Financial Performance - Total revenues for Q1 2023 were RMB7.00 billion (US$1.02 billion), representing a 5.4% year-over-year increase[4]. - Revenues from online music services increased by 33.8% year-over-year to RMB3.50 billion (US$510 million), with music subscriptions growing by 30.4% to RMB2.60 billion (US$378 million)[5][6]. - Net profit attributable to equity holders was RMB1.15 billion (US$167 million), representing an 88.5% year-over-year growth[6][15]. - Operating profit grew to RMB1.38 billion (US$201 million), reflecting an increase of 84.4% year-over-year[14]. - Non-IFRS net profit for the period was RMB 1,463 million (approximately USD 213 million), up 55.8% from RMB 939 million in Q1 2022[41]. - Profit for the period rose to RMB 1,200 million (approximately USD 175 million), representing an increase of 84.5% compared to RMB 649 million in Q1 2022[39]. User Engagement and Growth - The number of online music paying users rose by 17.7% year-over-year to 94.4 million, achieving a record-high paying ratio of 15.9%[5][6]. - The number of users utilizing the customized sound effect for the TNT album reached 2.3 million across 170 million streams[31]. - QQ Music and Kugou Music's recommendation streaming volume and time spent per user both increased year-over-year and quarter-over-quarter, achieving a new high in recommended streaming proportion[31]. - The company hosted 29 online and offline concerts in Q1, attracting nearly 70 million unique visitors within the Tencent ecosystem[23]. Revenue Streams - Advertising revenues saw notable growth due to increased interest from advertisers and a recovering macro environment[8]. - Revenues from audio live streaming increased year-over-year, supported by differentiated content and interactive features[10]. - Online music services revenue increased by 33.7% year-over-year to RMB 3,501 million (approximately USD 510 million) in Q1 2023[38]. Financial Position - As of March 31, 2023, total cash, cash equivalents, and term deposits amounted to RMB28.5 billion (US$4.15 billion), up from RMB27.4 billion at the end of 2022[19]. - Cash and cash equivalents increased to RMB 12,129 million (approximately USD 1,766 million) as of March 31, 2023, compared to RMB 9,555 million at the end of 2022[44]. - Total assets grew to RMB 69,113 million (approximately USD 10,064 million) as of March 31, 2023, up from RMB 67,009 million at the end of 2022[44]. - The equity attributable to equity holders of the Company increased to RMB 50,980 million (approximately USD 7,423 million) as of March 31, 2023, compared to RMB 48,099 million at the end of 2022[44]. - Total liabilities increased to RMB 17,882 million, up RMB 2,483 million from the previous period[45]. Cash Flow - Net cash provided by operating activities decreased to RMB 1,852 million, down RMB 642 million year-over-year[46]. - Net cash used in financing activities improved to RMB (80) million, a reduction of RMB 315 million from the previous year[46]. - Net cash provided by investing activities turned positive at RMB 811 million, an increase of RMB 1,140 million year-over-year[46]. - Deferred revenue decreased to RMB 2,170 million, down RMB 164 million from the previous period[45]. - Current liabilities totaled RMB 11,717 million, an increase of RMB 1,599 million compared to the previous period[45]. - Non-current liabilities rose to RMB 6,165 million, an increase of RMB 95 million from the previous period[45]. - Accounts payable decreased to RMB 4,998 million, down RMB 322 million from the previous period[45].

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 ...

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 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.

Financial Data and Key Metrics Changes - Tencent Music Entertainment Group reported significant changes in financial metrics for Q2 2022, with specific figures to be detailed in the full report [1] Business Line Data and Key Metrics Changes - The performance of various business lines will be discussed in detail during the earnings call, highlighting any notable shifts in revenue and user engagement [1] Market Data and Key Metrics Changes - Market performance indicators will be analyzed, focusing on user growth and market share within the music streaming industry [1] Company Strategy and Development Direction - The management team will outline the company's strategic initiatives and future direction, particularly in response to competitive pressures in the industry [1] Management's Comments on Operating Environment and Future Outlook - Management will provide insights into the current operating environment and their outlook for the future, addressing potential challenges and opportunities [1] Other Important Information - Additional relevant information regarding partnerships, technological advancements, and market trends will be shared during the call [1] Q&A Session All Questions and Answers Question: What are the expectations for user growth in the upcoming quarters? - Management will address user growth expectations and strategies to enhance user engagement in the coming quarters [1] Question: How is the company responding to competitive pressures? - The response to competitive pressures will be discussed, including any strategic adjustments being made to maintain market position [1]

Financial 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].

Financial Data and Key Metrics - No specific financial data or key metrics changes mentioned in the provided content [1] Business Line Data and Key Metrics - No specific business line data or key metrics changes mentioned in the provided content [1] Market Data and Key Metrics - No specific market data or key metrics changes mentioned in the provided content [1] Company Strategy and Industry Competition - No specific company strategy or industry competition details mentioned in the provided content [1] Management Commentary on Operating Environment and Future Outlook - No specific management commentary on operating environment or future outlook mentioned in the provided content [1] Other Important Information - The conference call is for Tencent Music Entertainment Group's First Quarter 2022 Earnings [1] - The call is being recorded and hosted by Mr Tony Yip [1] Q&A Session - No Q&A session details provided in the content [1]