Tencent Quarterly Profit Jumps 28% on Gaming and Cloud Growth

Gaming Revenue Rebounds Sharply

Tencent Holdings Ltd. reported net profit of 42.6 billion yuan ($5.9 billion) for the third quarter, a 28% increase from the same period a year earlier, as the company's gaming business bounced back following a regulatory thaw and strong performance from new titles. Revenue rose 11% to 167.2 billion yuan, above the 163.4 billion yuan consensus estimate.

Domestic gaming revenue climbed 14% to 37.3 billion yuan, the fastest growth rate in over two years. The recovery was led by the launch of "Honor of Kings: World," an open-world RPG based on Tencent's flagship mobile franchise, which generated an estimated 3.8 billion yuan in its first six weeks.

International Gaming Accelerates

International gaming revenue grew 11% to 14.5 billion yuan, driven by steady performance from Supercell's Brawl Stars and Squad Busters, as well as contributions from Riot Games' Valorant and League of Legends franchises. Tencent said its international gaming portfolio now reaches over 500 million monthly active users across 200 markets.

"Tencent's gaming pipeline is the strongest it has been since 2021," said Alex Yao, an analyst at JPMorgan in Hong Kong. "The domestic regulatory environment has normalized, and the international portfolio provides meaningful diversification."

Cloud and Enterprise Services

Revenue from the fintech and business services segment, which includes Tencent Cloud, grew 8% to 53.1 billion yuan. Cloud revenue specifically increased 18%, driven by adoption of Tencent's Hunyuan AI model and associated computing services.

The company said more than 100,000 enterprise customers were now using Hunyuan-powered tools for customer service automation, content generation, and data analysis. Gross margins for the cloud business improved to 32% from 26% a year earlier.

WeChat Ecosystem

WeChat and Weixin combined monthly active users reached 1.37 billion, up 2% year-over-year. Short-video content consumption within the app grew 25%, and advertising revenue from WeChat Channels — Tencent's short-video platform — increased 80%, though from a relatively small base compared to ByteDance's Douyin.

Total online advertising revenue grew 20% to 28.4 billion yuan, accelerating from 16% growth in the prior quarter. The company attributed the pickup to improved recommendation algorithms and advertiser adoption of AI-powered campaign optimization tools.

Capital Return and Outlook

Tencent repurchased HK$18.2 billion ($2.3 billion) of shares during the quarter, maintaining its position as one of Asia's most active buyback programs. The company has reduced its share count by approximately 4% over the past 12 months.

Management guided for continued double-digit revenue growth in Q4, supported by seasonal gaming activity, an expanding advertising business, and steady enterprise demand. Shares of Tencent rose 4.2% in Hong Kong trading following the earnings release, trading at 17 times forward earnings.

The company's investment portfolio, which includes significant stakes in Sea Ltd., Meituan, and JD.com, had a carrying value of approximately 450 billion yuan at quarter-end. Tencent has gradually reduced these holdings, divesting roughly $16 billion in assets over the past two years.