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Tencent's Second-Quarter Revenue Growth Slows Sequentially; Shares Slump

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Tencent's Second-Quarter Revenue Growth Slows Sequentially; Shares Slump

Tencent Music Entertainment's (TME) shares tumbled in Tuesday trading as the company's second-quarter revenue grew at a slower pace sequentially, though the results topped Wall Street's estimates.

The Chinese music and audio entertainment platform reported revenue of 8.93 billion renminbi ($1.32 billion) for the June quarter, representing 5.8% year-over-year growth and exceeding the FactSet-polled consensus of 8.81 billion renminbi.

That's slower than the 7.3% topline increase in the first quarter that the company reported in May. The company's American depositary receipts on the New York Stock Exchange slumped 10.1% in morning trade, and have slid 49% since the start of the year.

Tencent reported non-IFRS earnings of 1.70 renminbi per American depositary share for the second quarter, compared with 1.66 renminbi a year earlier, while analysts projected 1.64 renminbi.

"Our focus on differentiated content and a vibrant community continues to deepen engagement with our core users, and (Super VIP) membership continues to grow," Chief Executive Ross Liang said in a statement.

Tencent has discontinued reporting key operating metrics starting this year, including online music monthly active users, paying users, and average revenue per paying user, citing its evolving business model. It will instead disclose the number of total paying users across its music services annually at the end of the year.

Tencent's music related services division delivered an 11% year over year growth in revenue to 7.61 billion renminbi, driven by marketing and consumption services. Membership services revenue climbed 8.1% to 4.79 billion renminbi.

The company completed the acquisition of Ximalaya, an online audio platform in China, earlier this year, helping boost overall revenue for the second quarter.

"The addition of Ximalaya is an exciting milestone that will allow us to deliver an even richer audio experience and serve our users more effectively," Liang said. "Together, we are shaping the future of music and audio entertainment and unlocking long-term growth."

Revenue from social entertainment services and others fell 16% to 1.33 billion renminbi, the company said.

Price: $8.86, Change: $-1.04, Percent Change: -10.51%

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