Tencent (700) Q1 2025 earnings summary

Executive summary

• Total revenue for Q1 2025 reached RMB 180 billion, up 13% year-on-year, with gross profit at RMB 100.5 billion, up 20% year-on-year.

• Non-IFRS net profit attributable to equity holders was RMB 61.3 billion, up 22% year-on-year; diluted EPS rose 25% year-on-year due to share buybacks.

• Growth was driven by strong performance in domestic and international games, marketing services, and improved gross margins.

• AI investments are accelerating, with tangible contributions to advertising, games, and cloud, and are expected to drive long-term value.

• Weixin & WeChat MAU reached 1,402 million, maintaining the #1 position in China.

Financial highlights

• Non-IFRS operating profit was RMB 69.3 billion, up 18% year-on-year; operating profit was RMB 57.6 billion, up 10% year-on-year.

• Free cash flow was RMB 47.1 billion, down 9% year-on-year due to increased capex on GPUs and servers.

• Net cash position was RMB 90.2 billion as of March 31, 2025, up 17% quarter-on-quarter.

• Gross margin improved to 56%, up 3 percentage points year-on-year.

• Adjusted EBITDA reached RMB 81.6 billion, with a margin of 45%.

Outlook and guidance

• AI-related investments will temporarily narrow the gap between revenue and operating profit growth, with a typical investment-to-monetization lag of 1–2 years.

• Management expects continued long-term growth in games, advertising, fintech, and e-commerce, with a focus on extending business runways rather than short-term KPIs.