In This Article:
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Total Revenue: RMB7 billion, up 7% year over year.
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Online Music Revenue: RMB5.5 billion, increased by 20% year over year.
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Music Subscription Revenue: RMB3.8 billion, up 20% year over year.
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Net Profit (IFRS): RMB1.7 billion, increased by 35% year over year.
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Net Profit (Non-IFRS): RMB1.9 billion, increased by 29% year over year.
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Gross Margin: 42.6%, up 6.9 percentage points year over year.
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Online Music Paying Users: 119 million, up 16% year over year.
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Monthly ARPPU: RMB10.8, up 5% from the same period last year.
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SVIP Members: Surpassed 10 million.
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Operating Expenses: RMB1.2 billion, representing 17.4% of total revenues.
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Cash and Equivalents: RMB36 billion as of September 30, 2024.
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Diluted Earnings per ADS (IFRS): RMB1.01, up 36% year over year.
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Diluted Earnings per ADS (Non-IFRS): RMB1.16, up 30% year over year.
Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Tencent Music Entertainment Group (NYSE:TME) reported a 20% year-over-year growth in online music services revenue, contributing to a 29% increase in adjusted net profit.
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The company successfully renewed contracts with top Chinese labels and formed strategic partnerships with international artists, enhancing its music offerings.
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TME's SVIP membership program surpassed 10 million members, driven by enhanced privileges and high-quality audio features.
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The company reported a 35% year-over-year increase in IFRS net profit, reaching RMB1.7 billion.
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TME's gross margin improved to 42.6%, supported by an expanding user base and increased advertising revenues.
Negative Points
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Social entertainment services revenue decreased by 24% year over year, highlighting challenges in this segment.
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The effective tax rate increased to 17.7% from 12.2% in the previous year, due to withholding tax on earnings remitted by PRC subsidiaries.
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Despite the growth in SVIP memberships, the ARPPU (Average Revenue Per Paying User) did not perform as well as expected.
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The company faces ongoing challenges in stabilizing and growing its Monthly Active Users (MAUs), which have remained around 570 million.
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There is uncertainty regarding the future growth rate of gross profit margins, which may not match the growth seen in 2024.
Q & A Highlights
Q: What is the outlook for Q4 2024 and Q1 2025, especially regarding the Super VIP program? A: Cussion Kar Shun Pang, Executive Chairman, stated that the Super VIP program has shown strong initial results with over 10 million subscribers. The focus will remain on expanding the paying user base and increasing ARPPU. The company is optimistic about growth prospects for 2025, expecting acceleration in topline growth driven by subscriber and ARPPU increases, assuming a stable external environment.