A few days ago, Tencent Music-SW (01698.HK) released its unaudited financial results report for the first quarter of 2024 on the Hong Kong Stock Exchange.
During the reporting period, the company's total revenue was 6.77 billion yuan, a year-on-year decrease of 3.4%; Net profit was RMB1.53 billion, up 27.5% year-on-year, and adjusted net profit (non-IFRS) was RMB1.81 billion, up 23.9% year-on-year.
Regarding the decline in the company's total revenue, Tencent Music-SW explained in the financial report that it was mainly due to the decline in revenue from social entertainment services and other services, partially offset by the growth of revenue from online music services.
It should be noted that Tencent Music-SW has experienced a year-on-year decline in revenue for three consecutive quarters due to the above reasons. In the third and fourth quarters of 2023, Tencent Music-SW's revenue was 6.57 billion yuan and 6.89 billion yuan, respectively, down 10.8% and 7.2% year-on-year.
Due to the decline in revenue for two consecutive quarters in the second half of last year, the company's overall revenue in 2023 will only reach 27.752 billion yuan, a year-on-year decrease of 2.1% from 28.339 billion yuan in 2022, and a gap of about 3.5 billion yuan with the revenue scale of 31.244 billion yuan in 2021.
It is reported that the revenue composition of Tencent Music-SW mainly includes online music services, social entertainment services and other services. Among them, the decline in revenue from social entertainment services and other services is related to the company's business adjustment, and it has long been traced.
From 2020 to 2023, Tencent Entertainment-SW's social entertainment services and other service revenues will be 19.804 billion yuan, 19.777 billion yuan, 15.856 billion yuan, and 10.427 billion yuan respectively, with year-on-year growth rates of 8.33%, -0.14%, -19.83, and -34.23%, respectively.
In previous financial reports, Tencent Music-SW pointed out that 2023 is a critical year for Tencent Music-SW's transformation, and the company has adjusted some live interactive functions and implemented stricter compliance procedures since the second quarter to improve services and strengthen risk control management.
Titanium Media APP combed and found that in 2023, the revenue of online music services has indeed exceeded the revenue of social entertainment services and other services since the second quarter of last year.
Entering 2024, the revenue of social entertainment services and other services will be further reduced, according to the latest disclosed first-quarter report, the revenue of this business is only 1.76 billion yuan, a year-on-year decrease of 49.7%.
However, the profit scale of Tencent Music-SW has not been affected by business adjustment and revenue decline, but has achieved continuous growth, and the net profit attributable to equity holders of the company will be 1.148 billion yuan, 1.298 billion yuan, 1.168 billion yuan, 1.306 billion yuan, and 1.42 billion yuan respectively in 2023 so far in quarters.
Peng Jiaxin, executive chairman of Tencent Music Entertainment Group, has said that online music subscription revenue continues to accelerate year-on-year, and the scale of subscribers and the per capita income of a single paying user continue to increase, which is the main reason for the company's profit growth in 2023. According to Liang Zhu, CEO of Tencent Music Entertainment Group, the company's outstanding results in 2024 are mainly due to the marketing activities launched during the Spring Festival and optimized operational measures, which effectively increased user engagement.
Titanium Media APP has learned that Tencent Music-SW is a leading online music and audio entertainment platform in China, operating innovative music products including QQ Music, Kugou Music, Kuwo Music, and WeSing for All. During the reporting period, the number of online music paying users increased by 20.2% year-on-year to 113.5 million, a net increase of 6.8 million quarter-on-quarter, setting a record for the largest net increase in a single quarter for the company.
It is worth noting that the number of monthly active users of Tencent Music-SW's online music service has declined.
In the first quarter of 2024, the number of monthly active users of Tencent Music-SW's online music service was 578 million, a decrease of 2.4% from 592 million in the same period of 2023. The number of mobile monthly active users of social entertainment services was 97 million, down 28.7% from 136 million in the same period in 2023.
In the secondary market, Tencent Music-SW's share price continued to strengthen after the opening of the market on May 14, rising to 12.12% intraday, setting a record high price of HK$61.5 since the company's listing on the Hong Kong stock market, before retreating. As of today's close, Tencent Music-SW's share price closed at HK$59.2, up 7.93%, with a total market value of about HK$203.184 billion.
It is worth mentioning that Tencent Music-SW also announced that it will pay its first annual dividend, which is expected to pay an annual cash dividend of about US$210 million (about 1.516 billion yuan) in fiscal 2023 to shareholders of record as of the record date. (This article was first published on the Titanium Media APP, author: Chen Weina)