TMTPOST -- Tencent Holdings Ltd. defied Wall Street estimates with faster-than-expected top and bottom line for the second quarter of this year as artificial intelligence (AI) adoption is driving its game and advertising businesses.
Credit：Tencent
Tencent on Wednesday posted total revenue of RMB184.5 billion ($25.7 billion) for the quarter ended June 30, beating an average estimate of RMB179 billion, according to Bloomberg. The revenue shattered the company’s quarterly record and maintained a double-digit growth for a third straight quarter. With a 15% year-over-year (YoY) rise, the top line set the fastest pace since the third quarter of 2021, and accelerated from a 13% increase three months earlier, whereas analysts expected the company would deliver a 11% YoY increase.
The bottom line of Chinese social media and video game giant also grew stronger, instead of slowing down. On an IFRS basis, the profit attributable to equity holders of the company, or net income, surged 17% YoY to RMB 55.6 billion from April to June, while analysts estimated net income would add 6.7% following a 14% YoY increase for the previous quarter. Diluted earnings per share (EPS) were RMB5.996 with a 20% YoY increase, compared with a gain of 17% for the first quarter.
The profit reversed a slowdown trend showcased for the first quarter as Tencent’s high-margin businesses--domestic games and marketing services such as video accounts helped offset rising AI spending. Tencent Chairman and CEO Pony Ma, or Ma Huateng attributed the stellar growth to AI adoption. “During the second quarter of 2025, we delivered double-digit revenue and non-IFRS operating profit growth on a year-on-year basis, as we invested in, and also benefitted from, utilising AI,” Ma said in a statement.
Financial results of Tencent’s major segments suggested its investment in AI is beginning to paying off. Tencent’s bread-and-butter gaming saw a double-digit YoY growth for the third consecutive quarter. VAS (value-added services), including game and social network business, generated RMB91.4 billion with a 16% YoY rise, following a 17% increase for the March quarter.
Domestic Games brought RMB40.4 billion, representing a YoY rise of 17% after a 24% increase for the preceding quarter. The solid growth benefited from recently released Delta Force and growth in revenues from evergreen games including Honour of Kings, VALORANT, and Peacekeeper Elite, Tencent said.
Revenue from International Games grew 35% YoY to RMB18.8 billion, refreshing the quarterly record set from January to March with a 23% YoY increase. Acceleration of International Games was driven by revenue growth of Supercell’s games and PUBG MOBILE, as well as the contribution from newly released Dune: Awakenin. Social Networks revenues rose 6% YoY to RMB32.2 billion, driven by growth in app-based game virtual item sales, Video Accounts live streaming revenue and music subscription revenue.
“Our games performed well in terms of users and revenue as evergreen games such as Honour of Kings and Peacekeeper Elite evolve into platforms while increasing their usage of AI, and as new games such as Delta Force broke out,” said Ma.
Tencent said the second quarter saw it deployed AI tools in games to accelerate content production, introduced AI-powered features enabling more realistic virtual teammates and non-player characters, used AI-powered marketing activities to increase user acquisition and engagement, contributing to the popularity and revenue growth of Domestic and International Games.
Revenues from Marketing Services advanced to RMB35.8 billion for the second quarter with a 20% YoY increase, the same growth rate as three months ago. The growth was primarily due to AI-driven improvements to our advertising platform and enhancements to the Weixin transaction ecosystem, which resulted in robust advertiser demand across Video Accounts, MiniPrograms and Weixin Search. Marketing Services revenues increased across most major industry categories during the second quarter.
Marketing services revenue sustained rapid growth as Tencent upgraded its advertising foundation model, leading to better performance of advertisements across its traffic platforms, commented Ma. Tencent said during the second quarter it expanded AI capabilities in advertisement creation, placement, recommendation and performance analysis, enhancing advertising click-through rates and conversions, returns on investment for advertisers, and growing marketing services revenue on our platforms.
Revenues from FinTech and Business Services popped 10% YoY to RMB55.5 billion, compared with a 5% YoY increase for the second quarter. The revenue growth reflected higher revenues from consumer loan services, commercial payment activities and wealth management services. Tencent credited acceleration of revenue to increased enterprise customer demand for AI-related services, including GPU rental and API token usage, along with increased eCommerce technology service fees.
Tencent should remain relatively unaffected by U.S. tariffs, though its fintech and ad divisions remain exposed to potential second-order effects, should China’s economic growth slow in the second half of the year, Bloomberg Intelligence analyst Robert Lea expected.
Lea anticipated Tencent’s growth to return normalized this year with earnings growth decelerating to the mid-teen percentage range after an exceptional 2024. while geopolitical pressure and rising economic headwinds present risks to the second haf of the year, Tencent is better positioned to navigate these than its e-commerce peers, said the analyst.
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