Tencent Music Q1 2023 Revenue Tops $1 Billion As Paid Streaming Users Approach 100 Million, Report Shows

Days Before Tencent Music's IPO Launch, a Mysterious Investor Claims to Own 80% of the Company
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Despite facing heightened domestic competition, Tencent Music posted over $1 billion in revenue for Q1 2023, when the Shenzhen-headquartered company is said to have achieved more than 30% year-over-year (YoY) subscription-income growth across its streaming services.

Tencent Music (NYSE: TME) unveiled its first-quarter performance specifics today, disclosing continued declines in social entertainment mobile users (down 16% YoY to 136 million), paid social entertainment users (down 14.5% YoY to 7.1 million), and online music monthly active users (down 6.9% YoY to 592 million) alike for the three-month stretch.

While the latter total is almost 30 million users more than that which Tencent Music originally pinpointed for Q4 2022, the company indicated it’d started counting “unique mobile and certain IoT [internet of things] devices” in the category for this year’s first quarter. The Q1 2023 sum reflects listeners on TME’s QQ, Kugou, and Kuwo streaming services, and higher-ups went ahead and updated “comparative figures” so that they “conform to the current presentation.”

Also worth mentioning of the straightforward-but-significant topic is that “duplicate access of different services by the same device is not eliminated from the calculation” of monthly active users, according to Tencent Music. Needless to say, the point could result in some degree of usership overlap.

Beyond TME’s first-quarter user decreases, which arrived amid efforts from NetEase Cloud Music and TikTok parent ByteDance to establish footholds in China’s quick-expanding music market, Tencent Music communicated that its online music paid users had spiked by 17.7% YoY and by 6.7% quarterly to hit 94.4 million during Q1.

On top of this reported paid-user boost, Tencent Music identified a 10.8% YoY and 3.4% QoQ improvement in monthly average revenue per paid streaming user, which is said to have totaled CNY 9.2 ($1.32 at the current exchange rate).

Furthermore, even though average social entertainment revenue per paid user grew by 1.7% YoY throughout Q1 to touch CNY 164.50 ($23.58), according to the report, the category’s income was nearly identical to that of online music streaming during Q1 2023. For reference, it was only in the opening three months of 2022 that streaming revenue accounted for just 39% of TME’s total quarterly income.

“We continue to add more and more attractive member privileges behind our Super VIP package,” chief strategy officer Tony Yip responded to a question during Tencent Music’s earnings call. “While we’re not ready to disclose specific numbers, we are pleased to see the continued growth in the number of subscribers under the SVIP membership.”

In any event, a close to 36% YoY decline in selling and marketing expenses as well as a small reduction in revenue costs contributed to an approximately 85% increase in Q1 profit for Tencent Music, which placed the figure at CNY 1.2 billion ($171.9 million).

During today’s trading hours, Tencent Music stock (NYSE: TME) parted with 3.64% of its value to finish at $7.67 per share. Elsewhere in its Q1 earnings analysis, TME stated that it “had assisted 260 up-and-coming musicians in reaching their first million streams” via the “Emerging Force Program” within the overarching “Tencent Musician Platform.”