SHENZHEN, China – Tencent Music Entertainment Group (NYSE: NYSE:), China’s leading online music platform, reported a revenue beat for the first quarter of 2024, with figures surpassing analyst expectations.
Despite a year-over-year (YoY) decrease in total revenues, the company’s stock price surged by 5.6% following the announcement, indicating a positive market response to the stronger-than-expected revenue performance.
The company disclosed a first-quarter revenue of RMB6.77 billion (US$937 million), a 3.4% decrease YoY, mainly due to a decline in social entertainment services. However, this figure beat the consensus estimate of RMB6.57 billion. The number of paying users for online music services increased by 20.2% YoY to 113.5 million, contributing to a 39.2% YoY growth in music subscription revenues, which reached RMB3.62 billion (US$501 million). The company’s net profit also experienced significant growth, with a 27.5% increase YoY to RMB1.53 billion (US$212 million).
Executive Chairman Cussion Pang highlighted the robust growth in online music and a solid net profit margin expansion, attributing the success to the company’s focus on high-quality growth and tailored platform offerings. CEO Ross Liang emphasized the effectiveness of marketing campaigns during the Chinese New Year season and the steady recovery of the user base, attributing these to optimized operations and enhanced algorithms.
Despite the positive results, Tencent Music reported a decrease in mobile monthly active users (MAUs) for online music and social entertainment, dropping by 2.4% and 28.7% YoY, respectively. Nevertheless, the company managed to increase its monthly average revenue per paying user (ARPPU) for online music by 15.2%.
The company’s cost of revenues decreased by 14.8% YoY, and gross margin improved to 40.9% from 33.1% in the same period last year. Operating profit grew by 41.9% YoY, reaching RMB1.96 billion (US$271 million).
Tencent Music’s adjusted earnings per American Depositary Share (ADS) were RMB0.91 (US$0.13), slightly below the analyst estimate of RMB0.93. The company’s board of directors also declared an annual cash dividend for the fiscal year 2023, amounting to approximately US$210 million, to be paid to shareholders in June 2024.
The company’s share repurchase program, announced in March 2023, saw the repurchase of 32.2 million ADSs for a total consideration of US$235.5 million as of the end of the first quarter.
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