TENCENT ANNOUNCES 2022 THIRD QUARTER RESULTS

HONG KONG,Nov. 16,2022 -- 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 third quarter ("3Q2022") ended September 30,2022.

3Q2022 Key Highlights

Revenues: -2% YoY,non-IFRS[1] profit attributable to equity holders of the Company: +2% YoY

Total revenues were RMB140.1 billion (USD19.7 billion[2]),a decrease of 2% over the third 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 profit was RMB40.9 billion (USD5.8 billion),largely stable YoY. Operating margin was stable at 29%.

- Profit for the period was RMB33.4 billion (USD4.7 billion),an increase of 3% YoY. Net margin increased to 24% from 23% last year.

- Profit attributable to equity holders of the Company for the quarter was RMB32.3 billion (USD4.5 billion),an increase of 2% YoY.

- Basic earnings per share were RMB3.381. Diluted earnings per share were RMB3.306.

On an IFRS basis:

- Operating profit was RMB51.6 billion (USD7.3 billion),a decrease of 3% YoY. Operating margin was stable at 37%.

- Profit for the period was RMB38.8 billion (USD5.5 billion),a decrease of 3% YoY. Net margin was stable at 28%.

- Profit attributable to equity holders of the Company for the quarter was RMB39.9 billion (USD5.6 billion),an increase of 1% YoY.

- Basic earnings per share were RMB4.187. Diluted earnings per share were RMB4.104.

Total cash were RMB315.6 billion (USD44.5 billion) at the end of the period.

[1]Non-IFRS adjustments excludes share-based compensation,M&A related impact such asnet (gains)/losses from investee companies,amortisation of intangible assets and impairment provision/(reversals),SSV & CPP,income tax effects and others

[2]Figures stated in USD are based on USD1 to RMB7.0998

Mr. Ma Huateng,Chairman and CEO of Tencent,said,"During the third quarter,we started to benefit from the adjustments that we have made to reposition ourselves for a new industry paradigm. We activated in-feed advertisements in Video Accounts,achieved breakthroughs in international games publishing,and executed cost efficiency initiatives which re-focused us on core activities and controlled our cost growth. As a result,we achieved year-over-year growth in non-IFRS earnings after four quarters of decline. Leveraging our extensive user reach and products such as Mini Programs and Tencent Meeting,we served society in critical use cases and assisted digitalisation of offline industries. Our resilient businesses,diversified cash flows,sizeable cash balance and substantial investment portfolio enable us to invest in strategic growth areas and innovation,while at the same time returning capital to shareholders. We will distribute the large majority of our Meituan shareholding,which has generated significant returns,both strategically and financially."

3Q2022Financial Review

Revenues from VAS[3]decreased by 3% to RMB72.7 billion for the third quarter of 2022 on a year-on-year basis. International Games revenues increased by 3% to RMB11.7 billion,or 1% in constant currency terms,amid the ongoing industry normalisation post-COVID. During the quarter,we saw robust growth from VALORANT,the successful launch of Tower of Fantasy,and an expanded game portfolio at Miniclip,versus decreased revenue from PUBG Mobile. Domestic Games revenues decreased by 7% to RMB31.2 billion,as transitional industry challenges resulted in lower paying user counts. By title,we saw decreased revenues from Honour of Kings and Peacekeeper Elite influenced by the Minor protection measures which took effect from September 2021 onward,versus incremental revenues from recently launched League of Legends: Wild Rift,Return to Empire,and League of Legends Esports Manager. Social Networks revenues decreased by 2% to RMB29.8 billion,reflecting increased revenues from our Video Accounts live streaming service and music subscription service,versus decreased revenues from music- and games-related live streaming services and our video subscription service.

Revenues from Online Advertising decreased by 5% to RMB21.5 billion for the third quarter of 2022 on a year-on-year basis. The rate of year-on-year decline narrowed from the previous quarter,driven by the improvement of games,eCommerce and FMCG categories,as well as the lapping of certain industry-specific headwinds from 2021. Social and Others Advertising revenues decreased by 1% to RMB18.9 billion,reflecting continued weakness in certain ad categories,offset by strong demand for our Video Accounts in-feed ads. Media Advertising revenues decreased by 26% to RMB2.6 billion,reflecting lower advertising revenue from Tencent Video,primarily due to fewer releases of popular drama series,and to comparison versus Tokyo Olympic Games in the same period last year.

Revenues from FinTech and Business Services grew by 4% to RMB44.8 billion for the third quarter of 2022 on a year-on-year basis. FinTech Services revenue growth was higher than the previous quarter,benefitting from the recovery of online and offline commercial payment activities. Business Services revenues decreased slightly year-on-year,reflecting our continued efforts to scale back loss-making activities.

[3]Mobile games VAS revenues (including mobile games revenues attributable to our Social Networks business) decreased by 4% year-on-year to RMB41.0 billion,while PC client games revenues was largely stable YoY at RMB11.7 billion for the third quarter of 2022

Other Key Financial Information for 3Q2022

EBITDA was RMB43.1 billion,up 1% YoY. Adjusted EBITDA was RMB48.6 billion,down 1% YoY.

Capital expenditures were RMB2.4 billion,down 66% YoY.

Free cash flow was RMB27.6 billion,up 15% YoY.

As at September 30,2022,net debt position totalled RMB27.3 billion. Fair value of our shareholdings[4] in listed investee companies (excluding subsidiaries) totalled RMB532.5 billion (USD75.0 billion)and the carrying value of unlisted investee companies was RMB339.5 billion (USD47.8 billion).During the third quarter,the Company repurchased approximately 42.8 million shares on the Hong Kong Stock Exchange for an aggregate consideration of approximately RMB11.8 billion.

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

Operating Metrics

As at

30 September

2022

As at

30 September

2021

Year-

on-year

change

As at

30 June 2022

Quarter-on-

quarter

change

(in millions,unless specified)

Combined MAU of

Weixin and WeChat

1,308.9

1,262.6

3.7%

1,299.1

0.8%

Mobile device MAU of QQ

574.4

573.7

0.1%

568.7

1.0%

Fee-based VAS registered

subscriptions

228.7

235.4

-2.8%

234.7

-2.6%

Business Review and Outlook

Communication and Social

We leveraged the extensive reach of Weixin and the ease of use of Mini Programs to assist the real economy. Within Mini Programs,we accommodated more commerce and municipal service use cases. Mini Programs' DAU surpassed 600 million,representing an increase of over 30% year-on-year. Mini Programs' daily activations grew even faster,by over 50% year-on-year. We deepened the adoption of Mini Programs in key commerce categories such as food and beverage,apparel,and department stores,where offline merchants and brands are increasingly integrating their membership and loyalty programs,and building multi-channel retailing with Mini Programs. The Health Code Mini Programs helped users verify their health and travel status with over 320 billion visits year-to-date[5].

For QQ,we collaborated with brands,such as Gucci and KFC,to launch their virtual spaces within Super QQ Show,where they can provide immersive interactions for users. We enabled users to showcase and share their personalised party rooms with the broader community.

[5]During the period from 1Q 2022 to 3Q 2022

Digital Content

Our fee-based VAS subscriptions decreased by 3% year-on-year to 229 million. For Tencent Video,subscriptions declined moderately to 120 million due to content scheduling delays,while ARPU increased due to our initiative in adjusting membership pricing. We released popular self-commissioned drama series such as Love Like The Galaxy,which ranked first by video views across all online platforms in China[6].

[6]Source: Enlightent,3Q 2022

Domestic Games

With the implementation of our world-leading Minor[7]protection program,we have become fully compliant with China regulations,and fostered a healthier industry environment. Time spent from Minors decreased by 92% year-on-year,and constituted 0.7% of our Domestic Games' total time spent in July 2022. We demonstrated resilience in our adult user base and user engagement,as the industry lapped the impact of Minor protection measures implemented in September 2021. For September 2022,our combined PC and mobile games DAU of adult users increased by a double-digit percentage year-on-year growth rate,while total time spent on our PC and mobile games by adult users increased by a single-digit percentage year-on-year growth rate.

We are successfully extending the longevity of our leading game franchises,such as CrossFire. We published the original CrossFire PC game 14 years ago. As a result of our innovation in areas such as its player versus environment mode and ranked mode,CrossFire remains the leading FPS game on PC in China,achieving a high single-digit percentage year-on-year growth in its grossing receipts in the first nine months of this year. In 2015,we published CrossFire Mobile,developed by TiMi Studio Group,which significantly expanded the franchise's overall player base in China,and which currently remains one of the top 10 mobile games by time spent and grossing receipts in China[8],even after we launched a number of other successful FPS games.

[7]Players who are aged under 18

[8]Source: by time spent according to QuestMobile and by grossing receipts according to data.ai,3Q 2022

International Games

In games development,we are extending the success of our market-leading internally developed franchises. Riot Games applied its experience as the industry pioneer in eSports to drive VALORANT Champions tournament as the most watched eSports event in the tactical shooter genre[9],expanding VALORANT's fanbase and achieving record-high grossing receipts for the game during the third quarter of 2022. In October 2022,Supercell released the biggest-ever content update for Clash of Clans,boosting user engagement and in-game consumption. Clash of Clans has generally ranked as the top mobile strategy game internationally by annual grossing receipts since its launch in 2012,and maintained the number one position year-to-date in 2022[10].

In games publishing,we achieved breakthroughs with the successful release of two new titles,showcasing the capabilities of our global brand Level Infinite in localised content marketing and user community management. Tower of Fantasy,an open world MMORPG we released in August 2022,was the second highest-ranked among MMORPG by DAU internationally in the quarter[11]. Tower of Fantasy achieved commercial success in the most competitive markets,ranking first by grossing receipts among MMORPG in Japan and second in the United States[11]. On 4 November,we launched GODDESS OF VICTORY: NIKKE,a sci-fi RPG shooter with anime graphics,which ranked first by grossing receipts internationally across all mobile games[12]. GODDESS OF VICTORY: NIKKE was developed by Shift Up,a Korean studio in which we are an investor,and demonstrates our ability to support small sized creative teams via our publishing expertise and resources.

[9]Source: by hours watched according to Esports Charts,3Q 2022

[10]Source: data.ai,during the period from 1 January,2022 to 14 November,2022

[11]Source: data.ai,3Q 2022

[12]Source: data.ai,during the period from 4 November,2022

Online Advertising

For Video Accounts,we saw robust advertising demand for in-feed advertisements,particularly from the FMCG category. Advertising in Video Accounts is complementary and incremental to our existing advertising revenue. Excluding Video Accounts,Weixin's advertising revenue grew year-on-year,with rapid growth from Mini Programs.

FinTech

Our commercial payment volume posted double-digit year-on-year growth during the third quarter of 2022,with notable expansion in categories such as groceries,dining services and transportation.

Cloud and Other Business Services

As we scaled back loss-making activities and focused on internally developed products,revenue declined slightly year-on-year,but gross profit increased significantly year-on-year. We are actively assisting non-Internet industries to embrace digital transformation,boosting our revenue contributions from historically offline industries. For example,Tencent Cloud Enterprise enables customers such as banks and municipalities that prefer to host data on private clouds to integrate and deploy our public cloud products within their private clouds,meeting their needs for security and compliance. Public sector organisations,such as hospitals and schools,are increasingly using our key SaaS tools,facilitating efficient collaboration and online education.

For other detailed disclosure,please refer to our website https://www.tencent.com/en-us/investors.html,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.

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 investment-related 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

RMBin millions,unless specified

Unaudited

Unaudited

3Q2022

3Q2021

3Q2022

2Q2022

Revenues

140,093

142,368

140,093

134,034

VAS

72,727

75,203

72,727

71,683

Online Advertising

21,443

22,495

21,443

18,638

FinTech and Business Services

44,844

43,317

44,844

42,208

Others

1,079

1,353

1,505

Cost of revenues

(78,110)

(79,621)

(78,110)

(76,167)

Gross profit

61,983

62,747

61,983

57,867

Gross margin

44%

44%

44%

43%

Interest income

2,328

1,703

2,945

Other gains,net

20,886

22,984

20,886

4,420

Selling and marketing expenses

(7,124)

(10,435)

(7,124)

(7,932)

General and administrative expenses

(26,480)

(23,862)

(26,480)

(26,233)

Operating profit

51,593

53,137

51,593

30,067

Operating margin

37%

37%

37%

22%

Finance costs,net

(1,950)

(1,942)

(1,809)

Share of profit/(loss) of associates and

joint ventures,net

(3,697)

(5,668)

(3,697)

(4,460)

Profit before income tax

45,946

45,527

45,946

23,798

Income tax expense

(7,104)

(5,452)

(7,104)

(4,568)

Profit for the period

38,842

40,075

38,842

19,230

Net margin

28%

28%

28%

14%

Attributable to:

Equity holders of the Company

39,943

39,510

39,943

18,619

Non-controlling interests

(1,101)

565

(1,101)

611

Non-IFRS profit attributable to equity

holders of the Company

32,254

31,751

32,254

28,139

Earnings per share for profit

attributable to equity holders of

the Company

(in RMB per share)

- basic

4.187

4.143

4.187

1.951

- diluted

4.104

4.074

4.104

1.915

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

RMBin millions,unless specified

Unaudited

3Q2022

3Q2021

Profit for the period

38,075

Other comprehensive income,net of tax:

Items that may be subsequently reclassified to profit or loss

Share of other comprehensive income of associates and joint ventures

948

(157)

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

disposal and deemed disposal of associates and joint ventures

42

-

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

through other comprehensive income

(8)

-

Currency translation differences

5,809

(4,607)

Other fair value gains,net

1,830

133

Items that will not be subsequently reclassified to profit or loss

Share of other comprehensive income of associates and joint ventures

503

(16)

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

through other comprehensive income

(26,433)

(36,411)

Currency translation differences

2,245

(130)

(15,064)

(41,188)

Total comprehensive income for the period

23,778

(1,113)

Attributable to:

Equity holders of the Company

24,826

(594)

Non-controlling interests

(1,048)

(519)

OTHER FINANCIAL INFORMATION

RMBin millions,unless specified

Unaudited

3Q2022

2Q2022

3Q2021

EBITDA (a)

43,124

38,628

42,683

Adjusted EBITDA (a)

48,610

44,668

49,257

Adjusted EBITDA margin (b)

35%

33%

35%

Interest and related expenses

2,729

2,327

2,092

Net (debt)/cash (c)

(27,271)

(20,429)

(26,146)

Capital expenditures (d)

2,377

3,015

7,061

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 amortisationof 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 licencesand other content).

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

RMB in millions,unless specified

Unaudited

Audited

As at

September 30,2022

As at

December 31,2021

ASSETS

Non-current assets

Property,plant and equipment

55,406

61,914

Land use rights

18,195

17,728

Right-of-use assets

22,448

20,468

Construction in progress

7,671

5,923

Investment properties

555

517

Intangible assets

175,744

171,376

Investments in associates

301,846

316,574

Investments in joint ventures

6,796

6,614

Financial assets at fair value through profit or loss

207,222

192,184

Financial assets at fair value through other

comprehensive income

169,918

250,257

Prepayments,deposits and other assets

37,054

37,177

Other financial assets

7,563

1,261

Deferred income tax assets

28,358

26,068

Term deposits

24,945

19,491

1,063,721

1,127,552

Current assets

Inventories

2,933

1,063

Accounts receivable

44,837

49,331

Prepayments,deposits and other assets

71,615

65,390

Other financial assets

1,521

1,749

Financial assets at fair value through profit or loss

21,089

10,573

Term deposits

109,636

83,813

Restricted cash

2,614

2,476

Cash and cash equivalents

160,177

167,966

Assets held for distribution

-

102,451

414,422

484,812

Total assets

1,478,143

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

68,636

67,330

Treasury shares

(3,193)

-

Shares held for share award schemes

(4,565)

(4,843)

Other reserves

(54,303)

73,901

Retained earnings

749,345

669,911

755,920

806,299

Non-controlling interests

62,486

70,394

Total equity

818,406

876,693

LIABILITIES

Non-current liabilities

Borrowings

171,009

136,936

Notes payable

151,535

145,590

Long-term payables

10,246

9,966

Other financial liabilities

5,679

5,912

Deferred income tax liabilities

13,895

13,142

Lease liabilities

18,082

16,501

Deferred revenue

3,944

4,526

374,390

332,573

Current liabilities

Accounts payable

99,789

109,470

Other payables and accruals

55,176

60,582

Borrowings

9,694

19,003

Notes payable

10,646

-

Current income tax liabilities

10,555

12,506

Other tax liabilities

2,864

2,240

Other financial liabilities

5,738

3,554

Lease liabilities

6,207

5,446

Deferred revenue

84,678

87,846

Dividends payable for distribution in specie

-

102,451

285,347

403,098

Total liabilities

659,737

735,671

Total equity and liabilities

1,364

RECONCILIATIONSOFIFRSTONON-IFRSRESULTS

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 September 30,2022

Operating profit

51,593

5,925

(32,341)

1,313

12,962

1,445

10

–

40,907

Profit for the period

38,842

8,020

(32,106)

3,065

13,283

1,445

1,738

(933)

33,354

Profit attributable to

equity holders

39,943

7,818

(32,402)

2,836

11,617

1,738

(741)

32,254

Operating margin

37%

29%

Net margin

28%

24%

Unaudited three months ended June 30,2022

Operating profit

30,067

6,507

(5,539)

1,255

2,831

1,370

176

–

36,667

Profit for the period

19,230

8,439

(6,085)

2,989

3,189

1,370

176

(321)

28,987

Profit attributable to

equity holders

18,619

8,257

(5,968)

2,767

3,370

176

(271)

28,139

Operating margin

22%

27%

Net margin

14%

22%

Unaudited three months ended September 30,2021

Operating profit

53,137

6,652

(26,569)

1,149

6,389

70

–

–

40,828

Profit for the period

40,075

10,242

(26,781)

3,093

6,452

70

–

(633)

32,518

Profit attributable to

equity holders

39,510

10,063

(26,491)

2,719

6,452

70

–

(572)

31,751

Operating margin

37%

29%

Net margin

28%

23%

Note:

(a)Including put options granted to employees ofinvesteecompanies on their shares and shares to be issued underinvesteecompanies' share-based incentive plans which can be acquired by the Group,and other incentives

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

(c)Amortisationof intangible assets resulting from acquisitions

(d)Mainly including 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

(f)Mainly including expenses incurred for regulatory fines and certain litigation settlements of the Group and/or arising frominvesteecompanies

(g)Income tax effects ofnon-IFRSadjustments