On May 14, Tencent Holdings (00700.HK) released its Q1 2025 financial report, showing: revenue of RMB 180.02 billion, up 13% year-over-year; gross profit of RMB 100.49 billion, up 20% year-over-year; operating profit (Non-IFRS) of RMB 69.32 billion, up 18% year-over-year. The growth rates of gross profit and operating profit have consistently outpaced revenue growth for ten consecutive quarters, indicating a continuous improvement in profitability quality. The three main drivers—marketing services, value-added services, financial technology, and enterprise services—are creating a diversified and synergistic business structure to drive profitability through economic fluctuations.
The comprehensive activation of the AI strategy has invigorated the Tencent ecosystem, enhancing product user experience and generating higher-quality revenue: In the quarter, Tencent's marketing service revenue grew 20% year-over-year to RMB 31.85 billion, mainly due to the dual boost from AI technology upgrades on advertising platforms and the strengthening of the WeChat transaction ecosystem; value-added services revenue increased by 17% year-over-year to RMB 92.13 billion, with game segment revenue growing by 24%, primarily supported by the "evergreen strategy" and AI optimization of gaming user experiences; financial technology and enterprise services revenue grew 5% year-over-year to RMB 54.91 billion, with enterprise services standing out and AI-related revenue achieving rapid growth.
Based on high-quality income generated from its core businesses, Tencent continues to strengthen its AI strategy. In the first quarter, research and development expenditure reached RMB 18.91 billion, up 21% year-over-year, and capital expenditures were RMB 27.48 billion, up 91% year-over-year.
