A shot of Shenzhen, China, where Tencent Music is headquartered. Photo Credit: Charlie Fong
Tencent Music has posted its financials for Q2 2024, when revenue declined slightly from the same three-month stretch in 2023 despite continued double-digit subscriber growth.
The Shenzhen-based QQ, Kuwo, and Kugou operator today unveiled its performance specifics for April, May, and June of 2024, amid a quarters-running emphasis on subscribership in particular.
Said emphasis kicked off following a sweeping regulatory crackdown from the Chinese government and, given growing competition from the likes of NetEase Cloud Music as well as ByteDance’s streaming platform, hasn’t abated in the interim.
Running with those points, Tencent Music identified $757.63 million (CN¥5.42 billion) in Q2 2024 revenue from core streaming operations, up close to 28% YoY. However, revenue from social entertainment services, including livestream performances and more, fell almost 43% YoY to $242.66 million (CN¥1.74 billion), according to the report.
Behind the figures and the mentioned operational trends, Tencent Music acknowledged a 3.9% YoY decrease in online music monthly active users (571 million) – on top of a 31.6% YoY slip in mobile MAUs for social entertainment (93 million).
Even so, paid users improved in both online music/streaming (117 million, up 17.7% YoY) and in social entertainment (7.9 million, up 5.3% YoY), the analysis shows. Online music’s monthly average revenue per paid user jumped 10.3% YoY to hit $1.50 (CN¥10.7) in Q2, as its social entertainment counterpart fell 45.8% YoY to $10.23 (CN¥73.2), the company communicated.
Shifting to the broader Q2 financials for Tencent Music, which paid roughly $212 million in dividends in June, reduced operating expenses (themselves the result of lessened personnel costs) contributed to $250.21 million (CN¥1.79 billion) in quarterly net profit for the GMM Music stakeholder.
All told, Tencent Music said it had $4.90 billion (CN¥35.03 billion) in cash, cash equivalents, term deposits, and short-term investments as of June’s end. The market was seemingly unimpressed with the earnings report, though, as shares (NYSE: TME) parted with over 15% of their value during today’s trading.
Nevertheless, TME’s day-end worth of $11.12 represents a 27.4% boost from 2024’s beginning and a spike of 80.8% from mid-August of 2023.
Moving beyond these stock-price fluctuations, which are interesting but insignificant in the grand scheme of things, available evidence suggests that Tencent Music’s relevance is poised to keep on growing in tandem with China’s increasingly lucrative music market.
Consequently, access to this market (already fifth in size globally per the IFPI) and especially its paid users will become decidedly more valuable for international players in the coming years. Of course, the advantageous position benefits Universal Music-partnered Tencent Music on multiple levels.
And that’s not solely because of its reach; the point reflects the company’s correspondingly substantial control over promotion and listening trends. As described by Tencent Music, which has an upgraded “recommendation middleware” in place, a whopping 40% or so of its platforms’ Q2 2024 streams “were generated from recommendations.”
Factoring also for superfan initiatives, paid livestreams, and more, an argument can be made that Tencent Music’s relevance isn’t directly reflected in the financials and, at least from a stock-price perspective, should outweigh any short-term revenue fluctuations.
