腾讯音乐(01698) - 2025 - 中期财报

Cover and Company Information Disclaimer Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited disclaim responsibility for the accuracy or completeness of this announcement and any resulting losses - HKEX and SEHK are not responsible for the content of this announcement and bear no liability for any losses[1] Company Basic Information Tencent Music Entertainment Group (TME) announced its unaudited financial results for the second quarter ended June 30, 2025, and provided a list of board members - TME announced its unaudited Q2 2025 financial report, available on HKEX and the company website[2] - Board members include Executive Directors Cussion Pang, Zhu Liang, Min Hu, James Gordon Mitchell, Brent Richard Irvin, and Wei-Yeh Tseng, along with Independent Directors Wenling Yan, Yu Kei Mak, and Jianyin Chen[2] Q2 2025 Financial Highlights Key Financial Data TME achieved total revenue of RMB 8.44 billion in Q2 2025, a 17.9% year-over-year increase, primarily driven by strong growth in online music services revenue, with net profit and non-IFRS net profit both seeing significant increases | Indicator | 2025 Q2 (RMB) | 2024 Q2 (RMB) | YoY Growth | | :--- | :--- | :--- | :--- | | Total Revenue | 8.44 billion yuan | 7.16 billion yuan | 17.9% | | Online Music Services Revenue | 6.85 billion yuan | 5.42 billion yuan | 26.4% | | Online Music Subscription Revenue | 4.38 billion yuan | 3.74 billion yuan | 17.1% | | ARPPU | 11.7 yuan | 10.7 yuan | 9.3% | | Net Profit Attributable to Equity Holders | 2.41 billion yuan | 1.682 billion yuan | 43.2% | | Non-IFRS Net Profit Attributable to Equity Holders | 2.57 billion yuan | 1.873 billion yuan | 37.4% | | Diluted Earnings per ADS | 1.55 yuan | 1.07 yuan | 44.9% | | Non-IFRS Diluted Earnings per ADS | 1.66 yuan | 1.19 yuan | 39.5% | | Cash, Cash Equivalents, Term Deposits, and Short-term Investments Total Balance (End of Period) | 34.92 billion yuan | N/A | N/A | - Total revenue growth was primarily driven by strong growth in online music services revenue, partially offset by a decrease in social entertainment services and other services revenue[6] Management Comments Cussion Pang, Executive Chairman Cussion Pang emphasized the company's high-quality growth, with music subscription business as the core growth engine, while music-related services also showed strong momentum, aiming to build a one-stop music service platform - Achieved high-quality growth, with revenue and profit both showing steady year-over-year increases[7] - Music subscription business continued to be the core growth engine, with strong momentum in music-related services such as advertising, concerts, and artist merchandise[7] - Actively building a vibrant one-stop music service platform to empower content creators and reshape connections with music fans in more valuable ways[7] Zhu Liang, CEO Zhu Liang noted that the online music business achieved steady growth through product innovation and immersive experiences, with continuous increases in paying user scale, ARPPU, and user engagement, and super member scale exceeding 15 million - Online music business achieved steady growth through continuous product innovation and immersive experience creation[7] - Paying user scale and average revenue per paying user (ARPPU) continued to increase, with user engagement constantly improving[7] - Super member scale recently exceeded 15 million, demonstrating users' high trust and strong stickiness to the company[7] Q2 2025 Business Overview Key Operating Metrics In Q2 2025, online music services' monthly active users slightly decreased, but paying users and average revenue per paying user both increased, indicating enhanced user payment willingness and value | Indicator | 2025 Q2 | 2024 Q2 | YoY Change Rate | | :--- | :--- | :--- | :--- | | Online Music Services MAU (Millions) | 553 | 571 | (3.2%) | | Online Music Services Paying Users (Millions) | 124.4 | 117.0 | 6.3% | | Online Music Services ARPPU (RMB) | 11.7 | 10.7 | 9.3% | Content Ecosystem Development TME continuously enriches its content ecosystem and enhances content appeal by expanding collaborations with domestic and international record labels and artists, and innovating content co-creation and promotion models, laying a foundation for long-term growth - Expanded collaborations with domestic and international record labels and artists, signing The Black Label and H MUSIC for the first time, and renewing contract with Wang Feng[8] - Innovated content co-creation and promotion models, such as collaborating with SM Entertainment to create a Chinese special for NCT member Chenle, producing the ending song for the hit movie "Chang'an's Lychee," and forming a strategic partnership with Zhejiang TV[8] - TME's brand and platform value continue to deepen, providing customized support for domestic and international artists, earning widespread recognition[9] Product Innovation and User Stickiness The company effectively enhanced product appeal and user stickiness, promoted super member conversion, and expanded new monetization paths by hosting large-scale concerts, developing proprietary performance IPs, introducing interactive communities, improving audio quality, and enriching member benefits - Successfully managed large-scale international tours (G-DRAGON Macau concert) and domestic artist concerts (Fiona Sit, Tia Ray, GAI Zhou Yan), attracting over 36,000 attendees[12] - Created over 300 offline performance opportunities for nearly a hundred Tencent musicians through two proprietary performance IPs, "Dang Ran Hao Ting" and "Bu Fan Xian Chang"[12] - Partnered with DearU to introduce the interactive community "bubble" on QQ Music, allowing users to directly interact with hundreds of K-pop artists, with plans to invite popular Chinese artists to join[12] - Kugou Music pioneered Viper HiFi sound quality and "One-Click Power Sound 2.0" features, and launched the industry's first "AI Chorus" function, enhancing member music experience[12] - Artist-related benefits (digital albums, priority ticket purchase, Star Card series) significantly drove super member activation and conversion[12] - Closely collaborated with leading car manufacturers and numerous car models to create a superior in-car music experience, such as with Geely Group and Xiaomi's first SUV[15] - Newly launched innovative advertising memberships, optimized advertising models, and incentive schemes collectively promoted increased user engagement and advertising effectiveness, driving strong year-over-year growth in advertising revenue[15] Q2 2025 Financial Performance Review Revenue Analysis Total revenue increased by 17.9% year-over-year to RMB 8.44 billion, primarily driven by a strong 26.4% growth in online music services revenue, with subscription revenue up 17.1% due to improved ARPPU, and advertising, artist merchandise, and offline performance revenues also increasing, while social entertainment services revenue decreased by 8.5% | Indicator | 2025 Q2 (RMB) | 2024 Q2 (RMB) | YoY Change Rate | | :--- | :--- | :--- | :--- | | Total Revenue | 8.44 billion yuan | 7.16 billion yuan | 17.9% | | Online Music Services Revenue | 6.85 billion yuan | 5.42 billion yuan | 26.4% | | Online Music Subscription Revenue | 4.38 billion yuan | 3.74 billion yuan | 17.1% | | Social Entertainment Services and Other Services Revenue | 1.59 billion yuan | 1.74 billion yuan | (8.5%) | - Online music subscription revenue growth was primarily driven by an increase in average revenue per paying user (ARPPU), which grew from RMB 10.7 in the same period of 2024 to RMB 11.7 in Q2 2025[15] - Advertising business revenue increased year-over-year mainly due to a more diversified product portfolio and innovative advertising formats[15] - Artist merchandise and offline performance revenues also achieved strong growth[15] Costs and Gross Margin Operating costs increased by 13.1% year-over-year to RMB 4.69 billion, mainly due to increased IP-related costs, while gross margin improved from 42.0% to 44.4%, driven by music subscription and advertising revenue growth and a decrease in social entertainment services revenue sharing ratio | Indicator | 2025 Q2 (RMB) | 2024 Q2 (RMB) | YoY Change Rate | | :--- | :--- | :--- | :--- | | Operating Costs | 4.69 billion yuan | 4.15 billion yuan | 13.1% | | Gross Margin | 44.4% | 42.0% | 2.4 percentage points | - The increase in operating costs was primarily due to higher IP-related costs such as artist merchandise costs, offline performance costs, and advertising agency fees[14] - Gross margin improvement was mainly attributable to strong growth in music subscription revenue and advertising service revenue, and a decrease in the revenue sharing ratio for social entertainment services[14] Operating Expenses and Profit Total operating expenses remained stable at RMB 1.16 billion, with the percentage of total revenue decreasing from 16.0% to 13.7%, while operating profit increased by 35.5% to RMB 2.98 billion, and net profit attributable to equity holders increased by 43.2% to RMB 2.41 billion | Indicator | 2025 Q2 (RMB) | 2024 Q2 (RMB) | YoY Change Rate | | :--- | :--- | :--- | :--- | | Total Operating Expenses | 1.16 billion yuan | 1.148 billion yuan | 0.7% | | Operating Expenses as % of Total Revenue | 13.7% | 16.0% | (2.3) percentage points | | Operating Profit | 2.98 billion yuan | 2.198 billion yuan | 35.5% | | Net Profit Attributable to Equity Holders | 2.41 billion yuan | 1.682 billion yuan | 43.2% | - Operating expenses as a percentage of total revenue decreased from 16.0% in the same period of 2024 to 13.7%, indicating improved operational efficiency[16] Cash and Investment Status As of June 30, 2025, the company's total balance of cash, cash equivalents, term deposits, and short-term investments was RMB 34.92 billion, a decrease from RMB 37.67 billion as of March 31, 2025 | Indicator | June 30, 2025 (RMB) | March 31, 2025 (RMB) | Change | | :--- | :--- | :--- | :--- | | Cash, Cash Equivalents, Term Deposits, and Short-term Investments Total Balance | 34.92 billion yuan | 37.67 billion yuan | (2.75) billion yuan | Other Information Environmental, Social, and Governance (ESG) TME continues to create social value through music, launching the "Hear Guizhou" project this quarter, utilizing AI technology to help people relax and improve sleep - Launched the "Hear Guizhou" project, utilizing AI technology to help people relax and improve sleep through natural rhythms and immersive soundscapes[19] Exchange Rate Information The RMB to USD exchange rate used in this announcement is the noon buying rate on June 30, 2025, at RMB 7.1636 to USD 1.00, provided for convenience only - The RMB to USD exchange rate is RMB 7.1636 to USD 1.00, which is the noon buying rate on June 30, 2025, as published by the Federal Reserve Board in its H.10 statistical release[20] Non-IFRS Financial Measures The company uses non-IFRS net profit to evaluate operating performance and make decisions, believing it helps identify underlying business trends and provides clearer operating performance information, but it should not be considered a substitute for IFRS measures - The company uses non-IFRS net profit to evaluate operating performance and make financial and operating decisions[21] - Non-IFRS net profit excludes amortization of intangible assets and other assets arising from business acquisitions or combinations, share-based compensation expenses, net losses/gains from investments, and related income tax effects[22] About Tencent Music Entertainment Group Tencent Music Entertainment Group is China's leading online music and audio entertainment platform, operating QQ Music, Kugou Music, Kuwo Music, and WeSing, with a mission to use technology to create infinite possibilities in music and provide diverse music entertainment services - Tencent Music Entertainment Group is China's leading online music and audio entertainment platform, operating QQ Music, Kugou Music, Kuwo Music, and WeSing[23] - Its mission is to use technology to create infinite possibilities in music, offering services such as online music, online audio, online K-singing, music-centric live streaming, and online performances[23] Safe Harbor Statement This announcement contains forward-looking statements that involve inherent risks and uncertainties, and actual results may differ materially from expectations, with the company undertaking no obligation to update such information - This announcement contains forward-looking statements that involve inherent risks and uncertainties, and many factors could cause actual results to differ materially from those contained in any forward-looking statement[24] - The company undertakes no obligation to update such information, except as required by applicable law[24] Investor Relations Provides contact information for Tencent Music Entertainment Group Investor Relations - Investor Relations contact: ir@tencentmusic.com, +86 (755) 8601-3388 ext. 885034[25] Consolidated Financial Statements Consolidated Statements of Profit or Loss In Q2 2025, TME's total revenue increased by 17.9% to RMB 8.44 billion, operating profit grew by 35.5% to RMB 2.98 billion, and net profit attributable to equity holders increased by 43.2% to RMB 2.41 billion, driven by strong online music services revenue growth, while social entertainment services revenue decreased | Indicator (Millions RMB) | 2024 Q2 (RMB) | 2025 Q2 (RMB) | 2024 H1 (RMB) | 2025 H1 (RMB) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 7,160 | 8,442 | 13,928 | 15,798 | | Online Music Services Revenue | 5,424 | 6,854 | 10,431 | 12,658 | | Social Entertainment Services and Other Services Revenue | 1,736 | 1,588 | 3,497 | 3,140 | | Operating Costs | (4,150) | (4,693) | (8,147) | (8,807) | | Gross Profit | 3,010 | 3,749 | 5,781 | 6,991 | | Total Operating Expenses | (1,148) | (1,156) | (2,284) | (2,299) | | Operating Profit | 2,198 | 2,978 | 4,157 | 7,814 | | Income Tax Expense | (432) | (515) | (813) | (961) | | Profit for the Period | 1,794 | 2,467 | 3,324 | 6,855 | | Profit Attributable to Equity Holders of the Company | 1,682 | 2,409 | 3,104 | 6,700 | | Diluted Earnings per ADS | 1.07 | 1.55 | 1.99 | 4.32 | Unaudited Non-IFRS Financial Measures In Q2 2025, non-IFRS net profit was RMB 2.64 billion, a 32.9% year-over-year increase, and non-IFRS net profit attributable to equity holders was RMB 2.57 billion, a 37.4% year-over-year increase, with these measures excluding specific non-cash and non-operating items | Indicator (Millions RMB) | 2024 Q2 (RMB) | 2025 Q2 (RMB) | 2024 H1 (RMB) | 2025 H1 (RMB) | | :--- | :--- | :--- | :--- | :--- | | Profit for the Period | 1,794 | 2,467 | 3,324 | 6,855 | | Non-IFRS Net Profit | 1,985 | 2,640 | 3,797 | 4,866 | | Non-IFRS Profit Attributable to Equity Holders of the Company | 1,873 | 2,574 | 3,577 | 4,698 | | Non-IFRS Diluted Earnings per ADS | 1.19 | 1.66 | 2.29 | 3.03 | - Non-IFRS adjustments include amortization of intangible assets and other assets arising from acquisitions and business combinations, share-based compensation expenses, net losses/gains from investments, and related income tax effects[33] Consolidated Balance Sheets As of June 30, 2025, the company's total assets were RMB 107.873 billion, an increase from RMB 90.444 billion at the end of 2024, with total equity rising to RMB 86.375 billion and total liabilities increasing to RMB 21.498 billion | Indicator (Millions RMB) | December 31, 2024 (RMB) | June 30, 2025 (RMB) | | :--- | :--- | :--- | | Total Assets | 90,444 | 107,873 | | Non-current Assets | 55,900 | 76,996 | | Current Assets | 34,544 | 30,877 | | Total Equity | 69,726 | 86,375 | | Equity Attributable to Equity Holders of the Company | 67,863 | 83,878 | | Total Liabilities | 20,718 | 21,498 | | Non-current Liabilities | 4,168 | 5,002 | | Current Liabilities | 16,550 | 16,496 | Condensed Consolidated Statements of Cash Flows In Q2 2025, net cash inflow from operating activities was RMB 1.638 billion, net cash outflow from investing activities was RMB 633 million, and net cash outflow from financing activities was RMB 2.056 billion, resulting in a net decrease of RMB 1.051 billion in cash and cash equivalents | Indicator (Millions RMB) | 2024 Q2 (RMB) | 2025 Q2 (RMB) | 2024 H1 (RMB) | 2025 H1 (RMB) | | :--- | :--- | :--- | :--- | :--- | | Net Cash Inflow from Operating Activities | 2,944 | 1,638 | 5,630 | 4,157 | | Net Cash Inflow/(Outflow) from Investing Activities | 693 | (633) | (4,805) | (3,854) | | Net Cash Outflow from Financing Activities | (1,611) | (2,056) | (2,133) | (2,512) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 2,026 | (1,051) | (1,308) | (2,209) | | Cash and Cash Equivalents at End of Period | 12,251 | 10,999 | 12,251 | 10,999 |