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Shares of Tencent Music Entertainment Group soared after the owner of China’s largest online music platform announced its earnings exceeded expectations in the second quarter.
The company’s stock in Hong Kong jumped 14.3%, trading at HKD 100.90 (USD 12.85) around 2:20 p.m., after reaching an earlier high of 17.8%. Its New York-listed shares also surged, climbing 12% yesterday to USD 25.39.
For the quarter ending June 30, net profit increased over 43%, reaching CNY 2.4 billion (USD 336 million), compared to the same period last year. Diluted earnings per American Depositary Share rose to CNY 1.55 (22 cents USD), up from CNY 1.07, surpassing analysts’ estimates of CNY 1.42.
Revenue grew 18%, totaling CNY 8.4 billion (USD 1.2 billion), edging past the forecast of CNY 8 billion. The rise was driven by strong growth in online music services, although it was partly offset by declines in social entertainment and other service revenues.
“Our focus on product innovation to deliver immersive user experiences has propelled strong growth in our online music business,” said the CEO. “This can be seen in the continued expansion of our subscriber base and average revenue per paying user, along with increased user engagement.”
Monthly active users for Tencent Music’s online music services slightly declined by 3% year-over-year to 553 million. However, paying users increased by 6% to 124.4 million, and the average revenue per paying user (ARPPU) grew 9% to CNY 11.70 (USD 1.63).
Consequently, revenue from online music services rose by 26% to CNY 6.9 billion (USD 957 million), while income from social entertainment and other services fell 9% to CNY 1.6 billion (USD 222 million).
In the second quarter, Tencent Music focused on enhancing its content ecosystem. Notably, it purchased a 9.4% stake in South Korean agency SM Entertainment for KRW 243.3 billion (USD 175.9 million), becoming the second-largest shareholder after Kakao.
Additionally, in June, the company announced an agreement to acquire China’s leading audio content platform, Ximalaya, for a total of USD 2.9 billion. This move aims to bolster its presence in audiobooks, podcasts, and radio broadcasts.
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