Exhibit 99.1 Tencent Music Entertainment Group Announces First Quarter 2023 Unaudited Financial Results SHENZHEN, China, May 16, 2023 /PRNewswire/ -- Tencent Music Entertainment Group ("TME," or the "Company") (NYSE: TME and HKEX: 1698), the leading online music and audio entertainment platform in China, today announced its unaudited financial results for the first quarter ended March 31, 2023. Financial Highlights In the three months ended March 31, 2023: "We started 2023 with great momentum as our strateg ...

Dual-Class Share Structure and Voting Rights - Tencent holds approximately 92.6% of the voting rights in Tencent Music Entertainment Group through its ownership of B-class shares and other arrangements[4][5] - The total number of issued and outstanding shares as of April 18, 2023, is 3,432,154,261, comprising 1,767,205,006 A-class shares and 1,664,949,255 B-class shares[5] - B-class shares can be converted into A-class shares at any time, and if all B-class shares were converted, it would result in the issuance of 1,664,949,255 A-class shares, representing approximately 94.2% of the total A-class shares outstanding[6] - Tencent and Min River have committed to converting B-class shares to A-class shares before any transfer to non-affiliated entities, ensuring voting rights remain within the Tencent-controlled group[7] - The company's dual-class share structure grants higher voting rights to Class B shares held by Tencent and Min River, with Tencent holding the highest proportion of voting rights[8] - Any transfer of Class B shares to a non-Tencent affiliate will result in automatic conversion to Class A shares unless specified otherwise in the company's articles of association[8] - The dual-class share structure may pose risks to investors as the interests of Class B shareholders may not always align with those of other shareholders[8] - The company has a dual-class share structure, with Class B shares holding 15 votes per share compared to 1 vote per Class A share, giving significant control to Class B shareholders[162] - As of April 18, 2023, Tencent and its affiliates beneficially own 9.1% of the company's Class A shares and 98.5% of Class B shares, collectively holding 92.6% of the total voting rights[163] - The dual-class share structure may limit the influence of Class A and ADS holders on corporate matters and could prevent beneficial control change transactions[163] Financial Performance and Reporting - The company's annual report will be interpreted based on the English version in case of any discrepancies, except for Chinese entities, laws, and government agencies where the Chinese names take precedence[9] - The annual report includes sections on financial performance, market risks, corporate governance, and financial statements, among others[10] - The company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board[12] - The company has submitted all required reports under Sections 13 or 15(d) of the Securities Exchange Act of 1934 in the past 12 months[12] - The company's auditor has issued a report on the effectiveness of internal control over financial reporting as required by Section 404(b) of the Sarbanes-Oxley Act[12] - The company's financial reporting internal controls were effective as of December 31, 2022, but there is no guarantee that significant deficiencies will not be identified in future audits under Section 404 of the Sarbanes-Oxley Act[111] - The company's American Depositary Shares (ADS), each representing two Class A ordinary shares, are listed on the New York Stock Exchange under the ticker symbol "TME"[12] - The company's Class A ordinary shares are listed on the Hong Kong Stock Exchange under the stock code 1698[12] - The company is incorporated in the Cayman Islands and operates under the laws of that jurisdiction[12] - The company has filed all interactive data files required by Regulation S-T Item 405 in the past 12 months[12] User Metrics and Revenue Calculation - Monthly Average Revenue Per Paying User (ARPPU) for online music and social entertainment services is calculated by dividing the monthly revenue of each service by the number of paying users for that service[14] - Paying user rate is calculated as the proportion of paying users to mobile monthly active users (MAU) during a specific period[14] - The number of paying users for online music services is the average of users with active subscriptions at the end of each month during a specific quarter or year[14] - The number of paying users for social entertainment services is the average of users who contributed revenue through purchases of virtual gifts or super membership services during a specific month[14] - Mobile MAU for online music services is the total MAU of music products (QQ Music, KuGou Music, and KuWo Music) in a specific month, excluding duplicate visits from the same device[15] - Mobile MAU for social entertainment services is the total MAU of services like WeSing, KuGou Live, KuWo Live, KuGou ChangChang, and QQ Music Live in a specific month, excluding duplicate visits from the same user account or device[15] Regulatory and Compliance Risks - The company operates through a variable interest entity (VIE) structure due to Chinese regulations restricting foreign investment in certain industries[19] - The company's VIE structure allows it to direct activities that significantly influence the economic performance of the VIE and obtain the majority of its economic benefits[19] - The company's VIE structure includes various contractual agreements such as equity pledge agreements, exclusive purchase right agreements, and exclusive technical service agreements[19] - Variable Interest Entities (VIEs) accounted for 99.8%, 99.1%, and 96.8% of the company's net revenue in 2020, 2021, and 2022, respectively[21] - As of December 31, 2022, VIEs represented 26.5% of the company's total consolidated assets[21] - The company's contractual arrangements with Variable Interest Entities (VIEs) in China face legal and regulatory uncertainties, which could affect enforceability and financial performance[117] - Foreign investment in China's value-added telecom and internet cultural services industries is restricted, with foreign investors generally limited to holding no more than 50% equity in such businesses[117] - The company's Chinese subsidiaries are considered foreign-invested enterprises and are ineligible to provide value-added telecom services, internet audio-visual program services, internet publishing, internet cultural services, and radio/TV program production services in China, with few exceptions[118] - The company relies on Variable Interest Entities (VIEs) and contractual arrangements to conduct business in China, allowing it to control VIE activities, obtain economic benefits, and maintain exclusive purchase rights for VIE equity or assets[118] - Regulatory risks exist if Chinese authorities determine the company's VIE arrangements violate foreign investment restrictions, potentially leading to penalties, license revocations, or operational disruptions[118] - Non-compliance with Chinese regulations could result in the company being unable to consolidate VIE financials under IFRS, significantly impacting financial performance and stock value[118] - The enforceability of contractual arrangements with VIEs and their shareholders/partners is uncertain under Chinese law, and legal remedies may be insufficient or ineffective[119] - If VIE shareholders or partners breach contractual agreements, the company may face significant operational disruptions and financial losses[119] - The company's ability to enforce VIE contracts depends on the willingness of VIE shareholders/partners to comply, which may not align with the company's interests[119] - Legal disputes related to VIE arrangements are subject to Chinese law and arbitration, with limited precedents and formal guidance, creating uncertainty in outcomes[119] Content Licensing and Intellectual Property - The company relies on third-party licenses for content supply, and any adverse changes or termination of relationships with content providers could negatively affect its business, operating performance, and financial condition[43] - The company faces potential disputes and legal liabilities if users upload content without obtaining necessary copyright licenses[43] - The company's complex licensing agreements impose numerous obligations, and any breach or unfavorable changes in terms could adversely impact its business, operating performance, and financial condition[43] - Minimum guarantee payments under certain music and long-form audio content licensing agreements may limit the company's operational flexibility and negatively affect its business, financial condition, and operating performance[43] - The company has accumulated a large amount of user-generated content, some of which may lack proper copyright licenses, making it difficult to accurately identify and verify the copyright status of such content[53] - The company has implemented measures to reduce the risk of copyright infringement, including user agreements, blacklisting procedures, and a "notice and takedown" policy, but these measures may not fully prevent unauthorized content distribution[53] - The company faces potential legal liabilities if it fails to remove or block infringing content after receiving proper notice from copyright holders[53] - The company has adopted screening procedures to filter potentially infringing content and is willing to sign licensing agreements with copyright holders, but it cannot guarantee the removal of all alleged infringing content due to the volume of content on its platform[54] - The company has been involved in lawsuits related to copyright infringement and may face similar legal challenges in China and globally as it expands internationally[55] - The company's complex licensing agreements involve obligations such as tracking content usage, paying minimum guarantees, implementing anti-piracy measures, and complying with technical requirements[56] - Violations of licensing agreements could result in penalties, termination of rights, and significant adverse effects on the company's business and financial performance[56] - The company may face increased intellectual property claims as competition intensifies in China and globally, potentially leading to costly legal disputes and reputational damage[54][55] - The company's new products and services may expose it to additional intellectual property claims, making it difficult to predict the impact on its business and financial performance[55] - The company's reliance on third-party platforms to distribute licensed content carries risks, as these platforms may not comply with licensing terms, potentially leading to legal liabilities[55] Market and Competitive Risks - The company's ability to attract and retain users depends heavily on providing attractive content, including songs, playlists, videos, long audio, lyrics, live performances, and karaoke-related content[50] - The company faces risks if it fails to predict user preferences or adapt to industry dynamics, which could lead to a decline in user traffic and engagement[50] - A significant portion of the company's music and long audio products are licensed from third-party content partners, and unfavorable changes in licensing terms could impact content quality and costs[51] - The company may not have complete licensing for a small portion of the content on its platform, potentially exposing it to copyright infringement claims[52] - User-generated content uploaded to the platform may lead to potential disputes and legal liabilities if users fail to obtain necessary copyright permissions[52] - The company relies on third-party licensing agreements, and the inability to renew these agreements or unfavorable renewal terms could adversely affect its business[51] - Changes in royalty rates or licensing terms due to shifts in bargaining power, industry dynamics, or legal/regulatory environments could negatively impact the company's content supply[51] - The company invests heavily in content acquisition and production but may not always recover these investments or successfully identify attractive content[50] - The company faces challenges in identifying and obtaining licenses from certain copyright owners, particularly for user-uploaded content[52] - The company's content supply could be adversely affected if its relationships with content providers deteriorate or if providers enter agreements with competitors[51] Regulatory Changes and Compliance - The company faces uncertainty regarding the implementation and interpretation of the Trial Measures, which may impact future fundraising activities[38] - New live streaming regulations in China include mandatory real-name registration, user tipping limits, and restrictions on minors, with potential long-term impacts on the company's business and financial performance[39] - The revised Anti-Monopoly Law in China imposes stricter penalties, including fines of up to 10% of annual sales for anti-competitive practices, and enhances oversight of platform monopolies[40] - The Foreign Company Accountability Act poses risks of delisting from U.S. exchanges if PCAOB cannot fully inspect the company's auditor for two consecutive years[41] - Live streaming platforms are required to remove tipping-based rankings by June 7, 2022, under the new regulatory guidelines[39] - The Anti-Monopoly Law's new rules clarify control rights and concentration implementation, with stricter review mechanisms for mergers and acquisitions[40] - PCAOB's ability to conduct full inspections of China-based auditors remains uncertain, impacting the company's compliance with U.S. regulations[41] - The company may need to adjust growth strategies to adapt to evolving regulatory environments in China[39] - The revised Anti-Monopoly Law introduces detailed regulations on monopolistic agreements and abuse of market dominance, effective April 15, 2023[40] - The Foreign Company Accountability Act requires annual PCAOB determinations on the inspectability of China-based auditors, adding ongoing compliance risks[41] - Regulatory uncertainties in China's live streaming and social entertainment sectors could negatively affect the company's operations and financial outlook[39] Legal and Litigation Risks - The company faces 923 pending lawsuits alleging copyright infringement on its platform, with total damages sought amounting to approximately RMB 257.7 million (USD 37.4 million)[80] - The company relies on trade secrets, confidentiality policies, patents, copyrights, and other intellectual property laws to protect its innovations, but these measures may not be sufficient to prevent infringement[76] - The company may need to initiate legal proceedings to enforce its intellectual property rights, which could result in significant costs and resource diversion[77] - The company's platform content may be deemed inappropriate by regulators, potentially leading to penalties, license revocation, or reputational damage[78] - The company is involved in a putative class action lawsuit with certain directors and executives, which could have a material adverse impact on its business and financial performance[81] - The company may face future litigation or regulatory actions related to intellectual property, antitrust, or competition claims, which could negatively affect its reputation and user base[79] - The company's internal rules and procedures for content review may not keep pace with regulatory changes, potentially leading to legal and administrative liabilities[78] - The company may be required to pay substantial damages or adjust its business practices if it loses legal disputes, which could harm its financial condition and operational performance[80] - The company's insurance may not cover all defense costs or obligations arising from litigation, potentially impacting its cash resources and management focus[81] - The company's inability to protect its intellectual property could severely harm its business, operating results, and financial condition[76] Corporate Governance and Shareholder Rights - The company's strategy prioritizes rapid innovation and long-term user engagement over short-term financial performance, which may lead to decisions that reduce short-term revenue or profitability[84] - The company is investing heavily in content production and partnerships, including collaborations within the Tencent ecosystem, to meet evolving user demands[84] - The company faces risks related to privacy and security breaches, which could result in economic losses, reputational damage, and legal penalties[84] - The company collects and stores user, partner, and employee data to the minimum extent necessary for operations, but cannot guarantee complete protection against unauthorized access[84] - The company's services are vulnerable to cyberattacks, including malware, phishing, and denial-of-service attacks, which could disrupt operations and lead to data loss[85] - Compliance with evolving cybersecurity, data protection, and privacy laws may impose significant costs and require changes to the company's business operations[85] - The company must adhere to regulations on data collection, storage, and transfer, as well as measures to prevent unauthorized access or misuse of personal data[85] - The company's business is significantly dependent on its relationship with Tencent, and any negative developments in Tencent's market position, brand reputation, or financial condition could adversely affect the company's user base, marketing efforts, and brand strength[113][114] - Tencent holds 9.1% of the company's outstanding Class A shares and 98.5% of Class B shares, totaling 92.6% of the company's total voting rights[115] - Tencent's voting control may prevent transactions beneficial to Class A shareholders or ADS holders, such as control change transactions offering premiums above market price[115] - Potential conflicts of interest with Tencent include commercial opportunity allocation, employee recruitment, and competition with Tencent's rivals[116] - Tencent may sell its shares to third parties, including competitors, potentially impacting the company's business and shareholder interests[116] Financial and Operational Risks - The company's ability to attract and retain users may be significantly impacted if it fails to predict user preferences and provide content that meets user needs[43] - The company's business and financial condition could be significantly impacted by severe or prolonged economic weakness in China or globally[44] - The company's business may be adversely affected if it can no longer benefit from its business cooperation with Tencent[45] - The company's operations depend on the performance of China's internet infrastructure and telecommunications networks, which are largely operated and maintained by state-owned operators[48] - The company's securities trading may be prohibited, and its securities may be delisted from U.S. national securities exchanges if the PCAOB determines it cannot fully inspect or investigate the company's auditor for two consecutive years under the Holding Foreign Companies Accountable Act[48] - The company's ability to attract and retain users depends heavily on providing attractive content, including songs, playlists, videos, long audio, lyrics, live performances, and karaoke-related content[50] - The company faces risks if it fails to predict user preferences or adapt to industry dynamics, which could lead to a decline in user traffic and engagement[50] - A significant portion of the company's music and long audio products are licensed from third-party content partners, and unfavorable changes in licensing terms could impact content quality and costs[51] - The company may not have complete licensing for a small portion of the content on its platform, potentially exposing it to copyright infringement claims[52] - User-generated content uploaded to the platform may lead to potential disputes and legal liabilities if users fail to obtain necessary copyright permissions[52] - The company relies on third-party licensing agreements, and the inability to renew these agreements or unfavorable renewal terms could adversely affect its business[51] - Changes in royalty rates or licensing terms due to shifts in bargaining power, industry dynamics, or legal/regulatory environments could negatively impact the company's content supply[51] - The company invests heavily in content acquisition and production but may not always recover these investments or successfully identify attractive content[50] - The company faces challenges in identifying and obtaining licenses from certain copyright owners, particularly for user-uploaded content[52] - The company's content supply could be adversely affected if its relationships with content providers deteriorate or if providers enter agreements with competitors[51] Tax and Foreign Exchange Risks - The company currently intends to permanently reinvest profits from its Chinese subsidiaries and VIEs into its operations in China[24] - Under a hypothetical tax scenario, the net distribution to parent company/shareholders would be 67.5% after a 25% statutory tax rate and 10% withholding tax[25] - The company's tax planning strategies could result in a double taxation scenario, potentially reducing after-tax income to approximately 50.6% of pre-tax income[26] - The company has contingency plans involving non-deductible transfers to its Chinese subsidiary if tax planning strategies fail, which could impact profitability[26] - The company may be classified as a "Chinese resident enterprise" for Chinese corporate income tax purposes, which could result in a 25% tax rate on global income and negatively impact net income[154] - If classified as a Chinese resident enterprise, the company may need to withhold 10% withholding tax on dividends paid to non-resident enterprise shareholders, including ADS holders[155] - Non-res

SEC Filing and Report Details - Tencent Music Entertainment Group filed a Form 6-K report with the SEC for the month of April 2023 [1] - The report includes a press release as Exhibit 99.1 [2] - The report was signed by Min Hu on behalf of Tencent Music Entertainment Group on April 25, 2023 [4]

Financial Performance - Revenues for the year ended December 31, 2022, were RMB 28,339 million, a decrease from RMB 31,244 million in 2021, representing a decline of approximately 9.1%[34] - Gross profit for the year ended December 31, 2022, was RMB 8,773 million, down from RMB 9,404 million in 2021, indicating a decrease of about 6.7%[34] - Operating profit for the year ended December 31, 2022, was RMB 4,443 million, compared to RMB 3,800 million in 2021, reflecting an increase of approximately 16.9%[34] - Profit for the year ended December 31, 2022, was RMB 3,839 million, a slight increase from RMB 3,215 million in 2021, showing an increase of about 19.4%[34] - Total assets as of December 31, 2022, were RMB 67,009 million, compared to RMB 67,254 million as of December 31, 2021, indicating a marginal decrease of approximately 0.4%[38] - Total liabilities as of December 31, 2022, were RMB 17,882 million, an increase from RMB 16,199 million in 2021, representing an increase of about 10.4%[38] - Cash and cash equivalents at the end of the year 2022 were RMB 9,555 million, up from RMB 6,591 million at the end of 2021, indicating an increase of approximately 45%[38] - Net cash inflow from operating activities for the year ended December 31, 2022, was RMB 7,481 million, a significant increase compared to the previous year[43] - Net cash outflow from investing activities for the same period was RMB 1,446 million, reflecting a decrease in investment activities[43] - Net cash outflow from financing activities was RMB 3,419 million, indicating a reduction in financing activities compared to the previous year[43] VIE Structure and Contributions - In 2022, revenues generated by the VIEs accounted for 96.8% of Tencent Music Entertainment Group's total net revenues[23] - As of December 31, 2022, total assets of the VIEs represented 26.5% of the Group's consolidated total assets[23] - Cumulative capital contributions made by Tencent Music Entertainment Group to its PRC subsidiaries amounted to RMB1,161 million (US$168 million) as of December 31, 2022[26] - The VIEs transferred RMB16,415 million (US$2,380 million) to Tencent Music Entertainment Group's PRC subsidiaries as service fees in 2022[26] - The loan balance owed by the VIEs to the WOFEs was RMB129 million (US$19 million) as of December 31, 2022[26] - The total amount of undistributed profits from the PRC subsidiaries and VIEs was RMB17,660 million (US$2,560 million) as of December 31, 2022[27] - Tencent Music Entertainment Group has not declared or paid any cash dividends and has no plans to do so in the near future[27] - Revenues from VIEs constituted substantially all of the company's revenues in 2020, 2021, and 2022, highlighting the importance of these arrangements[215] Regulatory Environment - The Group faces significant legal and operational risks due to PRC regulatory authority over foreign investments and business operations[24] - Recent regulatory developments include the establishment of the National Data Bureau to oversee data-related activities, impacting the company's operations[48] - The company is subject to new live streaming regulations in China, which impose stricter requirements on live streaming businesses[55] - The Trial Administrative Measures by the CSRC require PRC domestic companies to fulfill filing procedures for overseas securities offerings, affecting future financing activities[51] - The CAC issued regulations on live streaming on May 7, 2022, requiring real-name registration and prohibiting minors from virtual gifting[56] - The new live streaming regulations may lead to increased scrutiny and potential adverse impacts on the company's business and financial condition[58] - The PRC Anti-Monopoly Law was amended on August 1, 2022, increasing penalties for monopolistic conduct, with fines up to 10% of the previous year's sales revenue[59] - The Holding Foreign Companies Accountable Act (HFCAA) could lead to trading prohibitions on U.S. markets if audit reports are not inspected for two consecutive years[61] - The PCAOB announced it could conduct inspections in mainland China and Hong Kong in 2022, reducing the risk of being identified as a "Commission-Identified Issuer" under the HFCAA[61] Content and Licensing Risks - The company relies on third-party licenses for content, and any adverse changes to these relationships could materially affect its financial condition[73] - Significant portions of the company's music and long-form audio offerings are licensed from content partners, with no assurance of favorable terms in the future[73] - There is a risk of not having complete licenses for certain copyrights, which could lead to potential disputes and liabilities related to copyright infringement[79] - The company has adopted measures to reduce the likelihood of using content without proper licenses, including user agreements and "notice and take-down" policies[83] - Minimum guarantee payments required under certain license agreements may limit the company's operating flexibility and adversely affect its financial condition if user growth does not meet expectations[91] - The company relies on estimates of market share and user growth to forecast whether minimum guarantees can be recouped, which could impact margins if actual performance underperforms expectations[92] - Inability to obtain accurate copyright ownership information may hinder the company's ability to secure necessary licenses, potentially leading to content removal and infringement claims[93] - The company may be subject to significant financial penalties and reputational damage if it fails to comply with complex license agreements[90] Competition and Market Dynamics - The company operates in a competitive industry, facing significant competition from online music services and other forms of content, which may impact market share[114] - The company faces increasing competition and potential intellectual property claims as it seeks to expand its international footprint[86] - The introduction of the pay-for-streaming model in Q1 2019 has driven user engagement, but future success is uncertain due to regulatory scrutiny and user demand fluctuations[97] - The company faces challenges in maintaining high-quality content and user experience to increase paying users, which is critical for revenue growth[98] - The company's advertising revenues are heavily dependent on the growth of the online advertising industry in China and the willingness of advertisers to invest in online platforms[171] - Regulatory changes, such as the MIIT Notice and the Internet Advertising Measures, have negatively impacted the effectiveness of splash ads, leading to a decrease in advertising revenues[172] Legal and Compliance Issues - As of December 31, 2022, there were 923 lawsuits pending against the company related to copyright infringement, with damages sought totaling approximately RMB257.7 million (US$37.4 million)[137] - The company must comply with evolving PRC regulations regarding content distribution, which may lead to penalties or operational constraints if not adhered to[135] - The company has limited control over user-generated content, which poses risks of legal and administrative liability if inappropriate content is displayed[136] - The company cooperates with talent agencies to manage live streaming performers, and any adverse changes in these relationships could impact operational efficiency[120] - The company may incur substantial costs to enforce contractual arrangements with VIEs if they fail to perform their obligations[203] - The effectiveness of the company's internal control over financial reporting was deemed effective as of December 31, 2022, but future audits may reveal material weaknesses[189] Strategic Focus and Future Outlook - The company plans to continue expanding its market presence and investing in new technologies and products to drive future growth[34] - The company is exploring new monetization opportunities while optimizing existing strategies to maintain revenue growth[97] - The company's strategic focus on long-term user engagement may lead to operational results that do not meet investor expectations, potentially impacting stock price[142] - The company prioritizes long-term partnerships and substantial investments in content production to cater to evolving user demands[142] Cybersecurity and Data Privacy - Privacy concerns and security breaches could lead to economic loss and legal liabilities, affecting user trust and business operations[144] - The company is subject to evolving cybersecurity and data protection laws, which may impose additional operational costs and compliance challenges[146] - The PRC Cyber Security Law and Data Security Law require network operators to implement security measures and appoint data security officers[148][149] - The company may face uncertainties regarding compliance with new regulations affecting national security and data processing activities[154] - Compliance with the GDPR and UK GDPR may result in fines up to EUR 20 million or 4% of worldwide annual turnover, whichever is greater, if personal data breaches occur[157] - The California Consumer Privacy Act (CCPA) provides California residents with expanded privacy rights, and similar laws are being enacted in other states, increasing compliance costs[158] - The company faces significant risks related to evolving privacy and data security regulations, which could lead to civil or regulatory liabilities and impact its financial condition[161] Management and Operational Risks - The loss of key management could disrupt operations and adversely affect future growth[166] - The company may need to alter its business model to comply with new regulations regarding virtual currencies, which could lead to penalties[167] - The company's operations depend on the performance of internet infrastructure in China, which is largely maintained by state-owned operators[68] - Programming errors on the platform could adversely affect user experience and market acceptance, impacting overall business performance[186] - Negative media coverage and social media publicity can harm the company's reputation and operations, potentially affecting financial performance[180] Tencent's Influence - Tencent holds 9.1% of the outstanding Class A ordinary shares and 98.5% of the Class B ordinary shares, representing 92.6% of total voting power[194] - Any negative developments in Tencent's market position or financial condition may adversely affect the user base and marketing efforts of the company[193] - The effectiveness of the company's marketing efforts is closely tied to Tencent's brand recognition and user ecosystem[193] - The company's financial contribution to Tencent was not material, and Tencent's strategic decisions may not align with the company's interests[198]

Tencent Music Entertainment Group (NYSE:TME) Q4 2022 Earnings Conference Call March 21, 2023 7:00 AM ET Company Participants Cussion Pang - Executive Chairman Ross Liang - Chief Executive Officer Tony Yip - Chief Scientific Officer Shirley Hu - Chief Financial Officer Conference Call Participants Alicia Yap - Citigroup Alex Poon - Morgan Stanley Lincoln Kong - Goldman Sachs Lei Zhang - Bank of America Securities Wei Xiong - UBS Xueqing Zhang - CICC Thomas Chong - Jefferies Charlene Liu - HSBC Tony Yip Good ...

Financial Performance - In Q4 2022, the company's net profit attributable to equity holders was RMB 1.15 billion (USD 167 million), representing a year-on-year increase of 114.7%[2] - For the full year 2022, net profit attributable to equity holders was RMB 3.68 billion (USD 533 million), a year-on-year increase of 21.4%[3] - The company's net profit attributable to equity holders in Q4 2022 was RMB 1.15 billion (USD 167 million), with a year-over-year increase of 103.5% in operating profit to RMB 1.39 billion (USD 201 million)[10] - Non-IFRS net profit for the three months ended December 31, 2022, was RMB 1,205 million, representing a 108.5% increase from RMB 577 million in the same period of 2021[27] - The adjusted net profit for the year ended December 31, 2022, was RMB 4,907 million, up from RMB 4,332 million in 2021, reflecting a growth of 13.2%[30] Revenue and Growth - Total revenue for Q4 2022 was RMB 7.43 billion (USD 1.08 billion), a year-on-year decrease of 2.4% but a quarter-on-quarter increase of 0.8%[5] - Total revenue for the full year 2022 was RMB 28.34 billion (USD 4.11 billion)[3] - Online music subscription revenue grew by 20.6% year-on-year to RMB 2.35 billion (USD 341 million) with paid user count reaching 88.5 million, up 16.1% year-on-year[2][6] - The company reported a significant increase in online music non-subscription revenue, which grew by 29.8% year-on-year to RMB 1.21 billion (USD 175 million) in Q4 2022[7] - Online music services revenue for the full year 2022 grew by 8.9% year-over-year to RMB 12.48 billion (USD 1.81 billion), driven by a 22.7% increase in paid users[11] - Online music service revenue for the three months ended December 31, 2022, was RMB 3,559 million, up 23.5% from RMB 2,880 million in the same period of 2021[27] Operating Costs and Expenses - In Q4 2022, operating costs decreased by 8.1% year-over-year to RMB 4.98 billion (USD 722 million), primarily due to a decline in revenue-sharing costs[9] - Operating expenses decreased by 25.1% year-over-year to RMB 1.36 billion (USD 197 million), with operating expenses as a percentage of total revenue dropping from 23.9% to 18.3%[9] - The total operating expenses for the three months ended December 31, 2022, were RMB 1,361 million, a decrease of 25.1% from RMB 1,817 million in the same period of 2021[27] Cash and Liquidity - The company's cash and cash equivalents, including short-term investments, increased to RMB 27.4 billion (USD 3.97 billion) as of December 31, 2022, up from RMB 25.4 billion[15] - The total cash and cash equivalents at the end of Q4 2022 reached RMB 9,555 million, up from RMB 6,591 million at the end of 2021[34] - The net cash inflow for the full year 2022 from operating activities was RMB 7,481 million, compared to RMB 5,239 million for the full year 2021[34] - The total cash and cash equivalents at the end of the year for 2022 were RMB 9,555 million, reflecting a strong liquidity position for the company[34] Strategic Initiatives - The company plans to exceed social entertainment service revenue with online music service revenue in a single quarter in 2023[4] - The company is focusing on innovative tools and expanding collaborations within the Tencent ecosystem to enhance content distribution and user experience[4] - The company has initiated a USD 1 billion stock repurchase plan to support its long-term growth strategy[3] - The company has launched a new share repurchase plan, allowing for the buyback of up to $500 million of Class A common stock over the next 24 months starting from March 2023[22] User Engagement and Content Creation - The average revenue per paid user per month increased by 4.7% year-on-year to RMB 8.9[6] - The independent musician community on the Tencent Musician platform has created over 2.3 million music works as of Q4[18] - Nearly 1,000 original songs produced by the company achieved over 100 million plays in 2022, with the hit song "Give Me" nearing 500 million plays[18] - The company has introduced innovative AIGC tools to enhance music content creation efficiency, including the Muse engine for automated music poster generation[19] - The company has expanded its ecosystem collaboration with WeChat Video Accounts, enhancing user engagement through innovative online and offline interactive experiences[20] Market Challenges - In Q4 2022, the company's social entertainment services and other services revenue decreased by 18.2% year-over-year to RMB 3.87 billion (USD 561 million) due to a changing macro environment and increased competition[8] - The company's audio live streaming revenue grew year-over-year, driven by the expansion of QQ Music Live and the integration of audio live streaming with music platforms[8]

Exhibit 99.1 Tencent Music Entertainment Group Announces Fourth Quarter and Full-Year 2022 Unaudited Financial Results SHENZHEN, China, March 21, 2023 /PRNewswire/ -- Tencent Music Entertainment Group ("TME," or the "Company") (NYSE: TME and HKEX: 1698), the leading online music and audio entertainment platform in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2022. Financial Highlights In the three months ended December 31, 2022: In the full y ...

Financial Data and Key Metrics - Total revenues for Q3 2022 were RMB 3.4 billion, up 7% sequentially [34] - Net profit for Q3 2022 was RMB 1.1 billion, with net assets increasing by 33% year-over-year [34] - Online music paying users grew to 85.3 million, up 20% year-over-year, with a monthly ARPU of RMB 8.8, up from RMB 8.5 in Q2 [35] - Subscription revenue grew to RMB 2.2 billion, up 18% year-over-year and 7% sequentially [34] - Gross margin for Q3 was 32.6%, up 3% year-over-year and 2.7% sequentially [37] Business Line Data and Key Metrics - Online music MAUs were 587 million, down year-over-year due to churn of casual users, but QQ Music DAUs increased year-over-year [23] - IoT MAUs achieved double-digit growth year-over-year, with new collaborations such as BMW and DD [24] - TME Live hosted 32 online and offline performances, accumulating close to 15 million unique viewers within the Tencent ecosystem [15] - The Tencent Musician platform served 350,000 musicians by the end of Q3, with 281 musicians utilizing the new TME Artists Album feature [10][12] Market Data and Key Metrics - The company expanded its international footprint, with collaborations such as YG Entertainment and Taylor Swift's album "Midnight" achieving significant sales [13] - TME Live and TMELAND secured extensive sponsorships from domestic and international advertisers across various industries [29] - The company continued to explore international markets, including the acquisition of Pokekara in Japan [59] Company Strategy and Industry Competition - The company plans to refine its dual-engine content and platform strategy, focusing on original content production and innovative business models [6] - TME aims to expand its influence by collaborating with popular IPs and artists, both domestically and internationally [9] - The company is investing in long-form audio and international business to maximize future growth potential [42] - TME is closely monitoring competition from short-form video platforms and potential new entrants into the music market [73] Management Commentary on Operating Environment and Future Outlook - Management highlighted the success of cost control measures and improved operational efficiency, leading to increased profitability [37][68] - The company expects continued growth in advertising revenue and subscription revenue, driven by innovative products and improved user engagement [35][55] - Management remains optimistic about the long-term growth potential of the music industry, despite macroeconomic challenges [35][55] Other Important Information - The company launched the TME Business Intelligence platform, providing high-frequency data updates to assist music label partners [30] - TME continued to fulfill its social responsibilities through music-empowered charity programs, such as the "Hear the Light of Music" album and charity concert [32][33] Q&A Session Summary Question: Music segment gross margin and net margin trends [44] - Gross margin improved due to optimized content costs, subscription revenue growth, and increased advertising revenue [45][46] - Net margin is expected to increase as the company continues to control content costs and improve monetization [46] Question: ARPU and music subscriber trends [48] - ARPU increased to RMB 8.8 in Q3, driven by promotions and content optimization [50] - The company aims to reach 100 million subscribers in the near term and achieve a mid-20% paying ratio in the long term [49] Question: Advertising business growth drivers [52] - Advertising revenue growth was driven by new formats, such as TME Live and TMELAND, and the ad-supported free listening mode [53][55] - The company expects continued growth in advertising revenue, supported by improving macroeconomic conditions [55] Question: Social entertainment business outlook [57] - Social entertainment revenues declined year-over-year due to macroeconomic challenges and competition [58] - The company is exploring new initiatives, such as audio live streaming and international expansion, to offset challenges in traditional live streaming [58][59] Question: Long-form audio business strategy [61] - Long-form audio is seen as a complement to the music business, with a focus on improving monetization through subscriptions [63] - The company aims for the long-form audio business to break even at a gross margin level by the end of next year [63] Question: Cost planning and margin improvement [65] - The company plans to continue controlling sales and marketing expenses while investing in new products and services [66] - Net profit margin is expected to improve as revenue growth resumes and cost optimization measures continue [68] Question: Competitive landscape and online music margin [72] - The company is monitoring competition from short-form video platforms and potential new entrants into the music market [73] - Online music margins are expected to improve due to subscription revenue growth, advertising recovery, and cost control [74] Question: Collaboration between TMELAND and WeSing Video [80] - The company is deepening cooperation with WeSing to enhance music-focused collaboration and promotional capabilities [81] - Future plans include closer cooperation to present more innovative shows and explore monetization avenues [82]

Financial Performance - The company's net profit for Q3 2022 was RMB 1.09 billion (USD 154 million), representing a year-over-year increase of 38.7% and a quarter-over-quarter increase of 22.5%[4]. - Total revenue for Q3 2022 was RMB 7.37 billion (USD 1.04 billion), showing a year-over-year decline of 5.6% but a quarter-over-quarter growth of 6.7%[4]. - Operating profit increased by 37.2% year-over-year to RMB 1.26 billion (USD 177 million), driven by growth in gross profit and effective control of operating efficiency[17]. - Net profit attributable to equity holders rose by 43.4% year-over-year to RMB 1.06 billion (USD 149 million) in Q3 2022[19]. - Basic and diluted earnings per American Depositary Share (ADS) were RMB 0.67 (USD 0.09) and RMB 0.66 (USD 0.09), respectively, for Q3 2022[20]. - Non-International Financial Reporting Standards net profit increased by 35.9% year-over-year to RMB 1.38 billion (USD 194 million) in Q3 2022[19]. - Non-IFRS net profit for Q3 2022 was RMB 1,411 million, a 33% increase from RMB 1,063 million in Q3 2021[35]. Revenue Breakdown - Online music subscription revenue increased by 18.3% year-over-year to RMB 2.25 billion (USD 316 million), with paid users reaching 85.3 million, a year-over-year growth of 19.8%[4]. - Online music service revenue increased by 18.8% year-over-year to RMB 34.3 billion (USD 4.82 billion), driven by strong growth in music subscription revenue and digital album sales[12]. - Music subscription revenue reached RMB 22.5 billion (USD 3.16 billion), up 18.3% year-over-year, with a 19.8% increase in paid user numbers[12]. - Social entertainment services and other services revenue fell by 20.0% year-over-year to RMB 39.4 billion (USD 5.53 billion), with a 26.0% decline in paid users[13]. - Online music service revenue for Q3 2022 was RMB 3,430 million, a 19% increase from RMB 2,888 million in Q3 2021[32]. - Social entertainment services and other revenue decreased to RMB 3,935 million in Q3 2022, down 20% from RMB 4,917 million in Q3 2021[32]. Cost and Expenses - Operating costs decreased by 9.7% year-over-year to RMB 49.6 billion (USD 6.98 billion), primarily due to a reduction in revenue-sharing costs[14]. - In Q3 2022, total operating expenses decreased by 12.3% year-over-year to RMB 1.44 billion (USD 202 million), accounting for 19.5% of total revenue, down from 21.0% in Q3 2021[16]. - Sales and marketing expenses fell by 58.3% year-over-year to RMB 245 million (USD 34 million), primarily due to effective control over marketing spending and optimization of promotional structure[16]. - Total operating costs for the nine months ended September 30, 2022, were RMB 20,914 million, a decrease of 11% from RMB 23,637 million in the same period of 2021[32]. - The company reported a decrease in total operating expenses for the nine months ended September 30, 2022, to RMB 4,196 million from RMB 4,870 million in the same period of 2021[32]. User Engagement and Product Development - The company launched a series of product upgrades in Q3 2022 to enhance user engagement and interaction, catering to diverse music tastes and refined user needs[6]. - The company plans to continue product innovation and explore more social entertainment verticals, including audio live streaming and virtual interactive content, to enhance competitiveness[6]. - The launch of the TME live brand combined online and offline music entertainment, hosting 32 events in Q3[9]. - The company introduced the Lingyin Engine for voice synthesis technology, enabling the production of over 1,000 songs using AI-generated voices by the end of Q3[10]. Social Responsibility and Community Support - The company aims to combine music with public welfare, enhancing social awareness and creating more social value while supporting the sustainable development of the music industry[6]. - The company supported over 350,000 independent musicians in Q3, enhancing their music content creation and commercialization[8]. - The company emphasized its commitment to social responsibility through various charitable initiatives, including a collaboration with artists for a public welfare album[10]. Shareholder Actions and Financial Position - The company completed over USD 800 million of its previously announced USD 1 billion share repurchase program by the end of Q3 2022[5]. - The company repurchased approximately 114 million ADS for a total consideration of about USD 860 million under the USD 1 billion share repurchase program announced on March 28, 2021[22]. - As of September 30, 2022, cash, cash equivalents, and short-term investments totaled RMB 25.45 billion (USD 3.58 billion), slightly down from RMB 25.80 billion as of June 30, 2022[21]. - The company’s cash and cash equivalents at the end of the period were RMB 8,582 million, showing a strong liquidity position[39]. - The equity attributable to the company's shareholders decreased from RMB 51,055 million to RMB 48,294 million, primarily due to an increase in treasury shares[38]. - The total equity decreased from RMB 51,055 million to RMB 48,294 million, indicating a decline in shareholder value[38]. Assets and Liabilities - As of September 30, 2022, total assets amounted to RMB 66,755 million, a slight decrease from RMB 67,254 million as of December 31, 2021[37]. - Non-current assets increased from RMB 40,463 million to RMB 40,685 million, with significant growth in land use rights from RMB 1,495 million to RMB 2,499 million[37]. - Cash and cash equivalents rose from RMB 6,591 million to RMB 8,582 million, reflecting a net increase of RMB 1,991 million[39]. - Total liabilities increased from RMB 16,199 million to RMB 18,461 million, with current liabilities rising from RMB 10,450 million to RMB 12,138 million[38]. - The company reported a net cash outflow from investing activities of RMB 1,243 million for the three months ended September 30, 2022[39]. - The company’s retained earnings decreased from RMB 14,194 million to RMB 10,970 million, reflecting a reduction in accumulated profits[38].

Financial Risk Management - The company's exposure to interest rate risk is minimal, with no significant interest-bearing assets other than term deposits and cash equivalents, and notes payable at fixed rates do not expose the company to cash flow interest-rate risk[785] - The Renminbi has fluctuated significantly against the U.S. dollar, depreciating by 5% in 2018, 1% in 2019, and appreciating by 6% in 2020 and 2% in 2021[786] - The company has not entered into any hedging transactions to mitigate foreign exchange risk, and currency fluctuations could impact the Renminbi or U.S. dollar amounts available for operations or payments[787] - Inflation in China has not materially impacted the company's operations, with year-over-year CPI changes of 4.5% in December 2019, 0.2% in 2020, 1.5% in 2021, and 1.5% as of March 31, 2022[790] Revenue Recognition - Revenue from online music services includes subscriptions, digital music sales, content sublicensing, and online advertising, with subscription fees collected upfront and recognized over the subscription period[794] - The company offers early access to new digital music singles and albums, with revenue recognized over time as the performance obligation is satisfied[795] - Advertising revenues are recognized based on CPD or CPM arrangements, with revenue allocated to each performance obligation on a relative stand-alone selling price basis[798] - Virtual gifts sold on online karaoke and live streaming platforms are categorized as consumable, time-based, or durable, with revenue recognized immediately, ratably over time, or over estimated lifespans, respectively[802] - Premium memberships for online karaoke and live streaming services are time-based, with fees collected upfront and revenue recognized ratably over the subscription period[805] - The company reports revenue on a gross or net basis depending on whether it acts as a principal or agent, based on factors such as being the primary obligor and having latitude in establishing prices[806] Financial Performance and Metrics - Revenue from online music services increased from RMB 7,152 million in 2019 to RMB 11,467 million in 2021, representing a growth of 60.3% over two years[940] - Revenue from social entertainment services and others remained relatively stable, with RMB 18,282 million in 2019 and RMB 19,777 million in 2021[940] - Total revenues grew from RMB 25,434 million in 2019 to RMB 31,244 million in 2021, an increase of 22.8%[940] - Gross profit increased from RMB 8,673 million in 2019 to RMB 9,404 million in 2021, a growth of 8.4%[940] - Profit for the year decreased from RMB 4,176 million in 2020 to RMB 3,215 million in 2021, a decline of 23.0%[940] - Earnings per share (basic) for Class A and Class B ordinary shares decreased from RMB 1.25 in 2020 to RMB 0.91 in 2021[940] - Mobile MAUs for online music services are calculated as the sum of mobile MAUs of music products, including QQ Music, Kugou Music, and Kuwo Music, without eliminating duplicate access[931] - Paying ratio is measured by the number of paying users as a percentage of mobile MAUs for a given period[932] - Monthly ARPPU for social entertainment services is calculated based on revenue from social entertainment and others, including advertising services[930] - Social entertainment mobile MAUs include access to services like WeSing, Kugou's Live Streaming, Kuwo's Live Streaming, Kugou Changchang, and QQ Music's Live Streaming[937] Financial Position and Assets - Total assets increased from RMB 52,678 million in 2019 to RMB 65,997 million as of March 31, 2022[943] - Goodwill grew from RMB 17,140 million in 2019 to RMB 19,126 million as of March 31, 2022[943] - Cash and cash equivalents decreased from RMB 15,426 million in 2019 to RMB 8,353 million as of March 31, 2022[943] - Retained earnings increased from RMB 7,007 million in 2019 to RMB 14,803 million as of March 31, 2022[943] - Non-current liabilities rose from RMB 510 million in 2019 to RMB 5,714 million as of March 31, 2022[943] - Current liabilities increased from RMB 8,490 million in 2019 to RMB 11,062 million as of March 31, 2022[943] - Total equity grew from RMB 43,678 million in 2019 to RMB 49,221 million as of March 31, 2022[943] - Profit for the year in 2019 was RMB 3,982 million[944] - Fair value changes on financial assets at fair value through other comprehensive income in 2019 were RMB 1,031 million[944] - Total comprehensive income for the year 2019 was RMB 5,268 million[944] - Total equity increased from RMB 43.678 billion in 2020 to RMB 52.731 billion in 2021, reflecting a growth of 20.7%[945][946] - Profit for the year in 2021 was RMB 3.029 billion, compared to RMB 4.155 billion in 2020, indicating a decrease of 27.1%[945][946] - Retained earnings grew from RMB 7.007 billion in 2020 to RMB 11.111 billion in 2021, an increase of 58.6%[945][946] - Noncontrolling interests increased from RMB 88 million in 2020 to RMB 486 million in 2021, a significant rise of 452.3%[945][946] - Share-based compensation value of employee services in 2021 was RMB 647 million, up from RMB 569 million in 2020, a 13.7% increase[945][946] - Repurchase of shares in 2021 amounted to RMB 3.561 billion, compared to RMB 134 million in 2020, a substantial increase[945][946] - Total comprehensive income for 2021 was RMB 527 million, down from RMB 8.079 billion in 2020, a decline of 93.5%[945][946] - Additional paid-in capital increased from RMB 34.425 billion in 2020 to RMB 35.044 billion in 2021, a growth of 1.8%[945][946] - Currency translation differences resulted in a loss of RMB 1.286 billion in 2020 and a gain of RMB 4 million in 2021[945][946] - Disposal of subsidiaries in 2021 led to a reduction in noncontrolling interests by RMB 6 million[946] - Total equity at March 31, 2022 was RMB 49,221 million, compared to RMB 51,055 million at January 1, 2022[948] Cash Flow and Investments - Net cash inflow from operating activities for Q1 2022 was RMB 2,494 million, up 32.8% from RMB 1,878 million in Q1 2021[949] - Cash generated from operations in Q1 2022 was RMB 2,450 million, a 33.3% increase from RMB 1,838 million in Q1 2021[949] - Net cash outflow from investing activities in Q1 2022 was RMB 329 million, significantly lower than RMB 2,382 million in Q1 2021[949] - Cash and cash equivalents at end of Q1 2022 were RMB 8,353 million, down 18.7% from RMB 10,274 million at end of Q1 2021[949] - Payments for business combinations, net of cash acquired, were RMB 19 million in Q1 2022 compared to RMB 2,072 million in Q1 2021[949] - Purchase of property, plant and equipment decreased to RMB 18 million in Q1 2022 from RMB 39 million in Q1 2021[949] - Purchase of intangible assets was RMB 119 million in Q1 2022, down from RMB 161 million in Q1 2021[949] - Placement of short-term investments decreased significantly to RMB 70 million in Q1 2022 from RMB 2,416 million in Q1 2021[949] - Net cash outflow from financing activities was RMB 395 million in Q1 2022, compared to RMB 372 million in Q1 2021[949] Corporate Governance and Leadership - Mr. Cussion Kar Shun Pang appointed as Executive Chairman since April 2021, responsible for long-term strategy and content ecosystem business[866] - Mr. Zhu Liang appointed as CEO since April 2021, overseeing QQ Music, Kugou Music, Kuwo Music, WeSing, and long-form audio business[867] - Mr. Zhenyu Xie serves as President and CTO, overseeing Kugou business, with over a decade of experience in digital music innovation[869] - Mr. James Gordon Mitchell chairs the compensation committee and serves as Chief Strategy Officer at Tencent, with extensive board experience[870] - Mr. Brent Richard Irvin serves as corporate VP and general counsel at Tencent, overseeing U.S. operations[871] - Mr. Matthew Yun Ming Cheng appointed as Director since May 2022, with financial management experience at Tencent and other firms[872] - Ms. Edith Manling Ngan serves as an independent non-executive Director, with roles in audit and compensation committees[874] - Mr. Adrian Yau Kee Mak chairs the audit committee, with extensive experience in corporate finance and accounting[875] - Ms. Jeanette Kim Yum Chan appointed as independent non-executive Director, with expertise in cross-border M&A and legal compliance[876] - Board composition includes nine Directors, with three independent Directors meeting Hong Kong Listing Rules requirements[862] - The company paid an aggregate cash compensation of approximately RMB65.0 million, RMB62.1 million, RMB69.8 million, and RMB17.3 million (US$2.7 million) to Directors and executive officers for the years ended December 31, 2021, and the three months ended March 31, 2022, respectively[884] - The company plans to adopt a board diversity policy to ensure a balanced mix of skills, experience, and diversity among board members[922] - The current Board consists of seven male and two female members, aged 46 to 63, with a focus on enhancing decision-making and corporate governance effectiveness[923] - Directors owe fiduciary duties to the company, including loyalty, honesty, and acting in the company's best interests, with potential legal consequences for breaches[924] Shareholder Structure and Equity - Tencent holds 53.2% of the company's total ordinary shares, representing 90.4% of the voting power as of the latest practicable date[856] - Spotify holds 8.3% of the company's total ordinary shares, with no voting power as of the latest practicable date[856] - 40.3% of the company's total issued and outstanding ordinary shares are held by the depositary of the ADS program in the United States as of the latest practicable date[859] Share-Based Compensation and Incentive Plans - The company's share-based compensation expenses are measured at the grant date based on the fair value of equity instruments and recognized as an expense over the vesting period[818] - Under the 2014 Share Incentive Plan, the company is authorized to issue a maximum of 101,785,456 Class A ordinary shares, with 1,733,442 options outstanding as of April 19, 2022[888] - The 2017 Option Plan allows for the issuance of up to 118,884,829 Class A ordinary shares, with 40,288,686 options outstanding and 9,586,586 vested as of April 19, 2022[896] - The 2017 Restricted Share Scheme authorizes the issuance of up to 216,329,580 Class A ordinary shares, with 47,394,718 restricted shares outstanding as of April 19, 2022[903] - The 2014 Share Incentive Plan permits awards of options, share appreciation rights, share grants, and restricted share units (RSUs)[888] - The 2017 Option Plan permits awards of options and is administered by the Board or Compensation Committee[897] - The 2017 Restricted Share Scheme aims to align the interests of selected personnel with shareholders through equity ownership[903] - The company's Board authorized the reservation of an additional 20,933,591 Class A ordinary shares for future issuances under the 2017 Option Plan in April 2022[896] - The company's Board authorized the reservation of an additional 104,627,958 Class A ordinary shares for future issuances under the 2017 Restricted Share Scheme in April 2022[903] - The 2017 Restricted Share Scheme allows awards of restricted shares to employees, executives, directors, consultants, and others contributing to the company's growth, subject to legal and regulatory compliance[904] - As of April 19, 2022, employees other than senior management held options to purchase 21,047,308 Class A ordinary shares, with exercise prices ranging from US$0.000076 to US$9.525 per share[913] Acquisitions and Strategic Partnerships - The company acquired 100% equity interest in Shenzhen Lanren for a total consideration of RMB2.7 billion, primarily payable in cash, plus certain post-acquisition equity-settled awards to Shenzhen Lanren's management team[840] - The company joined a consortium led by Tencent to acquire a 10% equity stake in Universal Music Group (UMG) at an enterprise value of EUR30 billion, with an option to purchase an additional 10% equity stake[837] - The company issued 282,830,698 ordinary shares to Spotify AB in exchange for 8,552,440 ordinary shares of Spotify, resulting in an approximately 2.5% equity interest in Spotify[836] - The company signed a five-year strategic partnership with China Literature, granting a global license to produce derivative content in the form of audiobooks of online literary works[838] VIE Structure and Operations - The company operates its relevant business in China through contractual arrangements with variable interest entities (VIEs) due to PRC laws limiting foreign ownership in certain industries[833] - The WOFEs receive 90% of the net operating income of the VIEs as service fees under the exclusive technical service agreement[956] - The total assets of the Group's VIEs were RMB15,127 million, RMB18,094 million, RMB18,117 million, and RMB18,794 million as of December 31, 2019, 2020, 2021, and March 31, 2022, respectively[970] - The total revenues of the Group's VIEs were RMB25,379 million, RMB29,094 million, RMB30,949 million, and RMB6,519 million for the years ended December 31, 2019, 2020, 2021, and the three months ended March 31, 2022, respectively[971] - The net profit/(loss) of the Group's VIEs was RMB1,323 million, RMB1,625 million, RMB(209) million, and RMB(65) million for the years ended December 31, 2019, 2020, 2021, and the three months ended March 31, 2022, respectively[971] - The total liabilities of the Group's VIEs were RMB6,871 million, RMB7,379 million, RMB7,086 million, and RMB7,602 million as of December 31, 2019, 2020, 2021, and March 31, 2022, respectively[970] - The registered capital, capital reserve, and PRC statutory reserves of the VIEs totaled RMB4,206 million, RMB4,185 million, RMB4,069 million, and RMB4,084 million as of December 31, 2019, 2020, 2021, and March 31, 2022, respectively[967] - The net cash inflow from operating activities was RMB454 million, RMB(671) million, and RMB2,151 million for the years ended December 31, 2020, 2021, and the three months ended March 31, 2022, respectively[971] - The net cash outflow from investing activities was RMB1,099 million, RMB3,554 million, and RMB2,408 million for the years ended December 31, 2020, 2021, and the three months ended March 31, 2022, respectively[971] - The net cash inflow from financing activities was RMB715 million, RMB3,462 million, and RMB219 million for the years ended December 31, 2020, 2021, and the three months ended March 31, 2022, respectively[971] - The cash and cash equivalents at the end of the period were RMB1,397 million, RMB634 million, and RMB596 million as of December 31, 2020, 2021, and March 31, 2022, respectively[971] Accounting Standards and Policies - The company's historical financial information is prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB)[973] - The company applies all effective standards, amendments, and interpretations mandatorily effective for the financial year beginning January 1, 2022[977] - New standards and amendments not yet effective for the financial year beginning January 1, 2022, are not expected to have a significant effect on the company's historical financial information[978] - The company will need to recognize deferred tax assets and liabilities for temporary differences arising on leases upon the effective date of amendments to IAS 12 on January 1, 2023[980] - Subsidiaries are fully consolidated from the date control is transferred to the company, and intercompany transactions and balances are eliminated[981] - Associates are entities where the company has significant influence, generally with a shareholding of 20% to 50% of voting rights, and are accounted for using the equity method[982] - Joint ventures are classified based on contractual rights and obligations, and the company accounts for them using the equity method after initial recognition at cost[983] Expenses and Liabilities - The company expects to incur listing expenses of approximately RMB74.7 million, including RMB22.2 million for sponsor-related expenses and RMB52.5 million for non-sponsor-related expenses[827] - The company's unaudited pro forma adjusted net tangible assets as of March 31, 2022, were RMB26.539 billion, with a net tangible asset per share of RMB8.