Tencent Q3 2025 Earnings
The key numbers, drivers, and takeaways from Tencent’s latest quarter.
Headline Results
It’s rare to see a company of this size grow revenue double-digits and grow profit even faster, and I think this is exactly where the market is overlooking what’s happening.
Revenue was up 15%, and gross profit grew 22%.
What Drove the Numbers
High-margin businesses like domestic games, international games, and advertising are growing faster than the rest of the company. Marketing services grew 21% thanks to AI-targeted ads.
International games reported +43% growth, but management said this spike was a one-off from upfront recognition of Dying Light. My estimate is that this added roughly ¥3.5–4.5B of “extra” revenue this quarter. Without it, overall revenue would have grown closer to 12–13%.
Margin + Cost Efficiency
One thing that jumps out is how efficient Tencent is today. After the pandemic and during China’s economic slowdown, they tightened the organisation and made it leaner, and we still see the benefits today.
G&A grew only 2% while the business grew 15%.
Gross margin improved from 53% to 56%, helped by high-margin game revenue, stronger ads, and better cloud profitability (management said they’ve taken steps to optimise cloud margins and it’s working).
CapEx was down 24%, but not because they’re cutting AI investment. Management clearly said it’s a payment-timing mismatch and chip scarcity — they actually want to spend more, but GPU supply is the bottleneck. So the AI investment story is intact.
Cash + Buybacks
Free cash flow came in at RMB 58.5B, basically flat YoY.
Total cash reached RMB 493B (+16% YoY).
Net cash rose to RMB 102B (+7% YoY).
They continued their buybacks as well, repurchasing 35.4 million shares for roughly HKD 21B.
Overall, this was a very good quarter. Tencent is still one of the few large companies that can grow double-digits, expand margins, and turn that into stronger profit growth. A high-quality business getting stronger.
This is not investment advice. I share my research and views for educational purposes only. Please make your own decisions based on your own judgement.