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2019Q3corporateoverview.Pdf 2019 Third Quarter Corporate Overview November 13, 2019 We Build Connections … QQ Weixin For Merchants: For Users: For Tencent: • Access to large user base • Always connected • Deepen user stickiness via broadened product offering • Unified user log-in enables CRM • Access to rich mix of content, and targeted advertising services, and transactions • Increase traffic conversion through transactions and • Online payment facilitates • Control multiple smart devices advertising transactions • Tap into new markets unlocked by mobile Internet 2 …via our Largest Communications and Social Platforms in China • Successful transition from PC to mobile • Mobile-centric creation for smart phones ➢ QQ 731 million 1 ➢ Weixin & WeChat 2 1,151 million1 ➢ Mobile QQ 2 653 million 1 • Young, entertainment-oriented users • White-collar users • Open platform + groups • Official Accounts + Mini Programs connect users to online content developers connect users to content and service and interest groups providers moving onto the mobile platform 1 Monthly active user accounts as of 30 September 2019 2 For smart devices 3 Mission 3.0: Value for Users Tech for Good • User value is our guiding principle, we strive to incorporate social responsibility into our products and services; • Promote technology innovation and cultural vitality; help industries digitally upgrade; collaborate for the sustainable development of society. Integrity Collaboration Proactivity Creativity Values 4 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 1,151m QQ & Qzone Communications FinTech • QQ smart devices & Social MAU at 653m Mobile Payment • Qzone smart devices MAU at 517m • #1 by MAU & DAU Cloud App Store • #1 by MAU Cloud Mobile Security • #2 service provider • #1 by MAU Utilities Mobile Browser • #1 by MAU * All rankings above refer to China market, unless otherwise stated. Company data as of September 30, 2019 5 * QQ smart devices MAU declined 6.4% YoY as we proactively cleaned up accounts that engaged in spamming and bots activities We Extend our Technological Strength to Industrial Internet… • Extend our “Connection” Strategy from connecting people to people, people to content and services, to connecting industries to consumers and business partners • Customized smart industry solutions based on Tencent Cloud, leveraging our high-DAU platforms and proprietary technologies, enhance enterprises efficiency on embarking digital transformation Smart Smart Smart Smart Smart Smart Smart Solutions Education Finance Healthcare Retail Tourism Transport High-DAU Platforms Weixin QQ Mini Programs Weixin Pay WeChat Work QQ Browser YingYongBao Tencent Autonomous Driving Technologies AI Tencent YouTu Lab Security Tencent AI Lab Big Data Analytics LBS • Comprehensive range of products and services (>250) on top of Infrastructure computing and storage Tencent Cloud • Solid infrastructure in 25 regions(1) and 53 availability zones(1) (1) As of 30 September 2019 6 … by Leveraging our Consumer Connections… Weixin Pay: • Mini Programs facilitate discovery, social sharing and consumption of • Expedites online/offline transactions in a secured way services and products via Weixin • Multiple means of payment e.g., • Mini Programs enable offline and Scan-to-Buy, QR Code, fit needs of online convergence for merchants different industries FinTech Weixin via QR Code Services • #1 mobile payments platform in • Official Accounts strengthen brand China; over 1bn average (1) awareness online and increase transactions per day sales via content marketing LiCaiTong: aggregated customer assets exceeded RMB800 billion(2) • Facilitates office administration and • Broad mix of quality media and internal communications social advertising inventories • Deepens customer engagement that reach billions of user and strengthen post-sales • Enhance ROI via targeted capabilities via integration with Tencent advertising technologies and IP WeChat Work Weixin and Mini Programs Marketing content partnership Solution • Manages customer databases and • CRM and sales conversion using digitalize user profiles for data Mini Programs, Official Accounts analytics (1) As of 31 December 2018 (2) As of 30 June 2019 7 … and by Strengthening Ecosystem through Investments Generate synergies with core • Partner with category leaders, allowing management attention and resources to focus on core platforms • Expand IP portfolio including games, video, music and literature via upstream investments • Broaden user reach and engagement via investments in vertical platforms Kuaishou Capture emerging opportunities • Enrich offerings to meet evolving user needs PingDuoDuo • Strengthen enterprise-facing and enterprise- dependent services such as payment, advertising and cloud Create value for investees • Access to our large user base • Provide infrastructure, technology and capital support, as well as experience sharing 8 2Q2019 • Business Model • Financials 9 Our Business Model VAS: Social Networks • Digital media subscriptions • Membership privileges Fee-based • Virtual item sales revenue VAS: Online Games • Smartphone games Fee-based • PC games revenue Online • Media Ads include news, video and Advertising music properties Traffic-based • Social & Others Ads include social properties, app store, browser and mobile revenue ad network FinTech and Business Services • FinTech services Transaction-based • Business services revenue 10 Social Networks Massive and engaged user base providing network effects across our ecosystem • Combined Weixin and Multiple proven monetisation levers WeChat: 1,151 million(1) Weixin & WeChat Communications Membership privileges and Social • QQ: 731 million(1) • Mobile QQ (for smart Upgrade to higher privilege membership QQ devices): 653 million(1) status to enjoy value added services (on top of free basic services) Digital content subscriptions News Services Online Music Video Services Media and Services Monthly subscription packages for digital digital content media and content services NOW News Feeds Live Broadcast Online Literature Virtual item sales Services • Monetising social experience as users buy virtual gifts to support their friends and favorite artists/hosts Utilities • In-game item sales Mobile / PC Manager App Store Browser (1) Monthly active user accounts as of 30 September 2019 11 Online Games (1) Leading market share • #1 PC games publisher & developer with 64% market share in China in China • #1 smart phone games publisher & developer with 48% market share in China on iOS (2) • Business cooperation or equity investment with 8 out of top 10 companies, expanding our global footprint Global Footprint • Operated 6 of the top 10 smart phone games by MAU globally, together with our majority owned subsidiaries • Global leading popular titles developed in-house: ➢ League of Legends – #2 global top grossing PC game (3) Strong Developer ➢ Honour of Kings /Arena of Valor – #2 global top grossing smart phone game (3) ➢ PUBG MOBILE – #1 global (ex China) smart phone game by MAU (4) ➢ Call of Duty Mobile – over 100 million downloads within one month after launch (5) • Over 40 PC game and over 130 smart phone game titles Diversity of game • Multiple genres across battle arena, tactical tournament, auto-chess, racing, role playing games, boardgames, portfolio(6) action, strategy and puzzle. 1. According to iResearch, market share based on revenues (both domestic and 4. According to App Annie, global ex China ranking by MAU as of September 2019 overseas) of Chinese online game companies in 2019 Q1 5. Company data as of 30 September 2019 2. According to App Annie, ranking based on gross revenues in September 2019 3. According to SuperData, worldwide ranking by August 2019 earnings 12 Media Advertising Unparalleled user reach QQ.com Video Portal Tencent News App Video App Banner In-feed Video pre-roll Embed image ads in apps to direct Integrate ads relevant to content feed Play video commercials before traffic to advertisers’ website to achieve higher click-throughs users’ selected programme 13 Social and Others Advertising More relevant ads via user targeting lead to more click-throughs and higher ad efficiency QQ KanDian Qzone Official Accounts Mini Programs Moments QQ Browser YingYongBao In-feed ads Promotional video ads Location-based ads Promotion coupon ads With customised design for Get in-program rewards by Bid for ad space in the “Mini Insert promotion coupons in interaction on Qzone watching ads on Mini Programs Programs Nearby” list moment ads 14 FinTech and Business Services Widespread payment adoption Strong infrastructure and provides opportunities for other technology capabilities assist FinTech services enterprises digitalization Weixin Pay Tencent Cloud Payments Cloud Services • Take-rate on commercial transactions • Usage-based billing or service fees on collected from merchants IaaS, PaaS, SaaS and technology • Cash withdrawal fee and credit card solutions from enterprise customers repayment charges collected from users Tencent Auto Tencent Tencent Intelligence Healthcare Smart Retail LiCaiTong WeiLiDai WeSure Smart Industry solutions Other FinTech services • Service fees from industry partners • Fees and commissions from financial e.g., education, financial, healthcare, institution partners municipal
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