Tencent Music Entertainment has published its financial results for Q3 2022 (the three months to end of September).
The China-based music streaming giant, which operates music services, QQ Music, Kugou and Kuwo, generated total revenues of RMB7.37 billion (USD $1.04 billion) in Q3, representing a 5.6% year-over-year decrease.
TME’s net profit grew YoY however, by 38.7%, reaching RMB1.09 billion (USD $154 million) in Q3.
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Revenues from online music services for Q3 2022 increased by 18.8% to RMB3.43 billion (USD $482 million) from RMB2.89 billion in Q3 2021.
TME says that this increase was driven by strong growth in music subscription revenues, supplemented by growth in revenues from sales of digital albums and advertising services, partially offset by a decrease in sublicensing revenues.
Revenues from music subscriptions reached RMB2.25 billion (USD $316 million), representing growth of 18.3% compared to RMB1.90 billion in the same quarter last year, primarily due to an increase in the number of paying users by 19.8%.
The company’s paying music users reached 85.3 million in Q3, after adding a total of 2.6 million paying music users in Q3 versus the end of Q2 2022.
TME’s total Mobile Monthly Active Users of online music reached 587 million in Q3, down 7.7% YoY, versus 636 million in Q3 2021.
The company says the year-over-year decline in online music mobile MAUs was “primarily due to churn of our casual users amid competition from pan-entertainment platforms, as well as cost optimization measures to focus on boosting monetization efficiency as a platform of scale”.
“Notably, online music paying users, a cohort representing high-quality users, continued to grow at a robust pace and drove paying ratio to a new record,” added TME in its filing on Tuesday (November 15).
In Q3 2022, TME completed its secondary listing on the Main Board of The Stock Exchange of Hong Kong under Stock Code 1698, nearly four years after the firm started trading on the New York Stock Exchange (on December 12, 2018).
TME said on Tuesday that, as “a signal of confidence in the Company’s bright future”, it had repurchased over $800 million of its own stock, “pursuant to the $1 billion share repurchase program announced last year as of the end of Q3.
“Effective cost optimization measures and improved operating efficiency led to increased profitability amid challenging macro conditions this quarter.”
Cussion Pang, TME
Cussion Pang, Executive Chairman of TME, said: “Effective cost optimization measures and improved operating efficiency led to increased profitability amid challenging macro conditions this quarter.
“Leveraging our dual engine content-and-platform strategy, we introduced more resources and optimized services to furnish music content creators and musicians with the tools they need and music lovers with the sounds and features they want.
Added Pang: “Furthermore, completing our listing on the Main Board of The Stock Exchange of Hong Kong, in addition to our primary listing on the NYSE, demonstrates our commitment to protecting long-term value for shareholders.
“We are truly grateful to our users, employees, partners and investors who have been with us along the way and helped us reach this important milestone.”
“Today, we cater to more diverse music tastes and nuanced user demands than ever before. Improved experiences, together with more privileges, translate into new, attractive monetization opportunities for us to actively tap into.
Ross Liang, TME
Ross Liang, CEO of TME, added: “Propelled by our innovative spirit, we introduced numerous immersive and connective product upgrades in the third quarter. Users now have even more unique ways to interact with our content and with one another as they listen, watch, sing and play.
“Today, we cater to more diverse music tastes and nuanced user demands than ever before. Improved experiences, together with more privileges, translate into new, attractive monetization opportunities for us to actively tap into.
“As we nurture these strengths, we continue to bring more social awareness and value to our music-empowered charity programs while supporting music and its evolution.”Music Business Worldwide
