Tencent Music Entertainment

13 Aug 2024

Tencent Music Stock Falls 15% on Declining Revenue, Monthly Active Users

Tencent Music Entertainment’s stock fell by 15% on Tuesday after declines in the leading Chinese music streamer’s quarterly revenue and monthly active users overshadowed higher profit and paid subscriber gains.

TME’s revenues of RMB7.16 billion ($985 million) edged 1.7% lower this quarter from the year-ago quarter, and monthly active users for online music services fell by 3.9%. Mobile monthly active users of social entertainment fell by 31.6% in the second quarter ending June 30 compared to the second quarter in 2023.

TME executives remained upbeat about their ongoing efforts to convert free users to paid subscribers. The quarter saw a nearly 18% year-over-year increase in online music subscriptions to 117 million, driving a 10% expansion of the company’s monthly average revenue per paying user (ARPPU).

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“We have seen a steady increase in both online music subscribers and retention,” TME’s chief executive Ross Liang, said on a call discussing the company’s earnings. “We are delighted to see improved user loyalty on our platform, thanks to multi-faceted product and technological advancements that bring out increasingly engaging and entertaining music journey for each user.”

Quarterly profit was up 33% to RMB1.79 billion (US$247 million) compared to the year-ago quarter and up 17% from the first quarter this year. Revenue from the company’s online music services jumped 27.7% to RMB5.42 billion (US$746 million) thanks to music subscription revenues rising nearly 30% to RMB 2.89 billion ($403.8 million).

That drove the company’s gross margin up to 42% from 34.3% last year.

The number of paying users of social entertainment rose 5.3% to 76.9 million, but the monthly ARPPU for those users dropped 45.8%.

TME’s stock was trading at $11.16, down 15% at 12:25 p.m. in New York. While Tuesday’s sharp decline has contributed to TME’s stock falling by nearly 25% in the past month, the company’s stock is up 28% year to date.

12 Jul 2024

Zhou Shen, Tia Ray & More to Perform at 2024 Tencent Music Entertainment Awards in Macau

Top Chinese singers including Zhou Shen, Xue Zhiqian, Tia Ray and Wang Yuan are set to perform at the 2024 Tencent Music Entertainment Awards (TMEA), which will be held at the Galaxy Arena in Macau, China, from July 19 to 21.

Themed “High Five. Music Drive,” the fifth edition of TMEA will showcase more than 50 international stars, a two-day indoor music festival and a music ceremony, bringing together top musicians from various Asian countries.

The event is organized by Tencent Music Entertainment Group (TME), a prominent online music and audio entertainment platform in China.

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Zhou Shen has 14 recordings on the current, 100-deep China TME UNI Chart, including two in the top 10 – “Hai” at No. 1 and “Xiao Mei Man” at No. 7. He is also represented in the top 30 with “Hua Kai Wang You” at No. 23, “Cui Can Mao Xian Ren” at No. 24, “Shen Lou” at No. 26 and “Feng Chui Guo De Chen Xi” at No. 30.

Tia Ray, a singer-songwriter from Hunan, China, was the top winner at China’s 2nd Wave Music Awards, which were presented in Beijing on June 20. Tia Ray won the best female singer award, and also received honors for record of the year and best pop album for Allure. Tia Ray rose to fame in 2012 as a contestant on the televised singing competition The Voice of China.

Established in 2019, the Tencent Music Entertainment Awards is an annual music awards ceremony that has solidified Tencent Music’s position as a leader in the Chinese music industry.

13 May 2024

Tencent Music Quarterly Profits Jump 28% on Growing Subscriber Base

Executives of Tencent Music Entertainment Group said on Monday that higher than expected subscriber growth pushed its first quarter profits up 28% to RMB1.53 billion ($212 million).

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Through marketing promotions timed around the Chinese New Year holiday, TME was able to add nearly 7-million-net new subscribers in the quarter—the most it has ever added in a single quarter—helping drive a nearly 40% increase in music subscription revenues of RMB3.62 billion ($501 million).

“Our effective marketing campaigns led to higher-than-expected first-quarter music subscriber growth,” TME chief executive Ross Liang said in a statement. “We are pleased to see a steady user base recovery thanks to our optimized operations efforts.”

Tencent Music had 113.5 million paying subscribers as of March 31 — roughly half the number of subscribers its more global competitor Spotify has. Still total revenues fell 3.4% compared to last year to RMB6.77 billion ($937 million) due to another quarter of declining social entertainment services revenues.

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Social Entertainment services has seen declining revenue since TME scrapped a popular livestreaming service amid concerns it could be exploited for gambling. Revenues in the quarter from social entertainment services fell nearly 50% to RMB1.76 billion ($244 million) from RMB3.5 billion in the same period last year. Increased competition has also contributed to a consistent downward trend in monthly active users to its social entertainment products, with 97 million, or 28% fewer monthly active users, in the first quarter this year compared to last year.

The impact of declining social entertainment division revenues was blunted by a 43% increase in online music division revenue, which totaled RMB5.01 billion ($693 million) and was driven by music subscription and advertising services revenues.

Monthly average users to TME’s online music platform ticked down 2.4% to 578 million, but the money TME earns from paying users to its site rose. In the first quarter, TME earned 10.6 RMB ($1.47), up 15.2% from 9.2 RMB ($1.27) in the year-ago quarter, in monthly average revenue for each paying user of its online music service.

Tencent Music operates QQ Music, Kugou and Kuwo as well as the social karaoke game WeSing.

19 Mar 2024

Tencent Music Profits Surged in 2023 on Paid Subscription Growth Despite Hit to Social Business

China‘s Tencent Music Entertainment Group saw its profit jump 36% to 5.22 billion yuan ($735 million) in 2023 as growth in paid subscriptions helped offset mixed results in its social media business, according to an earnings filing on Tuesday (Mar. 19).

The leading music streaming company in China — Tencent Music operates QQ Music, Kugou and Kuwo as well as the social karaoke game WeSing — reported that revenue from music subscriptions rose 39.1% to 12.10 billion yuan ($1.70 billion) thanks to 18.2 million more net paying subscribers in 2023. (That compares to a net increase of 12 million paying subscribers in 2022.) Tencent Music’s paying subscribers now total 106.7 million, or nearly as many U.S.-based subscribers as both Spotify and Apple Music combined.

Still, the company reported that its full-year revenue of 27.75 billion yuan ($3.91 billion) fell 2.1% from 2022 and that its fourth-quarter 2023 revenue of 6.89 billion yuan ($957.06 million) fell 7.2% from the year-ago quarter due to a revenue drop in its social entertainment services business.

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Tencent Music executives said that the company’s “dual engine” strategy, which drove a 38.8% increase in year-over-year revenue for its core online music business, allowed it to absorb the hit to its social business.

“The fourth quarter recorded accelerated year-over-year growth in music subscription revenue, anchored by consistent increases in subscribers and (average revenue per paying user),” said Cussion Pang, Tencent Music’s executive chairman. “Online music services’ strong performance mitigated headwinds from social entertainment services and contributed to expanded quarterly net profits.”

Revenue for the company’s social entertainment services business in full-year 2023 fell by 34.2% to 10.43 billion yuan (US$1.47 billion) from 2022, due to “adjustments to certain live-streaming interactive functions and more stringent compliance procedures,” the company said. Tencent Music, along with other content platforms like NetEase’s Cloud Music, removed a popular live-streaming feature that analysts said was often exploited for gambling after the Chinese government launched a crackdown on gambling in mid-2023.

The crackdown prompted Tencent Music and others to disable their live-streaming services, which were popular and highly lucrative, leaving the social entertainment services division of Tencent Music to struggle to bounce back, Reuters reported.

U.S.-listed shares of Tencent Music had risen 6.8% by 2:30 p.m. ET following the earnings release.

03 Jan 2024

UMG and Tencent Music Renew Multi-Year Licensing Pact

Universal Music Group and Tencent Music Entertainment have renewed their multi-year licensing agreement, the companies announced on Wednesday (Jan. 3). Under the renewed agreement between TME and UMG — first signed in May 2017 — Tencent will continue to distribute UMG content on its associated streaming platforms QQ Music, Kogou Music and Kuwo Music, as well as the karaoke platform WeSing.

The expansive partnership also includes music streaming in Dolby Atmos and high-definition formats, according to the announcement. The companies last renewed their licensing pact in 2020, when it also launched a joint venture music label to develop, produce and showcase Chinese artists.

TME’s majority owner, Tencent, also leads Concerto Partners, a consortium that owns a combined 19.92% stake in UMG.

Timothy Xu, chairman and CEO of Universal Music Greater China said, “We are delighted to extend our relationship with TME, as we continue to create new opportunities for UMG’s artists to connect with the many millions of dedicated music fans here in China. UMG will continue to work with TME to bring the very best in music to these passionate music consumers, and to explore new ways to enhance their listening experiences.”

TME executive chairman Cussion Pang added, “UMG has been an invaluable ecosystem partner to TME with deep mutual trust. Our diverse user demographics, large subscriber base, extensive industry insights, and advanced technologies have positioned us as a standout partner of choice. With a shared passion for music, we look forward to enriching our cooperation and strengthening our vibrant ecosystem to promote growth and prosperity.”

14 Nov 2023

Tencent Music Entertainment Reaches 103 Million Subscribers as Music Revenue Climbs 33%

Chinese music streaming company Tencent Music Entertainment saw its paying users grow to 103 million in the third quarter, up 20.8% year over year and 3.6% better than the previous quarter, the company announced Tuesday (Nov. 14). 

A 42% gain in subscription revenue to 3.2 billion RMB ($438 million) helped online music revenue grow 32.7% to 4.55 billion RMB ($624 million). Not only has Tencent Music Entertainment gained paying customers, but they’re also paying more: Average revenue per paying user (ARPPU) rose 17% to 10.3 RMB ($1.41) in the third quarter.

“We will continue to drive solid growth of our online music business, with subscription revenue driven by the subscription base growth and also ARPPU expansion as well,” said executive chairman Cussion Pang during Tuesday’s earnings call. “Outside of the subscription revenue, we expected the revenues from advertising and new initiatives, such as artist merchandise, to continue to grow healthily.”

Tencent Music Entertainment’s 103 million subscribers is well behind Spotify’s 226 million subscribers, but its subscriber base has grown steadily from 85.3 million and 71.2 million in the third quarters of 2022 and 2021, respectively. Its ARPPU of 10.3 RMB ($1.41) is also far lower than Spotify’s ARPU of 4.34 euros ($4.72), reflecting the relatively higher prices in the North American and European markets where Spotify is strongest. Still, Tencent Music Entertainment’s ARPPU showed strong growth last quarter after dropping from 8.9 RMB ($1.23) in the third quarter of 2021 to 8.8 RMB ($1.21) in the third quarter of 2022.

Tencent Music Entertainment operates the music streaming apps QQ Music, Kugou and Kuwo. It also owns WeSing, a social karaoke game. The music-focused company additionally offers podcasts and ventured into audiobooks with its 2021 acquisition of audiobook platform Lazy Audio.

The company touts what it calls a “dual-engine” strategy that improves both the content and the platform’s features and technology. In the third quarter, Tencent Music Entertainment expanded its partnership with K-pop company YG Entertainment to include ticketing, which gave subscribers the ability to purchase BLACKPINK concert tickets. A partnership with another South Korean company, Cube Entertainment, gives Tencent Music Entertainment a 30-day window of exclusivity on new song releases. On the technology side, a new music production tool in the Kugou app allows users to create music in multiple languages. “Through a brief training session, it can effectively and efficiently produce songs in Mandarin, Cantonese, English, Korean and Japanese,” said Pang.

Gains from the music side of the company couldn’t make up for steep declines in Tencent Music Entertainment’s social entertainment segment, however. Company-wide revenue declined 10.8% to 6.57 billion RMB ($900 million) due to a 48.8% year-over-year decline in social entertainment revenue and a 16.8% drop in social entertainment mobile monthly average users.

“For the social entertainment services, we will continue to execute our current operational strategy with the backdrop of the macro factors and competition for 2024,” said Pang. “Our primary target is to stabilize the business and better serve our core users.” 

Gross margin improved by 3.1 percentage points to 35.7% due to growth of music subscriptions and the company’s use of its own content. “Looking forward [to] Q4, we expect subscription revenue and advertisement revenue will continue to be strong,” said CFO Shirley Hu. “On the cost side, we expect our in-house made content will have a positive impact on gross margin continually and we will continue to increase our operational efficiency and monitor cost items.” 

Shares of Tencent Music Entertainment rose 3.1% to $7.66 on Tuesday. That was slightly better than the gains most stocks posted following a report that inflation was flat in October and up 3.2% from the previous year. The news sparked hope amongst investors that the Federal Reserve would stop hiking interest rates to help tame inflation. The Nasdaq composite gained 2.4% and the S&P 500 gained 1.9%. 

Tencent Music Entertainment third-quarter financial and user metrics:

  • Total revenue of 6.57 billion RMB ($900 million), down 10.8% year over year.
  • Music subscription revenue of 3.19 billion RMB ($438 million), up 42% year over year.
  • Social entertainment revenue of 2.02 billion ($276 million), down 48% year over year.
  • Net profit of 1.26 billion RMB ($173 million), up 15.6% year over year.
  • Monthly active users (online music) of 594 million, down 4.2% year over year.
  • Mobile monthly active users (social entertainment) of 129 million, down 16.8% year over year.
  • Paying users, online music of 103 million, up 20.8% year over year.
  • Paying users, social entertainment of 7.8 million, up 5.4% year over year.

01 Sep 2023

Spotify Shares Rose 15% to Lead Soaring Music Streaming Stocks This Week

Spotify led a group of high-flying streaming stocks this week by gaining 14.8% to $157.54 per share, increasing its market capitalization by nearly $4 billion to $30.7 billion. The world’s largest streaming company, which boasted 220 million subscribers as of June 30, has clawed back nearly all its losses since its share price dropped 14% following its second-quarter earnings on July 25. Through Friday (Sept. 1), Spotify shares are up 99.5% in 2023, second only to streaming company LiveOne’s 191.9% gain. 

The 21-stock Billboard Global Music Index improved 4.7% to 1,359.74, its highest mark in four weeks and the first gain since the week ended July 21. Twelve stocks finished the week in positive territory, seven stocks dropped and two were unchanged. The index outperformed many key indexes. In the United States, the Nasdaq composite gained 3.2% to 14,031.81 and the S&P 500 improved 2.5% to 4,515.77. In the United Kingdom, the FTSE 100 rose 1.7% to 7,464.54. South Korea’s KOSPI composite index climbed 1.8% to 2,563.71.

Six music streaming stocks improved by an average of 6.7% this week. Led by SiriusXM’s 11.4% gain, three radio stocks had an average gain of 4.9%. Led by Sphere Entertainment Co.’s 7.9% gain, four live music stocks had an average gain of 1.7%. Eight recorded music and publishing stocks had an average gain of 0.5% and were led by HYBE’s 5.1% improvement. 

Close behind Spotify was Chinese music streamer Cloud Music, which gained 13.4% to HKD 79.35 ($10.12). Cloud Music gained 3% last week following mid-year results that showed revenue improved 33.8% to 4.26 billion RMB ($587 million). This week’s gain came amidst a report by Reuters that Cloud Music was forced by Chinese authorities to remove live streaming features that are sometimes used for illegal gambling. One analyst estimated the anti-gambling crackdown to eliminate 20% to 70% of live streaming revenue at Cloud Music, Tencent Music Entertainment and broadcasting platform Huya. 

Tencent Music Entertainment shares rose 8.5% to $7.03, cutting the stock’s year-to-date loss to 15.1%. LiveOne shares jumped 11.9% to $1.88. Shares of French music streamer Deezer were unchanged at 2.07 euros ($2.24).

The lone laggard amongst music streaming stocks this week was Abu Dhabi-based Anghami. With its share price down 8.5% this week — the worst performance in the Billboard Global Music Index — investors apparently don’t see Anghami’s need for debt financing as a positive sign for the company. Anghami shares dropped 11% on Thursday after the company announced in an SEC filing the sale of $5 million of convertible debt related to an investment by the venture arm of Saudi media company SRMG that was announced on August 23. After dropping another 9% to 81 cents on Friday, Anghami shares ended the week well below the $1 floor for companies trading on the Nasdaq. 

18 Aug 2023

Tencent Music Entertainment’s 7% Gain Leads Music Stocks This Week

Tencent Music Entertainment topped all music stocks this week after second-quarter earnings on Tuesday helped the company’s share price gain 7.2% to $6.53. The Chinese music streaming company, traded on both the New York Stock Exchange and the Hong Kong Stock Exchange, reported second quarter revenue of $1.01 billion (up 5.5% year over year) and net profit of $179 million (up 51.6%).

Investors tend to react positively when companies report strong subscriber numbers and TME had good news about the surging Chinese market. TME finished the quarter with 99.4 million subscribers, up 20% from the prior-year period, and for the first time its music services (QQ Music, Kuguo Music and Kuwo Music) generated more revenue than its social entertainment services (WeSing). Users’ willingness to pay for copyrighted music, whether to listen to songs or enjoy premium features, “marks a significant step along TME’s growth trajectory,” said CEO Cussion Pang during Tuesday’s earnings call.

Tencent Music Entertainment was the only music stock with a double-digit gain and one of only two stocks to finish the week in positive territory. With Round Hill Music Royalty Fund unchanged, the remaining 18 stocks in the 21-stock Billboard Global Music Index lost ground this week. The index fell 3% to 1,299.04, the fourth straight week the index declined, and has lost 10.2% of its value since peaking at 1,447.32 for the week ended July 21.

Streaming companies (Spotify, TME, Cloud Music, Anghami, Deezer) dropped by an average of 1%. Live music companies (Live Nation, MSG Entertainment, Sphere Entertainment Co., CTS Eventim) had an average decline of 3.1%. Record labels, publishers and distributors (Universal Music Group, Warner Music Group, HYBE, SM, Believe, Round Hill, Hipgnosis Songs Fund) fell an average 4.6%. Radio and satellite broadcasters (SiriusXM, iHeartMedia, Cumulus Media) dropped by an average of 5.1%.

Music stocks’ decline reflected the losses seen by stocks around the world this week. Higher bond yields have helped dampen interest in equities and investors are increasingly looking for safer places to put cash. In the United States, the S&P 500 declined 2.1% and the Nasdaq composite fell 2.6%. In the United Kingdom, the FTSE 100 dropped 3.5%. South Korean’s KOSPI composite index fell 3.3%, the biggest one-week point and percentage decline since Sept. 2022, due to falling operating profits, concerns about the Chinese economy and high interest rates.

K-pop stocks were among this week’s biggest losers. Shares of YG Entertainment and JYP Entertainment, neither of which are in the index, fell 12.1% and 13.3%, respectively. HYBE shares dropped 7.3% and SM Entertainment fell 6.7%. All four K-pop companies’ share prices have made large gains this year, however. Even after this week’s declines, SM, YG and JYP have gained between 63% and 66% while HYBE shares are up 36.3%. 

16 Aug 2023

Tencent Music’s Quarterly Profit Jumps 52% on Music Subscriptions

Tencent Music Entertainment Group’s (TME) quarterly net profit surged by more than 50% for the quarter ending in June on the strength of its online music business, sending its stock up 5% in mid-day trading on Wednesday.

Net profit for TME’s second quarter was RMB1.30 billion ($179 million), up 51.6% from second quarter last year, the Chinese company reported on Tuesday. Total revenues rose 5.5% to RMB7.29 billion ($1.01 billion) in the quarter ending June 30, as a more paying subscribers helped the online music business contribute more than half of TME’s earnings for the first time since the company’s launch in 2016.

TME is growing increasingly focused on its music business, and its company promotions which resulted in a record high of 99.4 million paying users this quarter, are paying off, executives say.

“As we continue driving the healthy development of China’s online music industry, we have seen users become increasingly accustomed and willing to pay for copyrighted music, whether for songs they want to listen to or for premium listening features they enjoy,” TME executive chairman Cussion Pang said on Tuesday. “This marks a significant step along TME’s growth trajectory.”

Quarterly revenue from online music services jumped nearly 50% to RMB4.25 billion (US$586 million) on strong music subscription revenue growth and advertising services and contributed more than 58% of the company’s total revenues.

The number of monthly active users for online music fell nearly 5% to 594 million in the second quarter this year from 623 million in the year-ago quarter, but the number of paying online music users rose more than 20% to 99.4 million from 82.7 million a year ago.

Revenues from music subscriptions grew 37% to RMB2.89 billion ($399 million). 

TME’s social entertainment business, which it has de-emphasized for the last several quarters in a row, saw mobile monthly active users fall 18% to 136 million from 166 million, while paying social entertainment users also declined 5% to 7.5 from 7.9.

Monthly average revenue per paying user (ARPPU) rose 14% to RMB9.7 ($1.33) for online music, while monthly ARPPU for social entertainment declined 20% to RMB135 ($18.50).

Tencent Music executives said they are in the process of deploying several service enhancement and risk control measures that will promote music-centric live streaming, which they expect to put pressure on TME’s social entertainment services revenues throughout the rest of 2023.

“TME remains confident about delivering year-over-year net profit growth for 2023, driven by the continued strong performance of online music services, laying a much more solid foundation for the company’s healthy and resilient development in the long run,” a spokesperson said.

17 Jul 2023

Tencent Music Chief Strategy Officer Tony Yip to Step Down

Tony Yip, the chief strategy officer for Chinese audio streaming company Tencent Music Entertainment (TME), will step down on August 31, the company announced Monday (July 17). He plans to spend more time with his family overseas and pursue other personal interests, according to the press release. The company did not indicate who will replace Yip.

Yip started at Tencent Music Entertainment in 2018 when the company’s four streaming brands — QQ Music, Kugou Music, Kuwo Music and WeSing — had 20 million subscribers. He led Tencent Music Entertainment to a successful IPO on the New York Stock Exchange in 2018 and a dual listing on the Hong Kong Stock Exchange in 2022. As of March 31, Tencent Music Entertainment had more than 90 million subscribers — 2.3 times more than the year Yip joined — and revenue of RMB 28.3 billion ($4.1 billion), up about 49% from 2018.

“Tony’s professional expertise was instrumental to TME’s development by continuously refining our strategic focus, providing deep insights into the global online music and entertainment industry, supporting business development, capital markets and investment strategies, and establishing confidence in our Company among the investor community,” said TME executive chairman Cussion Pang in a statement.

Shares of TME declined 2.8% to $7.38 on the New York Stock Exchange on Monday and are down 10.9% year to date. While the share price has recovered from an all-time low of $2.95 in March 2022 following restrictions placed on Tencent Music Entertainment and many other Chinese tech companies, it’s still more than 77% below the all-time high of $32.25 set in March 2021.

The company will report second-quarter earnings on August 15.