2022-08-14 16:00Financial Performance - Net profit for Q2 2022 was RMB 892 million (US$ 133 million), with a Non-IFRS net profit of RMB 1.07 billion (US$ 159 million), reflecting an 8.3% year-over-year decrease but a 13.4% increase sequentially [1]. - Total revenues for Q2 2022 were RMB 6.91 billion (US$ 1.03 billion), a 13.8% decrease year-over-year, but a 3.9% increase sequentially [1]. - Gross profit for Q2 2022 was RMB 2.06 billion (US$ 308 million), a 15.3% decrease year-over-year, with a gross margin of 29.9% [20]. - Operating profit for Q2 2022 was RMB 1.05 billion (US$ 156 million), compared to RMB 1.04 billion in the same period of 2021 [25]. - Basic and diluted earnings per ADS for Q2 2022 were RMB0.53 (US$0.08) and non-IFRS earnings per ADS were RMB0.64 (US$0.10) respectively [28]. - The company reported a profit for the period of RMB 892 million (US$133 million) for Q2 2022, compared to RMB 871 million in Q2 2021, an increase of 2.4% [43]. - Non-IFRS net profit for Q2 2022 was RMB 1.045 billion (US$156 million), compared to RMB 1.035 billion in Q2 2021, showing a year-over-year increase of 1% [38]. - The effective tax rate for Q2 2022 was 12.2%, compared to 11.5% in Q2 2021 [81]. Revenue Breakdown - Revenues from music subscriptions increased by 17.6% year-over-year to RMB 2.11 billion (US$ 315 million), with paying users reaching 82.7 million, a 24.9% increase year-over-year [2]. - Revenues from social entertainment services decreased by 20.4% year-over-year to RMB 4.03 billion (US$ 601 million), with paying users declining by 28.2% [18]. - Revenues from online music services decreased by 2.4% to RMB 2.88 billion (US$ 430 million), while music subscription revenues grew by 17.6% to RMB 2.11 billion (US$ 315 million) due to a 24.9% increase in paying users [71]. - Total revenues for Q2 2022 decreased by RMB1.10 billion, or 13.8%, to RMB6.91 billion (US$1.03 billion) from RMB8.01 billion in Q2 2021 [70]. User Metrics - Online music mobile MAUs decreased by 4.8% year-over-year to 593 million, while social entertainment MAUs decreased by 20.6% to 166 million [6]. - The number of online music paying users increased by 24.9% year-over-year, demonstrating strong growth in subscription revenue [61]. Cash and Investments - As of June 30, 2022, the company's cash, cash equivalents, term deposits, and short-term investments totaled RMB25.80 billion (US$3.85 billion), a slight decrease from RMB25.93 billion as of March 31, 2022 [29]. - Cash and cash equivalents at the end of Q2 2022 were RMB10.04 billion (US$1.5 billion), up from RMB8.35 billion at the beginning of the period [54]. - Net cash generated from operations during Q2 2022 was RMB1.24 billion (US$185 million), while cash used in share repurchases was RMB969 million (US$145 million) [29]. - The company reported a net cash increase of RMB 1,502 million for the three months ended June 30, 2022, compared to a net cash decrease of RMB 3,378 million in the same period of 2021 [109]. Share Repurchase Program - The company completed over $700 million of its $1 billion share repurchase program by the end of Q2 2022, demonstrating confidence in its prospects [3]. - Approximately 86.8 million ADSs were repurchased under the US$1 billion share repurchase program, totaling approximately US$735 million as of June 30, 2022 [30]. - The company completed over $700 million of its $1 billion share repurchase program by the end of Q2 2022, with plans to complete the remainder throughout the year [58]. Strategic Initiatives - The company launched Jay Chou's digital album "Greatest Works of Art," selling over 6 million copies by the end of July 2022, marking a significant success on its platform [8]. - The company aims to leverage technology to enhance user engagement and expand its music-centric services, including online karaoke and live streaming [98]. - Tencent Music is focusing on market expansion and new product development to drive future growth, particularly in the online audio and concert services sectors [98]. - The company continues to explore strategic partnerships and acquisitions to enhance its competitive position in the music entertainment industry [98]. Asset and Liability Overview - Total assets decreased from RMB 67,254 million as of December 31, 2021, to RMB 66,308 million as of June 30, 2022, representing a decline of approximately 1.4% [106]. - Total equity attributable to equity holders decreased from RMB 50,317 million to RMB 47,238 million, a decline of approximately 4.1% [106]. - Non-current liabilities increased from RMB 5,062 million to RMB 5,331 million, an increase of approximately 5.3% [106]. - Accounts receivable decreased from RMB 3,610 million to RMB 2,898 million, a decline of approximately 19.7% [106]. - Retained earnings increased from RMB 14,194 million to RMB 15,659 million, an increase of approximately 10.3% [106].