2023-08-15 17:14Financial Data and Key Metrics Changes - Total revenues for Q2 2023 reached RMB7.3 billion, up 6% year-over-year, with adjusted net profit increasing by 48% year-over-year [4][31] - Online music services contributed 58% of total revenues, surpassing social entertainment services for the first time in history [31] - Monthly ARPPU reached an all-time high of RMB9.7, up 14% year-over-year and 5% sequentially [31][32] Business Line Data and Key Metrics Changes - Music subscription revenues grew to RMB2.9 billion, up 37% year-over-year, with paying users reaching 99.4 million, a 20% increase year-over-year [31][32] - Revenues from social entertainment services were RMB3.0 billion, down 25% year-over-year due to service enhancements and risk control measures [33][26] - Advertising revenues showed strong growth, driven by demand during the annual 618 e-commerce sales event [32] Market Data and Key Metrics Changes - The online music paying ratio reached an all-time high of 16.7% [5] - The number of paying users for online music services increased by 5 million sequentially [31] - The company reported a gross margin of 34.3%, up 4.4 percentage points year-over-year [34] Company Strategy and Development Direction - The company is focused on enhancing user experience and optimizing its music services, including in-car music offerings and AIGC features [18][19] - Strategic partnerships with top-tier labels and artists are being strengthened to expand content offerings [6][8] - The company aims to maintain a stable business scale in social entertainment while exploring diverse opportunities in the music arena [43][44] Management Comments on Operating Environment and Future Outlook - Management expects total revenues to decline by low- to mid-single digits year-over-year for 2023, primarily due to pressures in social entertainment services [26][42] - Confidence remains in delivering year-over-year bottom-line growth for 2023, driven by strong performance in online music services [27] - The company is committed to long-term sustainable growth despite short-term revenue pressures [33][34] Other Important Information - The company hosted the Tencent Music Entertainment Awards 2023, showcasing its industry influence and organizational capabilities [7][8] - Continued investment in research and development is planned to enhance music-related content creation and improve sound quality [35][62] - The company is actively involved in social welfare activities, including charity concerts for children [28] Q&A Session Summary Question: Revenue outlook for music and social entertainment segments - Management indicated that online music services are expected to maintain robust growth, while social entertainment services will face revenue pressure due to adjustments [40][42] Question: Rationale behind adjustments in social entertainment - Adjustments aim to create a more music-centric live streaming atmosphere and control potential risks, despite short-term revenue impacts [46][47] Question: Future targets for subscription business - Management expressed confidence in continued growth in subscription revenue driven by increased willingness to pay and enhanced user privileges [50][51] Question: AIGC developments and applications - The company is focusing on AIGC tools to assist musicians and enhance user interaction, including AI-enabled features for music discovery [55][56] Question: Gross margin expectations - Management expects gross margin to improve sequentially, driven by strong growth in subscription and advertising revenues [58][59]