Published - August 16th, 2023 @ 9:52 AM (GMT+2)
Financial Growth:
Tencent Music Entertainment (NYSE:TME), China's leading music streaming platform, has achieved a significant milestone by surpassing 100 million subscribers, as revealed in its Q2 financials. The company witnessed a 20% year-on-year increase in subscriber numbers, reaching 99.4 million, with an additional 5 million subscribers in the last quarter. This surge has propelled the quarterly revenues from music subscriptions by 37% year-on-year, amounting to RMB2.89 billion ($399 million).
The conglomerate, which also delves into social music activities like karaoke, reported a 6% rise in its revenue for the quarter, reaching RMB7.29 billion ($1.01 billion). The net profit attributable to equity holders stood at RMB1.30 billion ($179 million), marking a 52% year-over-year growth. However, revenues from social entertainment services witnessed a decline of 25% to RMB3.04 billion ($419 million) from RMB4.03 billion in the same period of 2022. This decrease was attributed to service enhancement and risk control measures, aiming to provide a superior music-centric user experience.
Shift in User Behavior:
Cussion Pang, the executive chairman of TME, highlighted that users are increasingly willing to pay for copyrighted music, leading to a record high in the paying ratio and average revenue per user. This shift has resulted in revenues from online music services surpassing social entertainment services for the first time in the company's history. TME has also enhanced its services by introducing a better recommendation engine, expanding music services for broader use cases, and offering a more personalized music entertainment experience through AI.
Ross Liang, CEO of TME, emphasized the company's strengthened ties with iconic labels and artists and its growing capability to support potential musicians and assist in music production.
Future Challenges:
On the other hand, Tencent Music also cautioned about a potential decline in future revenues due to stricter live-streaming controls. The company is adapting its live-streaming business to manage potential risks better, as stated by Tony Yip, its chief strategy officer. This decision follows China's anti-gambling crackdown in June, which led many platforms to turn off features like virtual item trades. Despite these challenges, TME's shares saw a 1.68% rise in Hong Kong.
Financial Overview:
The company's total revenue for the quarter ending June 30 was 7.29 billion yuan ($1.00 billion), aligning with Wall Street's predictions. The number of paying users for its online music streaming service surged by over 20% to 100 million. The net profit attributable to equity holders increased to 1.30 billion yuan from 856 million yuan the previous year.
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