First Quarter 2024 Financial Highlights
- Total revenues were
RMB6.77 billion (US$937 million ), representing a 3.4% year-over-year decrease, mainly due to the decline in revenues from social entertainment services and others, which was partially mitigated by strong year-over-year growth in revenues from online music services. - Revenues from music subscriptions were
RMB3.62 billion (US$501 million ), representing 39.2% year-over-year growth. The number of paying users increased by 20.2% year-over-year to 113.5 million. On a sequential basis, the number of paying users grew by 6.8 million, the largest quarter-over-quarter net increase to date. - Net profit was
RMB1.53 billion (US$212 million ), growing 27.5% year-over-year. Net profit attributable to equity holders of the Company wasRMB1.42 billion (US$197 million ), growing 23.9% year-over-year. Non-IFRS net profit[1] wasRMB1.81 billion (US$251 million ), representing 23.9% year-over-year growth. Non-IFRS net profit attributable to equity holders of the Company[1] wasRMB1.70 billion (US$236 million ), representing 20.8% year-over-year growth. - Diluted earnings per ADS was
RMB0.91 (US$0.13 ), up fromRMB0.73 in the same period of 2023. - Total cash, cash equivalents and term deposits as of
March 31, 2024 wereRMB34.18 billion (US$4.73 billion ). - An annual cash dividend for the year ended
December 31, 2023 to be paid to shareholders as of the record date will be approximatelyUS$210 million .
Mr.
First Quarter 2024 Operational Highlights
- Key Operating Metrics
1Q24 | 1Q23 | YoY % | |
MAUs “ online music (million) | 578 | 592 | (2.4 %) |
Mobile MAUs “ social entertainment (million) | 97 | 136 | (28.7 %) |
Paying users “ online music (million) | 113.5 | 94.4 | 20.2 % |
Paying users “ social entertainment (million) | 8.0 | 7.1 | 12.7 % |
Monthly ARPPU “ online music (RMB) | 10.6 | 9.2 | 15.2 % |
Monthly ARPPU “ social entertainment (RMB) | 73.4 | 164.5 | (55.4 %) |
Expanded licensed and original content offerings to cater to evolving user preferences, setting new music consumption trends.
- Reinforced partnerships with record labels to broaden our music library's comprehensiveness and popularity. 1) Renewed cooperation with Time Fengjun Entertainment, featuring 30-day head-start privileges on new songs and adding Dolby Atmos upgrades for popular idol groups such as TFBOYS. 2) Renewed partnership with HIM International Music to bring users iconic C-pop content. We also capitalized on our AI capabilities to bolster audience interaction and sing-alongs, amplifying artists' reach.
- Created an increasing number of blockbuster songs through original content production. 1) Produced high-quality original soundtracks for trending TV dramas The Legend of
Shen Li and In Blossom, gaining over 150 million streams on our platform. 2) With a keen grasp of popular trends, we partnered with strategic artists and indie musicians to create widely celebrated songs on social media, such asRIVER FLOW byTIA RAY and What I Anticipate Is Not Snow by Zhang Miaoge.
Innovative features fostered faster personal music asset accumulation on our platform, leading to better user engagement and greater high-potential user discovery.
- Introduced large audio models to increase music promotion accuracy and a new AI Assistant to make music discovery more fun, engaging and convenient.
- Launched a new rewards program and a series of interactive features including themed song-guessing contests and subscriber badges to invigorate music consumption and increase user stickiness.
- Capitalized on
Chinese New Year with targeted multi-channel promotions, attracting a larger-than-expected number of paying users; established a new partnership with Xiaomi (OTC:XIACF) SU7 and conducted holiday-themed activities to boost in-car music consumption. - Hosted QQMUSIC DIANFENG AWARDS, an annual trendsetting online-merge-offline music event catering to the younger demographic, to reinforce our core user base.
First Quarter 2024 Financial Review
Total revenues decreased by
- Revenues from online music services delivered a strong year-over-year increase of 43.0% to
RMB5.01 billion (US$693 million ) fromRMB3.50 billion in the same period of 2023. The increase was driven by solid growth in music subscription revenues, supplemented by growth in revenue from advertising services. Revenues from music subscriptions wereRMB3.62 billion (US$501 million ), representing 39.2% year-over-year growth compared withRMB2.60 billion in the same period of 2023. This rapid growth was driven by further expansion in the online music paying user base and healthy ARPPU. The number of online music paying users increased by 20.2% year-over-year to 113.5 million, with a monthly ARPPU ofRMB10.6 in the first quarter of 2024. The increase in the number of paying users was primarily due to increased users' willingness to pay for appealing membership privileges, expanded content, and attractive interactive features. We also optimized promotion campaigns duringChinese New Year to attract more paying users. The year-over-year increase in revenues from advertising was primarily due to our more diversified product portfolio and innovative ad formats, which were well-received by advertisers. - Revenues from social entertainment services and others decreased by 49.7% to
RMB1.76 billion (US$244 million ) fromRMB3.50 billion in the same period of 2023. The continued decrease was mainly the result of adjustments to certain live-streaming interactive functions and more stringent compliance procedures we implemented beginning in the second quarter of 2023, as well as increased competition with other platforms.
Cost of revenues decreased by 14.8% year-over-year to
Gross margin increased to 40.9% from 33.1% in the same period of 2023, primarily due to strong revenue growth from music subscriptions and advertising services, and the ramp-up of our own content.
Total operating expenses decreased by 7.6% year-over-year to
- Selling and marketing expenses were
RMB187 million (US$26 million ), representing an 11.8% year-over-year decrease, mainly due to overall optimized promotion efforts. - General and administrative expenses were
RMB949 million (US$131 million ), representing a 6.7% year-over-year decrease. This decrease was primarily due to reduced employee-related expenses.
Driven by improved operating efficiency and effective cost controls, our operating profit grew to
The effective tax rate for the first quarter of 2024 was 19.9% compared with 12.2% in the same period of 2023. The increase in the effective tax rate was mainly driven by the accrual of withholding income tax of
For the first quarter of 2024, net profit was
Basic and diluted earnings per American Depositary Shares ("ADS") for the first quarter of 2024 were
As of
Share Repurchase Program
Under the US$500 million Share Repurchase Program announced on March 21, 2023, as of March 31, 2024, we had repurchased 32.2 million ADSs in the open market with cash for a total consideration of
Annual Dividend Policy and Declaration of 2023 Dividend
On
Accordingly, on the same day, for the fiscal year of 2023, the Company's board of directors declared a cash dividend of
Social Responsibilities
We cooperated with
Exchange Rate
This announcement contains translations of certain RMB amounts into
Non-IFRS Financial Measure
The Company uses non-IFRS net profit for the period, which is a non-IFRS financial measure, in evaluating its operating results and for financial and operational decision-making purposes. ™E believes that non-IFRS net profit helps identify underlying trends in the Company's business that could otherwise be distorted by the effect of certain expenses that the Company includes in its profit for the period. ™E believes that non-IFRS net profit for the period provides useful information about its results of operations, enhances the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.
Non-IFRS net profit for the period should not be considered in isolation or construed as an alternative to operating profit, net profit for the period or any other measure of performance or as an indicator of its operating performance. Investors are encouraged to review non-IFRS net profit for the period and the reconciliation to its most directly comparable IFRS measure. Non-IFRS net profit for the period presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data. ™E encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.
Non-IFRS net profit for the period represents profit for the period excluding amortization of intangible and other assets arising from business acquisitions or combinations, share-based compensation expenses, net losses/gains from investments and related income tax effects.
Please see the "Unaudited Non-IFRS Financial Measure" included in this press release for a full reconciliation of non-IFRS net profit for the period to its net profit for the period.
[1] Non-IFRS net profit and non-IFRS net profit attributable to equity holders of the Company were arrived at after excluding the combined effect of amortization of intangible assets and other assets arising from business acquisitions or combinations, share-based compensation expenses, net losses/gains from investments, and related income tax effects. |
About Tencent Music Entertainment
Tencent Music Entertainment Group (NYSE: ™E and HKEX: 1698) is the leading online music and audio entertainment platform in
Safe Harbor Statement
This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the
Investor Relations Contact
Tencent Music Entertainment Group
ir@tencentmusic.com
+86 (755) 8601-3388 ext. 818415
TENCENT MUSIC ENTERTAINMENT GROUP | |||||||||
CONSOLIDATED INCOME STATEMENTS | |||||||||
Three Months Ended | |||||||||
2023 | 2024 | ||||||||
RMB | RMB | US$ | |||||||
Unaudited | Unaudited | Unaudited | |||||||
(in millions, except per share data) | |||||||||
Revenues | |||||||||
Online music services | 3,501 | 5,007 | 693 | ||||||
Social entertainment services and others | 3,503 | 1,761 | 244 | ||||||
7,004 | 6,768 | 937 | |||||||
Cost of revenues | (4,689) | (3,997) | (554) | ||||||
Gross profit | 2,315 | 2,771 | 384 | ||||||
Selling and marketing expenses | (212) | (187) | (26) | ||||||
General and administrative expenses | (1,017) | (949) | (131) | ||||||
Total operating expenses | (1,229) | (1,136) | (157) | ||||||
Interest income | 237 | 278 | 39 | ||||||
Other gains, net | 58 | 46 | 6 | ||||||
Operating profit | 1,381 | 1,959 | 271 | ||||||
Share of net profit/(loss) of investments accounted | 20 | (18) | (2) | ||||||
Finance cost | (34) | (30) | (4) | ||||||
Profit before income tax | 1,367 | 1,911 | 265 | ||||||
Income tax expense | (167) | (381) | (53) | ||||||
Profit for the period | 1,200 | 1,530 | 212 | ||||||
Attributable to: | |||||||||
Equity holders of the Company | 1,148 | 1,422 | 197 | ||||||
Non-controlling interests | 52 | 108 | 15 | ||||||
Earnings per share for Class A and Class B | |||||||||
Basic | 0.37 | 0.46 | 0.06 | ||||||
Diluted | 0.36 | 0.46 | 0.06 | ||||||
Earnings per ADS (2 Class A shares equal to 1 | |||||||||
Basic | 0.74 | 0.92 | 0.13 | ||||||
Diluted | 0.73 | 0.91 | 0.13 | ||||||
Shares used in earnings per Class A and Class | |||||||||
Basic | 3,120,690,738 | 3,081,992,364 | 3,081,992,364 | ||||||
Diluted | 3,165,297,869 | 3,123,242,656 | 3,123,242,656 | ||||||
ADS used in earnings per ADS computation | |||||||||
Basic | 1,560,345,369 | 1,540,996,182 | 1,540,996,182 | ||||||
Diluted | 1,582,648,934 | 1,561,621,328 | 1,561,621,328 |
TENCENT MUSIC ENTERTAINMENT GROUP | ||||||||
UNAUDITED NON-IFRS FINANCIAL MEASURE | ||||||||
Three Months Ended | ||||||||
2023 | 2024 | |||||||
RMB | RMB | US$ | ||||||
Unaudited | Unaudited | Unaudited | ||||||
(in millions, except per share data) | ||||||||
Profit for the period | 1,200 | 1,530 | 212 | |||||
Adjustments: | ||||||||
Amortization of intangible and other assets arising | 117 | 118 | 16 | |||||
Share-based compensation | 202 | 193 | 27 | |||||
(Gains)/losses from investments | (17) | 37 | 5 | |||||
Income tax effects | (39) | (66) | (9) | |||||
Non-IFRS Net Profit | 1,463 | 1,812 | 251 | |||||
Attributable to: | ||||||||
Equity holders of the Company | 1,411 | 1,704 | 236 | |||||
Non-controlling interests | 52 | 108 | 15 | |||||
Earnings per share for Class A and Class B | ||||||||
Basic | 0.45 | 0.55 | 0.08 | |||||
Diluted | 0.45 | 0.55 | 0.08 | |||||
Earnings per ADS (2 Class A shares equal to 1 | ||||||||
Basic | 0.90 | 1.11 | 0.15 | |||||
Diluted | 0.89 | 1.09 | 0.15 | |||||
Shares used in earnings per Class A and | ||||||||
Basic | 3,120,690,738 | 3,081,992,364 | 3,081,992,364 | |||||
Diluted | 3,165,297,869 | 3,123,242,656 | 3,123,242,656 | |||||
ADS used in earnings per ADS computation | ||||||||
Basic | 1,560,345,369 | 1,540,996,182 | 1,540,996,182 | |||||
Diluted | 1,582,648,934 | 1,561,621,328 | 1,561,621,328 | |||||
Represents the amortization of identifiable assets, including intangible assets such as domain name, trademark, | ||||||||
Including the net gains.losses on deemed disposals/disposals of investments, fair value changes arising from | ||||||||
Represents the income tax effects of Non-IFRS adjustments. |
TENCENT MUSIC ENTERTAINMENT GROUP | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
As at | As at | |||||
RMB | RMB | US$ | ||||
Audited | Unaudited | Unaudited | ||||
(in millions) | ||||||
ASSETS | ||||||
Non-current assets | ||||||
Property, plant and equipment | 490 | 526 | 73 | |||
Land use rights | 2,437 | 2,419 | 335 | |||
Right-of-use assets | 367 | 317 | 44 | |||
Intangible assets | 2,032 | 2,023 | 280 | |||
Goodwill | 19,542 | 19,567 | 2,710 | |||
Investments accounted for using equity method | 4,274 | 4,277 | 592 | |||
Financial assets at fair value through other comprehensive income | 6,540 | 8,791 | 1,218 | |||
Other investments | 307 | 327 | 45 | |||
Prepayments, deposits and other assets | 540 | 437 | 61 | |||
Deferred tax assets | 352 | 360 | 50 | |||
Term deposits | 8,719 | 7,589 | 1,051 | |||
45,600 | 46,633 | 6,459 | ||||
Current assets | ||||||
Inventories | 8 | 11 | 2 | |||
Accounts receivable | 2,918 | 2,808 | 389 | |||
Prepayments, deposits and other assets | 3,438 | 3,068 | 425 | |||
Other investments | 37 | 37 | 5 | |||
Term deposits | 9,937 | 16,370 | 2,267 | |||
Restricted Cash | 31 | 31 | 4 | |||
Cash and cash equivalents | 13,567 | 10,218 | 1,415 | |||
29,936 | 32,543 | 4,507 | ||||
Total assets | 75,536 | 79,176 | 10,966 | |||
EQUITY | ||||||
Equity attributable to equity holders of the | ||||||
Share capital | 2 | 2 | 0 | |||
Additional paid-in capital | 36,576 | 36,559 | 5,063 | |||
Shares held for share award schemes | (302) | (327) | (45) | |||
Treasury shares | (6,996) | (7,196) | (997) | |||
Other reserves | 9,658 | 11,887 | 1,646 | |||
Retained earnings | 16,969 | 18,391 | 2,547 | |||
55,907 | 59,316 | 8,215 | ||||
Non-controlling interests | 1,295 | 1,439 | 199 | |||
Total equity | 57,202 | 60,755 | 8,414 | |||
LIABILITIES | ||||||
Non-current liabilities | ||||||
Notes payables | 5,636 | 5,647 | 782 | |||
Deferred tax liabilities | 239 | 174 | 24 | |||
Lease liabilities | 297 | 257 | 36 | |||
Deferred revenue | 148 | 156 | 22 | |||
6,320 | 6,234 | 863 | ||||
Current liabilities | ||||||
Accounts payable | 5,006 | 5,493 | 761 | |||
Other payables and other liabilities | 3,472 | 2,936 | 407 | |||
Current tax liabilities | 567 | 670 | 93 | |||
Lease liabilities | 115 | 97 | 13 | |||
Deferred revenue | 2,854 | 2,991 | 414 | |||
12,014 | 12,187 | 1,688 | ||||
Total liabilities | 18,334 | 18,421 | 2,551 | |||
Total equity and liabilities | 75,536 | 79,176 | 10,966 |
TENCENT MUSIC ENTERTAINMENT GROUP | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
Three Months Ended | ||||||
2023 | 2024 | |||||
RMB | RMB | US$ | ||||
Unaudited | Unaudited | Unaudited | ||||
(in millions) | ||||||
Net cash provided by operating activities | 1,852 | 2,686 | 372 | |||
Net cash provided by/(used in) investing activities | 811 | (5,498) | (761) | |||
Net cash used in financing activities | (80) | (522) | (72) | |||
Net increase/(decrease) in cash and cash equivalents | 2,583 | (3,334) | (462) | |||
Cash and cash equivalents at beginning of the period | 9,555 | 13,567 | 1,879 | |||
Exchange differences on cash and cash equivalents | (9) | (15) | (2) | |||
Cash and cash equivalents at end of the period | 12,129 | 10,218 | 1,415 |
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