Revenue for Q1 2026 rose 9% year-over-year to RMB196.5 billion, with operating profit excluding new AI products up 17% and non-IFRS net profit attributable to equity holders up 11% to RMB67.9 billion.
Significant progress in AI, including the launch of Hunyuan 3 (Hy3) Preview, now a leading reasoning model in China and top-ranked on OpenRouter by token usage.
Productivity AI agents like WorkBuddy and CodeBuddy are gaining rapid adoption and high retention among users.
Core businesses, especially evergreen games and cloud services, delivered robust engagement, revenue, and cash flow.
Diluted EPS (non-IFRS) grew 12% year-over-year to RMB7.364, aided by share buybacks.
Gross profit reached RMB111.3 billion, up 11% year-over-year, with gross margin improving to 57%.
Non-IFRS operating profit was RMB75.6 billion, up 9% year-over-year; excluding new AI products, it was RMB84.4 billion, up 17%.
Free cash flow was RMB56.7 billion, up 20% year-over-year.
Net cash position at quarter end was RMB146.9 billion, up 37% quarter-on-quarter and 63% year-over-year.
Adjusted EBITDA reached RMB89.6 billion, with a margin of 46%.
Substantial increase in AI-related CapEx expected in the second half of 2026 as more China-designed ASICs become available.
Focus remains on scaling AI models and expanding agentic AI use cases, with ongoing investment in infrastructure and talent.
Monetization of AI products is expected to be gradual, with business-oriented revenues materializing faster than consumer subscriptions.
Management anticipates further expansion of AI-driven products and services, leveraging strong cash flow from core businesses.
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