Sustained High Quality Revenue Growth Operating Leverage to Support Strategic AI Investments over Longer Term
HONG KONG, May 14, 2025 /PRNewswire/ -- Tencent Holdings Limited (HKEX: 00700 (HKD Counter) and 80700 (RMB Counter), "Tencent" or "the Company"), a world-leading Internet and technology company in China, today announced the unaudited consolidated results for the quarter ended 31 March 2025 ("1Q2025").
Mr. Ma Huateng, Chairman and CEO of Tencent, said, "During the first quarter of 2025, our high-quality revenue streams sustained their solid growth trajectory. AI capabilities already contributed tangibly to businesses, such as performance advertising and evergreen games. We also stepped up our spending on new AI opportunities, such as the Yuanbao application and AI in Weixin. We believe the operating leverage from our existing high-quality revenue streams will help absorb the additional costs associated with these AI-related investments and contribute to healthy financial performance during this investment phase. We expect these strategic AI investments will create value for users and society, and generate substantial incremental returns for us over the longer term."
Total revenues were RMB180.0 billion (USD25.1 billion[2]), up 13% over the first quarter of 2024.
Gross profit was RMB100.5 billion (USD14.0 billion), up 20% YoY.
On a non-IFRS basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items:
Operating profit was RMB69.3 billion (USD9.7 billion), up 18% YoY. Operating margin increased to 39% from 37% last year.
Profit for the period was RMB 62.7 billion (USD8.7 billion), up 22% YoY.
Profit attributable to equity holders of the Company for the period was RMB61.3 billion (USD8.5 billion), up 22% YoY.
Basic earnings per share were RMB6.735. Diluted earnings per share were RMB6.583.
On an IFRS basis:
Operating profit was RMB57.6 billion (USD8.0 billion), up 10% YoY. Operating margin decreased to 32% from 33% last year.
Profit for the period was RMB49.7 billion (USD6.9 billion), up 17% YoY.
Profit attributable to equity holders of the Company for the quarter was RMB47.8 billion (USD6.7 billion), up 14% YoY.
Basic earnings per share were RMB 5.252. Diluted earnings per share were RMB5.129.
Capital expenditure was RMB27.5 billion (USD3.8 billion), up 91% YoY.
Total cash was RMB476.0 billion (USD66.3 billion) and free cash flow was RMB47.1 billion (USD6.6 billion), down 9% YoY. Net cash position totalled RMB90.2 billion (USD12.6 billion).
As at 31 March 2025, fair value of our shareholdings[3] in listed investee companies (excluding subsidiaries) totalled RMB653.4 billion (USD91.0 billion) and the carrying book value of our shareholdings in unlisted investee companies (excluding subsidiaries) was RMB337.9 billion (USD47.1 billion).
During the first quarter of 2025, the Company repurchased approximately 43.0 million shares on the Hong Kong Stock Exchange for a consideration of approximately HKD17.1 billion.
[1] Non-IFRS adjustments excludes share-based compensation, M&A related impact such as net (gains)/losses from investee companies, amortisation of intangible assets, impairment provisions/(reversals), SSV & CPP, income tax effects and others
[2] Figures stated in USD are based on USD1 to RMB7.1782
[3] Including those held via special purpose vehicles, on an attributable basis
1Q2025 Business Review and Outlook
We provided more onboarding support for Mini Shops merchants, in order to enrich the range of branded product listings, contributing to rapid year-on-year growth in GMV.
We rolled out AI features within Weixin to provide more interactive user experiences and increase productivity for content creators and developers. For example, we integrated our AI service Yuanbao as a Weixin contact, powered Weixin Search with large language models (LLMs), and provided a text-prompt image generating tool for Official Accounts.
Tencent Video maintained its leading position in China's long-form video market with 117 million[4] video subscribers. Tencent Music sustained its industry leadership in China's music streaming market with 123 million[5] music subscribers.
Several of our evergreen games, including Honour of Kings and CrossFire Mobile, achieved record high levels of gross receipts during the seasonally strong first quarter.
Delta Force's domestic user base reached a post-launch record of 12 million peak DAU in April 2025. Delta Force became the sixth most popular mobile game by average DAU industry-wide[6], and the highest-DAU new game released in the last three years industry-wide.
We upgraded our advertising technology platform with enhanced generative AI capabilities, such as improved image generation and video editing to accelerate advertisement creation, digital human solutions to facilitate live streaming activities, and deeper understanding of merchandise and user interests to deliver better recommendations.
Tencent Cloud's audio and video solutions ranked first by revenue for the seventh consecutive year in China[7]. We enhanced the audio and video solutions' content generation, media processing and real-time interaction experience by integrating LLM capabilities.
[4] The average daily number of paying users for the first quarter of 2025
[5] The average number of paying users as of the last day of each month during the first quarter of 2025
[6] By DAU among mobile games in domestic market during the first quarter of 2025, according to QuestMobile
[7] During 2018-2024, according to IDC
Operating Metrics
As at
31March
2025
As at
31 March
2024
Year-
on-year
change
As at
31 December
2024
Quarter-
on-quarter
change
(in millions, unless specified)
Combined MAU of Weixin
and WeChat
1,402
1,359
3 %
1,385
1 %
Mobile device MAU of QQ
534
553
-3 %
524
2 %
Fee-based VAS paying
users
268
260
3 %
262
2 %
1Q2025 Management Discussion and Analysis
Revenues from VAS increased by 17% year-on-year to RMB92.1 billion for the first quarter of 2025. Domestic Games revenues were RMB42.9 billion, representing a 24% year-on-year increase from a low base in the same period last year, driven by growth in revenues from Honour of Kings and Peacekeeper Elite, as well as contributions from recently released DnF Mobile and Delta Force. International Games revenues were RMB16.6 billion, reflecting a 23% year-on-year increase (22% increase on a constant currency basis), driven by growth in revenues from Brawl Stars, Clash Royale and PUBG MOBILE. Social Networks revenues rose by 7% year-on-year to RMB32.6 billion, driven by growth in app-based game virtual item sales, music subscription revenues and Mini Games platform service fees.
Revenues from Marketing Services[8] were RMB31.9 billion for the first quarter of 2025, reflecting a 20% year-on-year increase. This growth was primarily due to robust advertiser demand for Video Accounts, Mini Programs and Weixin Search inventories, supported by higher user engagement, ongoing AI upgrades to our advertising platform, and improvements to the transaction ecosystem within Weixin. Marketing Services revenues increased across most major industry categories during the quarter.
Revenues from FinTech and Business Services increased by 5% year-on-year to RMB54.9 billion for the first quarter of 2025. FinTech Services revenue growth was due to higher revenues from consumer loan services and wealth management services. Business Services revenue growth was driven by an increase in cloud services revenues and eCommerce technology service fees.
[8] Starting third quarter of 2024, we have renamed this revenue segment from "Online Advertising" to "Marketing Services" to better represent the breadth of our marketing solutions and accompanying technology services across our online marketing properties
About Tencent
Tencent uses technology to enrich the lives of Internet users.
Our communication and social services, Weixin and QQ, connect users with each other and with digital content and services, both online and offline, making their lives more convenient. Our targeted marketing services helps advertisers reach out to hundreds of millions of consumers in China. Our FinTech and business services support partners' business growth and assist their digital upgrade.
Tencent invests heavily in talent and technological innovation, actively promoting the development of the Internet industry. Tencent was founded in Shenzhen, China, in 1998. Tencent has been listed on the Main Board of the Stock Exchange of Hong Kong since 2004.
To supplement the consolidated results of the Group ("the Company and its subsidiaries") prepared in accordance with IFRS, certain additional non-IFRS financial measures (in terms of operating profit, operating margin, profit for the period, profit attributable to equity holders of the Company, basic EPS and diluted EPS) have been presented in this press release. These unaudited non-IFRS financial measures should be considered in addition to, not as a substitute for, measures of the Group's financial performance prepared in accordance with IFRS. In addition, these non-IFRS financial measures may be defined differently from similar terms used by other companies.
The Company's management believes that the non-IFRS financial measures provide investors with useful supplementary information to assess the performance of the Group's core operations by excluding certain non-cash items and certain impact of investment-related transactions. In addition, non-IFRS adjustments include relevant non-IFRS adjustments for the Group's major associates based on available published financials of the relevant major associates, or estimates made by the Company's management based on available information, certain expectations, assumptions and premises.
Forward-Looking Statements
This press release contains forward-looking statements relating to the business outlook, estimates of financial performance, forecast business plans and growth strategies of the Group. These forward-looking statements are based on information currently available to the Group and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realised in the future. Underlying these forward-looking statements are a lot of risks and uncertainties. In light of the risks and uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as representations by the Board or the Company that the plans and objectives will be achieved, and investors should not place undue reliance on such statements.
CONDENSED CONSOLIDATED INCOME STATEMENT
RMB in millions, unless specified
Unaudited
Unaudited
1Q2025
1Q2024
1Q2025
4Q2024
Revenues
180,022
159,501
180,022
172,446
VAS
92,133
78,629
92,133
79,022
Marketing Services
31,853
26,506
31,853
35,004
FinTech and Business Services
54,907
52,302
54,907
56,125
Others
1,129
2,064
1,129
2,295
Cost of revenues
(79,529)
(75,631)
(79,529)
(81,793)
Gross profit
100,493
83,870
100,493
90,653
Gross margin
56 %
53 %
56 %
53 %
Selling and marketing expenses
(7,866)
(7,536)
(7,866)
(10,285)
General and administrative expenses
(33,664)
(24,809)
(33,664)
(31,403)
Other gains/(losses), net
(1,397)
1,031
(1,397)
2,513
Operating profit
57,566
52,556
57,566
51,478
Operating margin
32 %
33 %
32 %
30 %
Net gains/(losses) from investments
and others
1,407
656
1,407
1,119
Interest income
3,748
4,248
3,748
3,910
Finance costs
(3,860)
(2,826)
(3,860)
(2,512)
Share of profit/(loss) of associates and
joint ventures, net
4,581
2,186
4,581
9,253
Profit before income tax
63,442
56,820
63,442
63,248
Income tax expense
(13,717)
(14,169)
(13,717)
(11,781)
Profit for the period
49,725
42,651
49,725
51,467
Attributable to:
Equity holders of the Company
47,821
41,889
47,821
51,324
Non-controlling interests
1,904
762
1,904
143
Non-IFRS operating profit
69,320
58,619
69,320
59,475
Non-IFRS profit attributable to equity
holders of the Company
61,329
50,265
61,329
55,312
Earnings per share for profit
attributable to equity holders of
the Company
(in RMB per share)
- basic
5.252
4.479
5.252
5.597
- diluted
5.129
4.386
5.129
5.485
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
RMB in millions, unless specified
Unaudited
1Q2025
1Q2024
Profit for the period
49,725
42,651
Other comprehensive income, net of tax:
Items that may be subsequently reclassified to profit or loss
Share of other comprehensive income of associates and joint ventures
652
(337)
Transfer of share of other comprehensive income to profit or loss upon disposal
and deemed disposal of associates and joint ventures
-
(30)
Transfer to profit or loss upon disposal of financial assets at fair value through
other comprehensive income
1
1
Net gains from changes in fair value of financial assets at fair value through other
comprehensive income
106
10
Currency translation differences
2,294
(3,929)
Net movement in reserves for hedges
(213)
(782)
Items that will not be subsequently reclassified to profit or loss
Share of other comprehensive income of associates and joint ventures
522
(120)
Net gains from changes in fair value of financial assets at fair value through
other comprehensive income
26,361
15,918
Currency translation differences
370
(463)
Net movement in reserves for hedges
6
-
30,099
10,268
Total comprehensive income for the period
79,824
52,919
Attributable to:
Equity holders of the Company
75,858
51,673
Non-controlling interests
3,966
1,246
OTHER FINANCIAL INFORMATION
RMB in millions, unless specified
Unaudited
1Q2025
1Q2024
4Q2024
EBITDA (a)
73,817
65,094
63,917
Adjusted EBITDA (a)
81,559
69,259
69,579
Adjusted EBITDA margin (b)
45 %
43 %
40 %
Interest and related expenses
3,386
3,044
3,340
Net cash/(debt)(c)
90,229
92,534
76,798
Capital expenditures (d)
27,476
14,359
36,578
Note:
(a) EBITDA is calculated as operating profit minus other gains/(losses), net, and adding back depreciation of property, plant and equipment,
investment properties as well as right-of-use assets, and amortisation of intangible assets and land use rights. Adjusted EBITDA is calculated as
EBITDA plus equity-settled share-based compensation expenses
(b) Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues
(c) Net cash/(debt) represents period end balance and is calculated as cash and cash equivalents, plus term deposits and others, including highly
liquid investment products held for treasury purpose, minus borrowings and notes payable
(d) Capital expenditures primarily consist of investments in technology IT infrastructure (including computer equipment, components, and software),
data centres, land user rights, office premises and intellectual properties (excluding media content)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION RMB in millions, unless specified
Unaudited
Audited
As at
31 March, 2025
As at
31 December, 2024
ASSETS
Non-current assets
Property, plant and equipment
91,727
80,185
Land use rights
22,928
23,117
Right-of-use assets
17,085
17,679
Construction in progress
13,250
12,302
Investment properties
900
801
Intangible assets
207,641
196,127
Investments in associates
305,487
290,343
Investments in joint ventures
7,138
7,072
Financial assets at fair value through profit or loss
202,869
204,999
Financial assets at fair value through other
comprehensive income
337,527
302,360
Prepayments, deposits and other assets
49,959
42,828
Other financial assets
978
1,076
Deferred income tax assets
29,490
28,325
Term deposits
98,066
77,601
1,385,045
1,284,815
Current assets
Inventories
427
440
Accounts receivable
49,311
48,203
Prepayments, deposits and other assets
102,015
101,044
Other financial assets
4,480
4,750
Financial assets at fair value through profit or loss
30,212
9,568
Financial assets at fair value through other
comprehensive income
5,444
3,345
Term deposits
132,549
192,977
Restricted cash
3,544
3,334
Cash and cash equivalents
205,253
132,519
533,235
496,180
Total assets
1,918,280
1,780,995
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
RMB in millions, unless specified
Unaudited
Audited
As at
31 March, 2025
As at
31 December, 2024
EQUITY
Equity attributable to equity holders of the Company
Share capital
-
-
Share premium
47,020
43,079
Treasury shares
(2,777)
(3,597)
Shares held for share award schemes
(5,377)
(5,093)
Other reserves
80,291
47,129
Retained earnings
921,297
892,030
1,040,454
973,548
Non-controlling interests
82,484
80,348
Total equity
1,122,938
1,053,896
LIABILITIES
Non-current liabilities
Borrowings
209,079
146,521
Notes payable
123,240
130,586
Long-term payables
11,495
10,201
Other financial liabilities
4,831
4,203
Deferred income tax liabilities
20,070
18,546
Lease liabilities
13,405
13,897
Deferred revenue
4,480
6,236
386,600
330,190
Current liabilities
Accounts payable
125,488
118,712
Other payables and accruals
71,532
84,032
Borrowings
44,151
52,885
Notes payable
9,326
8,623
Current income tax liabilities
18,956
16,586
Other tax liabilities
5,119
4,038
Other financial liabilities
5,846
6,336
Lease liabilities
5,442
5,600
Deferred revenue
122,882
100,097
408,742
396,909
Total liabilities
795,342
727,099
Total equity and liabilities
1,918,280
1,780,995
RECONCILIATIONS OF THE GROUP'S NON-IFRS FINANCIAL MEASURES TO THE NEAREST MEASURES PREPARED IN ACCORDANCE WITH IFRS
As
reported
Adjustments
Non-IFRS
RMB in millions,
unless specified
Share-based
compensation (a)
Net (gains)/losses
from investee
companies (b)
Amortisation of
intangible assets (c)
Impairment
provisions/ (reversals)
(d)
SSV & CPP
(e)
Income
tax effects
(f)
Unaudited three months ended 31 March2025
Operating profit
57,566
10,100
–
1,515
–
139
–
69,320
Share of profit/(loss) of associates
and joint ventures, net
4,581
968
111
1,713
267
–
–
7,640
Profit for the period
49,725
11,068
(31)
3,228
(689)
160
(769)
62,692
Profit attributable to
equity holders
47,821
10,833
1,081
2,854
(719)
160
(701)
61,329
Operating margin
32 %
39 %
Unaudited three months ended 31 March 2024
Operating profit
52,556
4,694
–
1,249
–
120
–
58,619
Share of profit/(loss) of associates and
joint ventures, net
2,186
1,509
(459)
1,556
699
–
–
5,491
Profit for the period
42,651
6,203
(1,476)
2,805
1,562
132
(535)
51,342
Profit attributable to equity holders
41,889
6,035
(1,449)
2,589
1,541
132
(472)
50,265
Operating margin
33 %
37 %
Unaudited three months ended 31 December 2024
Operating profit
51,478
6,140
–
1,416
–
441
–
59,475
Share of profit/(loss) of associates and
joint ventures, net
9,253
1,003
(3,799)
1,176
116
–
–
7,749
Profit for the period
51,467
7,143
(6,888)
2,592
1,760
1,109
(706)
56,477
Profit attributable to equity holders
51,324
7,034
(6,931)
2,396
1,037
1,109
(657)
55,312
Operating margin
30 %
34 %
Note:
(a) Including put options granted to employees of investee companies on their shares and shares to be issued under investee companies' share-based incentive plans which can be acquired by the Group, and other incentives
(b) Including net (gains)/losses on deemed disposals/disposals of investee companies, fair value changes arising from investee companies, and other expenses in relation to equity transactions of investee companies
(c) Amortisation of intangible assets resulting from acquisitions
(d) Mainly including impairment provisions/(reversals) for associates, joint ventures, goodwill and other intangible assets arising from acquisitions
(e) Mainly including donations and expenses incurred for the Group's Sustainable Social Value and Common Prosperity Programme ("SSV & CPP") initiatives
