2019 Second Quarter and

Interim Results Presentation

August 14, 2019

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Cautionary Note
This presentation may contain forward-looking statements relating to the forecasts, targets, outlook, estimates of
financial performance, opportunities, challenges, business developments, business plans and growth strategies of
Tencent Holdings Limited (the “Company” or “Tencent”) and its group companies. These forward-looking
statements are based on information currently available to Tencent and are stated here on the basis of the outlook
at the time that this presentation was produced. The Company undertakes no obligation to publicly update any
forward- looking statement, whether written or oral, that may be made from time to time, whether as a result of new
information, future developments or otherwise. The forward- looking statements are based on certain expectations,
assumptions and premises, some of which are subjective or beyond our control. The forward- looking statements
may prove to be incorrect and may not be realized in the future. Underlying the forward- looking statements are a
large number of risks and uncertainties. Therefore you should not rely on any of these forward- looking
statements. Please see our various other public disclosure documents for a detailed discussion of those risks and
uncertainties.

This presentation also contains some unaudited non-GAAP financial measures which should be considered in
addition to, but not as a substitute for, measures of the Company's financial performance prepared in accordance
with IFRS. In addition, these non-GAAP financial measures may be defined differently from similar terms used by
other companies. The Company's management believes that the non-GAAP financial measures provide investors
with useful supplementary information to assess the performance of the Company’s core operations by excluding
certain non- cash items and certain impact of acquisitions. For further explanation of our non-GAAP measures and
reconciliations between our GAAP and non-GAAP results, please refer to our earnings announcement.

In addition, information relating to other companies and the market in general presented in these materials has
been obtained from publicly available information and other sources. The accuracy and appropriateness of that
information has not been verified by Tencent and cannot be guaranteed.

The reporting currency of the company is Renminbi. For the purpose of this presentation, all figures quoted in US
dollars are based on the exchange rate of US$1 to RMB6.8747 for 2Q2019.

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1. Overview

2. Strategy Review

3. Business Review

4. Financial Review

5. Q&A

3
Financial Highlights
in billion RMB 2Q2019 2Q2018 YoY 1Q2019 QoQ

Total Revenue 88.8 73.7 +21% 85.5 +4%

Value Added Services 48.1 42.1 +14% 49.0 -2%
Social Networks 20.8 16.9 +23% 20.5 +2%

Online Games 27.3 25.2 +8% 28.5 -4%

Online Advertising 16.4 14.1 +16% 13.4 +23%

Media 4.4 4.7 -7% 3.5 +26%

Social and Others 12.0 9.4 +28% 9.9 +21%

FinTech and Business Services 22.9 16.7 +37% 21.8 +5%

Others 1.4 0.8 +74% 1.3 +9%

Gross Profit 39.1 34.4 +14% 39.8 -2%
Operating Profit 27.5 21.8 +26% 36.7 -25%
Net Profit to Shareholders 24.1 17.9 +35% 27.2 -11%

Non-GAAP*
Operating Profit 27.3 22.3 +23% 28.5 -4%
Operating Margin 30.7% 30.2% +0.5ppt 33.3% -2.6ppt
Net Profit to Shareholders 23.5 19.7 +19% 20.9 +12%
* Please refer to Slide 20 for details of non-GAAP adjustments.
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 Key Platforms Update
Online Games Platform Video
• #1 by users in China across Online • #1 by mobile DAU
PC and smart phone Games News
• #1 globally by revenue • #1 news services by MAU
Music
Media • #1 music services platform
Literature
Weixin & WeChat • #1 online content library
• #1 smart phone and publishing platform
community
• MAU at 1,133m
QQ & Qzone
Communications FinTech
• QQ smart devices & Social
MAU at 707m
• Qzone smart devices Mobile Payment
MAU at 554m • #1 by MAU & DAU

Cloud
App Store
• #1 by MAU Cloud
Mobile Security Utilities • #2 service provider
• #1 by MAU
Mobile Browser
• #1 by MAU
*All rankings above refer to China market, unless otherwise stated. Company data as of June 30, 2019. 5
1. Overview

2. Strategy Review

3. Business Review

4. Financial Review

5. Q&A

6
High-Quality Content – A Strategic Asset

High-quality content sustains appeal to users, now and in future

Highly regarded Professional

documentaries sports & eSports Movies Drama series Anime series
Educational Life-long bonding Immersive Thought-provoking Stimulate imagination

The Planets 2018-2019 NBA King's Avatar Explore with the Note Land of Warriors
Anime Movie

Mini- and short-video consumption has boomed in China, but mostly additive to Internet time spent
• Mini-video boom coincided with acceleration in time spent online, as mini-video enabled users to derive
entertainment in previously under-utilized pockets of time
• Many long-form content appear unaffected - time spent viewing sports and popular drama series on healthy
growth trends

Emerging synergies between long- and short-form content

• Repurpose long-form video content to create differentiated short- and mini-video content
• Highlights or short video clips to attract traffic to related long-form content
• Strong growth in short video consumption within Tencent Video app

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Unique Capabilities in High-Quality Content

High-Quality Content Creation Platforms Category-Leading Content Platforms

Fans
Tencent Tencent Tencent Tencent
Tencent Tencent Tencent Games Video Sports TME Comics
Games Video Comics

High-DAU Platforms
External Content Partners
Content

Weixin QQ QQ Browser YingYongBao

Source high-quality content, Expertise in content curation and Multiple platforms provide
internally and externally user management access to extensive user base
• In-house content incubation • Operations teams to enhance content • Category-leading plaforms
and capability to extend IPs packaging provide content to core users
across formats • Technology teams provide smooth • High-DAU platforms facilitate
• Partnership with best-in-class streaming experience easy access and amplify user
content providers globally coverage through social
• Customized communities foster user
interactions
interactions and connections with IPs

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#1: Convert Online Novels Into Cross-Media IP Entertainment

The King’s Avatar The Master of Diabolism

• Top novel IP, belonging to China Literature • Top novel IP from joint venture of China
Literature
• Breakout success in IP development across
media • Anime: exceeded 2.2 billion video views
• Anime: ranked #1 modern-day anime by video • Drama: praised for screenplay and Chinese
views in 2017 style art design; ranked #1 costume drama by
video views in July 2019
• Drama: ranked #1 online modern-day drama by
video views in August 2019
• Movie: to be released in August 2019
• Mobile games: to be developed by Tencent
Games

Anime Series Drama Movie Anime Series S1 Drama Anime Series S2

9
#2: Extend Win-Win Partnership with NBA

Tencent Games
Tencent eSports Tencent News
User Interaction

IP Content
Penguin Media Tencent Sports
Content Platform

QQ Tencent Video
Weixin

Progress since 2015 Season Next contract until 2025 Season

Tencent & NBA Initiatives Successful Consequences Extended Contract

• Established professional • Full season NBA audience base • Deliver NBA content across high-
sports content curation expanded to 490m and UV per live- DAU platforms in live streaming,
team to deliver exciting streamed game increased to 3.7m, video-on-demand, short- and mini-
game content each tripled from 4 years ago video formats
• Built up innovative studio to • Increased NBA brand awareness in • Enrich membership benefits
create on-the-scene China including club merchandise, online
experiences streaming privileges, joint
• Tencent Sports became the #1
membership discounts
• Distributed NBA-related destination for sports fans
content across high-traffic • Cooperate in developing NBA
• Increased advertising revenue,
platforms for easy access mobile games and eSports events
launched subscription model

10
1. Overview

2. Strategy Review

3. Business Review

4. Financial Review

5. Q&A

11
Revenue by Segment
88.8
85.5 2%
84.9
2%
3%
80.6
1%
73.5 73.7 26%
1% 1% 25%
26%
24%
65.2 66.4
21% 23%

18% 21%
56.6
16% 18%
17% 14% 20% 20%
49.6
19%
17%
43.9 15% 19%
40.4 15% 18%
12% 14%
35.7
10% 33% 31%
19% 39%
19% 28%
18% 41% 34%
37% 32%
42%
46%
45% 42%
48%

23% 24% 23%

25% 23% 23%
24% 23%
24% 25% 23%
24% 24%

2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19

Social Networks Online Games Online Advertising FinTech and Business Services Others (In billion RMB)

* Starting 1Q19, we move “FinTech and Business Services” revenues out of the Others segment to form a new segment. Please refer to Slide 17 for retrospective figures.
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Value-Added Services
Social Networks
• Virtual item sales in live streaming services
+14% -2% and games contributed to revenue growth
YoY QoQ
• VAS subscriptions increased 10% YoY to 169
million, within which video reached 97 million
48.1 49.0 48.1 mainly due to joint membership promotions
and self-commissioned Chinese anime series
42.1

20.8 20.5 +2% 20.8

+23%
16.9 Online Games
• Total smart phone games revenue* was
RMB22.2 billion, up 26% YoY, due to
+8% -4%
27.3 28.5 27.3 popularity of key titles and new releases.
25.2
Revenue grew 5% QoQ, as new game
releases offset weak seasonality

2Q18 2Q19 1Q19 2Q19 • PC client games revenue decreased 9% YoY

Social Networks Online Games
to RMB11.7 billion but cash receipts up YoY;
revenue down 15% QoQ due to weak
In billion RMB seasonality
* Total smart phone games revenue includes smart phone games revenue booked
under Online Games and related platform revenue booked under Social Networks.

13
VAS - Social Networks

Weixin QQ

Unique and vibrant Mini Programs ecosystem: A major version upgrade:

• Provides development tools, access to • Added Mini Programs – QQ users

consumers and monetization opportunities, particularly fond of entertainment and
attracting many developers and service games-related categories
providers. The number of mid/long- tail Mini
Programs more than doubled YoY • Enhanced chat experience, e.g., video,
voice, extended screen photo format;
• Content Mini Programs allow users to create, daily messages up QoQ
upload and share interesting videos, music,
and news more conveniently; more content • Upgraded algorithms to recommend new
Mini Programs with over 1-million DAU friends based on common interests and
emerged, and time spent per user increased shared contacts

• Daily messages and video uploads sustained

solid growth

14
VAS - Online Games

Smart Phone Games

• Released 10 games in 2Q versus 1 game in 1Q
• HoK revenue increased YoY; Perfect World Mobile
contributed full-quarter revenue; Peacekeeper Elite
contributed limited revenue due to our deferral policy
• In July, new releases included KartRider Rush, Game of Honour of Kings

Thrones: Winter is Coming, Dragon Raja

• Internationally, expanding user base with existing
blockbuster PUBG MOBILE and new games, e.g., Speed
Drifter, Chess Rush

Peacekeeper Elite

PC Client Games
• LoL DAU and time spent benefitting from new play mode Teamfight Tactics since late June -
clear global leader in auto-chess category; cash receipts in China increased YoY
• DnF fine-tuned gameplay to prioritize user engagement and reduce monetization

15
Online Advertising

Segment revenue grew YoY amidst challenging

macro-economic conditions and industry
competition. Sequentially, revenue was boosted
+16% +23%
YoY QoQ by strong demand from eCommerce in June and
online education before summer holidays

16.4 16.4 Media Ad

14.1
4.4 13.4 4.4 • Revenue decreased 7% YoY, due to
-7% +26% unexpected delay of certain top-tier dramas
4.7 3.5
and the absence of FIFA World Cup
reducing sponsorship advertising dollars

+28% 12.0 +21% 12.0 • Mobile Video DAU remained stable,

9.4 9.9 contributing to solid growth of in-feed ads
YoY and QoQ

2Q18 2Q19 1Q19 2Q19 Social & Others Ad

Media Social and Others
• Revenue increased YoY due to higher
In billion RMB impressions from the 3rd ad load in Weixin
Moments and QQ Kandian

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 FinTech and Business Services

FinTech Services
• Commercial payments grew rapidly - users,
+37% +5% merchants, transaction volume and revenue
YoY QoQ
• Users increasingly kept their money within
our payments ecosystem:
- LiCaiTong AUM exceeded RMB800 billion
as at end of June
- Lower frictional costs for users
- Withdrawal fee revenue and bank charges
reduced for us
22.9 21.8 22.9 • Focus on risk management
16.7
Business Services
• Expanded sales team and enhanced product
2Q18 2Q19 1Q19 2Q19 portfolio to sign up more key accounts and
large contracts, driving YoY revenue growth
In billion RMB
• Increased penetration among SMBs via
strategic partnerships with ISVs and resellers
*Segment revenue was RMB15,182 million in 1Q18, RMB16,666 million in 2Q18,
RMB19,693 million in 3Q18 and RMB21,597 million in 4Q18.
**In 2Q19, excluding interest income on custodian cash, segment revenue grew 57%
YoY and 7% QoQ.
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1. Overview

2. Strategy Review

3. Business Review

4. Financial Review

5. Q&A

18
Income Statement
in million RMB 2Q2019 2Q2018 YoY 1Q2019 QoQ

Revenues 88,821 73,675 +21% 85,465 +4%

COPS (49,695) (39,229) +27% (45,645) +9%
Gross profit 39,126 34,446 +14% 39,820 -2%
Interest income 1,652 1,072 +54% 1,408 +17%
Other gains/(losses), net 4,038 2,506 +61% 11,089 -64%
Operating expenses (17,295) (16,217) +7% (15,575) +11%
Operating profit 27,521 21,807 +26% 36,742 -25%
Finance costs, net (1,982) (1,151) +72% (1,117) +77%

Share of profits/(losses) of associates & JV 2,370 1,526 +55% (2,957) N.A.

Income tax expense (3,225) (3,602) -10% (4,812) -33%
Net profit 24,684 18,580 +33% 27,856 -11%
Net profit to shareholders 24,136 17,867 +35% 27,210 -11%
Diluted EPS in RMB 2.520 1.868 +35% 2.844 -11%
Non-GAAP:

Net profit to shareholders 23,525 19,716 +19% 20,930 +12%

Diluted EPS in RMB 2.456 2.062 +19% 2.187 +12%

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Non-GAAP Adjustments

Net (gains)/
Amortisation Tax
in million RMB GAAP SBC losses from Impairment Non-GAAP YoY QoQ
of intangible effect3
2Q2019 investee provision2 2Q2019 change change
assets
companies1

Operating profit 27,521 2,453 (4,950) 118 2,139 - 27,281 +23% -4%

Net profit 24,684 2,373 (6,523) 1,486 2,492 (321) 24,191 +18% +12%

Net profit to shareholders 24,136 2,296 (6,522) 1,432 2,492 (309) 23,525 +19% +12%

Operating margin 31.0% 30.7% +0.5ppt -2.6ppt

Net margin 27.8% 27.2% -0.6ppt +1.8ppt

Note:

1Including net (gains)/losses on deemed disposals, disposals of investee companies, fair value changes arising from investee companies, and other expenses incurred from
equity transactions of investees.

2Impairment provision for associates, joint ventures and intangible assets arising from acquisitions.

3 Income tax effects of non-GAAP adjustments.

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Segment Gross Margin

66.7 65.2 63.2 63.3

60.9 60.6 59.9 59.3 59.0 57.6
56.5 53.4 52.6

Value-Added Services (%)

46.6 48.6
45.3
41.9
36.3 34.8 37.8 36.3 37.2 37.4 36.7 36.6
31.2

Online Advertising (%)

28.5
26.1 26.0 25.1 24.5 24.0

FinTech and Business Services (%)

2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
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Operating Expenses
S&M G&A (incl. R&D)
(in billion RMB) (in billion RMB)

+28% +11%
YoY QoQ

12.6 12.6
11.3
-26% +11% 9.9
YoY QoQ 5.5 5.5
+32% 4.8 +13%
4.2

+24% 7.1 +10% 7.1

6.4 5.7 6.5
4.7 4.2 4.7

2Q18 2Q19 1Q19 2Q19 2Q18 2Q19 1Q19 2Q19

G&A (excl. R&D) R&D

22
Margin Ratios
57.3 54.0 53.9 51.3 50.0 48.6 47.4 50.4
46.8 44.0 46.6 44.1
41.4

GAAP Gross Margin (%)

41.2
37.2 37.4 35.4 34.4
34.1 33.1 32.9 33.3
30.2 28.0 30.7
26.4

Non-GAAP Operating Margin (%)

32.2
29.5 28.3 29.0 29.1 27.7 27.8 27.2
26.3 26.0 25.3 23.8 25.4

Non-GAAP Net Margin (%)

2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
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CAPEX, FCF and Cash Position
in million RMB 2Q2019 2Q2018 YoY 1Q2019 QoQ

Operating CAPEX 3,760 6,590 -43% 3,870 -3%

Non-operating CAPEX 602 495 22% 636 -5%

Total CAPEX 4,362 7,085 -38% 4,506 -3%

Operating Cash Flow* 25,005 22,512 11% 28,799 -13%

Less: CAPEX Paid 4,307 6,204 -31% 4,866 -11%

Free Cash Flow* 20,698 16,308 27% 23,933 -14%

Total Cash 184,426 134,176 37% 174,677 6%

Less: Total Debt 200,192 169,477 18% 184,272 9%

Improved
Cash Position (15,766) (35,301) (9,595) -64%
+55%

Fair value of our shareholdings in listed investee companies, excluding subsidiaries, was
approximately RMB 329.0 billion (USD47.9 billion) as at June 30, 2019

* In 2019, we have re-classified interests paid from operating to financing cash flows, and re-stated comparative figures accordingly 24
1. Overview

2. Strategy Review

3. Business Review

4. Financial Review

5. Q&A

25
Tencent Holdings Limited

2019 Second Quarter

and Interim Results
Presentation

Thank you! https://www.tencent.com/ir

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