Financial Data and Key Metrics Changes - In Q4 2024, total revenues reached RMB7.5 billion, an 8% year-over-year increase, with online music revenues growing by 16% to RMB5.8 billion [32][34] - Average net profit increased by 47% year-over-year to RMB2.1 billion, marking the highest quarterly profit in the company's history [32][40] - Non-IFRS net profit rose by 43% year-over-year to RMB2.4 billion [40] - Gross margin for Q4 reached 43.6%, up by 5.3 percentage points year-over-year [36][58] Business Line Data and Key Metrics Changes - Music subscription revenues in Q4 2024 reached RMB4 billion, representing an 18% increase year-over-year [33] - The number of online music paying users was 121 million, a 13% increase year-over-year [34] - Advertising revenues achieved strong year-over-year growth, primarily due to the growth in ad-supported model revenues [34] Market Data and Key Metrics Changes - The music and audio library exceeded 260 million licensed and co-created tracks by the end of 2024, up from 200 million at the end of the previous year [8] - The company has renewed strategic contracts with international labels, expanding its coverage of high-quality music content [9] Company Strategy and Development Direction - The company is focused on a dual-engine strategy combining rich content and platform innovation to capture emerging opportunities [7] - Plans to continue diversifying offerings across the music value chain and investing in original content production and innovative technologies [47][48] - The company aims to enhance user experiences through AI technologies and innovative features [30][90] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth prospects, supported by a strong performance in online music services and profit margin expansion [5][7] - The company anticipates healthy growth in online music driven by an increase in paying users and ARPPU [57] - Management noted that the willingness of users to spend on live music events has surged, indicating a positive cycle for music content consumption [80] Other Important Information - The company announced an annual dividend of $273 million and a new share repurchase program of up to $1 billion [7][42] - The commitment to ESG excellence is emphasized, with significant strides made in supporting female musicians [15][16] Q&A Session Summary Question: Guidance on 2025 growth outlook, especially for music subscription revenue - Management highlighted strong performance in 2024 and expressed optimism for continued growth in 2025, focusing on user experience and service innovation [50][56] Question: Balance between subscriber and ARPU growth - Management confirmed confidence in revenue and profit growth for 2025, with expectations for continued growth in both subscriber numbers and ARPPU [67][70] Question: Changes in consumer sentiment towards discretionary spending - Management observed a shift towards live music experiences, with increased willingness to spend on concerts and merchandise [78][80] Question: Strategy around AI for 2025 - Management plans to leverage AI technologies to enhance user experience and engagement, with ongoing investments in AI capabilities [84][90] Question: Sequential revenue growth for social entertainment - Management noted a key growth driver from new interactive features and a stabilized user base, with expectations for continued growth momentum [93][100] Question: Capital allocation and shareholder returns - Management emphasized a balanced approach to capital allocation, focusing on sustainable growth opportunities while returning value to shareholders through dividends and share repurchase programs [103][106]

Core Viewpoint - Tencent Music's Q4 2024 earnings report shows mixed results, with subscription growth under pressure but improved profitability and cost management, indicating potential for future growth despite competitive challenges [1][7]. Subscription Performance - The number of subscription users increased by 2 million in Q4, remaining flat compared to Q3, which aligns with previous guidance [1]. - Subscription revenue grew by 18% year-over-year, driven by an increase in average revenue per paying user (ARPPU) [3][14]. - The company aims to increase its subscription penetration rate to 25%-30%, currently at 21.8% [17]. Profitability and Cost Management - Operating income for the core business reached 2.079 billion CNY, exceeding market expectations, with an operating profit margin of 27.9% [5][21]. - The gross profit margin improved to 43.6%, reflecting effective cost management and operational efficiency [20][21]. - Non-IFRS net income for Q4 was 2.399 billion CNY, a 43% year-over-year increase, primarily due to favorable currency fluctuations [22]. Shareholder Returns - A new share buyback plan of 1 billion USD over two years and a dividend of 273 million USD for 2024 were approved, resulting in a shareholder return yield of 3.5% [2][3]. Competitive Landscape - Monthly active users (MAU) decreased by 20 million to 556 million, raising concerns about competition, particularly from competitors like Kuaishou Music [2][12]. - Kuaishou Music's MAU has surged to nearly 100 million, indicating a significant competitive threat [8][13]. Cash Position - As of the end of Q4, Tencent Music had a net cash position of 25 billion CNY (approximately 3.5 billion USD), which could be utilized for shareholder returns and potential investments [4][23].

Financial Data and Key Metrics Changes - In Q4 2024, total revenues reached RMB 7.5 billion, an 8% year-over-year increase [21] - Online music revenues increased by 16% year-over-year to RMB 5.8 billion, driven by strong growth in music subscription revenues [22] - Net profit increased by 47% year-over-year to RMB 2.1 billion, marking the highest quarterly profit in the company's history [21][26] - Non-IFRS net profit rose by 43% year-over-year to RMB 2.4 billion [27] Business Line Data and Key Metrics Changes - Music subscription revenues in Q4 2024 reached RMB 4 billion, representing an 18% increase year-over-year [22] - The number of online music paying users was 121 million, a 13% increase year-over-year [23] - Advertising revenues achieved strong year-over-year growth, primarily due to the growth in ad-supported model revenues [23] Market Data and Key Metrics Changes - Social entertainment services and other revenues were RMB 1.6 billion, down by 13% year-over-year [24] - The gross margin for Q4 reached 43.6%, an increase of 5.3 percentage points year-over-year [24] Company Strategy and Development Direction - The company is focused on strengthening its business presence across the music value chain and enhancing user experiences through continuous product and service innovation [40] - The dual engine strategy combines rich content and platform innovation to capture emerging opportunities [4] - The company plans to invest in original content production, high-quality content, and innovative technologies globally [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth prospects, expecting healthy growth in online music driven by an increase in paying users and ARPPU [40] - The company aims to explore new business opportunities in content ecosystems, IoT, long-form audio, and international markets [41] - Management noted that the music live shows business in China is expected to continue strong performance, with stable market size and ticket prices [57] Other Important Information - The company announced an annual dividend of $273 million and a new share repurchase program of up to $1 billion [4] - The total revenues for the full year 2024 were RMB 28.4 billion, up by 2% year-over-year [29] Q&A Session Summary Question: Guidance on 2025 growth outlook - Management highlighted strong performance in 2024 and expressed optimism for 2025, focusing on user experience and continuous innovation [40][41] Question: Balance between subscriber and ARPU growth - Management indicated confidence in maintaining growth in both subscriber numbers and ARPU, while being cautious of price sensitivity [51][52] Question: Changes in consumer sentiment towards discretionary spending - Management observed a growing demand for live concerts and music festivals, indicating a positive cycle for music content consumption [56] Question: Strategy around AI in 2025 - Management plans to leverage AI technologies to enhance user experience and improve sound quality, while managing costs effectively [60][62] Question: Sequential revenue growth for social entertainment - Management noted that new interactive features and compliance improvements contributed to recent growth in social entertainment revenue [66][70]

Financial Performance - Total revenue for Q4 2024 was RMB 7.46 billion (USD 1.02 billion), representing an 8.2% year-over-year increase, driven by strong growth in online music services[9]. - Net profit for Q4 2024 was RMB 2.08 billion (USD 284 million), a 47.3% year-over-year increase, while net profit attributable to equity holders rose by 49.8% to RMB 1.96 billion (USD 268 million)[9]. - For the full year 2024, total revenue reached RMB 28.4 billion (USD 3.89 billion), a 2.3% year-over-year increase[9]. - Full year operating profit increased by 43.8% year-over-year to RMB 8.71 billion (USD 1.19 billion)[26]. - Net profit for 2024 is projected at RMB 7.11 billion (USD 974 million), with profit attributable to equity holders of RMB 6.64 billion (USD 910 million)[29]. - Non-IFRS net profit for 2024 is expected to be RMB 8.14 billion (USD 1.12 billion), with basic and diluted earnings per ADS of RMB 4.97 (USD 0.68) and RMB 4.90 (USD 0.67) respectively[29]. Revenue Breakdown - Online music subscription revenue increased by 18.0% year-over-year to RMB 4.03 billion (USD 552 million), with paid user count rising by 13.4% to 121 million[9]. - Online music service revenue grew 16.1% year-over-year to RMB 5.83 billion (USD 799 million), driven by a strong increase in subscription revenue and advertising service revenue[19]. - Online music service revenue increased by 25.5% year-over-year to RMB 21.74 billion (USD 2.98 billion), driven by strong growth in subscription and advertising revenues[7]. - Online music subscription revenue reached RMB 15.23 billion (USD 2.09 billion), a 25.9% increase from RMB 12.10 billion in 2023, supported by a growing user base and higher average revenue per paid user[7]. User Metrics - Monthly active users for online music services decreased by 3.5% year-over-year to 556 million, while mobile monthly active users for social entertainment services fell by 21.2% to 82 million[11]. - The number of online music paying users increased by 13.4% year-over-year to 121 million, benefiting from high-quality content and attractive membership benefits[19]. - The super member business showed strong performance with increased user engagement and average revenue per paid user[10]. - Average revenue per paid user for online music services increased by 3.7% year-over-year to RMB 11.1[11]. Cash and Investments - Cash and cash equivalents, along with short-term investments, totaled RMB 37.58 billion (USD 5.15 billion) as of December 31, 2024[9]. - Cash and cash equivalents totaled RMB 37.58 billion (USD 5.15 billion) as of December 31, 2024, up from RMB 36.04 billion as of September 30, 2024[22]. - The company reported a net cash outflow from investment activities of RMB 6,818 million in 2024, compared to RMB 1,863 million in 2023, indicating a significant increase in investment spending[50]. Dividends and Share Repurchase - The company announced a cash dividend of approximately USD 273 million for the fiscal year 2024 and a new share repurchase plan of up to USD 1 billion[12]. - A cash dividend of USD 0.09 per ordinary share or USD 0.18 per ADS is declared for the 2024 fiscal year, totaling approximately USD 273 million[31]. - The company announced a new share repurchase plan allowing for the buyback of up to USD 1 billion of Class A ordinary shares over a 24-month period starting March 2025[30]. Cost Management - Operating expenses decreased by 7.3% year-over-year to RMB 1.17 billion (USD 161 million), with operating expenses as a percentage of total revenue declining from 18.4% to 15.7%[20]. - Sales and marketing expenses decreased by 3.6% year-over-year to RMB 865 million (USD 119 million), while general and administrative expenses fell by 7.5% to RMB 3.81 billion (USD 522 million) due to reduced personnel costs[28]. Strategic Initiatives - The company plans to leverage AI to enhance personalized services and provide users with fresh music experiences in 2025[10]. - The company has made significant progress in supporting female musicians, with 192,000 women musicians being nurtured within a more diverse and inclusive music community[32]. Asset and Liability Overview - Total assets increased from RMB 75,536 million in 2023 to RMB 90,444 million in 2024, representing a growth of 19.7%[48]. - Total equity increased from RMB 57,202 million in 2023 to RMB 69,726 million in 2024, a growth of 22%[49]. - The company’s total liabilities rose from RMB 18,334 million in 2023 to RMB 20,718 million in 2024, an increase of 13%[49].

Core Viewpoint - Tencent Music Entertainment Group (TME) reported strong financial results for Q4 and full year 2024, highlighting significant growth in online music services and a commitment to shareholder value through dividends and share repurchase programs [1][3]. Financial Highlights - Total revenues for Q4 2024 increased by RMB 565 million, or 8.2%, to RMB 7.46 billion (US$1.02 billion) compared to RMB 6.89 billion in Q4 2023 [5][6]. - Revenues from online music services rose by 16.1% year-over-year to RMB 5.83 billion (US$799 million) from RMB 5.02 billion in the same period of 2023 [5][6]. - For the full year 2024, total revenues reached RMB 28.40 billion (US$3.89 billion), a 2.3% increase from RMB 27.75 billion in 2023 [15][19]. - Net profit for Q4 2024 was RMB 2.08 billion (US$284 million), representing a 47.3% year-over-year growth [6][12]. - The company declared an annual cash dividend of approximately US$273 million for 2024 and authorized a new share repurchase program of up to US$1 billion [3][21]. Operational Highlights - Monthly Active Users (MAUs) for online music decreased by 3.5% year-over-year to 556 million, while paying users for online music increased by 13.4% to 121 million [4][8]. - Monthly Average Revenue Per Paying User (ARPPU) for online music rose to RMB 11.1 from RMB 10.7 in Q4 2023 [4][8]. - Revenues from music subscriptions grew by 18.0% year-over-year to RMB 4.03 billion (US$552 million) [6][8]. Cost and Profitability - Gross margin improved to 43.6% in Q4 2024 from 38.3% in the same period of 2023, driven by growth in music subscription revenues and advertising services [9]. - Total operating expenses decreased by 7.3% year-over-year to RMB 1.17 billion (US$161 million) [9][17]. - Total operating profit for Q4 2024 was RMB 2.41 billion (US$330 million), a 40.5% increase year-over-year [10][18]. Strategic Initiatives - The company emphasized innovation in user experience and content offerings, launching new features to enhance user engagement [3][5]. - TME's SVIP initiative showed strong performance, contributing to user engagement and ARPPU growth [3][7]. - The company is focusing on AI integration to personalize services and enhance user experiences in 2025 [3][7]. Content and Partnerships - TME has over 260 million licensed and co-created music and audio tracks, with renewed contracts with major entertainment companies [7]. - Collaborations with renowned artists and production of original soundtracks for popular media have expanded TME's content ecosystem [7]. ESG Commitment - The company has made strides in supporting female musicians and launched initiatives to raise biodiversity awareness through music [25].

Core Points - Tencent Music Entertainment Group (TME) announced the retirement of Mr. Matthew Yun Ming Cheng from its Board of Directors effective February 28, 2025, and appointed Mr. Wai Yip Tsang as a new director on the same date [1][2] - Mr. Cheng has been a member of TME's Board since 2022, contributing to the company's growth and innovation in the music industry [2] - Mr. Tsang brings a strong financial background and extensive experience in corporate finance, having held senior financial positions in various companies and currently serving as the Financial Controller of Tencent Holdings Limited [2] Company Overview - Tencent Music Entertainment Group is the leading online music and audio entertainment platform in China, operating popular music apps such as QQ Music, Kugou Music, Kuwo Music, and WeSing [3] - The company's mission is to create endless possibilities with music and technology, offering services that include online music, online audio, online karaoke, music-centric live streaming, and online concert services [3]

Core Viewpoint - Tencent Music Entertainment Group (TME) is set to report its unaudited financial results for Q4 and the full year of 2024 on March 18, 2025, before the U.S. market opens [1]. Group 1: Financial Reporting - TME will announce its financial results for Q4 and the full year of 2024 on March 18, 2025 [1]. - The company will host a Tencent Meeting Webinar on the same day at 7:00 A.M. Eastern Time or 7:00 P.M. Beijing/Hong Kong Time to discuss its business and financial performance [2]. Group 2: Participation Details - Participants interested in joining the Tencent Meeting Webinar must complete online registration in advance [3]. - Upon registration, participants will receive an email with access information, including meeting ID, link, dial-in numbers, and a unique attendee ID [3]. Group 3: Company Overview - Tencent Music Entertainment Group is the leading online music and audio entertainment platform in China, operating popular music apps such as QQ Music, Kugou Music, Kuwo Music, and WeSing [4]. - The company's mission is to create endless possibilities with music and technology, offering services that include online music, audio, karaoke, live streaming, and online concerts [4].

Core Viewpoint - Tencent Music Entertainment Group (TME) is currently positioned as a more attractive investment compared to RELX PLC based on various valuation metrics and rankings [1][3][7]. Valuation Metrics - TME has a forward P/E ratio of 17.45, significantly lower than RELX's forward P/E of 30.93, indicating that TME may be undervalued [5]. - The PEG ratio for TME is 0.83, while RELX has a PEG ratio of 3.53, suggesting TME offers better value relative to its expected earnings growth [5]. - TME's P/B ratio stands at 2.34, compared to RELX's P/B of 20.74, further highlighting TME's relative undervaluation [6]. Zacks Rank and Style Scores - TME holds a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while RELX has a Zacks Rank of 4 (Sell), suggesting a less favorable earnings forecast [3]. - TME's Value grade is B, contrasting with RELX's Value grade of F, reinforcing the notion that TME is a more appealing option for value investors [7].

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME.US) with a target price of $13.9, indicating a potential upside of 20.5% from the current price of $11.51 [2][5][15] Core Insights - The growth in super membership is expected to drive an increase in ARPU (Average Revenue Per User), with non-subscription revenue exceeding expectations. In Q3 2024, online music revenue reached 5.48 billion yuan, a year-on-year increase of 20.4% and a quarter-on-quarter increase of 1.0%. Subscription revenue also grew by 20% year-on-year, amounting to 3.8 billion yuan [3][8] - The company is exploring new avenues in the short drama sector, leveraging its strengths in the music field. Tencent Music is collaborating on a micro-drama titled "Debut, Sound Wave Youth," utilizing its extensive music copyright library and resources [4][14] Summary by Sections Online Music Business - In Q3 2024, Tencent Music's online music business generated revenue of 5.48 billion yuan, reflecting a 20.4% year-on-year growth and a 1.0% quarter-on-quarter growth. Subscription revenue was 3.8 billion yuan, also up 20% year-on-year and 2.7% quarter-on-quarter. The number of paid users increased to 119 million, a 15.5% year-on-year rise, with a payment rate of 20.7% [3][8][9] Social Entertainment Business - The social entertainment segment has faced challenges, with revenue declining by 24% year-on-year to 1.54 billion yuan in Q3 2024. The monthly ARPPU (Average Revenue Per Paying User) decreased by 25% year-on-year [10] Other Online Music Business - Other online music revenue, including advertising and digital album licensing, grew by 20% year-on-year to 1.64 billion yuan, although it saw a slight decline of 2.6% quarter-on-quarter [11][13] Future Growth Drivers - Future growth in online music subscription revenue is anticipated to be driven by the super membership program and stable growth in paid membership numbers. As of September, over 10 million super members were reported, contributing significantly to ARPU [9][10] Market Position - Tencent Music's market position remains strong, with a stable user base and significant monetization potential. The report highlights the company's efforts in cost reduction and efficiency improvements, alongside innovative business developments such as super memberships and short dramas [5][15]

Investment Rating - The report maintains a "Buy" rating for Tencent Music (TME) with a target price of 13.75 USD per ADS, equivalent to 53.45 HKD per share [5][54]. Core Views - Tencent Music's Q3 2024 total revenue reached 70.15 billion RMB, showing a year-over-year increase of 7% and a quarter-over-quarter decrease of 2%, slightly above consensus expectations of 70 billion RMB. The Non-GAAP net profit was 18.14 billion RMB, up 29% YoY but down 3% QoQ, with a Non-GAAP net profit margin of 25.9% [2][11]. - The online music business continues to grow steadily, with Q3 2024 revenue of 54.8 billion RMB, a 20% increase YoY and a 1% increase QoQ. Subscription revenue contributed 38.4 billion RMB, also up 20% YoY and 3% QoQ [3][21]. - The company aims to increase its SVIP membership to over 10 million and enhance the Average Revenue Per User (ARPU) value, which is projected to rise to 11 RMB in Q4 2024 [3][45]. Summary by Sections Financial Performance - Q3 2024 total revenue: 70.15 billion RMB, YoY +7%, QoQ -2% [2][11] - Non-GAAP net profit: 18.14 billion RMB, YoY +29%, QoQ -3% [2][11] - Non-GAAP net profit margin: 25.9%, YoY +4.4 percentage points, QoQ -0.3 percentage points [2][11] - Q3 2024 gross margin: 42.6%, slightly above consensus of 42.4%, YoY +7 percentage points, QoQ +0.6 percentage points [3][37]. Business Segments - Online music revenue in Q3 2024: 54.8 billion RMB, YoY +20%, QoQ +1% [3][21] - Subscription revenue: 38.4 billion RMB, YoY +20%, QoQ +3% [3][21] - Non-subscription revenue: 16.4 billion RMB, YoY +20%, QoQ -2% [3][21] - Social entertainment revenue: 15.35 billion RMB, YoY -24%, QoQ -12%, but showing signs of stabilization [34]. Future Projections - Q4 2024 revenue expected to be 73 billion RMB, YoY +6%, with Non-GAAP net profit projected at 20 billion RMB, YoY +29% [3][45]. - Long-term revenue projections for 2024-2025: 282 billion RMB and 311 billion RMB, with growth rates of 1.7% and 10.3% respectively [3][45]. - Expected Non-GAAP net profit for 2024-2025: 74.23 billion RMB and 88.84 billion RMB, with growth rates of 25.3% and 19.7% respectively [3][45].