Benefiting from revenue growth in AI cloud services, TENCENT's enterprise services revenue achieved double-digit year-on-year growth in Q3. The company's quarterly capital expenditure reached RMB 12.98 billion, down 24% YoY and over 32% QoQ. During the subsequent earnings call, TENCENT executives stated that full-year 2025 capital expenditure is expected to be below the previous guidance range but still higher than 2024 levels.
TENCENT Chairman and CEO Pony Ma revealed during the call that the company is upgrading its Hunyuan large language model architecture. As Hunyuan's capabilities continue to improve, TENCENT will gain stronger appeal and competitive advantages in developing Yuanbao applications and AI features within WeChat.
Key financial highlights for Q3 2025: - Total revenue: RMB 193 billion (+15% YoY) - Gross profit: RMB 109 billion (+22% YoY) - Non-IFRS operating profit: RMB 73 billion (+18% YoY) - Non-IFRS net profit attributable to equity holders: RMB 71 billion (+18% YoY)
Business segment performance: 1. Value-Added Services (50% of revenue): - Social networks revenue: RMB 32 billion (+5% YoY) - Domestic games revenue: Significant growth driven by Delta Force, Honor of Kings, and VALORANT - International games revenue: +43% YoY (42% at constant exchange rates)
2. Online Advertising (19% of revenue): - Revenue: RMB 36 billion (+21% YoY) - Growth supported by increased ad spending across all major advertiser categories
3. FinTech and Business Services (30% of revenue): - Revenue: RMB 58 billion (+10% YoY) - Cloud services achieved double-digit growth despite GPU supply chain constraints
Management emphasized that current GPU reserves are sufficient for internal needs, though external cloud revenue faces some limitations. The company continues to invest in AI talent and infrastructure improvements for the Hunyuan model.
Regarding capital expenditure, the difference between reported capex (RMB 12.98 billion) and cash payments (RMB 20 billion) reflects timing differences in server-related accruals, with typical 60-day payment terms to suppliers. For 2025, capex is expected to be below prior guidance but higher than 2024 levels.
The Yuanbao AI assistant has shown encouraging results within WeChat ecosystem features, including content summarization and Q&A capabilities in Video Channels and Official Accounts. TENCENT plans to introduce more Yuanbao-powered features to enhance user experience and discovery.
In gaming, VALORANT Mobile became China's most successful mobile game launch this year based on its first-month DAU and gross receipts. The company will continue its dual strategy of acquiring overseas studios and bringing China-developed games to global markets.
The newly launched AI Marketing Plus automated advertising solution is gaining traction among both SMB and larger advertisers, similar to Meta's Advantage+ adoption pattern overseas.