Cussion Kar Shun Pang; Executive Chairman of the Board; Tencent Music Entertainment Group
Yang Liu; Analyst; Morgan Stanley Asia Ltd.
Roger Duan; Analyst; Barclays Capital, Inc.
Wei Xiong; Analyst; UBS Securities Co. Ltd.
Good evening. Good morning. And welcome to Tencent Music Entertainment Group's third-quarter 2024 earnings conference call. I'm Millicent Tu, Head of IR.
We announced our quarterly financial results earlier today before the US market opened. The earnings release is now available on our IR website and via newswire services. During today's call, you will 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'll make forward-looking statements. Please note that we'll 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.
(Events Instructions) Please to 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?
Thank you, Millicent. Hello, everyone, and thank you for joining our call today. The solid third-quarter performance once again showcases our ability to deliver high-quality growth. Our fast approach continues to drive both subscriber-based expansion and ARPPU growth.
Online music services revenue grew by 20% year over year contributing significantly to a 29% year-over-year increase in adjusted net profit. During the quarter, we prioritized the deepening integrations across different products. It's evident that the synergies between our dual engines on platform and widen content ecosystem has become a powerful force, enabling us to unlock more value to users.
Let me give you some examples. First, our ongoing efforts to strengthen partnerships with domestic and international record labels have continued to bear fruit, enhancing our music offerings and diversifying our content. Recently, we renewed the contract with top Chinese labels like YH Entertainment Group and Image Music Group, including early access for new song releases from popular artists such as Silence Wang, Wang Sulong.
Additionally, we formed a strategic cooperation with Galaxy Corporation, home to the global music sensation, G-Dragon, to bring new more international music content, digital albums, and merchandise to our platform. Our scale and unique value proposition have enabled us to become the multi-year proprietary partner for G-Dragon's upcoming tour concerts in Asia and other regions.
As our influence in the industry grows, an increasing number of record labels are working with us to launch innovative artist-fan interaction events, focusing on new song releases such as voice-based interactions, song guessing games, and music challenges. Second, we have been partnering with A-listed artists and rising indie musicians to hold offline music experiences and concerts, connecting them with their fans in creative ways.
Two recent events demonstrated our success in this space. In September, we hosted TME's Zebra Music Festival in Anhui, featuring a stellar lineup of artists including Chen Chusheng, Joker Xue, and Zhang Yuan, as well as Tencent musicians and other popular artists, Leon Liu, Zhao Lei, and Suede
This event attracted an impressive 65,000 fans over two days, earning widespread acclaim and impact. We also organized an offline concert for singer and songwriter, Yu Jiayun, marking his first-ever ticket show with over 10,000 attendees.
Third, leveraging Tencent's powerful network and ecosystem, we continue to nurture our music content community that inspires interactive engagement. In the third quarter, we collaborated with celebrities Karry Wang, Wang Junkai; and Esther Yu, Yu Shuxin to produce theme songs titled The Hero (inaudible) and Breaking News (inaudible) for popular games League of Legends: Wild Rift and Peacekeeper Elite. These cross promotions with Tencent Games combined with distinct in-game item redemptions have led to impressive results. The popularity of these theme songs, which hit our top trending songs chart (inaudible) and Chinese songs charts (inaudible) has increased the user engagement, effectively reaching the music and gaming communities across platforms.
We recognize that different users cohorts have distinct music consumption needs and preferences. To address this, we are actively expanding unique benefits to our premium members for. Our super VIP members, we introduced priority access to extensive iconic digital albums from renowned artists such as (inaudible), with new additions of multiple K-pop singers in the third quarter. We also enhanced SVIP privileges to include unique concerts and fan activities, such as presales for tickets to shows by G.E.M., Tang Tsz-Kei; Mariah Carey; and Tia Ray, Yuan Ya Wei.
These enhanced privileges have effectively driven growth in our SVIP memberships, and we will continue to unlock new opportunities for both music labels and artists.
Last but not least, we published our inaugural ESG report in the third quarter, providing a comprehensive overview of our ESG practice and achievements. This is just the beginning of our sustainability journey.
I'm also delighted to share that the Tencent musician platform was recently recognized as one of China's first model cases for the national copyright powerhouse strategy, honoring our contributions to safeguarding music copyrights. This recognition will further motivate and propel us to promote the music industry healthy and sustainable development.
In summary, our sustainable and long-term approach to achieving high-quality growth will carry us far and beyond what we have achieved so far. We remain dedicated to fostering a compassionate, inclusive, and thriving music and ecosystem that benefits music labels, artists, users, and the broad industry.
Now, I would like to turn the call over to Ross for more details on our overall platform development. Ross, please go ahead. Thank you.
Zhu Liang
Thank you, Cussion. Hello, everyone.
Alongside our content and user insights, our years of operational expertise have been a key driver in strengthening our industry position and differentiating our value proposed position in a dynamic environment.
Our third-quarter results once again demonstrated our ability to execute on strategies that return users, attract the new paying subscribers, and upgrade more members to premium services. These results boiled down to our commitment to innovation and our increasing ability to meet users' (inaudible) music consumption preference.
Let me start by sharing some progress on our product upgrades in the third quarter, which have been well received by our large use case. First, our deep understanding in users' needs enables us to further innovate our product features, bringing fresh experiences. For example, recently, we launched the industry first player interface, featuring horizontal screen as well as real-time interactive comments feature, promoting a deeper sense of community belonging.
We also upgraded the top trending songs chart (inaudible) with active features, attracting millions of participants. This has helped increase the task influence.
Second, we continue to explore new technologies to enhance user experiences. For example, we have leveraged large language models to streaming line content production, further improving both efficiency and quality. Notably, in the third quarter, we deployed AI technology to create single (inaudible) which quickly went viral on short-video platforms. Our text-to-speech TTS technology also helped us create tens of thousands of audio books on our platform.
Turning to our efforts to expand our subscriber base, first, we optimized our operational and marketing efforts to drive a new subscriber acquisition across various environments. For example, centered on the Mid-Autumn Festivals event, when we rewarded the new users with subscription benefits through unique interactive features. This has positively contributed to paying user methods.
Second, we continue to improve our recommendation algorithm. One example is enhancing the novelty of tailored content suggestions, making it easier for users to discover music. This led to high recommendation streaming share subsequently in the third quarter, which in turn improve paying user commission efficiency.
Third, we collaborated with iconic IPs like Black Myth: Crayon Shin-chan, and Disney allowing us to offer personalized interfaces that are attractive additional paying users. In terms of SVIP, our highly engaged subscribers, we are pleased to report that at the end of the third quarter, we reached an important milestone by surpassing 10 million. The unique benefits of our SVIP plans are gaining traction as shown by the higher ARPPU and a long time spend on our platform compared to other tiers of paying users.
Let me provide more details on this achievement. First, our proprietary self-developed audio quality features have enhanced the listening experience for SVIP members. Standout examples from this quarter are QQ Music's Premium Sound, DTS sound quality, and Kugou Music's Viper Ultra Sound, which bring clear, more immersive audio to our users.
Furthermore, we expanded our high-quality sound experience to in-car scenarios with Viper series audio quality designed for our SVIP membership during Xiaomi, Li Auto, and the NIO Vehicles. Second, our enhanced long -form audio offerings have also had a positive impact on user revenues to review their subscriptions.
We expanded our audiobook content library with original content under popular IPs across various genres, including HTV dramas and films, comics, suspense, and the children's stories.
Third, these are just a few examples of the initial steps that we are taking to grow our SVIP memberships. Coupled with the growing depth of our content ecosystem, as Cussion discussed, we have a solid foundation for delivering richer content benefits. Moving forward, we will continue to focus on both unique content and product offerings, meeting the needs of our users and delivering the delightful music experiences.
With that, I would like to turn the call over to Shirley, our CFO, for a deep dive into our financials.
Min Hu
Thank you, Ross, and greetings to everyone. I will now turn to our financial results.
Our effective monetization of online music service and operational efficiency management continued to drive strong financial results in the third quarter of 2024. With strong performance in our music subscription and advertising business, we are pleased to see our revenue growth resume its growth trajectory on a year-over-year basis.
IFRS net profit increased by 35% year over year to RMB1.7 billion and non-IFRS net profit rose by 29% year over year to RMB1.9 billion. Total revenues in the third quarter of 2024 were RMB7 billion, up by 7% year over year.
Online music revenues increased by 20% year over year to RMB5.5 billion. This increase was mainly driven by the strong expansion of our music subscription revenues, supplemented by growth in advertising revenues as well as growth in revenues from offline performances.
Music subscription revenues in the third quarter of 2024 reached RMB3.8 billion, representing a 20% increase year over a year and the 3% rise sequentially. Monthly ARPPU was RMB10.8, up 5% from RMB10.3 in the same period last year. The number of online music paying users were 119 million, representing a 16% increase year over year with quarterly net ads of 2 million users with the goal of achieving growth in both subscribers and the monthly ARPPU.
We have strategically focused on SVIP membership program and enhanced membership benefits such as priority access to digital albums, presale for tickets to concerts and fan activities, and high-quality audio and sound effects for mobile and in-car users. These benefits and the features have helped us achieve an important milestone of passing 10 million SVIP members this quarter.
Advertising revenues also had a strong year-over-year growth, primarily due to the growth in ad-supported mode revenues. We continued to innovate and diversify our product offerings and advertising formats. The attractive interactive features and enriched benefits, we offered, helped improve entrance rate for our ad-supported advertising and enhanced user engagement and ECPM and attracted more advertisers this quarter.
Social entertainment services and other revenues were RMB1.5 billion, down by 24% year over year. For social entertainment services, our top priority is safety in operation and we will keep monitor marketing conditions and the competitive landscape. Meanwhile, we continue to innovate and build new products and features to drive quality growth in areas such as raising membership and advertising -- raising social entertainment.
Our gross margin for Q3 reached 42.6%, representing an increase of 6.9 percentage points year over year due to a few factors. First, the expansion of our pay user base, the enhanced monthly ARPPU for online music, and the growth in advertising revenues have positively impacted our growth margin.
Second, we have been focused on ROCE as a key metric to manage our content and royalty costs. Third, the ramping up of our own content continue to help improve our gross margin. Lastly, the growth in raising memberships and advertising, raising social entertainment, also positively impact our gross margin.
Going on to operating expenses, in the third quarter of 2024, they amounted to RMB1.2 billion, representing 17.4% of our total revenues compared with 19.3% in the same period of last year. Selling and marketing expenses were RMB220 million and remained relatively stable comparing with the same period of last year.
Our ROI-focused approach for promotion expenses, together with product appearance improvement, have contributed to the growth in online music MAUs. We will continue to invest in areas with long-term growth perspective, such as online music and content promotions.
General and administrative expenses were RMB998 million, down by 5% year over year, primarily driven by lower employee-related expenses. Our effective tax rate for Q3 was 17.7% compared to 12.2% in the same period of 2023. This increase was primarily attributed to the approval of withholding tax of RMB113 million related to earnings to be remit by our PRC subsidiaries to offshore entities.
For Q3 2024, our net profit and net profit attribute to equity holders of the company for RMB1.7 billion and RMB1.6 billion respectively. Non-IFRS net profit and the non-IFRS net profit attributable to equity holders of the company for RMB1.9 billion and RMB1.8 billion respectively. The financial results for Q3 2024 have reflected an unrealized loss from foreign exchange due to the fluctuation of exchange rate between RMB and USD as of June and September 30, 2024.
Our diluted earnings per ADS this quarter was RMB1.01, up 36% year over year. Non-IFRS diluted earnings per ADS include -- increased to RMB1.16, up 30% year over year. These results underscored our robust financial performance, enhanced operating efficiency, and the benefit from our share repurchase program.
Under the share repurchase program announced in March 2023, as of September 30, 2024, we have repurchased the 42.1 million ADS from the open market for total cash consideration of USD335.5 million, of which approximately USD100 million were repurchased in the third quarter of 2024. As of September 30, 2024, our combined balance of cash, cash equivalents, term deposits, and short-term investment were RMB36 billion as compared with RMB35 billion as of June 30, 2024. This combined balance was also affected by changes in the exchange rate of RMB to USD at different balance sheet dates.
Looking forward, we will continue to drive high-quality growth in our music business such as expanding SVIP memberships and advertising business as well as operational business improvement. We will also continue to invest in high-quality content, original content production as well as innovative technologies to further improve user engagement and enhance user experience. We remain confident in the long-term healthy growth in music industry and our business and are dedicated to provide high-quality returns for our shareholders.
This concludes our prepared remarks. We are now ready to take your questions.
Millicent Tu
(Event Instructions) Liu Yang, Morgan Stanley.
Yang Liu
(interpreted) Thank you very much. Thanks for the company for the presentation. I'd like to ask the first question. First question is regarding the outlook for Q4 of this year and the Q1 next year. From the presentation, I clearly noticed the Super VIP is progressing pretty well. Especially based on the microeconomic condition and the competition, do you believe Super VIP is going to continue to boost our performance growth? Especially, what would be your outlook for Q4 of this year and the full year of next year? Thank you.
Cussion Kar Shun Pang
Okay. Thanks for your questions. And I think this quarter's performance of TME once again testified the effectiveness of our high-quality growth strategy, which is shown by the balance of growth between our revenue and also the net profits as well as the subscribers and ARPPU.
So for the midterm targets, I think, our key priority is to continue to expand our paying user base. So at the same time, our commitment to grow the ARPPU is more than ever, which proven by the strong initial results of our Super VIP payer that you have mentioned. We have already recorded over 10 million subscribers as of the end of September 2024.
As you may recall our business journey, I think our strategy evolution is basically transitioning from the pay downloads to streaming and also upgrading our basic membership to Green Diamond membership; has given us a lot of insights and also accumulated experience. We are now pushing the boundaries to explore more diverse music scenarios and add more high-quality content, product features, and also user privileges to our new Super VIP membership, which we strongly believe that it will help us to broaden our user base and deepen our user loyalty as well. So it's going to be helping us to have a very healthy growth in the future.
Last but not least, I think that I would like to point out that we are now back on track to resume a positive revenue growth in 2024. And looking into 2025, we are optimistic about our growth prospects. Assuming the external environment stays stable, we expect to see an acceleration in both the topline growth and mainly driven by the steady increase in the number of subscribers and ARPPU and also along with improved profits and profit margins.
Millicent Tu
Lincoln Kong, Goldman Sachs.
Lincoln Kong
Well, thank you management for taking my question. Congrats on the pretty solid quarter. So my question would be on the member side. I think in the third quarter, we a new add up of 2 million new subscribers. That's actually better than we earlier expected or company's earlier target. Could management share a bit more in terms of the reason behind it?
And when we're thinking into fourth quarter, as we just passed the [Singles' Day], so could we have a bit more color in terms of the Singles' day promotion intensity? How should we think about the fourth-quarter new subscriber, as especially compared versus the third quarter? Any color in the user retention part will be great. Thank you.
Zhu Liang
(interpreted) Thank you very much. Thanks for your question. Yes, indeed, in Q3, the performance is better than expectation. I think it's mainly because of our strategies. We still would like to keep a very stable operational strategy starting from this year to now.
And at the same time, we also pay much attention to the ever-extending privilege for the monthly subscribers. And we are also at the same time, continue to stabilize the growth of the product. At the same time in Q3, there are some festivals, especially the Mid-Autumn Festival. We are also leveraging the campaign and the marketing strategies to make sure we grow our subscriber base in a very healthy way.
Well, regarding the marketing strategies, and I think in Q4 of this year or Q1 of next year, we're still going to keep a very tight control over the marketing because we want to seek for healthy and steady growth of our business and rather retain the subscribers and the users within us. And more importantly, we really want our users to know the true value of the subscription business, especially, the value of the content we provided to them. In that way, the user will stay with us and still be active on our platform.
In terms of the user or the subscriber privilege, in addition to the traditional content, and we were also trying to further improve the content quality. And besides the content, we also did a lot of job in order to improve the sound quality and the sound effect. For example, we continued our good cooperation with DTS. And at the same time, we also adopted the Audio 3D in order to provide more privilege to our users.
We also piloted some attempts in the in-car and the mobile end. But at the same time, we do hope that we will provide the good service and functionalities and the privilege to better improve the service to the subscribers, and more importantly, to make them feel happy. Especially recently, we also provide when listening to the song and there are also some backing vocal privilege that has been provided to the user.
So overly speaking, regarding our operational strategy of the subscribers, we still would like to take the traditional standard measures plus SVIP as a combo therapy. In that way, we can continue to improve the monetization efficiency of our platform.
Regarding the basic users and what we are trying to do is still based upon the subscriber base. We are going to continue to improve the size of the subscriber along with a very steady growth of the [ARRPU]. While at the same time, we also would like to emphasize on new user engagement and attention. And more importantly, for SVIP, we hope we can continue to promote the primary user from the subscriber to SVIP in order to further drive up the ARRPU. Because generally speaking, our SVIP size is still at a relatively low stage. So we hope it can go through for healthy and stable graphs in the near future that would also contribute to the future ARRPU improvement.
Millicent Tu
Alicia Yap, Citi,
Alicia Yap
Thank you for taking my questions. I have follow-up questions on --
Millicent Tu
Alicia, we can't hear you. Okay. Sorry about the technical issue. I think, Alicia, we'll go back to you later.
[Roger Duan], Barclays.
Roger Duan
Hi. Thank you, management, for taking my question. So, thank you, management.
So I have a follow-up also on SVIP program. So now we are over at 10 million as of third quarter. So just try to get a sense of how many of that was added during the quarter. And other than that, how many was converted from the regular VIP program or how many of that was from like new users? Thank you.
Zhu Liang
(interpreted) Thank you very much. Thanks for your question. According to the statistics, majority of our SVIP user are still be upgraded from the traditional or the basic SVIP. But we're also keeping an eye on the new customer engagement. But in that way, responding to your question, majority of the existing SVIP are still being promoted or upgraded from the basic VIP account.
Interestingly speaking, according to the user profile SVIP, we noticed that many of them are young users. This can also tell our service and the privilege we provided to the users are quite fit into their interest and needs.
But at the same time, we also keep an eye on the user of the EV because we know that many of the EV user are indeed the young users. So we do want to further extend the cross-device privilege to our SVIP. But at the same time, recently, we were also discussing combining SVIP with fence economy. And we were just wondering whether we can provide best VIP with the Starlight card in order to make sure they get the rewards and incentives from us.
So that's the reason with true belief in the next few years, our SVIP sites still have empty room for further improvement, which will also contribute to the ever-increasing ARRPU. Thank you.
Millicent Tu
Zhang Lei, Bank of America.
Lei Zhang
(interpreted) Thank you very much. Thanks for the management team. I also have a follow up question regarding SVIP and ARRPU. And first of all, we do see that SVIP size continue to grow, reaching 10 million within this quarter, which is better than what expected. But it seems that ARRPU is not performing that well, especially been reflected in a single month of Q3. You might to kindly work us through the reason and how you're going to balance the user size growth along with the ARRPU growth. And to the management team, how are you going to expect the ARRPU growth in the near future? When it's going to see a very good response from the ARRPU?
Zhu Liang
(interpreted) Thank you very much. Thanks for the question. I have to say that our SVIP size is not coming to 10 million over just one night. We will deep dive there for close to one year. We start everything from scratch. So it is indeed a result of the startup efforts, where -- nowadays, we already reached 10 million SVIP user. But regarding the ARRPU, the ARRPU has been accumulated and being performed in a continuous approach.
But just now in my response to the previous questions I have already mentioned in our existing model and majority of the SVIP customer are still the traditional subscribers. To respond to your question, at least from the model perspective, we believe when SVIP size reach 20 million to 30 million, then you're going to see more response from ARRPU. In other words, it's going to be in line with the ever-increasing SVIP size graphs. And that means that when the SVIP penetration continue to improve, it also going to contribute more to ARRPU.
But here now, I think what you need to say is how the ARRPY graph is going to continue. But we can't take ARRPU as an independent factor and assess it on the quarterly basis.
Just one more comment, and especially within our 10 million SVIP, I have to say its ARRPU higher than our basic subscriber account.
Millicent Tu
Fang Wei, Mizuho.
Wei Fang
Thank you taking my question. Just want to double click on the 10 million Super VIP milestone. By the way, congrats on the 10 million milestone. Can you help share any color on the Super VIP kind of profile? You mentioned, they tend to be more young users, right? What about by app, like we're seeing -- like QQ versus the Kugou apps, right? And you also highlighted some of the key drivers, for example, premium audio quality, right, the long-form audio offering. Just curious if there is a way to rank them by effectiveness this quarter? And then which area do you plan to focus on going forward to continue to drive the conversion? Thank you.
Zhu Liang
(interpreted) Thank you very much. Responding to the first part of your question, at least from our operations, around that 10 million SVIP, half are coming from QQ Music and half from Kugou. It is still in line with our high-value user operation strategy.
As I mentioned in my presentation, and actually, we do provide the full privilege to SVIP user, including the long-form audio and the high-quality sound effect and sound quality and the first enjoyment of the digital album as well as the user experience for cross devices, recent experience.
Well, regarding additional privilege, as I have already mentioned, we do provide the backing vocals. But at the same time, we also provide the ringtone editing at the Kugou app. But at the same time, we're also considering of providing some physical material privilege. For example, if you are SVIP with us, we can surely provide you some (inaudible) for example, like the calendars of the songs and we're also planning the SVIP family package or the family membership package because family membership package proved to be successful on the video website. So we are also considering of referring this good practice to our SVIP business.
Millicent Tu
Wei Xiong, UBS.
Wei Xiong
(interpreted) Thank you very much. Thanks for the management team. I have a question regarding social and entertainment business. For social and entertainment business, in Q3 of this year, the revenue actually stood better than what expected. The revenue decrease also been narrowed down. Is it possible for the management team to elaborate on the reasons?
Is there any specific measure you take in order to continue to improve the business? And especially, how we're going to take a look at the Q4 and the next year of social and entertainment business? How the growth rate might be? And what would be its contribution to the total revenue? Thank you.
Zhu Liang
(interpreted) Thank you very much. Thanks for your question. Regarding social entertainment business, there are two platforms
I think a good growth that has been identified are coming from WeSing. On WeSing, besides live streaming business, and we also provide the other business, for example, advertisement business on WeSing and especially its subscription business and the VIP business are all performing than -- better than what we expected. So generally speaking, the better-than-expected WeSing performance continued to contribute to the revenue for social entertainment business compared with last year.
The second one is on Kugou. And on Kugou, especially on Kugou live and live streaming, we did a very good design over the interactive games. It is more like a card collection mechanism and play, and which can help us to further implant the innovative play into the live streaming performance. So that's the reason we believe its revenue was better than what we expected. And I also believe that, that is also the reason its total contribution to the revenue growth is better than what we expected.
As we continue to solidify our middle desk for the live streaming service and also register a very stable performance, in order to make sure more functionalities could be swapped from one platform to another, so in that way, I believe in the near future, the social and entertainment business still going to have very stable drops.
Millicent Tu
Maggie Ye, CLSA.
Maggie Ye
Thank you for taking my question. Our MAU seems to have stabilized around RMB570 million in the past four quarters and they actually added RMB5 million in 3Q. So could management share with us the priority in your latest MAU strategy? Shall we actually expect MAU to return to any growth at some point? And how shall we think about future opportunities from deeper integration into Weixin ecosystem? Thank you.
Zhu Liang
(interpreted) Thank you very much. Thanks for the question. Regarding our MAU strategy and growth, I think the key is still rest with the content, especially our self-commissioned content and unique content continue to drive up the MAU. And especially, today, I mentioned while working with celebrities and artists of launching the album, but at the same time, the content is played on different terminals. And in that way, we also have the self-made hits. Most importantly, those high-quality content continue to drive up MAU. That is the strategy for us to continue to improve MAU growth.
From the product functionality perspective, for the past one year, we continue to optimize the play experience and provide more innovative actions of the interactive with the users. That can help us to further retain the users and continue to grow the MAU. And especially. I was mentioning that MAU on the terminal end, the growth has been pretty helpful.
But at the same time, on QQ Music, on this platform and we find out the promotion and marketing over ROCE really works and it proved to be physical. So that's the reason it can also help to drive up the MAU. And that's the reason we also would like to copy the successful story to Kugou.
But at the same time, I also would like to say that in-car DAU and IoT is still going to be a great growth driver in the near future, especially for the in-car business. And I think, a great opportunity was there. And besides Kugou and the concept version and [Kuwo] app, we hope that we're going to keep an eye on new apps in order to further contribute to the growing MAU.
And regarding the second part of question, how we're going to keep an eye on, listen to WeChat. We do believe listen to WeChat is a great platform with very good growth. But strategically speaking, we're also going to help listen to WeChat to gain a better growth. I think its business size looks okay and hope in the near future, it could also be an active platform and continue to lay a solid foundation for our self-commissioned content in the near future.
Millicent Tu
Thomas Chong, Jefferies.
Thomas Chong
Hi. Good evening. Thanks, management, for taking my question. My question is about operating expenses as well as a margin trend. Given that we already exceed 40% in terms of our GP margin, I just want to get some more color regarding our 2025 and our long-term profit trend and margin trend. What are the key areas that we can get a further coverage in in our cost side? And on OpEx side, how should we think about S&M expenses going forward and our loan IFRS earnings growth, going forward? Thank you.
Min Hu
(interpreted) Thank you very much. Let me talk about the GP margin first. In Q3, our GP margins stood at 42.6%. We registered continued growth for a few quarters.
I'm talking about a few drivers. The first driver is the ever-increasing revenue from the music business and also the growing of our user base. ARRPU of the user and also the rapid growth from the advertisement business, all positively contribute to the GP margin.
The second reason is because we adopt ROC in managing the cost. So that's the reason the cost on the copyrighted content, and especially, the content cost growth is actually lower than our music revenue growth.
And the third driver is because that we have a more contribution from the self-commissioned content and the co-created content that also going to positively contribute to the GP margin.
But regarding the social business, and you can say we also took some better strategies, and we continue to reduce the percentage of the live streaming share. But at the same time, we see SVIP revenue growth and advertisement growth also contribute a lot to our social revenue margin improvement.
So look into Q4 of this year and 2025 and I do believe the factors mentioned above still going to play very important roles. But regarding the GP margin, besides a good improvement, I think in 2025, the growth rate might lower than what we saw in 2024. We're talking about the operating expenses. We foresee that in 2025 S&M expenses and the G&A expenses going to grow slightly, but its growth rate would be much lower than our revenue growth rate.
So I do believe that in 2025, the adjusted net profit and the adjusted net profit rate still going to have a good growth momentum. You also asked about effective tax rate. And at least from the operational perspective, we do believe effective tax rate is going to remain unchanged.
But for this year and because we have many of the dividend that has been sent from the onshore companies to the offshore, so that's the reason it generates many withholding tax, which makes our effective tax rate looks higher. We are -- looking to next year, we may still have similar dividend programs and we are also going to have the measures in place. But regarding the total size of the dividend, that has not yet been confirmed.
Millicent Tu
Okay. Thank you everyone for joining us today. If you have any further questions, please feel free to contact our IR team.
And this concludes today's call. And thank you again and look forward to speaking to you next quarter.
Cussion Kar Shun Pang
Thank you very much. Thank you.
Min Hu
Thank you.
Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.
