Tencent’s music profits jump 39% on record subscribers, revenue growth

In its third quarter earnings report on Tuesday (Nov 15), China’s leading music streaming company Tencent Music Entertainment Group (TME) said quarterly net profit rose 39% to RMB 1.09 billion (US$154 million) from last year as the number of online music subscribers reached a record of DKK 85.3 million

TME, which owns streaming platforms QQ Music, Kugou and Kuwo, plus karaoke app WeSing, reported that music subscriptions rose 18.3% to RMB 2.25 billion (US$316 million) for the third quarter ended September. 30 compared to the same period in 2021. The number of subscribers increased by almost 20%, up from 71.2 million in the third quarter of 2021.

“As we take a balanced approach to growing paying users… revenue from online music services grew at a healthy pace in the third quarter, driven by year-over-year gains in subscriptions,” Cushion Pang, TME’s executive chairman, said in a statement. “Meanwhile, effective cost optimization measures and improved operational efficiency led to increased profitability amid challenging macro conditions this quarter.”

Overall, revenue from online music services rose 18.8% to RMB 3.43 billion ($482 million), but that was not enough to offset a 20% decline in revenue from social entertainment and services, the company’s other main business unit. TME’s total revenue fell 5.6% to RMB 7.37 billion (US$1.04 billion).

Media companies have reported massive declines in mobile revenue in the third quarter, as increased prices for many and the worsening economic outlook globally have consumers rethinking everyday spending. TME was not spared from the trend. The number of monthly active mobile music users fell 7.7% to 587 million in the quarter, compared to 636 million in the third quarter last year – a decline the company attributed to casual listeners ditching the platform.

The monthly average earnings per paying user of TME’s online music decreased 1% to RMB 8.8 million (US$1.24 million) compared to RMB 8.9 million (US$1.25 million) in the year-ago period.

The company bought back $800 million of its own stock in the third quarter, as part of a $1 billion share buyback program it announced last spring.

In September, TME launched a secondary listing on the Hong Kong Stock Exchange; it was already publicly traded on the New York Stock Exchange in the United States. Its move to issue secondary shares in Hong Kong followed similar moves by other major Chinese companies seeking to hedge against potential fallout from the geopolitical tensions between China and the US

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