Earnings call transcript: Tencent Music Q3 2025 beats forecasts, stock rises

Tencent Music Entertainment Group (TME) reported its third-quarter earnings for 2025, surpassing analyst expectations with an earnings per share (EPS) of $1.54, compared to the forecasted $1.52. Revenue reached $8.46 billion, exceeding the anticipated $8.23 billion. The company’s stock saw a premarket rise of 3.33%, reflecting investor enthusiasm after the earnings announcement.

Key Takeaways

• Tencent Music’s Q3 2025 revenue grew by 21% year-over-year.
• Music subscription revenues saw a significant increase of 70%.
• The company introduced new AI-powered features to enhance user experience.
• Stock price rose by 3.33% in premarket trading following the earnings release.

Company Performance

Tencent Music demonstrated robust growth in the third quarter of 2025, with total revenues increasing by 21% year-over-year to CNY 8.5 billion. This growth was driven by a 27% rise in online music revenues and a substantial 70% increase in music subscription revenues. The company’s net profit also saw a notable rise of 29%, reaching CNY 2.2 billion. These results underscore Tencent Music’s strong position in the competitive music streaming market, where it continues to face challenges from rivals such as Soda Music, NetEase Cloud Music, and ByteDance platforms.

Financial Highlights

• Revenue: CNY 8.5 billion, up 21% year-over-year
• Earnings per share: $1.54, surpassing forecasted $1.52
• Gross margin: 43.5%, up 0.9 percentage points year-over-year
• Monthly ARPPU: RMB 11.9, compared to RMB 10.8 last year

Earnings vs. Forecast

Tencent Music’s actual EPS of $1.54 exceeded the forecasted $1.52, marking a surprise of 1.32%. Revenue also surpassed expectations, coming in at $8.46 billion against the forecast of $8.23 billion, resulting in a revenue surprise of 2.79%. This performance reflects the company’s ability to consistently beat market expectations, contributing to positive investor sentiment.

Market Reaction

Following the earnings announcement, Tencent Music’s stock rose by 3.33% in premarket trading, reaching a price of $21.44. This increase comes despite a previous close of $20.75, which was 3.71% below the last trading session. The stock’s movement suggests a strong positive reaction from investors, who are likely encouraged by the company’s financial performance and growth prospects.

Outlook & Guidance

Looking ahead, Tencent Music expects sustained healthy growth in its music subscription business, with non-subscription businesses anticipated to grow at a faster pace. The company remains focused on enhancing content privileges, functional innovations, and artist partnerships. Executives expressed confidence in achieving revenue and gross profit margin growth in 2026.

Executive Commentary

Cussion Pang, Executive Chairman, stated, "We continue to lead the industry in music consumption and creation." CEO Ross Liang added, "Our music ecosystem continues to strengthen," highlighting the company’s strategic focus on expanding its content ecosystem and enhancing user experiences.

Risks and Challenges

• Increasing competition from other music streaming platforms
• Potential impact of low-price packages on profit margins
• Macroeconomic pressures that could affect consumer spending
• Rapid technological changes requiring continuous innovation
• Regulatory challenges in the digital content industry

Q&A

During the earnings call, analysts inquired about Tencent Music’s competitive landscape and growth drivers for subscription services. The company addressed concerns regarding the potential impact of low-price packages on profit margins and explained considerations for gross margin with new business lines.

Full transcript - Tencent Music Entertainment Group (TME) Q3 2025:

Nelson Tu, Head of Investor Relations, Tencent Music Entertainment Group: Good evening and good morning, and welcome to Tencent Music Entertainment Group’s third quarter 2025 earnings conference call. I’m Nelson Tu, Head of IR. We announced our quarterly financial results earlier today before the U.S. market opens. The earnings release is now available on our IR website and via NewsWire services. During today’s call, you’ll hear from Mr. Cussion Pang, our Executive Chairman, and Mr. Ross Liang, our CEO, who will share an overview of our company strategies and business updates. Then, Ms. Shirley Hu, our CFO, will discuss our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statement in our earnings release, which applies to this call as we made forward-gain statements.

Please note that we discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under IFRS in our earnings release and filings with the SEC. All participants are muted at this time. After management’s remarks, there will be a Q&A session, and please be advised that today’s call is being recorded. With that, I’m very pleased to turn the call over to Cussion, Executive Chairman of TME. Cussion, please.

Cussion Pang, Executive Chairman, Tencent Music Entertainment Group: Thank you, Millicent. Hello everyone, and thank you for joining our call today. In the third quarter, we delivered another set of strong financial results, underpinned by the well-rounded performance of our online music business. Our ongoing innovations across content, services, and live experience continue to fuel steady growth in our subscription business, while pushing momentum in non-subscription revenue, particularly in concerts and artist merchandise. Backed by our strong financial position and operational excellence, we are poised to further broaden our music service, unlock new growth opportunities, and create greater value for artists, partners, and users across the entire music industry. Now, let me share some highlights from this quarter. First, we further enriched our content coverage to include more offerings in different music genres and languages.

For example, in pop music, we renewed the contract with JYP Entertainment, a leading Korean label, and partnerships with Jam Studio, G.E.M. Deng Ziqi, Jason Zhang Jie, and Lay Zhang Yixing’s studio, strengthening our collection of top hits. To better serve users’ passions for game-related music, we partnered with Tencent Games to co-produce Atlas of Tomorrow, 明日坐标, the tenth anniversary theme song performed by JJ Lin Lin Junjie for Honor of Kings 王者荣耀. Performed as the final act of Honor of Kings’ tenth anniversary co-creation night, the song quickly garnered over 600 million social media mentions within two weeks of its release, engaged 280 cultural and tourism authorities nationwide, standing out as one of the year’s most impactful game soundtracks.

We also collaborated with Blizzard Entertainment for the first time and introduced 50 original soundtracks from iconic game titles including World of Warcraft, 魔兽世界, and Hearthstone, 炉石传说. To further enrich anime and K-pop music categories, we established strategic partnerships with renowned Japanese ACG label, King Records, and Korean label, Sirio, offering popular anime songs and OSTs from hit dramas such as Boys Over Flowers, 花样男子. Second, during the quarter, we successfully staged several large-scale international concerts and events, extending our reach beyond borders to tap into the international market opportunities. A prime example is the concert tour that we hosted for leading Korean artist G-Dragon, G-Dragon 2025 World Tour Rubber Mash, building on our success in the second quarter. This time, we put on 14 additional solo shows for him across six cities, including Sydney, Melbourne, and Kuala Lumpur, drawing over 150,000 attendees.

The popularity of the tour led to an acceleration of live concert revenue growth, demonstrating our strength in delivering world-class entertainment experiences. Our annual flagship, TMEA Concerts, was another success and a highlight for the quarter. The event featured 35 different artists and groups and drew more than 10,000 attendees, underscoring its strategic importance as a well-anticipated premiere gathering within the music industry. Building on the momentum from TMEA, this year we broke new ground and introduced another flagship concert IP, TME Live International Music Awards Thema, to celebrate the achievements of international artists and showcase their talents. The inaugural Thema featured 22 globally renowned artists and groups from China and a number of Asian countries, including famous Acolyte Baldwin, PPG, Asper, and SMTR25. The two-day event immersed over 20,000 attendees in a vibrant atmosphere.

We also organized and delivered several major concert tours for well-known artists like Fiona Sit, 薛凯琪, Tia Ray, 袁雅薇, Angela Zhang, 张韶涵, and G.E.M. The success of these shows illustrates TME’s strength and impact in bolstering artists’ fan bases, especially through interactions with younger audiences. For instance, in G.E.M.’s most recent shows in Chongqing, through integrated online and offline promotional resources, we helped her attract more than 40,000 attendees, up from 10,000 in a single event in the third quarter. This marked a successful upgrade in concert scale, moving from arena level to stadium level. Together, these remarkable events have laid a solid foundation for TME to continue to grow at scale. As we further build out our performance pipeline, we are confident that there will be more exciting opportunities home and abroad to deliver large-scale and immersive live music experiences for users.

Third, we continue to break new ground with artist partnerships, providing them with holistic support and leveraging our increasing promotional capability to enrich artist-centric offerings. For instance, during the quarter, we partnered with Tencent’s hit title, Crossfire, 穿越火线, to produce Yu Qi’s Song Yu Qi new song, COPDD. By seamlessly integrating this song into the game ecosystem and allowing users to earn in-game items through listening tasks, we amplified its impact. The track sold to number two on the QQ Music News Song chart within two days of its release. As another example, in this quarter, we premiered Lay Zhang’s new digital album, Rock the Heavenly Palace, 闹天宫, together with collectible card packages. This innovative approach not only boosted participation but also led the album to rank among the top of the 2025 bestseller charts.

The production and release of Bai Lu’s first physical album, My Odyssey, featuring two distinct version designs, marked another success. The album earned strong acclaim from fans and achieved outstanding sales performance. All of the above examples illustrate the power and firewall of our content and platform dual engine. Supported by our massive user base, fueled by an expanding content ecosystem and constant innovations, we have reinforced the virtuous cycle, allowing us to design diverse services to address users’ needs. With user interactions deepening and community engagement strengthening, it boosts the reach of quality content on our platform and attracts more attention from artists and labels, both home and abroad, fueling the sustainable growth of our ecosystem. Last but not least, on ESG, for seven consecutive years, we have proudly won the Music Garden Space Public Welfare Program, partnering with singers and teachers to support music education in rural areas.

This year, we invited recent users to redeem their points accumulated through incentive apps to directly support the program, sparking greater users’ interest. Over 380,000 participants took part. Looking ahead, we will continue to leverage our dual engine strategy, explore new opportunities, and expand our reach, building a seamless, vibrant, all-in-one music service platform for music lovers. Now, I would like to hand it over to Ross for a deeper dive into our overall platform development. Ross, please go ahead. Thank you. Thank you, Cussion. Hello everyone. Our music ecosystem continues to strengthen in the third quarter, benefiting from our profound user insights and operational excellence. As we focus on enhancing the value proposition for users, this quarter, we achieved steady growth in SVIP penetration and ARPPU. We are also building a diversified product portfolio, catering to different user cohorts to effectively expand our platform’s reach to a broader audience.

To this end, our commitment to harnessing AI to elevate users’ experiences continues to empower us to remain at the forefront of delighting music users. First, on system integration, we were among the first to support Apple’s Liquid Glass mode in iOS 26 and introduced Liquid Glass’s themes and players on Android for optimized visual effects and better interactions. We also fully adapted our app for HarmonyOS, with core music features now largely aligned with what we offer on Android. Second, we upgraded player interactive features and AI-powered functionalities. For example, we embedded more enlightening designs and tokens on the playback page, creating delightful surprises across new touchpoints, which also proved effective in new song promotions. We also pioneered multi-mode song transition feature, Automix, offering seamless remix and a more immersive streaming experience. To effectively deepen engagement, we expanded our AI-powered lyric card feature, unicorning over 200 leading artists.

The card collecting process is full of threads and fun, driving sharing among users and increased user activities. Our upgraded AI assistant allows users to generate a personalized playlist with just one tap or easily create their own original music. This has significantly allowed the body to creative expression and helped increase content consumption through recommendation. We are here to serve and delight. As a result, users can unlock additional tools and perks from our multi-pronged membership offerings. Whether a freemium user, a deeper value adds member, or a standard subscriber, we provide different services to cater to the distinct needs of users. In fact, recently, we started to see an increasing readiness of freemium users upgrading to add members, which also led to increased time spend.

For those looking to experience the ultimate service, our SVIP offers an unparalleled range of freemium features, which have been crucial in driving SVIP adoption rate and average spend. Its penetration and ARPPU expanded both year-over-year and quarter-over-quarter as we introduced new privileges and innovative services that strengthened its value proposition and inspired music appreciation in new ways. A few highlights to share. First, premium sound qualities remain a key draw for SVIP. As we accelerated its result, QQ Music newly introduced DTS Booming External Speakers, became the top conversion driver among audio qualities, Viper Aero Sound 2.0 in QQ Music. With its improved sound quality, sound clarified and reduced data usage also proved to be highly effective in retaining SVIP loyalty. Second, our insight into content and user propelled us to provide creative offerings, which in turn helped boost SVIP uptake.

For example, the digital album, an integral part of our content ecosystem, remains effective at SVIP conversion. Members highly appreciate their privileged access to digital albums alongside limited edition collectible NFC cards. Notable collaborations this quarter include Eason Chan, Zhang Jie, Fare and Dreams, and Idol’s self-titled Japanese EP, which significantly boosted SVIP conversions. Another example is Starlight Cards. In the third quarter, we rolled out new Starlight Cards featuring popular artists such as Fiona Sit, Asper, Idol, and Things in Times SHINei, which instantly became a big draw. We have also expanded artist partnerships to include more international musicians, including JYP, YG, Japan’s Jo1, and Western artist Jake, replicating our success domestically. We recently extended our Starlight Card offerings to the Hong Kong and Thailand markets through our music platform Joox.

Third, we rolled out several targeted initiatives to reinforce the artist-fan connection and strengthen user loyalty through Bubble. We expanded our artist rosters by onboarding over a dozen musicians from domestic labels such as Huxia, Nextide, and Ride, giving more fans the chance to interact directly with their favorite artists online. This in turn attracted a broader user base. We leveraged AI to further localize the Bubble features and functionalities, leading to improved user retention. The new and upgraded features include in-app translation and speech-to-text capabilities empowered by large AI models, as well as desktop shortcuts for quick and spontaneous access. We also launched limited edition badges to celebrate key artist moments, such as new song releases, birthdays, and debut anniversaries. This, complemented by unique phone-only perks, helped strengthen emotional ties between artists and fans, resulting in improved retention and engagement.

In summary, we are pleased with the progress we have made in enhancing the value of an increasingly diverse user base. Moving forward, we remain committed to further enhancing our cost trends and platform efficiency. We are well positioned to continue to shape the industry from music creation to enjoyment. With that, I would like to turn the call over to Shirley, our CFO, for a deep dive into our financials. Thank you, Ross. Greetings everyone. Let me now turn to our financial results. In Q3 2025, our total revenues grew 21% year-on-year to CNY 8.5 billion, marking the highest revenue growth since Q1 2021. This resulted from continued growth momentum in music subscriptions, together with robust growth in offline performances, advertising services, and artist-related merchandise sales. Online music revenues grew 27% year-on-year to CNY 7 billion.

Music subscription revenues grew 70% year-on-year to RMB 4.5 billion in Q3 2025, driven by continued growth in monthly ARPPU and subscriber base. Monthly ARPPU reached RMB 11.9 this quarter, compared to RMB 10.8 in the same period of last year, primarily driven by expansion in SVIP membership program. This quarter, we continued to broaden and strengthen the SVIP benefits. For example, QQ Music newly introduced the DTS Booming External Speaker, and we expanded Starlight Cards with more popular artists. Both are popular features to drive SVIP adoption. Additionally, our multi-pronged membership offerings across ADS membership, standard memberships, and SVIP membership also contributed to improved user engagement and conversion. All of these efforts have laid down the foundation for the healthy growth of our subscription units.

Advertising revenue continued its strong growth trajectory on a year-on-year basis, primarily driven by more diversified product portfolio and innovative ad formats such as ad-supported model. Offline performances and artist-related merchandise sales delivered triple-digit year-on-year revenue growth this quarter in Q3. We successfully held multiple concerts both domestically and internationally. In the overseas market, we hosted 14 shows for G-Dragon across six cities, achieving robust ticket sales. In the domestic market, we successfully hosted concerts for high-profile artists such as Cussion Pang and Jane Yip. In addition, we provided concert-related merchandise sales during the concerts, which offered more artist-fan connection opportunities and in turn contributed to the revenue growth in artist-related merchandise sales. Social entertainment service and other revenues were RMB 1.5 billion, down by 3% year-on-year. Our gross margin in Q3 2025 was 43.5%, up 0.9 percentage points year-on-year.

The increase was mainly attributable to strong growth in music subscription and advertising revenues, alongside a lower revenue sharing ratio in social entertainment services. At the same time, new growth areas such as offline performances and artist-related merchandise sales have lower gross margin. The revenue mix shift may cause gross margin fluctuations in different periods. Diversification in revenues offers the possibility for further growth in our revenue and gross profit and helps us cultivate a more comprehensive one-stop music services ecosystem. Moving on to operating expenses, they amounted to RMB 1.3 billion, representing 15.5% of our total revenues in Q3 2025, compared with 70.4% in the same period of last year. Selling and marketing expenses were RMB 260 million, up by 18% year-on-year, primarily due to higher content promotion expenses and channel spending. We keep monitoring market conditions and increase spending as needed with financial discipline.

General and administrative expenses were RMB 1.05 billion, up by 5% year-on-year, primarily due to growth in employee-related expenses. Our effective tax rate for Q3 2025 was 70.7% and remained relatively stable compared with ETR in the same period of 2024. We accrued withholding income tax of RMB 118 million this quarter. For Q3, our net profit increased by 29% to RMB 2.2 billion, and the net profit attributable to equity holders of the company increased by 36% to RMB 2.2 billion. Non-IFRS net profit increased by 28% to RMB 2.5 billion, and the Non-IFRS net profit attributable to equity holders of the company increased by 33% to RMB 2.4 billion. Our diluted earnings per ADS this quarter was RMB 1.38, up by 37% year-on-year, and the Non-IFRS diluted earnings per ADS was RMB 1.44, up by 33% year-on-year.

As of September 13, 2025, our combined balances of cash equivalents, term deposits, and short-term investment were RMB 36.1 billion, as compared to RMB 34.9 billion as of June 30, 2025. This combined balance was impacted by the repayment of $300 million for the senior unsecured lots due in Q3 2025, and it was also affected by changes in the exchange rate of RMB to USD at different balance sheet dates. Looking forward, we will put more efforts in IP cultivation and self-produced content while keeping product innovation to foster a vibrant and comprehensive music ecosystem. With solid growth in our core business and increased product diversification, such as offline performance and artist-related merchandise, we are well positioned and are confident in the high-quality growth of our business. This concludes our prepared remarks. Operator, we are ready to open the call for questions. Thank you.

Shirley, if you’re dialing in by phone, please press five to ask a question and then press six to unmute yourself. If you’re accessing the call from a Tencent meeting or VooV meeting application, please click the raise hand button at the bottom left. For the benefit of all participants on today’s call, please leave yourself one question. If you have more, please re-enter the queue. If you ask a question in Chinese, please may we ask you to repeat in English. The first question comes to the line from Morgan Stanley, Yang Liu. Yang, your line’s open. Thanks a lot for the opportunity. I would like to ask about the fourth quarter this year and the 2026 outlook for the business. 感谢提问的机会，我想问一下管理层现在这个时间点怎么看待公司在今年四季度和2026年的业务展望。非常感谢。 Thank you so much for your questions.

With our holistic high-quality growth strategy, we delivered another quarter of strong results on both the top and the bottom line. We continue to lead the industry in music consumption and creation, and we are confident to deliver good results. On the music subscription side, our multi-pronged membership offerings lead to better caters to users’ diverse needs. Number of paying users and ARPPU grow steadily, while user retention and time spend remain healthy. SVIP penetration and ARPPU increased year-over-year and quarter-over-quarter. In addition, I would like to point out that the newly launched X memberships also gained momentum, which will help us to unlock greater value from the freemium users as well. On the non-subscription side, our one-stop music entertainment service platform will continue to drive users’ demands and business growth.

First, on the advertising side, our diversified and innovative ad formats continue to create value for advertisers and users, so it will continue to drive steady business growth in quarter four. Second, on the fast-growing live concerts business, we have already achieved significant breakthroughs home and abroad, which will contribute to a triple-digit year-to-year revenue growth. Last, on the fan-based economy, we have explored a variety of new product combinations and service formats, which will effectively help artists and music labels to further unlock commercial value. In short, for the year 2025, we remain hopeful to deliver strong performance of our online music services to further drive good revenue and profit growth of the company. Looking ahead to 2026, we are committed to implement our platform and content ecosystem dual-engine strategy.

With the strong foundation that we have built, together with the new initiatives, we expect sustained healthy growth in our music subscription business, although at a slightly slower rate given its high base. Non-subscription businesses’ contribution to the group performance will continue to increase and is expected to grow faster than the subscription business. Thank you, Cussion. The next question comes from Goldman Sachs Lincoln. Lincoln, your line’s open. Thank you very much for taking my question. It’s been a very solid quarter in the third quarter. I just want to quickly touch on the industry landscape here, especially for the music streaming business. I think recently there’s a bit of a marketing clamor over some peer music app competition in terms of the faster MAU ramp-up or potential high budgets for purchase of music contents.

Just want to wonder, management thoughts, do you see anything changed in terms of the competition landscape at all? How’s our strategy to further enhance our leadership in terms of the content differentiation, our user mindset, and overall service offering to consumers? Thank you. 这个问题主要是想问一下竞争态势有没有变化，因为也看到最近有一些渠道是说就是在买内容还有用户平台上面其实都有一些竞争。所以想问管理层竞争态势上有些什么新的想法可以分享，然后下一步会如何去提高我们的核心竞争力。 当然竞争态势上大家可以是确应该大家也确实也可以注意到，我们目前还是基本上还是这么几家，当然多了，当然汽水，包括是网云跟汽水音乐，包括字节里面的汽水音乐和番茄音乐畅听版。 Thank you very much. Thanks for your question. Regarding the competition, I think we still have the same competitors in the music industry, including Soda Music as well as NetEase Cloud Music, and also Soda Music and Tomato Music Trio from ByteDance. 所以当然我们也观察到了本身汽水音乐的相对来说有一定的增长。 For sure. We also noticed the growth from Soda Music. 对我们来说，我们实际上仍然还是因为竞争是常见的。我们在今年也是Q1的20周年，其实我们也是在这样一条路上面临了非常多的竞争。 For TME, we always believe competition is normal, and this is also what we see from the past to now. This year also marks the 20th anniversary of QQ Music. Along the way for our development, we have already encountered many competitions.

streaming experience. Regarding the competition, I would like to touch upon platform and content, the two perspectives. Regarding the platform, I think for music application, it’s still a traditional business, and the business is based on the streaming business, where traditionally we do have the recommendation, where our asset management maintains the same and most important and critical user experience for us regarding the live streaming business. I think our competitive edge still rests with our music library, along with the user asset management that has been accumulated for so many years. At the same time, you can also say that TME still leads the industry regarding the sound quality and sound effect, where we also continue to provide the sound quality, the lossless sound quality to the market. In addition to currently providing lossless music sound quality, in this quarter we will launch a new version in spatial audio.

advantage. We also continue to engage with the high sound quality equipment or musical fixtures, including the Hi-Fi, and continue to engage the earpiece and the loudspeaker high-quality sound effect fixtures and equipment to further extend our content coverage. Besides these basic products, within TME, we have already further extended our business to provide a more enriched and diversified music experience to our users. Especially from our recent performance on the Starlight Card, along with our user badge, as well as Bubble, we do have the in-app artist and fans in action, which all yield very positive results, which do not exist for any other competing products. At the same time, regarding the social entertainment business, our WeSing product still shows great potential and advantage regarding commercialization, and we also have offline karaoke events, which also yield very positive results, so this basically consolidates our own product advantage in the karaoke segment.

This can also help to consolidate our traditional business advantage. 说到其实最重要的，我希望大家关注的是我们目前只是看到了我们移动端上的一些变化，但实际上来说对于音乐产品来看，多端多中端的表现其实仍然实际上才是整个去覆盖的规模。 I think the majority of people just pay attention to the changes on our mobile applications, where for any music product, you have to still keep an eye on the user range as well as content coverage on multi-terminals and multi-devices. 所以我们在PC端仍然还是有比较大的规模，比较大的用户规模，我们自己在新的领域中在车载仍然有很高的渗透率，同时我们最近在鸿蒙上的表现也是在整个音乐App中处于领先的部位。 We can say that at our PC end, we still have a huge subscriber base, and also for the in-car service, we have a very high penetration ratio. Especially recently, we are actually leading the music applications by working with HarmonyOS. 所以这是基本上我们认为说基于我们目前这样的这么多年的产品体验的优化创新，以及我们技术多终端的表现，我们相信我们自己在竞争环境中还是处在非常有利的位置的。 You can say based upon our product innovation, optimized user experience, and continued innovation, and we’ll still be able to pioneer and lead the market development. 版权方面我们其实一直以来TME都是提供了行业里面最全最优质的所有的音乐内容。 Regarding the patents or the copyright for TME, we always provide the most complete and high-quality application content in the whole industry.

Besides releasing different genres of the songs, the most important thing we did for the past few years is continue to engage and co-create many different musical content with music creators in our industry. Besides working for different genres of the songs, recently we also started to follow and work with Tencent Games and Tencent Video to create their top-notch IP for the co-creation of the OST songs. Moreover, the achievements have actually been recognized and loved by the industry and especially by our users. In addition to this, we also see that we are currently comprehensively working with our partners to create content, which has already gone beyond the original field of songs. We are doing more in performances, fan-based economy, and have also started many different expansions. This also provides our entire platform with the most comprehensive and high-quality content for our users.

What we do is to provide the most comprehensive and high-quality content to our users. 所以基于当前TME的平台内容生态一体两翼的这种策略底下，这个确实就是我们当前最大的竞争的优势跟差异化，而且我们把平台跟内容的联动确实能帮助到我们整体的对于版权的保护以及我们整个音乐在线的包月的推动等等，都是有一个非常好的一个结果。 You can say that now we do have the well-established platform with very robust content creation. We are adopting the one body with two wings strategy. That is indeed our largest competitive edge and differentiation compared with other competitors, and we’re also going to continue to integrate the platform and content for further development. That is also good for our IP protection and also continue to drive the subscription business development, which will be ultimately positive for our future business growth. 当前的行业里面还是竞争比较激烈，但我们还是对我们整体的业务的健康发展还是非常有信心的。 Indeed, the industry is facing fierce competition, but we’re still very confident for our future development. Thank you. The next question comes from Alicia Yip from Citi. Alicia, please. Hi, good evening. Thanks for taking my questions. Congrats on the solid results.

I have a question regarding the music concert. Can management share with us what would be your 2026 pipeline for the music concert? How should we be thinking about modeling the revenue growth from music concert merchandising and also the digital album sales? What are the challenges and opportunities on pursuing music concert business and also to ensure the sustainable, steady, long-term growth? Thank you. 非常感谢，谢谢管理层，感谢大家允许我来提问。首先感谢管理层，也恭喜管理层在第三季度取得了非常优秀的业绩。我这边有个问题是跟我们的线下音乐会所相关的，管理层是否能够跟我们分享一下2026年对于线下演唱会我们的一些资本管线和规划，以及包括和演唱会所相关的一些，包括周边的销售，包括树桩的一个销售，我们如何从收入增长的角度来考虑如何进行建模，以及包括我们目前所推动的音乐会和线下活动的一些业务是否受到任何的挑战或者相关的机遇，如何能够帮助这一业务实现持续的稳定的长期增长。谢谢。 非常感谢 Lucia 的那个提问。其实演出这个领域对于 TME 来讲，我们其实是下定决心长期的投入的，而且在过去的几年里面，我们分几个维度来打造我们整个演出的业务的范畴，包括我们自驾的艺人的巡演，头部的巡演。同时间也会跟行业里面的顶尖的歌手来举办他们的演唱会。同时间我们也会有公司内部的我们自主的品牌，像 TMEA 跟 TMA 等等，这个也是我们全方位的来投入到我们整体的演出市场里面的情况。 Thank you very much. Thanks for addition. You see that for the Earthlight performance or concert, this is actually a commitment for TME to go for, and we also have a long-term investment for that. Especially for the past few years, I will just share with you what we did from a few perspectives.

First of all, regarding the artist tour, we still organize the top artist tour for the most popular artist in our industry, where at the same time we also invite the top artist to come and to stage the Earthlight concert. Where internally we also have our own proprietary IT, including TMEA as well as TMA. For TME, we did a comprehensive resources investment and substantial resources allocation to make sure we continued to advance the Earthlight performance. 在过去的几年里面，我们不断的去积累经验，而且也获得更多我们的合作伙伴的认可。就等于我之前在Script里面也跟大家分享过，就我们也在今年主办了韩国的艺人G-Dragon亚太区的巡演，然后给了我们有很多不同的经验，而且也让我们真的在整个的亚太地区能获得空前的成功。除了这个以外，我们也把相关的经验能用到我们其他的不同的大型的演出里面，也获得了非常好的一个成绩，这个也是让我们感觉到非常的满意的。 Actually, the Earthlight performance not only helped us to build our experience, but also continued to forge a deep bond with our partners. For example, in the prepared remarks, I have already mentioned what we do for G-Dragon, the South Korean artist.

We help to stage his Asia-Pacific region tour, and this can actually help us to further accumulate experience, where at the same time it also hit a great success in Asia-Pacific region. Such experience from the tour events can also be replicated and be introduced into other large-scale Earthlight concert and performance. We are very happy and satisfied with what we have been achieved. 后续我们的计划除了继续会安排更多的举办更多不同的头部艺人的一个演出以外，还有我们的TMA还有TMEA的盛典等等，我们也致力去提高我们整体的演出演唱会里面的水平。 We also hope through our TME unique advantage to combine online and offline platforms and the music ecosystem, to further enhance the overall music concert experience to a higher level, and also become our differentiated competitive advantage. You can say that besides organizing more top artist tours and performance, we are also going to leverage our own proprietary IP, including TMEA and TMA, to continue to improve our performance in organizing the Earthlight performance and concert. This also can showcase our unique advantage because TME would be able to integrate our online and offline music resources and continue to further deepen our collaboration with the musical ecosystem.

In that way, it can also make sure that our audience will enjoy a high-quality music experience, and that can also become our competition advantage and differentiation. 通过我们主办更多的头部的演出的项目，我们也希望可以把更多的演出的特权、粉丝经济的特权可以给到我们的用户，这个也同时间能推动我们在SVIP整体的包月的业务的拓展。同时间我们也希望通过这些能给到我们用户一个来到TME里面去消费的更多的一个更全面的体验。 By organizing such top artist performance, we also hope that we will provide more performance privilege as well as privilege to the fan-based economy to our user. This can also help to promote the SVIP subscription business development, where at the same time we will be able to provide our user a more comprehensive and immersive experience by staying with TME. 粉丝经济的部分，我们也会有更多的我们的周边的服务，包括我们的刚才讲到的一些Premium等等的，我们也获得了很多用户的喜爱，而且特别在比如说G-Dragon等等的演出里面，我们的周边产品的销售也是有非常好的一个成绩。所以这方面也是我们未来将会持续去投入的一个地方。 Regarding the fan-based economy, we also continue to further improve our service to the fan groups and community by providing the premier privilege to them, which is proven to be very popular among our fans. For example, I have already shared with you the G-Dragon Asia-Pacific tour.

The merchandise sales from that tour proved to be quite successful. This is also what we continue to do by providing the premier privilege to our users. Okay, thank you. The next question comes from Jeffrey St. Thomas. Thomas, your line’s open now. Hi, good evening. Thanks, management, for taking my question. My question is about our subscription services. Given that we have been strengthening our upward growth while we are maintaining our steady net nets, I just want to get some color with regard to how we should think about our 2026 growth driver for the subscription services. How should we think about the growth momentum for our people and net sets? I’m just wondering if we are seeing the competitive dynamic environment in terms of the competition, would there be any changes in terms of the growth driver?

I.e., would we launch more lower-priced packages to drive the subscriber growth, and the upward may not be as fast as what we previously expected? On the other hand, when we look into our SVIP subscribers and the penetration, can management talk about the goal in 2026? Thank you. 非常感谢，谢谢管理层。我这边的话有几个问题。首先我们可以看到目前在我们的包月服务上的话，我们包括 ARPPU，包括近期增都保持非常喜人的一个态势。那是否可以从 2026 年长期展望的一个角度能帮我分享一下？从 2026 年角度来说，我们主要的一些增长的驱动力是什么，以及包括不管是从 ARPPU 以及包括近期增的一个角度来说，主要驱动力是什么？而且考虑到目前市场当中竞争格局的一些变化，公司会不会考虑到为了长期的增长来尽可能推出一些低价或者是性价比比较高的一些产品来进一步的提升我们的近新增，但与此同时可能会牺牲 ARPPU？那与此同时，从 SVIP 的基数以及包括整体的一个业务发展角度来说，2026 年公司是如何考虑如何展望的？谢谢。其实从现在 2026 年的目标来看，我们仍然认为我们的整个的订阅用户能够取得比较稳健的增长。那它的驱动力首先还是来自于以下几个方面吧。第一个最重要的仍然还是内容付费，也就是说我们仍然会基于我们优质的自制内容，以及我们比较良好的跟版权跟内容版权方的合作关系去为用户提供最为优质的独特的内容。 Thank you very much. Thanks for Thomas. Regarding our overall target for 2026, I think we’re still going to register a very steady growth for the subscriber base. Regarding the growth driver, it may come in from the following aspects. First of all, still leveraging the high-quality content for business growth. We’re still going to provide the high-quality content by working with our IP partners to continue to provide the high-quality and unique content to our users.

relatively good results. The second growth driver may come from the content privilege because starting from 2026, we’re going to explore the new boundaries. Besides the traditional music content, we’re also going to pursue the boundary for the Starlight Card, the Earthlight concert, as well as the merchandise. Because my colleague used to mention regarding the content, we not only do the music content, but also continue to develop other peripherals or merchandise to continue to pursue a sustainable business growth. Another key growth driver for the subscription business would rest with the functional privileges, including the sound quality, sound effect, the ringtone editing, as well as the AI empowered sound writing. This can actually be the differentiating function we offer to the market. Basically, we are still consolidating and innovating on both our content and our functionalities, and based on this fundamental logic, we can further expand our subscription business and also achieve growth in our ARPPU.

In that way, we will be able to further grow the size of our subscription business and also achieving ARPPU growth. 面对低价会员，这个其实我们应该也不是现在面临的，我们实际上已经这么久一直都会面临的低价会员的会员的考虑。实际上我们已经其实在这么几年之内，我们已经做了比较充分的准备，包括其实现在你可以常见的这种免费广告模式本身是已经是我们三年前就推出的方法了。 It can say that regarding the second part of the question, the low-priced package, and this is not something new to us, and we have already seen such a thing for many years, and especially we have already been prepared for that. Especially you can see the freemium model, and that is a model we have started from three years ago. 所以基本上从我们的基础逻辑来看，就是在目前这个商业化整体的构成，我们是从免费用户，然后以及激励广告，然后到我们的广告会员，再到我们的普通会员，然后再到我们的SVIP这样一个多级结构来面对我们整个的这种用户规模的。 You can say that from the fundamental business logic and regarding how we consider the growth of the user, we first of all have the free-to-use service user, and then they go for ad-supported mode, and then we do have the regular user, and then they will be upgraded to SVIP. It’s a multi-pronged membership in order to help to further grow our user size.

就算是在免费激励广告这部分，我们实际上虽然可能几家竞品在竞争团态上都能提供这样的模式，但从实际的应该商业数据来看，我们在单DAU上的变现效率是远远高于其他家的。 It can say that especially for ad-supported mode, even if it’s also being provided by other competing products in the market, but if you take a look at the commercial data, especially the monetization efficiency of a single DAU actually makes TME trump other competitors. 所以基本上我们现在目前已经有比较好的经验是在这样的商业化效率以及在用户的留存中间取得比较好的平衡。 So in other words, we already have a very good experience in balancing between commercialization efficiency and user retention. 那最终当然就是说在UP值提升上面，就是你问的第最后那个问题，对于 SVIP 其实我们已经讲了很多遍，就是我们的所有的，呃，这仍然是我们最重要的部分，然后 SVIP 的渗透率跟 UP 值仍然会有比较好的，仍然在我按照我们的预计在增长，我们预计明年也会有一个比较好的一个，呃，驱动力，是因为，呃，除了我们的内容付费以外，就是我们相信我们刚才 Carson 所提到的我们版权部分的综合性的合作是能够更好地驱动我们 SVIP 的增长的。 We’re responding to the final part of your question that is regarding to SVIP, and I think I have already said that in the prepared remarks, SVIP continues to be a critical part of our business, and for the penetration ratio and ARPPU for SVIP, it’s still growing or even maintaining a good growth as what we expected.

Regarding the year of 2026, I think a key driver for SVIP, besides providing the subscription and the high-quality content, we’re also going to have and forge comprehensive partnership with our IP partners to continue to drive SVIP growth. Thank you. The next question coming from Maggie from CLSA. Maggie, your line’s open now. Hey, thank you, Cussion, Ross, Shirley, and Millicent for taking my question. This is regarding the gross profit and gross margin. In light of the potential revenue mix change, thanks to very robust growth in the offline performance as well as artist-related merchandise, how should we think about the profitability of these initiatives and their impact to our overall trend in gross profit as well as margin? Thank you. 非常感谢，谢谢管理层。我这边有个问题是关于毛利率和毛利润的，因为鉴于目前的话，我们在线下演唱会以及包括艺人所相关周边产品业务方面取得了非常强劲的一个增长，导致我们潜在的一些收入变化，收入组合发生了变化。那我们应该如何看待我们在推进线下演唱会，以及包括艺人周边业务过程当中，可能对我们的营业能力，包括对于毛利率和毛利整体的趋势所造成的影响？谢谢。对，嗯，就在目前看呢，我们的这个在线音乐业务呢，随着我们的包月业务和广告业务的一个持续的一个增长，那我们以及我们对内容成本结构和效率的持续的优化，那我们这个整个的，呃，包月业务和广告业务的增长会给我们毛利率还是会持续带来一定的积极的贡献。 Thank you very much. Thanks for addition.

From what we see now regarding our online music business, and we still maintain a continued growth for subscription business and advertisement business, where from the content cost structure and efficiency side, we continue to do the optimization, and I surely believe our subscription and advertisement business growth will continue to benefit the GP margin. 对，当然了，广告业务也会有些季节性的变化，那么也会季节性的对我们的毛利率带来一定的波动。 But for sure, as you may notice, advertisement business will encounter seasonalities, and those seasonalities will indeed bring the fluctuations to the GP margin. 那随着我们持续会在演唱会那个艺人的周边的商品的销售上，会增加对这个艺人整体IP的一个投入，那么在业务的发展初期呢，这个对毛利率是一定会有一些负面的影响的。 It can say that we continue to drive the development of the offline performance as well as to grow the merchandise for artists, and we will need to make further investment on the artist-related IP. In the initial stage of the business development, it will indeed have some negative impact on the GP margin.

但这些业务呢，满足了这个用户的多元的音乐的消费需求，那么单用户的这个消费价值也会更高。 Whereas you can see that for those businesses, it can actually help to take care of the user’s diversified musical needs, and the consumption values from a single user will surely be more elevated. 那同时我们将组合整体的这个音乐的服务，整合版权，艺人IP的投入成本来提升这个成本的效率。 At the same time, we also provide a comprehensive music service along with the copyright and the artist IP in order to further improve the efficiency of the cost. 那么长期来看呢，我们希望我们这些投入能够驱动收入和毛利润的整体的一个有效的增长。 For the long run, we hope our investment will help to drive the effective growth in both revenue and the gross profit as a whole. 对，所以，呃，从现在来看Q4呢，呃，我们来看就是说因为广告收入和这个，呃，呃，包月的收入会一个一个持续的一个增长。 At least from what we see now in Q4 of this year, there will still be continuous growth for the monthly revenues for both the advertisement business and the subscription business. 那，呃，呃，明近这个年底呢，我们的演唱会和周边的这些，呃，粉丝经济方面的这个销售呢，可能在收入的占比上会稍低一点。那么整体我们看Q4的毛利率会相对于Q3还是有一定的增加的。 We are approaching to the end of this year.

The contribution from the sales of the offline events as well as the artist-related merchandise will contribute less to the overall revenue. For that reason, the Q4 GP margin would be elevated compared with Q3. 对，那么，呃，看到2026年呢，啊，基于我们对我们的包月业务和这个广告业务的这个增长的这个信心，还有我们在这个，呃，这个，呃，演演出和这个周边粉丝方面的一些，呃，加大的一些投入吧，那我们会看到随着这个收入的这个，嗯，收入的这个在不同季节里面的波，这个结构的波动，那么我们的毛利率会在每个季度可能会有一定的波动。 We’ll look into the year of 2026, and as we continue to build our confidence over the subscription business and advertisement business, along with investment in the offline events, along with the artist merchandise, our revenue or the revenue may differ or fluctuate due to the seasonality reason. 但我们相信呢，2026年整体的这个，呃，收入的增长和这个毛利率的增长都是比较有信心的。 Overall speaking, we’re still very confident for our 2026 revenue growth and the GP margin growth. Profit, profit. Profit, profit margin growth. Yeah. Thank you everyone for joining us today. If you have any further questions, please feel free to contact our team. This concludes today’s call. Thank you very much again, and look forward to seeing you next quarter.

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