On August 12, Tencent Holdings (00700) released its unaudited consolidated results for the second quarter ended June 30, 2026. Chairman and CEO Ma Huateng stated: "Entering the third quarter of this year, we are building a new, AI-empowered Tencent across three layers—intelligence, applications, and infrastructure—and have already made significant progress. In the intelligence layer, the official release of Hy3 provides users with a widely accessible and cost-effective model, laying the foundation for the Hy series to reach industry-leading levels in the future. In the application layer, AI-powered office efficiency service WorkBuddy and AI coding tool CodeBuddy have achieved breakthrough user growth, leading their respective fields in China. In the infrastructure layer, we have significantly increased computing power procurement, which will help convert the use of our applications and models into revenue. At the same time, we have further refined our existing businesses, with marketing services revenue continuing to grow, several new games performing outstandingly, and WeChat Video Accounts' viewership growing rapidly."
Key financial highlights for Q2 2026: Total revenue grew 11% year-on-year, gross profit increased 13%, and operating profit under non-IFRS rose 9%. Total revenue reached 204.8 billion yuan, an 11% increase compared to Q2 2025. Gross profit was 118.4 billion yuan, up 13%. Under non-IFRS, excluding certain one-time and/or non-cash items to reflect core business performance: Operating profit was 75.6 billion yuan, up 9%, with an operating margin of 37%, down from 38% last year. Excluding contributions from new AI products, operating profit was 86.1 billion yuan, up 19%, and the operating margin improved to 42% from 39% last year. Profit was 70.6 billion yuan, up 9%. Profit attributable to equity holders was 68.4 billion yuan, up 9%. Basic earnings per share were 7.581 yuan, and diluted earnings per share were 7.433 yuan. Under IFRS, operating profit was 67.3 billion yuan, up 12%, with an operating margin of 33%, flat from last year. Profit was 58 billion yuan, up 3%. Profit attributable to equity holders was 56 billion yuan, up 0.7%. Basic earnings per share were 6.207 yuan, and diluted earnings per share were 6.104 yuan. Capital expenditure was 52.8 billion yuan, a 176% increase year-on-year. Total cash was 511.2 billion yuan, up 9% year-on-year. Net cash was 58.2 billion yuan, down 22% year-on-year. In Q2 2026, the company generated 52.7 billion yuan in operating cash flow. After deducting 59.3 billion yuan in capital expenditure payments, 5 billion yuan in media content payments, and 2.2 billion yuan in lease liability payments, free cash flow turned negative to 13.8 billion yuan. The Q2 2026 operating cash flow included large AI-related prepayments used to provide infrastructure supporting Hy model upgrades, WorkBuddy and CodeBuddy inference needs, WeChat AI initiatives, and AI capability building across various products and services, while also meeting growing external customer demand for cloud services. Excluding prepayments for computing power procurement, free cash flow was 37.6 billion yuan. As of June 30, 2026, the fair value of the company's interests in listed investees (excluding subsidiaries) was 487.2 billion yuan, compared to 547.1 billion yuan as of March 31, 2026. As of June 30, 2026, the carrying value of interests in unlisted investees (excluding subsidiaries) was 387.9 billion yuan, compared to 365.1 billion yuan as of March 31, 2026. In Q2 2026, the company repurchased approximately 37.38 million shares on the Hong Kong Stock Exchange for a total consideration of about 16.9 billion Hong Kong dollars.
In July 2026, the company released the official version of Hy3, which significantly improved performance compared to the Hy3 preview version and outperformed most models of similar size. Based on token consumption on OpenRouter, Hy3 has consistently ranked among the top three globally since its launch. WorkBuddy has achieved rapid user growth and healthy user retention, with strong user willingness to pay for tokens through subscriptions and top-ups. WorkBuddy's market-leading position benefits from its robust harness engineering capabilities, rich model selection, and industry-leading skill library. In recent weeks, the company has initiated small-scale grayscale testing of the WeChat AI agent, Xiaowei, which is powered by the customized WeLM model focused on user privacy, WeChat scenarios, and inference efficiency. WeChat Video Accounts' total user time spent increased over 20% year-on-year in Q2 2026, driven by richer content targeting younger users, upgraded interactive features, and a new content mixing system. Domestically, the average daily active users for long-standing hit games Delta Force and VALORANT reached new highs in Q2 2026. Roco Kingdom: World ranked first among all new mobile games launched in the Chinese market this year by both average daily active users and total gross billing. Miniclip achieved breakthrough success in international markets, with Arrows – Puzzle Escape becoming the most downloaded mobile game globally in Q2 2026, generating strong in-app advertising revenue. The company upgraded its intelligent advertising product matrix, Tencent Marketing AIM+, providing AI-driven end-to-end advertising capabilities for WeChat Stores and short drama advertisers.
In Q2 2026, VAS revenue grew 8% year-on-year to 98.4 billion yuan. Domestic game revenue increased 17% year-on-year to 47.3 billion yuan, with most major games contributing to revenue growth, notably Delta Force, VALORANT, VALORANT: Source Operation, and Roco Kingdom: World. International game revenue was 18.6 billion yuan, down 0.8% year-on-year due to foreign exchange fluctuations, but up 4% at constant exchange rates, as growth from Wuthering Waves and VALORANT was offset by declines in some Supercell games. Social network revenue increased 0.8% year-on-year to 32.5 billion yuan. Marketing services revenue was 43.6 billion yuan in Q2 2026, up 22% year-on-year, driven by optimization of AI-driven ad recommendation models, upgrades to the Tencent Marketing AIM+ intelligent advertising product matrix, and integration of closed-loop marketing capabilities within the WeChat ecosystem. Marketing spending from most major industries increased on the company's platform during the quarter. FinTech and business services revenue grew 9% year-on-year to 60.3 billion yuan. FinTech services revenue growth was mainly driven by growth in commercial payments, wealth management, and consumer lending services. Business services revenue growth primarily came from cloud services, supported by increased demand for AI-related services, continued international expansion, and a more favorable pricing environment.
In July 2026, the company released the official version of Hy3, which significantly improved performance compared to the Hy3 preview version and outperformed most models of similar size. Based on token consumption on OpenRouter, Hy3 has consistently ranked among the top three globally since its launch. WorkBuddy has achieved rapid user growth and healthy user retention, with strong user willingness to pay for tokens through subscriptions and top-ups. WorkBuddy's market-leading position benefits from its robust harness engineering capabilities, rich model selection, and industry-leading skill library. In recent weeks, the company has initiated small-scale grayscale testing of the WeChat AI agent, Xiaowei, which is powered by the customized WeLM model focused on user privacy, WeChat scenarios, and inference efficiency. WeChat Video Accounts' total user time spent increased over 20% year-on-year in Q2 2026, driven by richer content targeting younger users, upgraded interactive features, and a new content mixing system. Domestically, the average daily active users for long-standing hit games Delta Force and VALORANT reached new highs in Q2 2026. Roco Kingdom: World ranked first among all new mobile games launched in the Chinese market this year by both average daily active users and total gross billing. Miniclip achieved breakthrough success in international markets, with Arrows – Puzzle Escape becoming the most downloaded mobile game globally in Q2 2026, generating strong in-app advertising revenue. The company upgraded its intelligent advertising product matrix, Tencent Marketing AIM+, providing AI-driven end-to-end advertising capabilities for WeChat Stores and short drama advertisers.
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