmed the company's expectation to return to growth in the second half of 2025. He stated that full-year net margins should be comparable to 2024. Regarding the June 18th promotion, he explained that consumers are accustomed to frequent sales and now focus on value for essential needs, a trend Vipshop will cater to with unique, off-price deals.

Thomas Chong of Jefferies inquired about Vipshop's Q1 2025 revenue guidance, asking for color on year-to-date performance and current consumer sentiment. He also requested an outlook for full-year 2025 revenue and margin trends.

Answer

CEO Eric Shen stated that year-to-date performance is on track with guidance and consumer sentiment is marginally better than in prior quarters. For the full year 2025, he expressed the goal of returning to positive growth in both GMV and revenue by pursuing a high-quality growth strategy while maintaining solid profitability, noting the company may invest a portion of profits into growth initiatives.

Thomas Chong of Jefferies inquired about recent consumer sentiment, GMV trends in Q4, the outlook for GMV and margins in 2025, and the expected timeline for returning to positive GMV growth.

Answer

CEO Eric Shen, via interpreter Jessie Fan, stated that quarter-to-date performance is within guidance, with October's strength attributed to an early Double 11 promotion. He noted that while consumer sentiment may have bottomed out, it remains rational, and a meaningful recovery has not yet occurred. For 2025, the outlook is unpredictable, and the company will plan cautiously, expecting Q4 trends to extend into the new year. Management is focused on growing profit dollars and maintaining stable margins with disciplined cost control.

Thomas Chong from Jefferies asked how management plans to allocate resources between domestic and overseas markets over the next few years.

Answer

CEO William Ding, via interpreter Bill Pang, stated that NetEase has sufficient resources to pursue both domestic and overseas markets simultaneously. He highlighted the company's 20-year history of accumulating tools, processes, and talent. While acknowledging the need to better understand overseas gamers, he affirmed that from a resource and execution standpoint, NetEase is well-equipped for both fronts.

Thomas Chong of Jefferies questioned the sequential increase in G&A expenses in Q4 and asked for the company's outlook on operating profit for 2025.

Answer

Hao Cao, Vice President of Finance, explained that the quarter-over-quarter increase in G&A expenses was primarily due to costs associated with workforce optimization as part of the company's business adjustments. Looking ahead to 2025, Cao stated that despite potential pressure on revenue growth from these adjustments, the company remains committed to optimizing its cost structure and controlling expenses. As a result, Douyu expects to see an improvement in its operating losses for 2025 compared to the previous year.

Thomas Chong of Jefferies asked for commentary on the sequential increase in G&A expenses and for management's outlook on operating profit for 2025.

Answer

VP of Finance Hao Cao clarified that the quarter-over-quarter increase in G&A expenses was primarily due to costs related to workforce optimization as part of the company's business adjustments. Looking ahead to 2025, he stated that despite potential pressure on revenue, the company remains committed to optimizing its cost structure and controlling expenses to improve gross margin and business efficiency. He concluded by stating they expect some improvement in operating losses for 2025 compared to the previous year.

Thomas Chong of Jefferies questioned the change in gross profit margin in Q3, the outlook for the full year 2024, and whether profit improvements are expected in 2025 following operational adjustments.

Answer

Hao Cao, Vice President of Finance, attributed the Q3 gross margin decline to live streaming revenues falling faster than associated costs. He noted that revenue sharing fees and fixed content costs, like copyright fees and streamer base pay, increased as a percentage of revenue. While operating expenses are being controlled, the effects of cost restructuring are gradual, and the near-term goal is to contain losses and steadily improve financial performance over time.

On behalf of Thomas Chong, an analyst asked about the stability of DouYu's streamer base amidst competition and whether the company plans significant future investments in streamer resources.

Answer

Lingling Kong, from the Interim Management Committee, stated that streamer assets are currently stable. She detailed a multi-faceted strategy that includes selectively renewing top-tier contracts, enhancing operations in niche game segments to improve stickiness, and providing streamers with diverse income opportunities like game prop sales. The company is also actively recruiting new talent with revised models and better incentives.

Thomas Chong from Jefferies asked for management's comments on the softness in mobile MAUs during the first quarter and the outlook for this key metric.

Answer

An executive explained that the MAU decline was primarily due to competition from short video platforms, affecting mostly low-engagement users with minimal impact on monetization. In response, DouYu is focusing on core user operations, enhancing cross-platform content collaborations, and promoting game prop sales. While anticipating potential downward pressure on MAU in 2024, the company is actively pursuing a 'second growth engine' through new products and models.

Thomas Chong of Jefferies asked about the key factors behind Huya's shareholder return strategy, particularly the newly announced 2025-2027 dividend plan.

Answer

Junhong Huang, Acting Co-CEO and SVP, explained that the three-year, no-less-than $400 million dividend plan is designed to reward shareholders, optimize capital structure, and improve cash utilization. He highlighted Huya's strong financial position, with over $900 million in cash and no debt at the end of 2024, ensuring sufficient funds remain for business development post-dividend. Huang also confirmed the extension of the existing share repurchase program, of which $63.6 million has been utilized, until March 2026.

Thomas Chong asked for an update on the live streaming revenue trend and the overall outlook for this core business segment.

Answer

Executive Junhong Huang acknowledged that live streaming revenue remains under pressure from the soft macroeconomic environment and weak user spending on tipping. While short-term pressure is expected to continue, management sees future flexibility as the economy improves. The company's strategy is to maintain user engagement through content investment and technology improvements to prepare for future diversified commercialization. In the long run, the expansion of game-related services is expected to bring more stability to the overall business.

Thomas Chong asked about advertising monetization, specifically the percentage of merchants using ad solutions and their performance. He also inquired about how foreign exchange (Forex) trends are factored into the 2025 guidance.

Answer

President & COO Alex Hungate reported that advertising penetration of GMV grew to 1.7% in Q4, with merchant adoption increasing significantly and retention at approximately 75%. He noted the return on ad spend is 5-8x for merchants. CFO Peter Oey explained that the 2025 guidance uses prevailing spot rates and that the company tends to be conservative on FX assumptions at the start of the year.

Thomas Chong of Jefferies inquired about the monthly sales performance in the period following the Double 11 event. He also asked for the outlook on key categories such as luxury, apparel, FMCG, and consumer electronics.

Answer

Arthur Yu, President of Baozun E-Commerce, noted a softening of sales across all categories post-Double 11 due to heavy promotions, but expressed hope for an apparel recovery in December with colder weather. He described the overall category outlook for next year as flat and cautious. However, he emphasized that the current market creates opportunities for high-quality service providers like Baozun, as brands focus on building their infrastructure and capabilities.

Thomas Chong inquired about the consumer segment, expectations for Tmall versus non-Tmall channels, the competitive landscape for the e-commerce segment in the second half of the year, and the outlook for the upcoming Double 11 shopping festival.

Answer

Arthur Yu, President of Baozun E-commerce, responded that Tmall is seeing a recovery while Douyin continues double-digit growth, a trend expected to persist. He highlighted the emergence of true omnichannel operations across platforms like Little Red Book and Kuaishou. For Double 11, he anticipates an earlier start and longer duration, which presents a value-added opportunity for Baozun to help brands navigate the increased complexity and replicate their strong 618 performance.

Thomas Chong asked for the reasons behind the new home business outperforming the broader industry and requested commentary on the segment's alpha and monetization rate trends.

Answer

CEO Yongdong Peng attributed the outperformance to robust operational execution, expanded channel service coverage, and enhanced sales capabilities. He highlighted deeper strategic collaborations with top-tier developers, particularly state-owned enterprises, which doubled year-over-year. Peng also noted that improved agent incentives and technology tools that better identify potential customers have significantly boosted transaction efficiency and sales volume, allowing Beike to outperform the market without compromising its monetization rate.