Tencent's Q2 Earnings Surge: AI and Gaming Drive 15% Revenue Growth

China's Tencent beats Q2 revenue forecasts as gaming, AI fuel growth

BEIJING, Aug 13 (Reuters) - Tencent (0700.HK), opens new tab reported second-quarter revenue growth of 15% on Wednesday, driven by robust gaming performance and deployment of AI across services and platforms including WeChat. For the three months to June, the Chinese technology giant reported revenue of 184.5 billion yuan ($25.7 billion), exceeding analyst estimates of 178.5 billion yuan, according to LSEG data. Gaming remained a key growth driver, with domestic revenue rising 17% to 40.4 billion yuan and international revenue climbing 35% to 18.8 billion yuan. The strong performance was fueled by flagship titles including Honor of Kings and Dungeon & Fighter Mobile. Marketing services revenue increased 20% year-on-year to 35.8 billion yuan, bolstered by the use of AI to enhance the targeting of adverts. Net profit for the quarter reached 55.6 billion yuan, surpassing analyst expectations of 52.3 billion yuan, LSEG data showed. Tencent has significantly ramped up its AI investments over the past two years, with the company allocating increasingly large portions of its capital expenditure to AI initiatives. The company's total capital expenditure was 76.8 billion yuan in 2024 and management has said that 2025 capital spending would rise to the "low teens" as a percentage of total revenue. Second-quarter capital expenditure more than doubled year-to-year to 19.1 billion yuan, according to the earnings release. The company has developed its own large language model, Hunyuan, launching the latest "Turbo S" version in February. But Tencent has also embraced third-party models, notably integrating DeepSeek's technology across its platforms including WeChat, which has over 1 billion monthly active users. Its AI assistant Yuanbao became China's most-downloaded iPhone app in early March after the DeepSeek integration, overtaking DeepSeek's own application. ($1 = 7.1756 Chinese yuan renminbi) Reporting by Liam Mo and Brenda Goh Editing by Bernadette Baum, Aidan Lewis Our Standards: The Thomson Reuters Trust Principles., opens new tab

Chinese tech giant Tencent's quarterly revenue jumps 15% on AI investments, gaming unit boost

Tencent on Wednesday reported a 15% jump in second-quarter revenue as a strong performance in its gaming unit and AI investments boosted growth. Here's how Tencent did in the first quarter of 2025: * Revenue: 184.504 billion Chinese yuan ($25.7 billion), compared to 161.117 billion Chinese yuan in the same period last year * Operating profit: 63.052 billion yuan, versus 57.313 billion yuan last year "During the second quarter of 2025, we delivered double-digit revenue and non-IFRS operating profit growth on a year-on-year basis, as we invested in, and also benefitted from, utilising AI," said Tencent CEO Ma Huateng.

Why Tencent Rallied Today | The Motley Fool

Tencent, which is arguably the best company in China, reported second-quarter earnings that apparently impressed investors. It's easy to see why; revenue growth accelerated relative to the prior quarter and year, along with continued margin expansion. Unsurprisingly, artificial intelligence leadership was mentioned as a key factor behind the top-line growth and cost controls. Tencent's revenue is on a $100 billion run-rate, so it's really impressive that the company was able to accelerate its revenue growth in light of the law of large numbers. Total revenue grew 15% year over year, a higher rate than the 13% rate last quarter and the 8% growth rate in the year-ago quarter. Every major segment for Tencent grew double-digits, reflecting broad-based strength, except for Social Networks, which saw just 6% growth due to a lack of compelling new content in video streaming. Still, the other major segments including Domestic Games and International Games grew 17% and 35%, respectively. Marketing revenue was up 20%, and FinTech and Business Services revenue was up 10%. Impressively, margins also expanded with gross margins expanding by 1.1 percentage points relative to last quarter. While adjusted (non-IFS) operating margins fell quarter over quarter, that appears to be a seasonal trend possibly around compensation. Relative to the prior year, adjusted operating margins expanded by 1.2 percentage points to a strong 37.5%. The acceleration shows the Chinese economy, which had been in near-recessionary conditions for a couple years, may finally be recovering on the back of last year's stimulus measures. But some of the acceleration could also be due to AI. Management touted the use of AI across all its business segments, including game and content production, online advertising effectiveness, and Tencent's cloud business. For those willing to invest in China, Tencent should be at the top of the list. The company is diversified across not one but several high-margin businesses, and allocates profits effectively across dividends, buybacks, and investments in other companies.

Tencent accelerates in Q2, boosted by gaming and AI

Tencent posted adjusted net income of RMB 64.8bn (approximately €8.2bn) in Q2 2025, up 11% y-o-y. Adjusted net income attributable to shareholders rose 10% to RMB 63.1bn, and 20% excluding items related to associated companies. Adjusted basic EPS was RMB 6.93, up nearly 17%. Revenue reached RMB 184.5bn (€23.3bn), up 15%. Adjusted EBITDA climbed 24% to RMB 85.1bn, representing a margin of 46%. Free cash flow stood at RMB 43bn (+7%). In detail, value-added services (VAS) - which include games, social networks, music and video - remained the main driver, with revenue up 16% to RMB 91.4bn. Domestic games grew 17% thanks to Delta Force and Honor of Kings, while international revenues jumped 35%. Marketing services gained 20% to RMB 35.8bn, driven by advertising AI. The FinTech and business services segment grew by 10%. "We have achieved solid growth by capitalizing on AI in our core businesses," said CEO Ma Huateng. Tencent has confirmed its strategic priorities, with no change to its guidance at this stage.

Tencent Posts Earnings Beat as AI Buoys Game, Ad Businesses -- Update

Tencent Holdings kicked off the earnings season for China's tech behemoths with faster-than-expected profit growth as its AI advancements led to stronger earnings from its game and marketing businesses, buffering a ramp-up in spending on the new technology. The WeChat operator--China's largest company by market capitalization--is in an artificial-intelligence race with other Chinese tech giants such as Alibaba and startups like DeepSeek, seeking to build top AI models and enhance its offerings that span gaming, social media, digital payments and cloud services. Despite its heavy AI investment, Tencent posted an earnings beat on both the top and bottom lines on Wednesday, surprising analysts who had largely expected its profit growth to start slowing from the second quarter. Net profit for the three months ended June rose 17% to 55.63 billion yuan, equivalent to $7.75 billion, as contributions from domestic games and video accounts--high-margin businesses--helped to mitigate rising costs. Revenue increased 15% to a new quarterly record of 184.50 billion yuan, growing by double digits for a third straight quarter. Capital expenditure for the period more than doubled from a year earlier but was lower than the 27.48 billion yuan recorded in the first quarter, putting it in line with Tencent President Martin Lau's earlier projection for 2025 capex as a percentage of revenue to reach the low teens. Tencent's core gaming business maintained solid momentum, with revenue from domestic games rising 17%, boosted by legacy titles, such as "Honor of Kings," as well as substantial deferred revenue in the first quarter. Revenue from the international games segment surged 35%. The company said it leveraged AI in games to accelerate content production and empower marketing activities. Among the games in its pipeline, "Valorant Mobile," a first-person shooter game adapted from its PC version, is the next most anticipated mobile title from Tencent. Marketing services revenue sustained a rapid growth of 20%, which the company attributed to its upgraded advertising foundation model. The company's comments on AI all point to an "early sign of leveraging AI in improving core business," Citi analysts said in a note. Nvidia's resumption of H20 chip sales to China is also good news for the country's top AI spenders such as Tencent. However, Beijing's recent scrutiny of the chip's security risks has turned it into a bargaining chip in U.S.-China trade negotiations and creates new uncertainties for Chinese customers. Ahead of the results, Tencent's Hong Kong-listed shares rose 4.7% to close at their highest level in four years. Analysts said the recent rally in the stock likely reflects the market's renewed enthusiasm for AI's potential, with Tencent positioned to be a major beneficiary. That is especially so following Meta's strong earnings, Morningstar analyst Ivan Su said, as many have overlooked the long-term profits these investments could deliver until recently.