TMTPOST --  Tencent Holdings Ltd. on Wednesday posted stellar-than-anticipated revenue with the strongest growth in more than three years as the artificial intelligence (AI) adoption is starting to play a meaningful role in driving its key businesses.

Credit：Tencent

For the quarter ended March 31, Tencent reported total revenue of RMB180 billion ($25 billion) with a year-over-year (YoY) rise of 13%, the fastest pace since the third quarter of 2021. The top line accelerated from a 11% increase three months ago and beat analysts’ expected RMB173.9 billion, according to FactSet.

The bottom line of Chinese social media and video game giant mixed. On an IFRS basis, the profit attributable to equity holders of the company, or net income, jumped 14% YoY to RMB47.1 billion after a 90% YoY surge for the previous quarter. That fell short of projection of RMB52.2 billion, in part refecting rising AI spending. Diluted earnings per share (EPS) were RMB5.13 with a 17% YoY increase, compared with a gain of 95% for the fourth quarter. On a non-IFRS basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items, the net income popped 22% YoY to RMB61.3 billion after a 30% increase for the December quarter, and diluted EPS gained 25% YoY to RMB6.58, ahead of analysts’ forecast of RMB6.35.

“During the first quarter of 2025, our high-quality revenue streams sustained their solid growth trajectory. AI capabilities already contributed tangibly to businesses, such as performance advertising and evergreen games,” said Tencent Chairman and CEO Pony Ma, or Ma Huateng. Ma showed upbeat on AI spending on China’s top messaging app WeChat, or Weixin in Chinese. He stated: “We also stepped up our spending on new AI opportunities, such as the Yuanbao application and AI in Weixin. We believe the operating leverage from our existing high-quality revenue streams will help absorb the additional costs associated with these AIrelated investments and contribute to healthy financial performance during this investment phase.”

Tencent’s bread-and-butter gaming picked up speed for the March quarter. VAS (value-added services), including game and social network business, generated RMB92.1 billion with a 17% YoY rise. That was the second straight quarter that Tencent recorded a double-digit YoY growth rate in revenue from the segment following a 14% increase for the previous quarter.

Domestic Games brought RMB42.9 billion, representing a YoY rise of 24% after a 23% increase for the preceding quarter. The solid growth benefited from a low base in the prior year’s period, and from major games such as Honour of Kings, Peacekeeper Elite as well as contributions from recently released games DnF Mobile and Delta Force, Tencent said. Revenue from International Games grew 23% YoY to RMB16.6 billion, refreshing the quarterly record set from October to December with a 15% YoY increase. Acceleration of International Games was driven by robust performances from Brawl Stars, Clash Rovale and PUBG MOBILE.

Social Networks revenues rose 7% YoY to RMB32.6 billion, driven by growth in app-based game virtual item sales, music subscription revenues and Mini Games platform service fees. Revenue from that division was also stronger than the third quarter when Tecent recorded a 6% YoY increase.

In the seasonally strong first quarter, several of Tencent’s evergreen games, including Honour of Kings and CrossFire Mobile, achieved record high levels of gross receipts. Delta Force’s domestic user base reached a post-launch record of 12 million peak daily active use (DAU) in April. Delta Force became the sixth most popular mobile game by average DAU industry-wide6, and the highest DAU new game released in the last three years industry-wide.

Marketing Services maintained its robust growth. Revenues from the division advanced 20% YoY to RMB31.9 billion for the fourth quarter, compared with a 17% increase three months ago. That was primarily fueled by  strong advertiser demand for Video Accounts, Mini Programs and Weixin Search inventories, supported by higher user engagement, ongoing AI upgrades to Tencent’s advertising platform and improvements to the transaction ecosystem within Weixin, Tencent said.

The first quarter saw Tencent rolled out AI features within Weixin to provide more interactive user experiences and increase productivity for content creators and developers. It integrated its AI service Yuanbao as a Weixin ontact, powered Weixin Search with large language models (LLMs), and provided a text-prompt image generating tool for Official Accounts.

Tencent also  upgraded its advertising technology platform with enhanced generative AI capabilities, such as improved image generation and video editing to accelerate advertisement creation, digital human solutions to facilitate live streaming activities, and deeper understanding of merchandise and user interests to deliver better recommendations.

Revenues from FinTech and Business Services popped 5% YoY to RMB54.9 billion, compared with a 3% YoY increase for the fourth quarter. The revenue growth reflected higher revenues from wealth management services and consumer loan services. The growth were driven by an increase in cloud services revenue and eCommerce technology service fees. For Tencent Cloud, the company improved the audio and video solutions’ content generation, media processing and real-time interaction experience by integrating LLM capabilities. Tencent Cloud’s audio and video solutions ranked first by revenue for the seventh consecutive year in China, according to IDC.