Lei Jianping on May 13
Tencent Music Entertainment Group ("TME", NYSE: TME and HKEX: 1698), an online music and audio entertainment platform, today reported financial results. According to the financial report, Tencent Music's total revenue in the first quarter of 2024 was 6.77 billion yuan ($937 million).
Tencent Music's net profit attributable to equity holders in the first quarter of 2024 was 1.42 billion yuan (US$197 million), up 23.9% year-on-year.
Tencent Music's non-IFRS net profit for the first quarter of 2024 was 1.81 billion yuan (US$251 million), up 23.9% year-on-year. Net profit attributable to equity holders of non-IFRS companies was RMB1.7 billion (US$236 million), up 20.8% year-on-year.
Peng Jiaxin, Executive Chairman of Tencent Music Entertainment Group, said: "Since the beginning of 2024, we have achieved outstanding results. Online music services continued to grow strongly, with a record high of 6.8 million net subscribers per paying subscriber in the first quarter, and a healthy per capita income per paying user. Our focus on high-quality growth also drove further net profit margins. We continue to enrich our library and introduce more personalized features and experiences to better meet the needs of our users, so that we can stay dynamic and competitive in an ever-changing industry. ”
Liang Zhu, CEO of Tencent Music Entertainment Group, said, "With our extensive experience in the industry, we launched an effective marketing campaign to take advantage of the peak Chinese New Year season, and achieved above-expected growth in music membership in the first quarter. At the same time, through a variety of optimized operational measures, we are also pleased to see a steady recovery in the number of users in the market. We continue to optimize algorithms, upgrade product features, and enrich AIGC applications to consistently create a more engaging music experience for users and improve user engagement on the platform. ”
The online music business has become the core driver of the company's high-quality growth in 2024Q1
Tencent Music's revenue from online music services in the first quarter of 2024 was 5.01 billion yuan (US$693 million), up 43% from 3.5 billion yuan in the same period last year, mainly due to the growth of online music subscription revenue and advertising service revenue. Among them, online music subscription revenue was 3.62 billion yuan (US$501 million), a year-on-year increase of 39.2% compared to 2.6 billion yuan in the same period in 2023, mainly driven by the further increase in the scale of online music subscribers and a healthy per capita income per paying user.
In the first quarter of 2024, the number of online music paying users reached 113.5 million, a year-on-year increase of 20.2% and a net increase of 6.8 million quarter-on-quarter, the largest net increase in a single quarter to date. Online music ARPPU is maintained at a healthy level. The continuous increase in the number of online music paying users is mainly due to the increase in users' willingness to pay for more attractive membership benefits, interactive product features and rich music content. During the Spring Festival, Tencent Music also optimized its promotions to attract more paying users.
The year-on-year increase in advertising revenue of Tencent Music was mainly due to the provision of a diversified product portfolio and innovative advertising formats that are highly sought after by advertisers.
In the first quarter of 2024, Tencent Music Entertainment Group's overall performance was stable and improved, exceeding 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.
Deepen cooperation with record companies and strengthen content production capabilities
Tencent Music's rich content production and co-creation in the first quarter of 2024 to meet the changing preferences of users:
1. Deepen the cooperation of record companies and expand the richness and popularity of the content of the music library. 1) Complete the renewal of the contract of Times Fengjun, and have the rights and interests of new songs from popular groups such as TFBOYS and Times Youth League for 30 days, and the upgrade of Dolby sound effects in the whole song library. 2) Renewed the contract with Huayan International to consolidate the supply of top content for Chinese pop music. At the same time, with the strength of AI technology, it enriches user interaction and chorus gameplay, and expands the fan coverage and influence of artists.
2. Strengthen the ability to self-control content and create more hit songs. 1) Produced high-quality soundtracks for the current popular film and television dramas "Walking with the Phoenix" and "Flower Order", and the related songs have been played more than 150 million on the platform. 2) BASED ON OUR GRASP OF CONTENT TRENDS, WE HAVE TEAMED UP WITH STRATEGICALLY PARTNERED ARTISTS AND INDEPENDENT MUSICIANS TO CREATE A NUMBER OF SONGS THAT ARE HIGHLY PRAISED ON SOCIAL MEDIA, SUCH AS "RIVER FLOW" BY TIA RAY AND YUAN YAWEI'S "RIVER FLOW" AND "I'M NOT LOOKING FORWARD TO SNOW" BY ZHANG MIAOGE.
Tencent Music's functional innovations in the first quarter of 2024 will promote users to accumulate personal music assets, enhance user engagement and tap high-potential users.
1. Launched a large audio model to promote high-quality content for users more accurately. Test a new AI assistant that makes music discovery more fun, interactive, and convenient for users.
2. Launched the incentive point model, as well as a series of interactive gameplay including themed song guessing challenges and music fan medals, to stimulate the vitality of music consumption and increase user stickiness.
3. Take advantage of the Spring Festival peak season to carry out targeted multi-channel promotion, attracting more paying users than expected. Reached a cooperation with Xiaomi SU7 and launched a festival-themed event to promote in-car music consumption.
4. Held the QQ Music Summit Ceremony, which consolidated Tencent Music's core user base through this annual music event that integrates online and offline music for young users.
Tencent Music's Q1 operating profit increased to 1.96 billion
Tencent Music's gross profit margin improved to 40.9% in the first quarter of 2024 from 33.1% in the same period of 2023, mainly due to the growth of music subscription and advertising service revenue, as well as the gradual increase in original content.
Tencent Music's total operating expenses for the first quarter of 2024 were RMB1.14 billion (US$157 million), down 7.6% year-on-year. Operating expenses as a percentage of total revenue decreased to 16.8% from 17.5% in the same period in 2023.
Tencent Music's sales and marketing expenses for the first quarter of 2024 were RMB187 million (US$26 million), down 11.8% year-on-year. This decrease was mainly due to the optimization of overall promotional measures; General and administrative expenses decreased by 6.7% year-on-year to RMB949 million (US$131 million).
Thanks to improved operational efficiency and effective cost control, Tencent Music's operating profit increased to 1.96 billion yuan (US$271 million) in the first quarter of 2024, a year-on-year increase of 41.9%.
As of March 31, 2024, the combined balance of cash, cash equivalents and term deposits was RMB34.18 billion (US$4.73 billion).
It will pay an annual cash dividend of more than $1.5 billion for the first time
Tencent Music will pay its first annual dividend and is expected to pay an annual cash dividend of approximately US$210 million (approximately RMB 1.516 billion) for fiscal year 2023 to shareholders of record as of the record date.
The first annual dividend is a testament to Tencent Music's confidence in its future prospects and long-term value. At the same time, Tencent Music will continue to improve the company's operating performance and create long-term value for shareholders. The latest financial report data also fully demonstrates the sustainable growth trend of Tencent Music in the future.
———————————————
Lei Di was founded by Lei Jianping, a media person, if it is reprinted, please indicate the source.