Benefiting from the revenue growth of AI cloud services, Tencent's enterprise service revenue in the third quarter achieved double-digit growth year-on-year. The company's capital expenditure for the quarter was 12.98 billion yuan, a decrease of 24% year-on-year and a decline of over 32% quarter-on-quarter.

In the subsequent earnings call, Tencent's executives stated that the actual capital expenditure for the full year of 2025 is expected to be lower than the previous guidance range but will still be higher than in 2024. However, Tencent President Liu Chiping pointed out that the company currently has sufficient GPU reserves to meet internal needs.

Tencent Group Chairman and CEO Ma Huateng stated during the call that the company is upgrading its Hunyuan large model architecture. With the continuous enhancement of Hunyuan capabilities, Tencent will gain stronger appeal and competitive advantages in the development of Yuanbao applications and the development of AI features within WeChat.

Tencent President Liu Chiping stated that ideally, WeChat will eventually launch an AI agent that can help users complete various tasks directly within WeChat. WeChat encompasses five major ecosystems: communication, social networking, content (public accounts, video accounts), mini-programs, payment, and commerce, which not only grasp user intent but also can execute tasks in a closed loop. Such an agent would be the ideal personal assistant.

Partial transcript of the call (translated with AI assistance):

Ma Huateng:

In the third quarter of 2025, we achieved steady revenue and profit growth, reflecting healthy trends across gaming, marketing services, as well as fintech and enterprise services. Our strategic investments in artificial intelligence are benefiting us, for example, in areas such as advertising targeting and gaming engagement, as well as in efficiency improvements in coding, gaming, and video production. We are upgrading the team and architecture of the Hunyuan foundational model, whose image and 3D generation models are now industry-leading. With the continuous enhancement of Hunyuan capabilities, we will gain further appeal in developing Yuanbao applications and in our efforts to develop AI features within WeChat.

Let’s look at our financial data for the third quarter: total revenue was 193 billion yuan, a year-on-year increase of 15%. Gross profit was 109 billion yuan, a year-on-year increase of 22%. Non-International Financial Reporting Standards operating profit was 73 billion yuan, a year-on-year increase of 18%. Non-International Financial Reporting Standards profit attributable to equity holders of the company was 71 billion yuan, a year-on-year increase of 18%.

Now, let’s look at our key services: in communication and social networking, the combined monthly active accounts of WeChat and WeChat achieved year-on-year and quarter-on-quarter growth, reaching 1.4 billion. In digital content, TME continues to consolidate its leadership in the number of paid users and ARPU in music streaming. In gaming, "Delta Operation" has now entered the top three in total revenue for Chinese games, while "Valorant" has successfully expanded from PC to mobile. In artificial intelligence, we have enhanced the complex reasoning capabilities of the Hunyuan large language model, particularly in coding, mathematics, and science. Our Hunyuan image generation model ranks first globally on the text-to-image model leaderboard of LLMArena. Our Wenyuan 3D model ranks first among publicly available 3D generation modelsNow I will hand over to Martin for the business review.

Tencent President Liu Chiping:

Thank you, Pony. Good evening, everyone, and good morning. In the third quarter of 2025, our total revenue grew by 15% year-on-year. Value-added services accounted for 50% of total revenue, with the social network segment accounting for 17%, domestic games accounting for 22%, and international games accounting for 11%. Marketing services accounted for 19% of total revenue, while fintech and enterprise services accounted for 30% of total revenue. In this quarter, our gross profit grew by 22% year-on-year, reaching RMB 109 billion. Gross profit from value-added services grew by 23% year-on-year, reaching RMB 59 billion, accounting for 54% of total gross profit. Gross profit from marketing services grew by 29% year-on-year, reaching RMB 21 billion, contributing 19% to total gross profit. Gross profit from fintech and enterprise services grew by 15% year-on-year, reaching RMB 29 billion, contributing 27% to total gross profit.

Turning to the business segments: revenue from value-added services was RMB 96 billion, a year-on-year increase of 16%. Revenue from social networks grew by 5% year-on-year, reaching RMB 32 billion, driven by increased revenue from video account live streaming services, music subscriptions, and mini-game platform service fees. Revenue from music subscriptions grew by 17% year-on-year, driven by increases in ARPU and the number of subscription users. The number of music subscription users grew by 6% year-on-year, reaching 226 million. Revenue from long video subscriptions decreased by 3% year-on-year. ARPU remained stable, while the number of video subscription users decreased by 2% year-on-year to 114 million, due to the delayed release of the series "Love Life," which has since become one of the most-watched series in China after its release at the end of the quarter.

Domestic game revenue grew by a net 15% year-on-year, mainly benefiting from "Delta Force," "Honor of Kings," and "Valorant." International game revenue grew by 43% year-on-year (42% growth at constant exchange rates), with this exceptionally rapid growth rate attributed to the recognition of upfront revenue from the sales of "Dying Light: Beasts" game copies, as well as the consolidation of recently acquired studios.

In terms of communication and social networking, for small shops, we are systematically building a more vibrant transaction ecosystem, leading to sustained rapid growth in GMV, and enhancing the product recommendations and sales conversion of small shops by better understanding user interests based on their content consumption through leveraging our foundational model capabilities. Through innovation, we have launched new features to enhance product discovery. For example, we added a gifting feature on video accounts and card pages using social graphs. We also upgraded the image search function within WeChat, allowing users to scan objects, identify them, and shop in small shops. We have also enhanced AI capabilities within WeChat to provide new services for users and promote creator usage. Yuanbao has achieved encouraging results. The Yuanbao feature in the comment boxes of video accounts and public accounts can summarize content and encourage users to ask follow-up questions. Users love this feature. We have also enriched the content generated by Yuanbao in the Tencent News feed within WeChat and facilitated user exploration of news-related topics through the Yuanbao application. Now, I will hand over to JamesThank you, Martin. In the domestic gaming sector, the total revenue of "Honor of Kings" has increased year-on-year, benefiting from collaborations with Chinese literary IPs "The Lord of the Mysteries" and "Fox Spirit Matchmaker." The game achieved 13.9 million daily active users during its tenth-anniversary event in October. "League of Legends" launched hero and minion skins inspired by ancient Shu artifacts from the Bronze Age. "Delta Force" ranked among the top three in the industry in terms of total revenue this quarter, achieving over 30 million daily active users in September, including over 10 million PC daily active users, thanks to new season content, extensive anniversary events, and global sports events.

We launched the mobile game "Valorant" on August 19, and based on its first month's DAU and total revenue, it has become the most successful mobile game release in China this year. Other MPCs continued to grow and achieved record DAU and total revenue in September, benefiting from esports themes and weapon props. The success of the mobile game release has more than doubled the merged monthly active users of "Valorant" from July's level, exceeding 50 million in October.

In our international gaming sector, "Clash Royale" released a new auto chess mode "Merge Tactics" and expanded its trophy road achievement system to 10,000 trophies, driving higher player engagement, with both monthly and daily active users and total revenue reaching historical highs in September. Total revenue increased by over 400% year-on-year. In the third quarter, "PUBG Mobile" also achieved year-on-year revenue growth, benefiting from ancient Egyptian-themed skins and innovative executions such as collaborations with "Transformers" and Lotus Cars, including creative emotes, sound effects X, and dual gliders.

Our Polish subsidiary Techland released a new game in its "Dying Light" series, "Dying Light: Beast," which received very positive average user ratings on Steam, and the early revenue from confirmed game copy sales drove exceptionally rapid growth in international gaming revenue this quarter.

Marketing services revenue increased by 21% year-on-year, reaching RMB 36 billion, supported by increased advertising spending from all major advertiser categories. Impressions grew year-on-year as we enhanced engagement and increased the launch loads of video accounts, mini-programs, and search. Average eCPM increased year-on-year as we upgraded the advertising base model, added parameters, and captured additional closed-loop marketing demand. We launched the automated advertising campaign solution AIMarketingPlus, which allows advertisers to automate targeting, bidding, and placements, as well as optimize ad creatives to improve their marketing ROI. Video accounts enriched the content and transaction system, and their upgraded recommendation algorithm drove stronger user engagement, with increases in DAU and user duration promoting growth in ad impressions. Advertisers are increasingly adopting our marketing tools to drive traffic to their short videos, live broadcasts, and mini-stores. For mini-programs, the increase in activation and usage duration attracted advertising spending for mini-dramas and mini-games to promote their content. For WeChat search, the increase in commercial query volume and click-through rates facilitated significant revenue growth. We improved the relevance of search ads by upgrading large language model capabilities and optimizing sponsored results to better match user queriesLooking at the financial technology and enterprise services segment, revenue was RMB 58 billion, a year-on-year increase of 10%. Financial technology service revenue achieved high single-digit percentage growth, mainly driven by commercial payment services and consumer credit services. The year-on-year growth rate of commercial payment amounts was faster in the third quarter compared to the second quarter. Online payment amounts continued to grow strongly, while offline payment amounts showed improvement, particularly in the retail and transportation categories. For consumer credit services, our non-performing loan rate remained at the industry’s lowest level and improved year-on-year, reflecting our robust risk management practices.

Turning to enterprise services, despite supply chain constraints in procuring GPUs, revenue still achieved double-digit year-on-year growth in the third quarter, benefiting from increased cloud service revenue and growth in technology service fees generated by rising e-commerce transaction volumes from small shops. Our cloud storage and data management products (i.e., cloud object storage, TCHouse, and VectorDB) saw significant year-on-year revenue growth, with increased demand, including from leading automotive and internet companies. For WeChat Work, we launched an AI summary feature that generates project reviews and provides suggestions based on users' emails and conversations, thereby improving project collaboration efficiency.

Q&A Session:

Q1: How should we view future growth trends? Additionally, can you share thoughts on international gaming strategies? For example, will you continue to invest in high-quality overseas game studios, or will you push more self-developed games to the global market? My second question is about capital expenditures. This quarter's capital expenditure was approximately RMB 13 billion, but the cash payment for capital expenditures was RMB 20 billion. How should we understand the difference between these two figures? Do you have any new updates on the full-year capital expenditure guidance?

Answer (James Michel, Chief Strategy Officer of Tencent):

Alright. Let me start with the question about games, specifically the growth rate of our international gaming business and the strategy for international gaming. The growth rate of our international gaming business reported this quarter is significantly higher than the potential trend line. This is because, in this quarter, we benefited from the consolidation of newly acquired or recently acquired game studios, as well as the early revenue recognition benefits from the game "Dying Light: Beasts."

Therefore, looking ahead, entering the fourth quarter, you should expect the growth rate of the international gaming segment and its sub-segments to slow down, coming closer to the potential trend line. Regarding our strategy for the international gaming business, yes, as you mentioned the driving factors, we will continue to seek acquisitions of game studios, continue to seek collaborations with overseas game studios, and we will also continue to seek to bring more games made in China to global audiences.

Regarding capital expenditures, the difference reflects the timing mismatch between accrued expenses related to server expenditures and cash payments, which may lead to a temporary mismatch between the two. Specifically, the payment terms for our server suppliers are typically 60 days.

Regarding capital expenditures for 2025, what I can share is that in 2024, total capital expenditures increased by 221% year-on-year, accounting for approximately 12% of previous revenues. For 2025, we had guided that total capital expenditures would account for a low single-digit percentage of revenue. However, capital expenditures for 2025 will be below our previous guidance range, but the amount will be higher than in 2024Q2: The first question, can the management elaborate on your comments regarding the upgrade of the Hunyuan team and Hunyuan infrastructure? What should we expect to see from the upgraded version? Additionally, does the management have any updated views on how Yuanbao can complement your existing AI capabilities and better integrate into the WeChat ecosystem over the past few months? The second question is about your advertising marketing service revenue. Will the automated advertising campaign solution, AI MarketingPlus, better serve small and medium advertisers? Should we expect this solution to drive broader adoption among advertisers and lead to higher return on investment spending, potentially supporting accelerated advertising revenue growth in the coming quarters? Thank you.

Answer (Liu Chih-Ping):

Yes, regarding the Hunyuan team and Hunyuan architecture, we are actually hiring more top talents, especially in the research field, to complement our existing strong engineering team. You know, they complement each other. We are also improving the overall architecture of Hunyuan, involving different dimensions, such as enhancing hardware and software infrastructure to support better data preparation, support better model pre-training, and support large-scale reinforcement learning across different knowledge domains. So, you know, these are more specific and clearer improvements we are making in the Hunyuan team and Hunyuan architecture.

Now, regarding how Yuanbao and WeChat complement each other, I want to point out the fact that WeChat has actually introduced many AI features based on Yuanbao's capabilities. For example, the Yuanbao features we added in the video accounts and public account comment boxes allow users to ask it questions and summarize content so they can quickly reference it, and actually based on the summary you (Yuanbao) provided, it encourages many interesting follow-up questions and comments. We have also enriched Tencent News feedback within WeChat with content generated by Yuanbao, and, you know, it allows many users to explore more news content, related news content, and ask questions about news content. And we are actually increasing and planning to add more Yuanbao features. So, these features actually serve WeChat users better and actually help Yuanbao reach a broader audience. More and more of these audiences discover Yuanbao's capabilities through WeChat and eventually become users of the Yuanbao application. So, you know, this is a complementary relationship.

Answer (James Mitchell):

Regarding the AI MarketingPlus automated advertising campaign solution. We believe that the automated advertising campaign solution benefits all advertisers who deploy it because it allows them to automatically reach advertising placements and user profiles that perform better than those they manually target.

You are right, small and medium-sized enterprises are the first and most eager to adopt such products because they have the least old processes to replace, which is also our current experience. But we are also seeing larger advertisers adopting AI MarketingPlus, which is similar to the experience of Meta's Advantage+ automated advertising solution overseas. Thank youQ3: The first question is about the follow-up on Yuanbao and WeChat. It seems that the adoption rate of Yuanbao and the enhancement of engine technology AI functions rely on the capabilities of the foundational model, but according to recent comments, capital expenditures remain at a low level. So, is there a risk that the company is not aggressive enough, leading to the potential AI application market being outperformed by those companies that either have better model capabilities or are more aggressive in capital spending?

The follow-up question is about some expense items, specifically sales and marketing as well as R&D. When should we expect the internal adoption of AI to bring cost efficiencies that offset some of the investments we discussed regarding Yuanbao, as well as gaming and advertising?

Answer (Liu Chih-Ping):

Regarding the adoption of Yuanbao and capital expenditures, our GPUs are currently sufficient. The GPUs we have are actually enough to meet our internal needs. And, you know, there are currently some limiting factors in external cloud revenue. Regarding the capabilities of Yuanbao and the mixed Yuan model, as I mentioned when answering Alicia's question, we have actually made significant improvements in our team, talent recruitment, and mixed Yuan infrastructure. And throughout the mixed Yuan research process. I would say we are actually satisfied with the progress we have made. You know, if you wait a little longer for our next model, you will see meaningful improvements in mixed Yuan capabilities. And I believe that with these new improvements we are continuously making, the enhancement of mixed Yuan capabilities will continue to accelerate. At this point in time, we actually do not believe there is a decisive better model in China, as everyone is in very fierce competition, and different models may have their strengths and weaknesses in different use cases. So we do not think we are really falling behind. You know, as we continue to improve mixed Yuan capabilities, we are also seeing the participation of Yuanbao rising quite nicely. So, you know, I think you will see continuous improvements in model capabilities and our AI products.

Now regarding expenses, I think at this point in time, general and administrative expenses, especially R&D expenses, are actually partly related to our AI investments. So, you know, there will naturally be a certain degree of increase as we invest more in AI. And if you look at the benefits brought by AI, uh, at this stage, many efficiency gains are more reflected on the revenue side and gross profit side. So you see quite good growth in these projects. But in terms of cost items, I would say we made quite significant organizational optimizations a few years ago. Our existing organization is actually efficient. And the adoption of AI has actually enabled our teams to do more things, rather than, you know, cutting costs. I think you might be comparing with some other companies. Thank you. We will take the next question.

Q4:

The first question, you mentioned that Tencent is developing agent AI capabilities within WeChat. Can you share your views on how agent AI can create value for WeChat consumers? I am particularly interested in your thoughts on agent commerce. The second question is about capital expenditures. Did I hear John correctly that capital expenditures for 2025 will be lower than previous guidance but higher than the actual capital expenditures for 2024, if I understand correctly?Does this reflect a change in the supply situation of AI chips, a change in AI investment strategies, or a change in your expectations for future token consumption? Thank you.

Answer (Liu Chao Ping):

Yes, regarding your second question, the answer is that you heard it right. This does not reflect a change in our AI strategy, nor a change in our expectations for future token consumption. It is indeed a change in the supply situation of AI chips.

Currently, I believe the ideal blueprint is that WeChat will eventually launch an AI agent to help users accomplish many tasks within WeChat using AI. WeChat's ecosystem has a very strong communication and social ecosystem, with a large amount of data that enables the agent to understand users' needs, intentions, and interests; it has a very strong content ecosystem, including public accounts and video accounts; it has a mini-program ecosystem that basically covers most use cases on the internet; and it has a business ecosystem that allows people to purchase goods, as well as a payment ecosystem that allows people to complete payments almost instantly. So, this is almost the ideal assistant for users, understanding their needs and being able to perform all tasks within that ecosystem. This is the ideal blueprint.

Now I think, uh, how do we achieve this? Right? You know, at this point in time, we are actually still in a very early stage of development. WeChat is doing many things in parallel. For example, it is introducing the Yuanbao capability into WeChat, so yes, we can test many independent AI functions within WeChat. It is also enhancing search with AI so that we can more efficiently meet users' needs for search, information gathering, and analysis. We are also starting to develop agent capabilities in vertical fields. This is the work we are doing. We have not launched these features yet, but it is likely that we will gradually develop these features. But ultimately, you know, we can actually integrate all these agent capabilities and AI functions to create the ideal blueprint for this WeChat agent.

I think in terms of agent commerce, right? I think, you know, there is the agent side and the business side here. In terms of business, we have actually made very good progress in building the e-commerce ecosystem. The GMV of small stores has been growing very well for a long time, and as it continues to grow, right, and in the process of developing vertical field agents, yes, at some point, we will also have agent e-commerce. But this, you know, is a later stage in the process. Thank you. We will take the next question.

Updating

Tencent conference call: Capital expenditures for the full year of 2025 will be below guidance, GPU reserves are currently sufficient,