TENCENT ANNOUNCES 2026 SECOND QUARTER RESULTS

Substantial Progress towards Building a New, AI-empowered Tencent at Intelligence, Application and Infrastructure Levels HONG KONG , Aug. 12, 2026 /PRNewswire/ -- Tencent Holdings Limited (HKEX: 00700 (HKD Counter) and 80700 (RMB Counter), "Tencent" or "the Company"), a world-leading Internet and technology company in China, today announced the unaudited consolidated results for the quarter ended 30 June 2026 ("2Q2026"). Mr. Ma Huateng, Chairman and CEO of Tencent, said, "As we entered into the third quarter of the year, we are making substantial progress towards building a new, AI-empowered Tencent in terms of intelligence, applications, and infrastructure. At the intelligence level, Hy3's production version provides users a widely used model with strong cost-performance metrics, and serves as a stepping-stone toward the Hy family of models attaining state-of-the-art capabilities in the future. At the application level, our WorkBuddy AI office productivity service and CodeBuddy AI coding tool are achieving breakout user growth and are the clear leaders in their fields in China today [1] . At the infrastructure level, we substantially stepped up our procurement of compute, which will enable us to convert usage of our applications and models into revenue going forward. At the same time, we continue to enhance our existing services, with sustained marketing services revenue growth, several successful recently released games, and rapidly increasing video views on Weixin Video Accounts." 2Q2026 Financial Highlights Revenues: +11% YoY, gross profit: +13% YoY, non-IFRS operating profit: +9% YoY Total revenues were RMB204.8 billion, up 11% over the second quarter of 2025 ("YoY"). Gross profit was RMB118.4 billion, up 13% 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 RMB75.6 billion, up 9% YoY. Operating margin decreased to 37% from 38% last year. Operating profit excluding New AI Products [2] was RMB86.1 billion, increased by 19% YoY. Operating margin excluding new AI products contributions increased to 42% from 39% last year. Net profit was RMB 70.6 billion, up 9% YoY. Net profit attributable to equity holders of the Company was RMB68.4 billion, up 9% YoY. Basic earnings per share were RMB7.581. Diluted earnings per share were RMB7.433. On an IFRS basis : Operating profit was RMB67.3 billion, up 12% YoY. Operating margin was stable at 33%. Net profit was RMB58.0 billion, up 3% YoY. Net profit attributable to equity holders of the Company was RMB56.0 billion, up 0.7% YoY. Basic earnings per share were RMB6.207. Diluted earnings per share were RMB6.104. Capital expenditure was RMB52.8 billion, up 176% YoY. Total cash was RMB511.2 billion, up 9% YoY. Net cash position totalled RMB58.2 billion, down 22% YoY. We recorded negative free cash flow of RMB13.8 billion for 2Q2026, as net cash generated from operating activities of RMB52.7 billion was more than offset by capital expenditure payments of RMB59.3 billion, media content payments of RMB5.0 billion and lease liability payments of RMB2.2 billion. Included in our operating cash flow were large AI-related prepayments to provide infrastructure to support our Hy model enhancements, WorkBuddy and CodeBuddy inference needs, Weixin AI initiatives, and development of AI capabilities across our products and services, as well as to meet growing external demand for our cloud services. Excluding the prepayments for compute procurement, our free cash flow would have been RMB37.6 billion. The fair value of our shareholdings [3] in listed investee companies (excluding subsidiaries) totalled RMB487.2 billion as at 30 June 2026, compared with RMB547.1 billion as at 31 March 2026. The carrying book value of our shareholdings in unlisted investee companies (excluding subsidiaries) was RMB387.9 billion as at 30 June 2026, compared with RMB365.1 billion as at 31 March 2026. During 2Q2026, the Company repurchased approximately 37.4 million shares on the Hong Kong Stock Exchange for an aggregate consideration of approximately HKD16.9 billion. [1] Analysys, by monthly interactions among PC-based AI-native office agents in China, June 2026 [2] New AI products primarily consist of Hy, Yuanbao, CodeBuddy, WorkBuddy, and Xiaowei 2Q2026 Management Discussion and Analysis Revenues from VAS increased by 8% year-on-year to RMB98.4 billion for 2Q2026. Domestic Games revenues were RMB47.3 billion, up 17% year-on-year, driven by growth from most of our major games, with notable contributions from Delta Force, VALORANT PC and MOBILE, and Roco Kingdom: World. International Games revenues were RMB18.6 billion, down 0.8% year-on-year due to foreign currency movements, or up 4% year-on-year in constant currency terms, as higher revenues from Wuthering Waves and VALORANT PC were offset by lower revenues from certain Supercell games. Social Networks revenues increased by 0.8% year-on-year to RMB32.5 billion. Revenues from Marketing Services were RMB43.6 billion for 2Q2026, up 22% year-on-year, supported by enhancements to our AI-driven ad recommendation model (which determines the ad shown to each user for each impression), upgrades to our automated campaign management solution AIM+ (which helps advertisers purchase performant impressions), and integration of closed-loop marketing capabilities within the Weixin ecosystem (which facilitates Weixin-integrated services, such as Mini Games and Mini Shops, to advertise more effectively on Tencent-managed ad properties). Most major industry categories increased marketing spending on our platforms during the quarter. Revenues from FinTech and Business Services rose by 9% year-on-year to RMB60.3 billion for 2Q2026. FinTech Services revenue growth was mainly due to higher revenues from commercial payment, wealth management and consumer loan services. Business Services revenue growth was primarily driven by increased revenues from our cloud services, underpinned by greater demand for AI-related services, ongoing international expansion, and a more favourable pricing environment. Operating Metrics As at 30 June 2026 As at 30 June 2025 Year- on-year change As at 31 March 2026 Quarter- on-quarter change (in millions, unless specified) Combined MAU of Weixin and WeChat 1,439 1,411 2 % 1,432 0.5 % Mobile device MAU of QQ 520 532 -2 % 516 0.8 % Fee-based VAS subscriptions [4] 259 264 -2 % 266 -3 % [3] Including those held via special purpose vehicles, on an attributable basis [4] Average daily number of subscriptions during the quarter Business Review and Outlook We released the full Hy3 production version in July 2026, which delivered a substantial step-up in performance versus the Hy3 preview version, and significantly outperforms most similar-sized models. Since its launch, Hy3 has consistently ranked among the top 3 models globally in terms of token consumption on OpenRouter [5] . WorkBuddy is achieving rapid user growth and healthy user retention rates, with high user willingness to pay for tokens via subscriptions and top-ups. WorkBuddy's market leadership is underpinned by its robust harness engineering, wide range of model availability, and industry-leading Skills library. In recent weeks, we have begun a small-scale prototype test for Xiaowei , the agentic AI inside Weixin. Xiaowei is powered by a customised model, WeLM, built for user privacy, Weixin-specific use cases and inference efficiency. Video Accounts ' total time spent grew more than 20% year-on-year in 2Q2026, benefitting from enriched content for younger users, upgraded interactive features and a new multi-variable content ranking system. Our domestic evergreen games [6] , Delta Force and VALORANT PC , achieved lifetime highs in average DAU in 2Q2026. Our new game, Roco Kingdom: World , ranked first by average DAU [7] and by gross receipts [8] among all new mobile titles released in China year-to-date. Miniclip attained breakout success in international markets as Arrows – Puzzle Escape became the most downloaded mobile game globally in 2Q2026 [9] , generating robust in-app advertising revenues. We upgraded our automated campaign management solution, AIM+ , with AI-powered end-to-end execution capabilities for mini shop and mini drama advertisers. 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: TencentGlobal). [5] Since 7 July 2026 [6] Evergreen games refer to domestic and international games surpassing average quarterly DAU of 5 million for mobile or 2 million for PC, and generating over RMB4 billion annual gross receipts [7] QuestMobile, by average DAU on mobile platforms [8] Sensor Tower, by gross receipts on mobile platforms [9] Sensor Tower, 2Q2026 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 marketing services helps advertisers reach out to hundreds of millions of consumers in China. Our FinTech and business services support 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. Tencent has been listed on the Main Board of the Stock Exchange of Hong Kong since 2004. Investor contact: IR@tencent.com Media contact: GC@tencent.com Non-IFRS Financial Measures To supplement the consolidated results of the Group ("the Company and its subsidiaries") prepared in accordance with IFRS, certain additional non-IFRS financial measures (in terms of operating profit, operating margin, profit for the period, 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 Group. These forward-looking statements are based on information currently available to the Group 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. The Board and the Company assume no obligation to correct or update the forward-looking statements contained in this announcement. CONDENSED CONSOLIDATED INCOME STATEMENT RMB in millions, unless specified Unaudited 2Q2026 2Q2025 1Q2026 Revenues 204,785 184,504 196,458 VAS 98,414 91,368 96,110 Marketing Services 43,565 35,762 38,171 FinTech and Business Services 60,286 55,536 59,885 Others 2,520 1,838 2,292 Cost of revenues (86,352) (79,491) (85,193) Gross profit 118,433 105,013 111,265 Gross margin 58 % 57 % 57 % Selling and marketing expenses (11,869) (9,410) (11,343) General and administrative expenses (38,808) (31,921) (33,800) Other gains/(losses), net (480) (3,578) 1,253 Operating profit 67,276 60,104 67,375 Operating margin 33 % 33 % 34 % Net gains/(losses) from investments and others 11,184 2,638 1,928 Interest income 4,202 4,121 4,025 Finance costs (2,979) (3,941) (2,979) Share of profit/(losses) of associates and joint ventures, net (9,993) 4,473 3,620 Profit before income tax 69,690 67,395 73,969 Income tax expense (11,713) (11,351) (14,577) Profit for the period 57,977 56,044 59,392 Attributable to: Equity holders of the Company 56,022 55,628 58,093 Non-controlling interests 1,955 416 1,299 Non-IFRS operating profit 75,636 69,248 75,627 Non-IFRS profit attributable to equity holders of the Company 68,415 63,052 67,905 Earnings per share for profit attributable to equity holders of the Company (in RMB per share) - basic 6.207 6.115 6.431 - diluted 6.104 5.996 6.302 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME RMB in millions, unless specified Unaudited 2Q2026 2Q2025 Profit for the period 57,977 56,044 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 (343) 6 Transfer of share of other comprehensive income to profit or loss upon disposal and deemed disposal of associates and joint ventures 1 (3) Net (losses)/gains from changes in fair value of financial assets at fair value through other comprehensive income (33) (85) Transfer to profit or loss upon disposal of financial assets at fair value through other comprehensive income 1 - Currency translation differences (9,670) 3,323 Net movement in reserves for hedges and others 258 (163) Items that will not be subsequently reclassified to profit or loss Share of other comprehensive income of associates and joint ventures 467 (31) Net gains /(losses) from changes in fair value of financial assets at fair value through other comprehensive income 15,355 67,681 Currency translation differences (4,151) 232 Net movement in reserves for hedges - (60) 1,885 70,900 Total comprehensive income for the period 59,862 126,944 Attributable to: Equity holders of the Company 58,716 122,756 Non-controlling interests 1,146 4,188 OTHER FINANCIAL INFORMATION RMB in millions, unless specified Unaudited 2Q2026 2Q2025 1Q2026 EBITDA (a) 85,776 79,467 84,167 Adjusted EBITDA (a) 91,372 85,122 89,617 Adjusted EBITDA margin (b) 45 % 46 % 46 % Interest and related expenses 3,212 3,541 3,134 Net cash (c) 58,191 74,592 146,860 Capital expenditures (d) 52,784 19,107 31,936 Note: (a) EBITDA is calculated as operating profit minus 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 cash represents period end balance and is calculated as cash and cash equivalents, plus term deposits and others, including highly liquid investment products held for treasury purposes, minus borrowings and notes payable (d) Capital expenditures primarily consist of investments in IT infrastructure (including computer equipment, components, and software), data centres, land use rights, office premises and intellectual properties (excluding media content) CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION RMB in millions, unless specified Unaudited Audited As at 30 June, 2026 As at 31 December, 2025 ASSETS Non-current assets Property, plant and equipment 198,909 149,905 Land use rights 21,961 22,339 Right-of-use assets 17,724 17,367 Construction in progress 7,089 9,670 Investment properties 965 950 Intangible assets 206,064 205,999 Investments in associates 323,674 342,409 Investments in joint ventures 6,232 6,303 Financial assets at fair value through profit or loss 219,882 207,157 Financial assets at fair value through other comprehensive income 315,581 356,640 Prepayments, deposits and other assets 91,203 24,540 Other financial assets 2,409 1,327 Deferred income tax assets 31,553 28,618 Term deposits 52,724 70,302 1,495,970 1,443,526 Current assets Inventories 685 530 Accounts receivable 55,606 49,930 Prepayments, deposits and other assets 137,449 111,270 Other financial assets 3,051 4,201 Financial assets at fair value through profit or loss 28,041 35,929 Financial assets at fair value through other comprehensive income 9,658 8,781 Term deposits 214,275 236,801 Restricted cash 7,729 6,977 Cash and cash equivalents 206,930 141,041 663,424 595,460 Total assets 2,159,394 2,038,986 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) RMB in millions, unless specified Unaudited Audited As at 30 June, 2026 As at 31 December, 2025 EQUITY Equity attributable to equity holders of the Company Share capital - - Share premium 73,692 63,796 Treasury shares (2,180) (3,450) Shares held for share award schemes (8,315) (7,124) Other reserves 5,893 90,494 Retained earnings 1,066,763 1,010,436 1,135,853 1,154,152 Non-controlling interests 86,660 86,913 Total equity 1,222,513 1,241,065 LIABILITIES Non-current liabilities Borrowings 212,650 208,369 Notes payable 154,021 126,204 Long-term payables 12,252 10,544 Other financial liabilities 4,403 2,879 Deferred income tax liabilities 22,581 21,684 Lease liabilities 13,366 13,280 Deferred revenue 2,127 2,210 421,400 385,170 Current liabilities Accounts payable 175,579 121,127 Other payables and accruals 88,586 96,496 Borrowings 86,292 42,618 Notes payable - 10,542 Current income tax liabilities 16,878 18,558 Other tax liabilities 4,324 3,723 Other financial liabilities 4,647 3,992 Lease liabilities 5,499 5,386 Deferred revenue 133,676 110,309 515,481 412,751 Total liabilities 936,881 797,921 Total equity and liabilities 2,159,394 2,038,986 RECONCILIATIONS OF THE GROUP'S NON-IFRS FINANCIAL MEASURES TO THE NEAREST MEASURES PREPARED IN ACCORDANCE WITH IFRS 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 and other donations (e) Others (f) Income tax effects (g) Unaudited three months ended 30 June 2026 Operating profit 67,276 6,579 – 1,602 – 179 – – 75,636 Share of profit/(loss) of associates and joint ventures, net (9,993) 1,327 12,834 1,356 188 – 647 – 6,359 Profit for the period 57,977 7,906 4,316 2,958 (2,064) 864 647 (2,013) 70,591 Profit attributable to equity holders 56,022 7,756 4,527 2,611 (2,064) 861 647 (1,945) 68,415 Operating margin 33 % 37 % Unaudited three months ended 31 March 2026 Operating profit 67,375 6,534 – 1,578 – 140 – – 75,627 Share of profit/(loss) of associates and joint ventures, net 3,620 810 817 1,612 264 – – – 7,123 Profit for the period 59,392 7,344 (3,255) 3,190 2,467 765 – (130) 69,773 Profit attributable to equity holders 58,093 7,193 (3,342) 2,862 2,397 765 – (63) 67,905 Operating margin 34 % 38 % As reported Adjustments Non-IFRS 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 30 June 2025 Operating profit 60,104 7,361 – 1,614 – 169 – – 69,248 Share of profit/(loss) of associates and joint ventures, net 4,473 903 (798) 1,544 226 – – – 6,348 Profit for the period 56,044 8,264 (2,396) 3,158 (372) 751 – (683) 64,766 Profit attributable to equity holders 55,628 8,071 (3,192) 2,848 (405) 751 – (649) 63,052 Operating margin 33 % 38 % 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 can be acquired 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) 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) Primarily non-recurring compliance-related costs and expenses incurred for certain litigation settlements of the Group and/or arising from investee companies (g) Income tax effects of non-IFRS adjustments