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SHENZHEN - Tencent Music Entertainment Group (NYSE:TME) reported better-than-expected first quarter results on Tuesday, with revenue and profit rising on the back of strong growth in its music subscription business.
However, the company’s shares slipped 0.98% in pre-market trading following the release.
The leading Chinese online music platform posted revenue of RMB7.36 billion ($1.01 billion) for the quarter ended March 31, up 8.7% YoY and beating analyst estimates of RMB7.27 billion. Non-IFRS diluted earnings per ADS came in at RMB1.37 ($0.19), exceeding expectations of RMB1.32.
Tencent (HK:0700) Music’s online music services segment was the main driver of growth, with revenue surging 15.9% YoY to RMB5.80 billion ($800 million). Music subscription revenue jumped 16.6% to RMB4.22 billion ($581 million), as paying users increased 8.3% YoY to 122.9 million and monthly ARPPU rose to RMB11.4 from RMB10.6 a year ago.
"Our strong first-quarter performance, marked by robust revenue growth and solid profitability, underscores the successful execution of our high-quality growth strategy," said Cussion Pang, Executive Chairman of TME.
However, revenue from social entertainment services and others declined 11.9% YoY to RMB1.55 billion ($214 million), which the company attributed to adjustments in certain live-streaming features and stricter compliance procedures.
The company’s gross margin expanded to 44.1% from 40.9% in Q1 2024, driven by strong growth in higher-margin music subscriptions and advertising services.
Tencent Music ended the quarter with RMB37.67 billion ($5.19 billion) in cash and cash equivalents, term deposits and short-term investments.
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