Tencent (00700) reported a first-quarter revenue of 196.5 billion yuan, a year-on-year increase of 9%.

The world-leading internet technology company, Tencent Limited (Hong Kong Stock Exchange code: 00700 (Hong Kong Dollar Counter) and 80700 (Renminbi Counter), "Tencent" or "the Company") announced today the unaudited comprehensive performance for the first quarter ending on March 31, 2026 ("1Q2026"). Chairman and CEO Ma Huateng stated, "In the beginning of 2026, we made significant breakthroughs in new AI products and continued to drive core business growth with AI empowerment. The restructured AI R&D team has rebuilt AI infrastructure, developed the Hy3 preview model, which outperforms in performance among models of equivalent parameter scale, balancing practicality and cost-effectiveness; since April 28, it has consistently ranked high in token consumption on the OpenRouter leaderboard. Our efficiency AI intelligent agent solution has shown initial effectiveness. We believe that WorkBuddy is currently the most widely used efficiency AI intelligent agent service in China. At the same time, our core business continues to grow in user stickiness, revenue, and profitability, providing abundant cash flow support for AI investment and laying a solid scene foundation for AI application." 1Q2026 financial summary Total revenue: 9% year-on-year growth, Gross profit: 11% year-on-year growth, Operating profit according to non-International Financial Reporting Standards (IFRS): 9% year-on-year growth. Total revenue was RMB 196.5 billion, an increase of 9% compared to the first quarter of 2025 ("year-on-year"). Gross profit was RMB 111.3 billion, a year-on-year increase of 11%. According to non-IFRS, excluding the impact of certain one-time and/or non-cash items to reflect the performance of core business: Operating profit was RMB 75.6 billion, a year-on-year increase of 9%; operating profit margin was 38.5%, remaining flat compared to last year. Excluding new AI products, operating profit was RMB 84.4 billion, a year-on-year increase of 17%; excluding new AI products, the operating profit margin increased from 39.9% last year to 43.0%. Profit was RMB 69.8 billion, a year-on-year increase of 11%. Profit attributable to equity holders of the Company was RMB 67.9 billion, a year-on-year increase of 11%. Basic earnings per share were RMB 7.517, and diluted earnings per share were RMB 7.364. According to International Financial Reporting Standards: Operating profit was RMB 67.4 billion, a year-on-year increase of 17%; operating profit margin increased from 32.0% last year to 34.3%. Profit was RMB 59.4 billion, a year-on-year increase of 19%. Profit attributable to equity holders of the Company was RMB 58.1 billion, a year-on-year increase of 21%. Basic earnings per share were RMB 6.431, and diluted earnings per share were RMB 6.302. Capital expenditure was RMB 31.9 billion, a 16% year-on-year increase. Total cash was RMB 533.7 billion, a 12% year-on-year increase. Free cash flow was RMB 56.7 billion, a 20% year-on-year increase. Net cash was RMB 146.9 billion, a 63% year-on-year increase. As of March 31, 2026, the fair value of equity investments in listed companies (excluding subsidiaries) was RMB 547.1 billion, compared to RMB 672.7 billion as of December 31, 2025. As of March 31, 2026, the book value of equity investments in unlisted companies (excluding subsidiaries) was RMB 365.1 billion, compared to RMB 363.1 billion as of December 31, 2025. In 1Q2026, the Company repurchased approximately 12.65 million shares at a total cost of approximately HKD 7.6 billion on the Hong Kong Stock Exchange. 1Q2026 Management Discussion and Analysis Value-added services revenue in 1Q2026 increased by 4% year-on-year to RMB 96.1 billion. Domestic market game revenue was RMB 45.4 billion, a year-on-year increase of 6%, with revenue growth lagging behind the growth in domestic market game turnover due to the later Chinese New Year holiday in 2026 compared to 2025, leading to more revenue being deferred to later quarters. The growth in domestic market game turnover was driven by existing evergreen games such as "Honor of Kings," "Peace Elite," and "Delta Force" (recently included in the evergreen games category), as well as the momentum from recently released games such as "Rock Kingdom: World." International market game revenue was RMB 18.8 billion, a year-on-year increase of 13% (14% at fixed exchange rates), primarily driven by individual computer games "Clash of Clans: Royal Wars," "Tide Chime," and "Fearless Contract." Social network revenue decreased by 2% year-on-year to RMB 31.9 billion, as the later Chinese New Year holiday in 2026 resulted in a decrease in sales of mobile game app props in the domestic market confirmed in 1Q2026 compared to 1Q2025. Marketing service revenue in 1Q2026 was RMB 38.2 billion, with a year-on-year growth rate increasing from 17% in 4Q2025 to 20% in this quarter. We upgraded the AI-driven advertising recommendation model, expanded the closed-loop marketing capabilities within the WeChat ecosystem, improved advertising effectiveness, and increased ad pricing. Most major industries saw growth in advertising spending this quarter, with significant growth in internet services, e-commerce, and gaming industries. Financial technology and enterprise service revenue in 1Q2026 increased by 9% year-on-year to RMB 59.9 billion. The growth in financial technology service revenue was mainly driven by the growth in commercial payment and wealth management service revenue. Enterprise service revenue increased by 20%, driven by increased demand in domestic and international markets (including AI-related services) and a more favorable pricing environment, leading to an increase in cloud service revenue and merchant tech service fee revenue driven by the rise in transaction volume in WeChat Mini Program. Business Data 1Q2026 Business Review and Outlook Several evergreen games achieved record high turnover in this quarter, including "Honor of Kings," "Peace Elite," and "Delta Force," while the new game "Rock Kingdom: World" also gained popularity. Our Tencent Marketing AIM+ intelligent advertising product matrix empowered around 30% of advertising spending from advertisers, and was widely used by advertisers in mini-games, short videos, and WeChat Mini Program advertising. We expanded the parameter scale of the Video Number content recommendation model and optimized the model algorithm to deliver more relevant content to users. Total user engagement time on Video Number increased by over 20% year-on-year. We provided incentive measures to brand merchants on WeChat Mini Program and introduced coupon sharing features to senior buyers, maintaining rapid year-on-year growth in WeChat Mini Program transactions. The growth rate of commercial payment amount increased compared to 4Q2025, benefiting from the continuous growth in transaction volume and the rise in average transaction amounts in retail and catering services categories. Tencent Cloud's efficiency AI intelligent agent solution achieved rapid growth and healthy retention rate. In terms of daily active accounts, WorkBuddy has become the most popular efficiency AI intelligent agent service in China. In April, we released the Hy3 preview large language model built on the restructured AI infrastructure. We believe that Hy3 preview currently performs the best among models of equivalent parameter scale in terms of inference, intelligent agents, and code capabilities. Since April 28, based on token consumption, it has become the most widely used model on OpenRouter. This article is reprinted from "Tencent News," GMTEight Editor: Xu Wenqiang.