HKG:1698

Tencent Music's Q1 Revenue Advances as Profit Hit by Lapse of Prior-Year Gain

Tencent Music Entertainment (HKG:1698) posted higher first-quarter revenue as growth in its music subscription and live entertainment businesses helped offset the absence of a large one-off gain from a year earlier.The online music entertainment platform said attributable profit fell to 2.09 billion yuan from 4.29 billion yuan a year earlier after the year-ago quarter included a 2.37 billion yuan gain related to the deemed disposal of an associate.Earnings per share declined to 0.67 yuan from 1.39 yuan in the corresponding period last year.Revenue rose 7.3% to 7.90 billion yuan from 7.36 billion yuan, driven by continued growth in music-related services, according to a Tuesday filing with the Hong Kong bourse.In breakdown, revenue from music-related services climbed 12% to 6.51 billion yuan, supported by higher membership, advertising, and offline performance-related revenue.Membership services revenue increased 6.6% to 4.57 billion yuan as Tencent Music expanded privileges under its SVIP (Super VIP) program and introduced new offerings, including fan-club memberships, bubble, and WeverseDM services.Tencent Music's Chief Executive, Ross Liang, said the company continued to strengthen user engagement and subscription growth through its "content-and-platform dual engine" strategy."During the quarter, we delivered continued improvement in SVIP adoption and user engagement," Liang said, adding that Tencent Music is expanding user reach through Tencent's ecosystem while advancing a tiered subscription strategy to support long-term monetization growth.Tencent Music said live performance-related revenue posted triple-digit year-over-year growth, driven by concerts featuring leading K-pop groups and the expansion of performances across domestic and overseas markets.The platform also said high-profile releases from its proprietary music catalog, including Zhou Shen's theme song for Project Hail Mary, helped boost streaming engagement.Tencent Music said artificial intelligence tools are increasingly being used to improve music production efficiency and expand content creation, with AI-generated songs accounting for a growing share of daily new releases.However, Tencent Music's Executive Chairman, Cussion Pang, said the rise of artificial intelligence in music creation is increasing the importance of premium intellectual property and original content."While AI is broadening participation in content creation, it does not replace human creativity and, in many ways, reinforces the scarcity and intrinsic value of premium IP," Pang said, adding that the platform remains focused on strengthening copyright protection.Separately, Tencent Music announced on Tuesday that it secured conditional antitrust approval from China's market regulator for its proposed $2.4 billion acquisition of online audio platform Ximalaya.The deal is expected to strengthen Tencent Music's presence in audiobooks, podcasts, and other digital audio services, subject to conditions on free content access and exclusive copyright arrangements.