Tencent Music Entertainment Group (TME) posted its Q1 results today, which outperformed previous forecast, sending its stocks to 7.96 USD with a 13.66 billion USD market capitalization.
The group saw growth in its first-quarter revenue from music subscriptions, with a notable year-over-year increase of 30.4%, reaching RMB2.60 billion (US$378 million). Furthermore, TME witnessed a substantial rise in the number of online music paying users, which grew by 17.7% year-over-year to 94.4 million. As a result, the online music paying ratio reached an all-time high at 15.9%. The group attributes these changes to TME's optimized content operations, users' increased willingness to pay for premium features such as sound quality and effects, and promotional efforts.
The company experienced strong growth in total revenues during the first quarter, driven by a focus on optimizing efficiency. In the first quarter of 2023, total revenues reached RMB7.00 billion (US$1.02 billion), reflecting a year-over-year increase of 5.4%. Revenues from online music services rose by 33.8% year-over-year to RMB3.50 billion (US$510 million), which brought them on par with social entertainment services for the first time. The net profit attributable to equity holders of the company amounted to RMB1.15 billion (US$167 million), demonstrating a steep year-over-year growth of 88.5%.
The Group has formed partnerships with top music labels and artists, such as HYBE, the company that manages groups such as BTS, and Studio Ghibli to bring soundtracks from "Castle in the Sky," "My Neighbor Totoro," and "Spirited Away" on Tencent Music's platforms.
TME's business incorporates the latest technological trends. As stated in the financial report, TME's "TME Studio" and "Vocal Producer" assist users in enhancing their efficiency in lyrics writing, composition, music content analysis, and editing. These tools can also integrate users' original voices into various songs, facilitating the creation of UGC(user-generated-content). Additionally, TME introduced an "AI music companion" named Xiaoqin, who hosted a live streaming show featuring singing and dancing.
Founded in 2016, TME is one of the largest online music service providers in China, with China's social conglomerate Tencent as its biggest shareholder. At its inception, TME brought together QQ Music (founded in 2005), Kuwo Music (founded in 2005), and Kugou Music (founded in 2004), which were all popular music platforms for Chinese users. Over the past decade, TME has expanded beyond its original focus on music and audio content, integrating social entertainment services into its offerings. These services include music live audio/video broadcasts and online concert services across the aforementioned platforms, as well as independent online karaoke through the platform WeSing.