Tencent Music Surpasses 60 Million Paying Subscribers, Reports 24% Year-Over-Year Revenue Hike

Tencent Music IPO Launches at Lowest Expected Price Range
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Tencent Music experienced a 42.6 percent year-over-year increase in paid subscribers and a 24 percent YoY revenue hike during 2021’s first three months, according to the Shenzhen-headquartered company’s Q1 2021 earnings report.

Tencent Music – which operates the QQ Music, Kugou Music, and Kuwo Music streaming services as well as the WeSing karaoke app – just recently made the corresponding performance analysis available.

QQ, Kugo, and Kuwo Music boasted a cumulative total of 60.9 million paid users as of March 31st, 2021 – a 42.6 percent YoY boost, once again, and an improvement of 4.9 million from 2020’s fourth quarter. For reference, Q4 2020 brought a 40.4 percent subscriber gain, compared to the same stretch in 2019, and the uptick across Q4 2020 and Q1 2021 represents “the largest quarterly net increase since 2016,” when Tencent Music debuted.

Nevertheless, Tencent Music’s non-paid user totals continued to dip during the first quarter of 2021, including a 6.4 percent YoY falloff for online-music mobile MAUs (totaling 615 million) and a 14.2 percent drop for social-entertainment mobile MAUs (224 million). Paid social-entertainment users also declined by 12.4 percent, to 11.3 million.

The YoY social-entertainment mobile user decrease reflects “the changing competitive landscape,” Tencent Music stated, before noting that both the figure and social-entertainment mobile DAUs increased on a quarterly basis.

Plus, “MAUs through in-car systems, smart speakers, TV and other connected devices were 69 million” as of March 31st, per the earnings report – a 50 percent YoY jump. And besides more than quadrupling its library of long-form audio titles year over year, Tencent Music said that “the number of artists on our Tencent Musician Platform more than doubled to over 200,000,” compared to Q1 2020, while “their music streaming volume recorded double-digit growth” on the quarter.

On the earnings front, Tencent Music generated $1.22 billion (factoring based upon the exchange rate at the time of this piece’s writing) throughout January, February, and March of 2021, a roughly 24 percent year-over-year uptick.

Within the total, revenue from online music services improved by approximately 34.5 percent (to $427.90 million) YoY, due largely to a more than 40 percent gain in subscription revenue (totaling $262.96 million), fueled by the aforementioned subscriber additions.

Lastly, in terms of the earnings breakdown, Tencent Music’s Q1 2021 income “from social entertainment services and others” increased by 18.9 percent (to $790.45 million) from Q1 2020, and the company’s quarterly operating profit finished at $180.50 million, according to the report.

Despite this seemingly solid performance, Tencent Music stock (TME on the NYSE) recorded only a small per-share gain ($0.23 and 1.5 percent) during the first two hours or so of trading today, with TME worth $15.53.

After appearing to put stateside delisting concerns in the rearview, TME surpassed $20 per share to kick off 2021 – and even approached a $30-per-share price point during January and February, prior to touching a record high of $32.25 per share in late March.

The stock-market success was short-lived, however, and Tencent Music about one month ago tapped former Tencent VP Zhu “Ross” Liang to replace Cussion Pang as CEO. Pang became executive chairman of the board under the arrangement – which went into effect on Thursday, April 15th – but interestingly, only he (not Liang) provided a statement in the Q1 2021 performance analysis.

Finally, late-April reports indicated that Tencent is facing a more than $1.5 billion “antitrust” penalty in China – with an emphasis on Tencent Music – as part of the government’s broader crackdown on leading tech companies.

More pressingly, these reports suggested that Tencent Music may have to “give up exclusive music rights” – and could “even be forced to sell the acquired Kuwo and Kugou music apps.”