May 13, 2024 - Tencent Music Entertainment Group, China's leading online music and audio entertainment platform (hereinafter referred to as "TME" or the "Company") (NYSE: TME and HKEx: 1698) today announced its unaudited financial results for Quarter 1 ended March 31, 2024.
In 2024 Quarter 1, Tencent Music Entertainment Group's overall performance was stable and exceeded market expectations. After achieving a key transformation in 2023, the online music business has become the core driver of the company's high-quality development. In 2024 Quarter 1, online music services continued to grow strongly. Online music subscription revenue increased by 39.2% year-on-year to 3.62 billion yuan, and the number of online music paying users increased by 20.2% year-on-year to 113.50 million. Net growth 6.80 million a record high in a single quarter. At the same time, online music ARPPU also remained at a healthy level.
Continued high-quality growth in performance also proves that the company has been adhering to the strategy of "one body and two wings" of content and platform. In Quarter 1, 2024, the company will continue to enrich the top popular music content and help create high-quality and popular music works to meet users' diverse preferences and lead the trend of music consumption; at the same time, product function upgrades and technological innovations have improved the active level and participation of platform users. At a time when the music industry is becoming more and more dynamic, the company will continue to promote the healthy development of the industry and benefit all industry participants.
Peng Jiaxin, executive chairperson of Tencent Music Entertainment Group, said: "Since the beginning of 2024, we have achieved outstanding results. Online music services continue to grow strongly, with the net increase of online music paying users in the first quarter reaching a record high of 6.80 million, and the per capita income of individual paying users remains healthy. Our focus on high-quality growth also drives further improvement in net profit margin. We continue to enrich the music library content and introduce more personalized functional experiences to better meet user requests, so as to remain dynamic and competitive in a changing industry."
Liang Zhu, chief executive of Tencent Music Entertainment Group, said: "Drawing on our rich industry experience and leveraging the Spring Festival peak season, we launched an effective marketing campaign and achieved more than expected music membership growth in the first quarter. At the same time, through a variety of optimized operational measures, we are also pleased to see the steady recovery of general users. We continue to optimize algorithms, upgrade product functions, and enrich AIGC applications to consistently create a more attractive music experience for users and improve customer engagement on the platform."
Quarter 1 2024 Financial Overview
Total revenue, at RMB 6.77 billion (US $937 million), decreased 3.4% year over year, primarily due to lower revenue from social entertainment services and other services, partially offset by strong growth in online music services revenue.
· Online music subscription revenue was RMB 3.62 billion (US $501 million), up 39.2% year-on-year. The number of online music paying users rose 20.2% year-on-year to 113.50 million, a net increase of 6.80 million month-on-month, the largest net increase in a single quarter to date.
· Net profit was RMB 1.53 billion (USD 212 million), up 27.5% year-on-year. Net profit attributable to equity holders of the company was RMB 1.42 billion (USD 197 million), up 23.9% year-on-year. Non-International Financial Reporting Standards net profit was RMB 1.81 billion (USD 251 million), up 23.9% year-on-year. Net profit attributable to non-International Financial Reporting Standards equity holders was RMB 1.70 billion (USD 236 million), up 20.8% year-on-year.
Business overview for the first quarter of 2024
Main business indicators
Enrich copyright cooperation and self-produced content to meet users' changing preferences and lead the trend of music consumption.
· Deepen cooperation with record companies to expand the richness and popularity of music library content. 1) Complete the contract renewal of Times Fengjun, with the rights and interests of TFBOYS and other popular groups to debut new songs for 30 days, and upgrade Dolby sound effects in the full library. 2) Contract renewal with Huayan International to consolidate the head content supply of Chinese pop music. At the same time, with the strength of AI technology, enrich user interaction and chorus gameplay, and expand the fan coverage and influence of artists.
· Strengthen the ability to self-control content and create more hit songs. 1) Create high-quality soundtracks for the current hit film and television dramas "Walking with Phoenix" and "Flower Ling", which have been played on the platform for more than 150 million. 2) Based on our grasp of content trends, we have teamed up with strategic partners and independent musicians to create a number of songs that have been highly praised on social media, such as TIA RAY Yuan Yawei's "RIVER FLOW" and Zhang Miaoge's "It's Not Snow I Expect".
Functional innovation promotes users to accumulate personal music assets, enhance customer engagement and tap high potential users.
· Launch a large audio model to promote high-quality content more accurately for users. Test the new AI assistant to bring users a more interesting, interactive and convenient music discovery experience.
Launched incentive points mode, as well as a series of interactive gameplay including theme song guessing challenges and fan medals, to stimulate music consumption vitality and increase user stickiness.
· Take advantage of the Spring Festival peak season to carry out targeted multi-channel promotion, attracting more paying users than expected. Collaborate with Xiaomi SU7 and launch festival-themed activities to promote in-car music consumption.
· Held the QQ Music Summit Festival, strengthening our core user base through this annual music event that integrates online and offline for young users.
Social responsibility
Together with Tencent Charity, we have launched the "If Music Has Shape" music care special project for three consecutive years to call attention to the autistic community. This year, we invited more than 60 groups of well-known singers at home and abroad to share their music works and support children with autism. These autistic painters draw on music works as inspiration. We also held an exhibition of music care art paintings to display their works, to convey our attention and care through multiple media, and to expand the social value of music.
