Tencent Music’s IPO Filing Reveals Record Streaming Profits

Tencent Music has turned a profit the past three years.  Spotify has only turned a profit once.  Any questions?

Several months ago, Chinese conglomerate Tencent Holdings unveiled its plan to list its music division on Wall Street.

With a valuation of over $25 billion, Tencent Music Entertainment (TME) was poised to become the second-largest tech IPO launch of 2018, following Spotify’s traditional non-IPO direct listing.

Other Chinese tech companies have had success on Wall Street this year.

In March, iQiyi, a Chinese streaming video company, went public with a $2.4 billion valuation.  Then, in July, Pinduoduo, an e-commerce discount platform, launched its IPO with a $1.6 billion valuation.

TME executives first posited the idea of raising up to $4 billion from going public.  Then, last September, a leaked report revealed that they had halved that price to just $2 billion.

Due to turbulent market conditions, Tencent Music delayed its IPO launch, originally scheduled for October 18th.  The stock will now go public on December 12th, a rare move for large-scale tech IPOs.

An F1/A filing with the United States Securities and Exchange Commission (SEC) reveals several interesting facts about Tencent Music.

First, the company hopes to raise up to $1.41 billion from the IPO.  It’s underwritten by Morgan Stanley, JP Morgan, Goldman Sachs, Deutsche, and BofA Merrill Lynch.  Tencent Music will list at a price between $13 and $15.

Second, the company remains incredibly healthy and regularly turns a profit, unlike Spotify.  TME also continues to grow.

For the quarter ended September 30th, 2018, Tencent Music’s revenue reached ¥13.6 billion ($2 billion).  This number has increased 83.7% over the same period last year, when the company reported ¥7.4 billion ($1.1 billion) in revenue.

In addition, Tencent Music revealed its profit for the nine months ended 2017 and 2018 reached ¥785 million ($114.5 million) and ¥2.7 billion ($394 million), respectively.

In the nine months ended September 30th, 2018, Tencent Music’s adjusted profit reached ¥3.3 billion ($474 million).  This marks a 162.9% increase over the same period last year, when the company reported ¥1.2 billion ($180.7 million).

In total, Tencent Music grew more than 10% over the previous quarter.  The company also grew 71% over the same period last year.

You can view the complete F1/A filing here.


Featured image by Japanexperterna.se (CC by 2.0).

2 Responses

  1. cool

    if tencent and some others can do it, so can spotify do profits. It’s not impossible and the latest report has been much better

  2. Anonymous

    “Tencent Music has turned a profit the past three years. Spotify has only turned a profit once. Any questions?”

    Yes, how much does the average engineer in China make compared to Europe/US?

    What are benefits like in China? Is the tech industry over there just as competitive and basically require companies to have absurd perks to court the best employees?