TENCENT ANNOUNCES 2022 FIRST QUARTER RESULTS

HONG KONG,May 18,2022 -- Tencent Holdings Limited ("Tencent" or the "Company",00700.HK),a leading provider of Internet value added services in China,today announced the unaudited consolidated results for the first quarter ("1Q2022") ended March 31,2022.

1Q2022 Key Highlights

Revenues: stable YoY,non-IFRS[1] profit attributable to equity holders of the Company: -23% YoY

Total revenueswereRMB135.5 billion(USD21.3 billion[2]),stableover the first quarter of 2021 ("YoY").

On a non-IFRS basis,which is intended to reflect core earnings by excluding certain one-time and/or non-cash items:

- Operating profitwas RMB36.5 billion (USD5.8 billion),a decrease of 15%YoY. Operating margin decreased to 27% from 32% last year.

- Profit for the periodwas RMB26.3billion (USD4.1billion),a decrease of 24%YoY. Net margin decreased to 19% from 26% last year.

- Profit attributable to equity holders of the Companyfor the quarter was RMB25.5billion (USD4.0 billion),a decrease of 23% YoY.

- Basic earnings per sharewere RMB2.678. Diluted earnings per share were RMB2.620.

On an IFRS basis:

- Operating profit was RMB37.2 billion (USD5.9 billion),a decrease of 34% YoY. Operating margin decreasedto 27% from 42% last year.

- Profit for the period was RMB23.7billion (USD3.7 billion),a decrease of52% YoY. Net margin decreased to 18% from 36% last year.

- Profitattributable to equity holders of the Companyfor the quarter was RMB23.4 billion(USD3.7 billion),a decrease of51%YoY.

- Basic earnings per share were RMB2.455. Diluted earnings per share were RMB2.404.

Total cash were RMB304.1billion (USD47.9 billion) at the end of the period.

Mr. Ma Huateng,Chairman and CEO of Tencent,said,"During the challenging first quarter of 2022,we implemented cost control initiatives and rationalised certain non-core businesses,which would enable us to achieve a more optimised cost structure going forward. We utilised tools such as Mini Programs,Tencent Meeting,and WeCom to help enterprises and consumers weather the resurgence of COVID-19 in China,and continued investing in strategic growth areas including enterprise software,Video Accounts and international games. Looking forward,we will sharpen our focus and sustain our innovation through challenges and cycles,and continue to create value for our users,partners,and society."

[1]Non-IFRS adjustments exclude share-based compensation,M&A related impact such asnet (gains)/losses from investee

companies,amortisation of intangible assets and impairment provisions/(reversals),SSV & CPP,income tax effects and others

[2]Figures stated in USD are based on USD1 to RMB6.3482

1Q2022Financial Review

Revenues from VAS[3] were RMB72.7 billion for the first quarter of 2022,broadly stable compared to the first quarter of 2021. Domestic Games revenues decreased by 1% to RMB33.0 billion,as direct and indirect effects of the minor protection measures impacted active user and paying user counts. During the quarter,the incremental revenues generated by recently launched games,such as League of Legends: Wild Rift and Fight of The Golden Spatula,were largely offset by the decrease in revenues from games such as Moonlight Blade Mobile and Call of Duty Mobile. International Games revenues grew by 4% to RMB10.6 billion,reflecting an increase in revenues from games including VALORANT and Clash of Clans,partly offset by a decrease in revenues from PUBG Mobile as user spending normalised post-COVID. Social Networks revenues grew by 1% to RMB29.1 billion,reflecting increased revenue from our Video Accounts live streaming service,largely offset by decreased revenues from music- and games-related live streaming services.

Revenues from Online Advertising decreased by 18% to RMB18.0 billion for the first quarter of 2022 on a year-on-year basis,reflecting weak demand from advertiser categories including education,Internet services and eCommerce,plus regulatory changes impacting the online advertising industry itself,partly offset by solid demand from the FMCG category,as well as our consolidation of Sogou's advertising revenue. Social and Others Advertising revenues decreased by 15% to RMB15.7 billion,primarily due to sharply lower advertising revenues from our mobile advertising network,which was particularly affected by the regulatory changes,partly offset by greater advertising revenues from Official Accounts,driven by the popularity of notification feeds ads. Media Advertising revenues decreased by 30% to RMB2.3 billion,reflecting lower advertising revenues from our media platforms including Tencent News and Tencent Video,partly offset by advertising revenue contribution from the Beijing 2022 Winter Olympics.

Revenues from FinTech and Business Services increased by 10% to RMB42.8 billion for the first quarter of 2022 on a year-on-year basis. FinTech Services year-on-year revenue growth moderated as COVID-19 resurgence in March 2022 impacted commercial payment volume. Business Services revenue recorded a mild year-on-year decrease,as we repositioned our IaaS service from revenue scale-up at all costs to self-sustained growth,and proactively reduced loss-making contracts.

Other Key Financial Information for 1Q2022

EBITDA was RMB38.3 billion,down 22% YoY. Adjusted EBITDA was RMB46.1 billion,down 13% YoY.

Capital expenditures wereRMB7.0 billion,down 10% YoY.

Free cash flow was RMB15.2 billion,down 54% YoY.

As at March 31,2022,net debt position totalled RMB11.0 billion. Fair value of our shareholdings[4] in listed investee companies (excluding subsidiaries) totalled RMB606.0 billion (USD95.5 billion). During the first quarter,the Company repurchased approximately 8.9 million shares on the Hong Kong Stock Exchange for an aggregate consideration of approximately RMB3.0 billion (USD474 million).

[3]From the third quarter of 2021,we disclose revenues from Domestic Games and International Games as new sub-segments

under VAS,reflecting the increasing scale of our International Games business. Mobile games VAS revenues (including mobile

games revenues attributable to our Social Networks business) decreased by 3% year-on-year to RMB40.3 billion,while PC client

games revenues grew by 2% year-on-year to RMB12.1 billion for the first quarter of 2022.

[4]Including those held via special purpose vehicles,on an attributable basis

Operating Metrics

As at

31 March

2022

As at

31 March

2021

Year-

on-year

change

As at

31 December

2021

Quarter-on-

quarter

change

(in millions,unless specified)

Combined MAU of

Weixin and WeChat

1,288.3

1,241.6

3.8%

1,268.2

1.6%

Mobile device MAU of QQ

563.8

606.4

-7.0%

552.1

2.1%

Fee-based VAS registered

subscriptions

239.1

225.7

5.9%

236.3

1.2%

Business Review and Outlook

Communication and Social

Within Weixin,Video Accounts continued to gain user traction with significant year-on-year growth in video views and time spent,bolstered by expansion in news,knowledge-based and entertainment content,as well as enhanced recommendation technologies. Mini Programs exceeded 500 million DAU and sustained rapid growth in gross merchandise value with deepened penetration in retail,dining and municipal services.

For QQ,we are enriching features for young users to better create,share and connect with each other. We provide avatar tools for users to create short videos featuring their customised Super QQ Show characters. Through Status update,users can choose to let their contacts see what videos or music they are consuming,so that their friends can access and stream the same content within QQ via Mini Programs.

Digital Content

Our fee-based VAS subscriptions increased 6% year-on-year to 239 million. We extended our market leadership in the long-form video streaming market with 124 million subscribers,leveraging IP adaptations of successful comics and novels. For music,subscription counts increased to 80 million,driven by high quality content as well as increased consumer willingness to subscribe for music services.

Domestic Games

Among our most popular and longer-established games,Honour of Kings,the top-ranked mobile game by DAU in China[5],released fewer commercially successful items during the Chinese New Year holiday period than in prior years,but its adult user base remained engaged. With the release of popular items inspired by the Chinese floral festival,Honour of Kings resumed year-on-year growth in its grossing receipts in March 2022. Peacekeeper Elite,the second-most popular mobile game by DAU in China[5],released its third anniversary update in April 2022,enhancing user engagement. We are also successfully expanding our presence in other key genres of games. Fight of The Golden Spatula,an auto battler genre game we released in August 2021,added new champions and game mechanics,and was the sixth most popular mobile game by DAU in China[5]. Return to Empire,a real-time strategy mobile game we launched in March 2022,became China's second most successful game in its genre by grossing receipts in April 2022[6].

[5]Source: QuestMobile,1Q2022

[6]Source: data.ai

International Games

We believe that the mobile game industry outside China generally underwent a post COVID-19 normalisation downward in terms of user activities and spending in early 2022. PUBG Mobile experienced this pattern with a year-on-year revenue decline in the first quarter of 2022. However,our PC game VALORANT continued its robust performance with a growing user base and higher paying propensity. We also released titles in other key genres which generated favorable critical response. For example,Dune: Spice Wars,a real-time strategy PC game based on the popular sci-fi IP Dune and published by our subsidiary Funcom,entered into Early Access in April 2022. We and Electronic Arts have jointly developed Apex Legends Mobile,a hero shooter battle royale game based on one of the most successful new PC/console IPs in recent years,which was launched in May 2022.

Online Advertising

For 2022 second quarter-to-date,overall advertising sentiment remained weak as advertisers in categories such as FMCG,eCommerce and travel have reduced their spending significantly. Amid the difficult market environment,we continue to invest in our advertising system and are upgrading our machine learning infrastructure to process data more efficiently. The upgrade should enable us to deliver better targeting and conversion rates for advertisers

FinTech

Commercial payment activities have been weak since mid March 2022,due to the resurgence of COVID-19 in several cities in China,which negatively affected payment volume growth in categories such as transportation,dining services and apparel.

Cloud and Other Business Services

As we re-focused on healthy growth for Business Services,we scaled back loss-making activities,and concentrated resources on our PaaS solutions in areas such as video cloud and cybersecurity. Taking advantage of our accumulated experience in providing in-house interactive entertainment and video chat services,and our low-latency network infrastructure,we are increasingly migrating our clients from basic CDN (Content Delivery Network) services to sophisticated video-on-demand,live streaming and real-time communication solutions. According to Gartner,Tencent ranked first in China by CPaaS (Communication PaaS) revenues

[7]

. In cybersecurity,we expanded our client base across network,endpoint and business operation security solutions,fulfilling enterprises' growing needs for protection against cyber-attacks,and for cybersecurity compliance.

[7]Source: Gartner's "Market Share: All Software,Markets,Worldwide,2021"

For other detailed disclosure,please refer to our website https://www.tencent.com/en-us/investors.htmlhttp://www.tencent.com/ir,or follow us via Weixin Official Account (Weixin ID: Tencent_IR)

About Tencent

Tencent uses technology to enrich the lives of Internet users.

Our communication and social services,Weixin and QQ,connect users with each other and with digital content and services,both online and offline,making their lives more convenient. Our targeted advertising service helps advertisers reach out to hundreds of millions of consumers in China. Our FinTech and business services support our partners' business growth and assist their digital upgrade.

Tencent invests heavily in talent and technological innovation,actively promoting the development of the Internet industry. Tencent was founded in Shenzhen,China,in 1998. Shares of Tencent (00700.HK) are listed on the Main Board of the Stock Exchange of Hong Kong.

For investor and media enquiries,please contact IR@tencent.com

Non-IFRS Financial Measures

To supplement the consolidated results of the Group prepared in accordance with IFRS,certain additional non-IFRS financial measures (in terms of operating profit,operating margin,profit for the period,net margin,profit attributable to equity holders of the Company,basic EPS and diluted EPS),have been presented in this press release. These unaudited non-IFRS financial measures should be considered in addition to,not as a substitute for,measures of the Group's financial performance prepared in accordance with IFRS. In addition,these non-IFRS financial measures may be defined differently from similar terms used by other companies.

The Company's management believes that the non-IFRS financial measures provide investors with useful supplementary information to assess the performance of the Group's core operations by excluding certain non-cash items and certain impact of M&A transactions. In addition,non-IFRS adjustments include relevant non-IFRS adjustments for the Group's major associates based on available published financials of the relevant major associates,or estimates made by the Company's management based on available information,certain expectations,assumptions and premises.

Forward-looking Statements

This press release contains forward-looking statements relating to the business outlook,estimates of financial performance,forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations,assumptions and premises,some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realised in the future. Underlying these forward-looking statements are a lot of risks and uncertainties. In light of the risks and uncertainties,the inclusion of forward-looking statements in this press release should not be regarded as representations by the Board or the Company that the plans and objectives will be achieved,and investors should not place undue reliance on such statements.

CONSOLIDATED INCOME STATEMENT

RMB in millions,unless specified

Unaudited

Unaudited

1Q2022

1Q2021

1Q2022

4Q2021

Revenues

135,471

135,303

135,471

144,188

VAS

72,738

72,443

72,738

71,913

Online Advertising

17,988

21,820

17,518

FinTech and Business Services

42,768

39,028

42,768

47,958

Others

1,977

2,012

1,977

2,799

Cost of revenues

(78,397)

(72,668)

(78,397)

(86,371)

Gross profit

57,074

62,635

57,074

57,817

Gross margin

42%

46%

42%

40%

Interest income

1,737

1,614

1,703

Other gains,net

13,133

19,521

13,133

86,199

Selling and marketing expenses

(8,058)

(8,530)

(8,058)

(11,616)

General and administrative expenses

(26,669)

(18,967)

(26,669)

(24,380)

Operating profit

37,217

56,273

37,217

109,723

Operating margin

27%

42%

27%

76%

Finance costs,net

(1,935)

(1,367)

(1,863)

Share of (loss)/profit of associates and

joint ventures,net

(6,280)

1,348

(6,280)

(8,267)

Profit before income tax

29,002

56,254

29,002

99,593

Income tax expense

(5,269)

(7,246)

(5,269)

(3,888)

Profit for the period

23,733

49,008

23,733

95,705

Net margin

18%

36%

18%

66%

Attributable to:

Equity holders of the Company

23,413

47,767

23,413

94,958

Non-controlling interests

320

1,241

320

747

Non-IFRS profit attributable to equity

holders of the Company

25,545

33,118

25,545

24,880

Earnings per share for profit

attributable to equity holders of

the Company

(in RMB per share)

- basic

2.455

5.020

2.455

9.957

- diluted

2.404

4.917

2.404

9.788

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

RMB in millions,unless specified

Unaudited

1Q2022

1Q2021

Profit for the period

23,008

Other comprehensive income,net of tax:

Items that may be subsequently reclassified to profit or loss

Share of other comprehensive (loss)/income of associates and joint

ventures

(50)

288

Transfer of share of other comprehensive income to profit or loss upon

disposal and deemed disposal of associates and joint ventures

-

(3)

Net losses from changes in fair value of financial assets at fair value

through other comprehensive income

(16)

-

Currency translation differences

(4,461)

(5,908)

Other fair value gains

3,217

1,163

Items that will not be subsequently reclassified to profit or loss

Share of other comprehensive income of associates and joint ventures

187

381

Loss from changes in fair value of assets held for distribution

(17,130)

-

Net (losses)/gains from changes in fair value of financial assets at fair

value through other comprehensive income

(58,850)

18,483

Currency translation differences

(142)

207

(77,245)

14,611

Total comprehensive income for the period

(53,512)

63,619

Attributable to:

Equity holders of the Company

(52,277)

63,756

Non-controlling interests

(1,235)

(137)

OTHER FINANCIAL INFORMATION

RMB in millions,unless specified

Unaudited

1Q2022

4Q2021

1Q2021

EBITDA(a)

38,283

36,568

49,355

Adjusted EBITDA (a)

46,102

42,267

52,927

Adjusted EBITDA margin(b)

34%

29%

39%

Interest and related expenses

2,103

2,188

1,726

Net (debt)/cash (c)

(11,035)

(20,243)

5,581

Capital expenditures (d)

6,971

11,661

7,734

Note:

(a) EBITDA is calculated as operating profit minus interest income and other gains/losses,net,and adding back depreciation of property,plant and equipment,

investment properties as well as right-of-use assets,and amortisation of intangible assets and land use rights. Adjusted EBITDA is calculated as EBITDA

plus equity-settled share-based compensation expenses.

(b) Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues.

(c) Net (debt)/cash represents period end balance and is calculated as cash and cash equivalents,plus term deposits and others,minus borrowings and

notes payable.

(d) Capital expenditures consist of additions (excluding business combinations) to property,construction in progress,investment

properties,land use rights and intangible assets (excluding video and music content,game licences and other content).

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

RMB in millions,unless specified

Unaudited

Audited

As at

March 31,2022

As at

December 31,2021

ASSETS

Non-current assets

Property,plant and equipment

61,560

61,914

Land use rights

18,451

17,728

Right-of-use assets

22,091

20,468

Construction in progress

6,529

5,923

Investment properties

589

517

Intangible assets

178,712

171,376

Investments in associates

309,630

316,574

Investments in joint ventures

6,509

6,614

Financial assets at fair value through profit or loss

197,161

192,184

Financial assets at fair value through other

comprehensive income

189,993

250,257

Prepayments,deposits and other assets

37,093

37,177

Other financial assets

4,222

1,261

Deferred income tax assets

27,616

26,068

Term deposits

21,124

19,491

1,081,280

1,127,552

Current assets

Inventories

2,712

1,063

Accounts receivable

52,774

49,331

Prepayments,deposits and other assets

69,961

65,390

Other financial assets

1,568

1,749

Financial assets at fair value through profit or loss

11,742

10,573

Term deposits

82,604

83,813

Restricted cash

2,691

2,476

Cash and cash equivalents

188,826

167,966

Assets held for distribution

-

102,451

412,878

484,812

Total assets

1,494,158

1,612,364

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)

RMB in millions,2021

EQUITY

Equity attributable to equity holders of the Company

Share capital

-

-

Share premium

71,817

67,330

Treasury shares

(1,222)

-

Shares held for share award schemes

(4,686)

(4,843)

Other reserves

9,094

73,901

Retained earnings

702,856

669,911

777,859

806,299

Non-controlling interests

67,418

70,394

Total equity

845,277

876,693

LIABILITIES

Non-current liabilities

Borrowings

148,467

136,936

Notes payable

135,465

145,590

Long-term payables

9,377

9,966

Other financial liabilities

5,783

5,912

Deferred income tax liabilities

12,524

13,142

Lease liabilities

17,981

16,501

Deferred revenue

4,562

4,526

334,159

332,573

Current liabilities

Accounts payable

112,512

109,470

Other payables and accruals

48,437

60,582

Borrowings

21,656

19,003

Notes payable

9,515

-

Current income tax liabilities

13,968

12,506

Other tax liabilities

2,456

2,240

Other financial liabilities

3,326

3,554

Lease liabilities

5,927

5,446

Deferred revenue

96,925

87,846

Dividends payable for distribution in specie

-

102,451

314,722

403,098

Total liabilities

648,881

735,671

Total equity and liabilities

1,364

RECONCILIATIONS OF IFRS TO NON-IFRS RESULTS

As

reported

Adjustments

Non-IFRS

RMB in millions,

unless specified

Share-based

compensation

(a)

Net (gains)/losses

from investee

companies (b)

Amortisation of

intangible assets

(c)

Impairment

provisions/

(reversals) (d)

SSV &

CPP (e)

Others (f)

Income

tax effects

(g)

Unaudited three months ended March 31,2022

Operating profit

37,217

8,136

(18,559)

1,388

7,003

1,348

5

–

36,538

Profit for the period

23,733

9,635

(18,552)

3,163

7,832

1,348

5

(868)

26,296

Profit attributable to

equity holders

23,413

9,452

(18,542)

2,857

7,827

1,348

5

(815)

25,545

Operating margin

27%

27%

Net margin

18%

19%

Unaudited three months ended December 31,2021

Operating profit

109,723

5,664

(100,349)

1,316

15,217

604

976

–

33,151

Profit for the period

95,705

7,880

(98,046)

3,340

15,573

604

1,568

(866)

25,758

Profit attributable to

equity holders

94,958

7,776

(97,804)

3,010

15,567

(804)

24,880

Operating margin

76%

23%

Net margin

66%

18%

Unaudited three months ended March 31,2021

Operating profit

56,273

3,704

(18,331)

1,062

50

–

–

–

42,758

Profit for the period

49,008

5,036

(22,231)

2,699

178

–

–

(187)

34,503

Profit attributable to

equity holders

47,767

4,855

(21,829)

2,352

178

–

–

(205)

33,118

Operating margin

42%

32%

Net margin

36%

26%

Note:

(a) Including put options granted to employees of investee companies on their shares and shares to be issued under investee companies' share-based incentive plans which canbeacquired by the Group,and other incentives

(b) Including net (gains)/losses on deemed disposals/disposals of investee companies,fair value changes arising from investee companies,and other expenses in relation to equity transactions of investee companies

(c) Amortisation of intangible assets resulting from acquisitions

(d) Impairment provisions/(reversals) for associates,joint ventures,goodwill and other intangible assets arising from acquisitions

(e) Mainly including donations and expenses incurred for the Group's Sustainable Social Value and Common Prosperity Programme ("SSV & CPP") initiatives (excluding share-based compensation expenses)

(f) Mainly including expenses incurred for regulatory fines in the Mainland of China and certain litigation settlements

(g) Income tax effects of non-IFRS adjustments