Revenue Performance - Total revenue for Q1 2024 was RMB 6.77 billion (USD 937 million), a decrease of 3.4% YoY, primarily due to declines in social entertainment and other services, partially offset by strong growth in online music service revenue[2] - Online music service revenue increased to RMB 5,007 million in Q1 2024, up 43% from RMB 3,501 million in Q1 2023[16] - Social entertainment service and other service revenue decreased to RMB 1,761 million in Q1 2024, down 50% from RMB 3,503 million in Q1 2023[16] - Social entertainment and other service revenue decreased by 49.7% YoY to RMB 1.76 billion (USD 244 million), primarily due to adjustments in live interaction features and stricter compliance procedures since Q2 2023, as well as competition from other platforms[7] User Metrics - Online music subscription revenue reached RMB 3.62 billion (USD 501 million), a 39.2% YoY increase, driven by a 20.2% YoY growth in paying users to 113.5 million, with a net addition of 6.8 million users, the highest quarterly net increase to date[2] - Monthly active users (MAU) for online music services were 578 million, a 2.4% YoY decrease, while mobile MAU for social entertainment services dropped 28.7% YoY to 97 million[4] - Average revenue per paying user (ARPPU) for online music services increased 15.2% YoY to RMB 10.6, while ARPPU for social entertainment services decreased 55.4% YoY to RMB 73.4[4] Profitability - Net profit for Q1 2024 was RMB 1.53 billion (USD 212 million), a 27.5% YoY increase, with non-IFRS net profit at RMB 1.81 billion (USD 251 million), up 23.9% YoY[2] - Net profit for Q1 2024 was RMB 1.53 billion (USD 212 million), with non-IFRS net profit reaching RMB 1.81 billion (USD 251 million)[7] - Net profit attributable to equity holders of the company increased to RMB 1,422 million in Q1 2024, a 24% rise from RMB 1,148 million in Q1 2023[17] - Non-IFRS net profit reached RMB 1,812 million in Q1 2024, up 24% from RMB 1,463 million in Q1 2023[18] - Operating profit increased by 41.9% YoY to RMB 1.96 billion (USD 271 million) in Q1 2024, benefiting from improved operational efficiency and effective cost control[7] - Operating profit grew to RMB 1,959 million in Q1 2024, up 42% from RMB 1,381 million in Q1 2023[16] - Gross margin improved from 33.1% to 40.9% YoY, driven by strong growth in music subscription and advertising service revenue, as well as increased original content[7] - Gross profit rose to RMB 2,771 million in Q1 2024, a 20% increase from RMB 2,315 million in Q1 2023[16] Cash and Financial Position - The company's cash, cash equivalents, and term deposits totaled RMB 34.18 billion (USD 4.73 billion) as of March 31, 2024[2] - Cash, cash equivalents, and term deposits totaled RMB 34.18 billion (USD 4.73 billion) as of March 31, 2024, up from RMB 32.22 billion as of December 31, 2023[8] - Total assets increased to RMB 79,176 million as of March 31, 2024, compared to RMB 75,536 million as of December 31, 2023[20] - Cash and cash equivalents decreased to RMB 10,218 million as of March 31, 2024, down 25% from RMB 13,567 million as of December 31, 2023[20] - Time deposits increased to RMB 16,370 million as of March 31, 2024, up 65% from RMB 9,937 million as of December 31, 2023[20] - Total equity increased from RMB 55,907 million in 2023 to RMB 59,316 million in 2024, representing a growth of 6.1%[21] - Retained earnings rose from RMB 16,969 million in 2023 to RMB 18,391 million in 2024, a growth of 8.4%[21] - Total liabilities slightly increased from RMB 18,334 million in 2023 to RMB 18,421 million in 2024, a growth of 0.5%[21] Shareholder Returns - TME announced a 2023 annual cash dividend of approximately USD 210 million to shareholders of record[2] - The board approved an annual cash dividend policy, declaring a dividend of USD 0.1370 per ADS for 2023, with a total cash dividend payment of approximately USD 210 million[10] - The company repurchased approximately 32.2 million ADSs for about USD 235.5 million under the USD 500 million share repurchase program announced on March 21, 2023[9] Earnings Per Share - Basic and diluted earnings per ADS were RMB 0.92 (USD 0.13) and RMB 0.91 (USD 0.13), respectively, with non-IFRS basic and diluted earnings per ADS at RMB 1.11 (USD 0.15) and RMB 1.09 (USD 0.15), respectively[8] - Basic earnings per ADS grew to RMB 0.92 in Q1 2024, a 24% increase from RMB 0.74 in Q1 2023[17] Tax and Compliance - The effective tax rate for Q1 2024 was 19.9%, up from 12.2% in the same period last year, primarily due to a provision for income tax of RMB 107 million (USD 15 million) and changes in preferential tax rates for certain subsidiaries[7] Operational Costs - Operating costs decreased by 14.8% YoY to RMB 4.0 billion (USD 554 million), mainly due to a decline in revenue-sharing costs corresponding to the decrease in social entertainment service revenue, partially offset by increases in content copyright and payment channel costs[7] Cash Flow - Net cash inflow from operating activities increased from RMB 1,852 million in 2023 to RMB 2,686 million in 2024, a growth of 45%[22] - Net cash outflow from investing activities significantly increased from RMB 811 million in 2023 to RMB 5,498 million in 2024, a growth of 577.9%[22] - Net cash outflow from financing activities increased from RMB 80 million in 2023 to RMB 522 million in 2024, a growth of 552.5%[22] - Net decrease in cash and cash equivalents was RMB 3,334 million in 2024, compared to a net increase of RMB 2,583 million in 2023[22] - Ending cash and cash equivalents decreased from RMB 12,129 million in 2023 to RMB 10,218 million in 2024, a decrease of 15.8%[22] Strategic Initiatives - The company expanded its music library through partnerships with labels like TF Entertainment and HIM International, leveraging AI to enhance user interaction and fan engagement[5] - TME launched an audio large model and tested a new AI assistant to improve music discovery and user interaction, alongside introducing incentive points and interactive features to boost user engagement[6] - The company collaborated with Xiaomi SU7 and hosted the QQ Music Peak Festival to strengthen its core user base and promote in-car music consumption[6]
腾讯音乐-SW(01698) - 2024 Q1 - 季度业绩