Tencent Music

Tencent Music (NYSE: TME) generated north of $900 million during Q3 2023 – a figure that reflects a close to 11% year-over-year (YoY) slip but a more than 40% YoY spike in subscription revenue, according to a new earnings report.

The company behind Chinese streaming services Kugou, QQ, and Kuwo as well as the WeSing karaoke app posted its third-quarter financials today. Per the document, the aforementioned revenue total came in specifically at CNY 6.57 billion, or $905.73 million at the present exchange rate, for the three months ended September 30th.

And while the business’s “social entertainment” showing, including revenue from livestream events, has slipped for multiple quarters running, an improvement on the subscription side once again picked up part of the slack, the resource shows.

Social entertainment paid users grew slightly YoY to 7.8 million, YG Entertainment-partnered Tencent Music disclosed. However, the category’s mobile MAUs (129 million, down almost 17% YoY) and monthly average revenue per paid user (CNY 86.2/$11.88, down 51.4% YoY) are said to have fallen.

Shifting to the streaming side, MAUs across Tencent Music’s above-noted services reportedly declined 4.2% YoY to 594 million amid continued competition from the likes of NetEase Cloud Music and the music platform that ByteDance offers in the quick-growing Chinese market.

Even so, the initially highlighted subscription revenue boost (42% YoY to CNY 3.19 billion/$439.77 million) was fueled by double-digit jumps in paid users (103 million, up 20.8% YoY) and monthly average revenue per paid user (CNY 10.3/$1.42, up 17% YoY), the company relayed.

During the corresponding earnings call, execs drove home their belief that Tencent Music’s paid-streaming reach will continue expanding in the approaching years – while also acknowledging the possibility of a slowdown (relative to 2023 percentages) during 2024.

Nevertheless, Tencent Music intends to zero in on superfan monetization in 2024, higher-ups said during the earnings call. Beyond subscription revenue, the business further said that it anticipates “advertising and new initiatives” including merch will “continue to grow healthily.”

Lastly, in terms of Tencent Music’s core financials, Q3 2023 operating expenses fell 11.8% YoY to CNY 1.27 billion/$175.01 million, cost of revenues decreased 14.8% YoY to CNY 4.23 billion/$583.14 million, and net profit spiked 15.6% YoY to CNY 1.26 billion/$173.70 million, the disclosure shows.

Also during the earnings call, Tencent Music emphasized the continued development of AI components within its Venus production and promotion offering. The latter is now said to be capable of the “fast and convenient generation of a user’s AI voice to produce musical works.”

Back in Q1, Tencent Music announced a $500 million share-buyback program, and as of Q3’s end, the company had repurchased about $103 million worth of TME stock, according to execs. At the time of this writing, TME was worth $7.74, reflecting a market cap of over $13 billion and a 4.38% improvement on the day.