HANGZHOU, China, Feb. 20, 2025 /PRNewswire/ -- NetEase Cloud Music Inc. (HKEX: 9899 or the "Company"), a leading interactive music streaming service provider in China, today announced its financial results for the fiscal year 2024 ended December 31, 2024.
Summary of Key Financial Metrics (RMB in thousands, unless otherwise stated)
Year ended 31 December
2024
2023
(Unaudited)
(Unaudited)
Revenue
7,950,146
7,866,992
Gross profit
2,681,512
2,102,670
Profit before income tax
1,570,255
767,679
Profit for the period
1,565,369
734,182
Non-IFRS measure:
Adjusted net profit (1)
1,700,078
818,500
Fiscal Year 2024 Key Financial Highlights
Revenue was RMB8.0 billion, an increase of 1.1% compared with RMB7.9 billion in 2023.
Online music services:
Revenue from online music services was RMB5.4 billion, an increase of 23.1% compared with RMB4.4 billion in 2023.
Revenue from sales of membership subscriptions increased to RMB4.5 billion from RMB3.6 billion in 2023, driven by an increase in monthly paying users of online music services with the enhanced product and content offerings of our membership services.
Social entertainment services and others:
Revenue from social entertainment services and others was RMB2.6 billion, compared with RMB3.5 billion in 2023. The decline was primarily attributed to a more prudent operational approach for our social entertainment services, along with a focused emphasis on core music business.
Gross profit was RMB2.7 billion, an increase of 27.5% compared with RMB2.1 billion in 2023, due to increased revenues from online music services and continued improvement in cost control measures.
Gross margin improved to 33.7% from 26.7% in 2023. A one-off adjustment of certain content licensing fees increased the gross profit margin by approximately 1.3 percentage points in 2024.
Net profit increased by 113.2% to RMB1,565.4 million, compared with net profit of RMB734.2 million in 2023.
Adjusted net profit reached RMB1,700.1 million, compared with adjusted net profit of RMB818.5 million in 2023.
Note: (1) Adjusted net profit is defined as profit for the year attributable to the equity holders of the Company adjusted by adding back equity-settled share-based payments as appropriate.
Business Overview
Throughout 2024, we focused intently on strengthening our core music business while nurturing an enduring and vibrant music-centric community. By enriching our premium offerings such as expanding our content library, refining personalised recommendations, introducing innovative features, and fostering a stronger sense of community, we further deepened user engagement. Additionally, the rollout of enhanced membership benefits spurred rapid growth in our subscription-based memberships, further driving robust revenue growth in our core online music business and profitability.
We continued to engage users across our leading music-inspired community. Our total monthly active users (MAUs) steadily increased and our DAU/MAU ratio remained above 30%. We further enhanced music discovery and consumption via improved personalised recommendations and comprehensive audio-visual experiences. We broadened interactive scenarios across various user-generated content (UGC) formats to further cultivate our music-centric community, driving increased community content generation, consumption and user interactions. Through these efforts, users became more engaged and spent more time on our mobile app. We also continued to expand our music consumption scenarios by partnering with several NetEase games.
Through our rich library of licensed music and original music, we have built a comprehensive and distinctive content ecosystem. In 2024, we continually expanded our music content library, emphasising trending music interests among younger generations while maintaining a focus on improving efficiency. Additions from major Korean music labels, including JYP Entertainment, Kakao Entertainment and CJ ENM, continued to round out our library. We remain dedicated to promoting the growth of high-quality Chinese original music. In 2024, we celebrated the 10th anniversary of our independent musician platform. We have continuously enhanced our in-house music. In 2024, several in-house tracks gained popularity, such as "Follow" ( 《罗生门》).
In 2024, our efforts to strengthen our music-centric monetisation accelerated our growth in online music revenue year-over-year. Revenue from subscription-based memberships grew 22.2% year-over-year, fuelled by an increase in our subscriber base, though slightly offset by a dilution in monthly ARPPU (average revenue per paying user). We rolled out premium offerings, including expanded content and cutting-edge features, expanded membership privileges (such as functional tools, social features and dress-up privileges) and joint programs with external partners. Notably, membership retention rates, time spent and activity ratios grew year over year across our rapidly expanding subscriber base.
We further improved our profitability in 2024, having benefited from economies of scale from our increased subscriber base, strong monetisation of our core online music business and ongoing cost optimisation initiatives. Our gross margins reached 33.7%, up from 26.7% in 2023, and our adjusted net profit surged to RMB1,700.1 million in 2024, more than doubling from RMB818.5 million in 2023.
Looking ahead, our focus will remain on delivering exceptional music experiences, fostering a thriving community, elevating user engagement, and strengthening our operational capabilities. Our strategic vision includes the following key initiatives:
Further diversifying and enhancing our differentiated content offerings with greater efficiency: We plan to deepen our collaboration with copyright holders, boost our independent artist incubation capabilities and elevate our in-house music production competencies, emphasising our strengths in key music genres;
Cultivating our dynamic music-driven community ecosystem: By enriching our offerings with innovative interactive features and expanding opportunities for user communication and connection, we will create more engaging and immersive experiences for our user community;
Driving user willingness to pay for and subscribe to premium offerings: Through enhanced user experiences, deeper engagement, improved membership benefits and expanded consumption scenarios, we will strengthen the appeal of our premium offerings.
Optimising profitability through disciplined approach to operations: We will continue to focus on cost optimisation, operating efficiency and disciplined cost management to achieve sustainable growth.
Comprehensive and differentiated content ecosystem
We actively broadened our content library to offer users a comprehensive and diverse range of licensed and original music. In 2024, we maintained a steady growth of our music library in terms of the number and variety of music tracks. In addition to rounding out top-tier music, we focused on promoting music genres favoured by music lovers on our platform.
Enhancing partnerships with copyright holders
Throughout the Reporting Period, we remained dedicated to forging expansion of our collaborations with music copyright holders in a cost-effective manner.
Amplifying offerings in signature music genres. Music genres such as hip-hop, rock, Japanese ACG and Western music have surged in popularity on our platform. We broadened our content library in those signature genres, including a newly signed strategic partnership with Modern Sky Entertainment. We are also featuring new songs from rappers like KeyNG, VaVa, AIR, Sha Yiting (沙一汀), as well as rock band Penicillin and artist Dou Wei (窦唯). Additionally, we are pursuing copyright collaborations with Western artists, particularly in electronic music, hip-hop, folk and rock genres, including a recent agreement with Galen Grew.
Expansive catalogue of music labels. We continued enriching our catalogue of music labels, forming new partnerships with major domestic and international labels and artists. We were pleased to sign copyright agreements with major K-Pop labels, including JYP Entertainment and CJ Entertainment. Additionally, we established a strategic collaboration partnership with Kakao Entertainment. Moreover, we signed a copyright cooperation agreement with Li Jian (李健), authorizing the full release of his classic works including "Legend" (《传奇》) and "Baikal Lake" (《贝加尔湖畔》).
In-depth collaborations with our copyright partners. We worked closely with copyright holders to enhance both content distribution and commercialisation. These efforts drove remarkable digital and physical album sales on our platform.
Strengthening our leading independent artists' ecosystem
We are committed to investing in initiatives that aid musicians in music creation, promotion and financial support to help them grow their influence and revenue. As of the end of December 2024, our platform had over 773,500 registered independent artists who contributed approximately 4.4 million music tracks. In 2024, our NetEase Musician platform celebrated its 10th anniversary. To celebrate, we launched a series of activities that showcased musicians' 10-year journey, fostering growth, belonging and artists' connection with fans on the platform.
Supporting musicians in content creation. Our diverse range of support throughout the creative process helps artists actualise their creative potential, such as our all-in-one AI music creation tool, NetEase Tianyin. We also organised co-working camps to bring together emerging music talents for collaboration. At our recent in-person camp, we hosted top overseas musicians like Marc Dold and Yuto for the first time to conduct masterclasses and offer guidance to aspiring artists.
Exploring and improving the exposure of musicians and their work. In 2024, our region-oriented music promotions included our renowned City Tour Guide special planning series (城市云游指南), for which we released the Northeast Special Edition, and launched a new event in Guizhou and Suzhou. Our Project Cornerstone (石头计划) released nine compilation albums featuring fresh talent from diverse regions. To foster talent in our signature music genres, we introduced the Chinese Rap Rookie Award (中文说唱新人赏), focusing on identifying rising rap talent. We released a new project "Rap Map" (说唱地图) to help users better understand Dialect rap. We also launched the "Nation" (呐•声) project, featuring a fusion of ethnic and contemporary popular music.
Helping musicians realise commercial value. We rolled out the latest phase of our renowned musician support project, "Project Cloud Ladder 2024" (云梯计划2024), which further bolsters financial backing for musicians by offering a more attractive financial settlement mechanism and a broader scope of incentives.
Developing and promoting differentiated in-house music
Drawing on our musical expertise, diverse user base and deep user insights, our in-house studios focused on producing high-quality music content. This approach caters to the diverse preferences of different audiences, particularly for the younger generation who is eager to discover new high-quality music. Multiple tracks developed in-house have gone viral on both our community and external platforms.
In 2024, our in-house studios successfully produced and popularised multiple hit songs. We focused on top music genres, such as hip-hop, and produced multiple popular hip-hop tracks, including "Follow" (《罗生门》), "Hai Shi Hui Xiang Ni" (《还是会想你》), "5:20 AM" (《5: 20 AM》), "Xie Tian Xie Di" (《谢天谢帝》) and "Ren Shang Ren"《( 人上人》). Our in-house version of 《Dehors》has gained significant popularity. The song combines Cantonese and French languages, creating a unique musical fusion that appeals to a wide range of audiences. Other popular new songs include "Blooming Bauhinia" (《紫荆花盛开》) and "Yu Shi" (《于是》), among others.
Diversified audio-based content offerings
Beyond music tracks, we have been actively broadening long-form audio offerings on our platform. In 2024, we achieved steady growth in long-form audio content consumption, with the average listening time per user of long-form audio on our platform having increased significantly by 35.8% year-over-year.
PUGC/UGC – podcast. By focusing on music-inspired content, podcasts provide an enjoyable avenue for fans to discover quality tracks and lesser-known songs. During the Reporting Period, we launched several customised podcast series interpreting different music genres, such as folk and rock.
PGC – audio books & radio dramas. We have been expanding our library of PGC long-form audio content in a cost-effective way by creating more popular self-produced content. We introduced Mo Yan's latest audiobook "Not Blown Down by the Strong Wind" (《不被大风吹倒》) and launched a special project. In this project, Mo Yan addressed young users' concerns through audio recordings, offering a unique companion experience.
Product innovation and community ecosystem
Throughout 2024, we focused on product innovation and reinvigorating our unique community experience. Since early 2024, we achieved significant results through a comprehensive upgrade to the NetEase Cloud Music App, particularly on emphasising personalised content recommendations and music centric community. Our ongoing efforts elevated the user experience, increased their resonance with our community and boosted music interaction, which led to improved user engagement, such as increased time spent on our mobile app.
Optimising users' music discovery and listening experience
We intensified our focus on improving users' music discovery and consumption experiences by enhancing personalised content recommendations and innovative features that elevate our premium music-inspired audio-visual offerings.
Music content discovery and distribution. We continuously strengthened our app's personalised recommendations functionality, including: 1) enhancing recommendation capabilities by integrating user consumption behaviour across various apps, 2) improving the recommendation function tailored for newer users, and 3) adding new content dimensions for music recommendations, such as playlists based on masterpieces, emotions and genres. These initiatives have increased the efficiency and coverage of content
Enhancing the music consumption experience. We are delving into extended music consumption, and adding more audio-visual and scenario-based features. We upgraded Music Encyclopedia and introduced innovative features such as Lyric Books (歌词本), AI Singing and Lightbulb (小灯泡) for song recommendations. We released a range of new music player interfaces to enhance the audio-visual experience, such as IP-themed players and the popular Vinyl player DIY feature.
Fostering music-inspired community resonance and connections
In 2024, we focused on the emotional impact of music to strengthen our community's music-inspired attributes. This approach improved community content consumption, interaction and creation, playing a vital role in sustaining and increasing strong user activity and stickiness.
Community consumption and interaction. We further enhanced the visibility of our iconic comments section in various app scenarios, by displaying popular comments on the vinyl player and introducing a new player that showcases selected comments. We also optimised interactive features around our iconic comments section. These efforts boosted emotional connections inspired by music, encouraging more user interactions.
Community content generation. Utilising our platform resources, we hosted community activities to encourage the creation of UGC content, like music comments and others. Additionally, we diversified our community content by exploring the integration of music-inspired graphic and text content formats.
Expanding music consumption and communication scenarios
Expanding collaboration with NetEase. In 2024, we expanded our collaborations with NetEase games and online education division (specifically Youdao Dictionary). For example, we introduced music-inspired social interaction features in games, enhancing the integrated music and gaming experience for users. These collaborations boosted our brand awareness and recognition among younger users.
IoT layouts. We continued optimising our functionality that lets users easily switch between different terminals like mobile, PC, TV and in-car scenarios, effectively addressing diverse user needs and improving user experience. These efforts help us improve overall user activity and engagement across multiple terminals and scenarios. In 2024, we further expanded in-car coverage to new brands and models such as Xiaomi, Mercedes-Benz, Harmony lntelligent Mobility Alliance, and Changan. Additionally, we formed a long-term strategic partnership with Great Wall Motors.
Conference Call
The Company's management will host an earnings conference call at 7:00 p.m.Beijing/Hong Kong Time on Thursday, February 20, 2025 (6:00 a.m. U.S. Eastern Time on the same day). Details for the conference call are as follows:
All participants must use the link provided above to complete the online registration process in advance of the conference call. Upon registering, each participant will receive a set of dial-in numbers, an event passcode, and a personal access PIN, which will be used to join the conference call.
A replay of the call will be accessible by phone at the following numbers and entering PIN: 10044909. The replay will be available through February 27, 2025.
Chinese Mainland:
400-120-9216
Hong Kong:
800-930-639
United States:
1-855-883-1031
Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.music.163.com.
About NetEase Cloud Music Inc.
Launched in 2013 by NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), NetEase Cloud Music Inc. (HKEX: 9899) is a well-known online music platform featuring a vibrant content community. Dedicated to providing an elevated user experience, NetEase Cloud Music Inc. provides precise, personalised recommendations, promotes user interaction and creates a strong social community. Its focus on discovering and promoting emerging musicians has made NetEase Cloud Music Inc. a destination of choice for exploring new and independent music among music enthusiasts in China. The platform has been recognised as the most popular entertainment app among China's vibrant Generation Z community.
This press release contains forward-looking statements relating to the business outlook, estimates of financial performance, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realised in the future. Underlying these forward-looking statements are a lot of risks and uncertainties. In light of the risks and uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as representations by the Board or the Company that the plans and objectives will be achieved, and investors should not place undue reliance on such statements.
Non-IFRS Measure
To supplement our consolidated results, which are prepared and presented in accordance with International Financial Reporting Standards ("IFRS"), our Company uses adjusted net loss as an additional financial measure, which is not required by, or presented in accordance with, IFRS. We believe that this measure facilitates comparisons of operating performance from period to period and company to company by eliminating the potential impact of items that our management does not consider to be indicative of our Group's operating performance, such as certain non-cash items. The use of this non-IFRS measure has limitations as an analytical tool, and shareholders and potential investors of our Company should not consider them in isolation from, as a substitute for, analysis of, or superior to, our Group's results of operations or financial condition as reported under IFRS. In addition, this non-IFRS financial measure may be defined differently from similar terms used by other companies, and may not be comparable to other similarly titled measures used by other companies. Our presentation of this non-IFRS measure should not be construed as an implication that our future results will be unaffected by unusual or non-recurring items.
