Tencent beats expectations with 15% revenue growth, AI investments paying off

Investing.com -- Tencent Holdings Ltd (F:NNN1y) on Thursday reported solid third quarter results that exceeded analyst expectations, with total revenue increasing 15% YoY to RMB192.9 billion, 2% above consensus estimates.

The company’s strategic investments in artificial intelligence are showing positive returns across multiple business segments.

Non-IFRS net income rose 19% YoY to RMB72.8 billion, significantly outpacing consensus estimates of RMB66 billion. Adjusted earnings per share reached RMB7.575. The company’s operating margin improved to 38% from 37% in the same period last year, demonstrating continued operating leverage.

"During the third quarter of 2025, we achieved solid revenue and earnings growth, reflecting healthy trends across games, marketing services, and fintech and business services," said Ma Huateng, Chairman and CEO of Tencent.

"Our strategic investments in AI are benefitting us in business areas such as ad targeting and game engagement, as well as in efficiency enhancement areas such as coding, and game and video production."

By segment, Tencent’s Value-Added Services (VAS) revenue grew 16% YoY to RMB95.9 billion, with domestic games revenue increasing 15% to RMB42.8 billion.

International games revenue surged 43% YoY to RMB20.8 billion, significantly exceeding analyst expectations of RMB18.3 billion, driven by higher revenues from Supercell’s games and newly acquired studios.

Marketing Services revenue rose 21% YoY to RMB36.2 billion, benefiting from higher ad impressions and improved eCPMs through AI-powered ad targeting. Fintech and Business Services revenue increased 10% YoY to RMB58.2 billion, in line with consensus estimates.

The company’s newly released game Delta Force ranked among the top 3 games industry-wide by gross receipts during the quarter, while VALORANT MOBILE has become China’s most successful mobile game launch year-to-date.

Capital expenditure decreased 24% YoY to RMB13 billion, representing 7% of total revenue, down from RMB19.1 billion in the previous quarter. Free cash flow remained flat YoY at RMB58.5 billion, while total cash increased 16% YoY to RMB493.3 billion.

During the quarter, Tencent repurchased approximately 35.4 million shares on the Hong Kong Stock Exchange for an aggregate consideration of approximately HKD21.1 billion.

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