Tencent Music Enjoys Rise in Paying Users
TME, the music arm of China's tech giant Tencent, reported a 27 percent increase in paying users of its music apps in the first quarter.
Tencent Music Entertainment Group (NYSE: TME) beat Wall Street estimates for quarterly profit, as more users paid for its music streaming services.
The music arm of China's tech conglomerate Tencent Holdings Ltd. (HKEX: 0700) reported after markets closed Monday that its revenue in the three months through March reached $855 million, up 39 percent year-over-year.
Net profit was $147 million, or 9 cents per share, at an increase of 17 percent, according to the report.
"During the past few quarters, we constantly expanded our online music subscriber base while steadily increasing our subscriber retention rate," TME's chief executive officer, Cussion Pang, said in the statement. "As our users increasingly consume music content through streaming services, we are riding on this trend to gradually transition into a pay-for-streaming model over the coming years."
The company said it had 654 million mobile monthly active users (MAUs) of its music apps and 225 million MAUs of social apps during the first quarter. The number of paying music users increased 27 percent to 28.4 million while paying social app MAUs reached 10.8 million, at a 13 percent rise.
Unlike Western peers such as Spotify Technology SA, Tencent Music generates only a fraction of revenue from music subscription packages and instead relies heavily on services popular in China such as online karaoke and live streaming. The Swedish streaming service is a stakeholder in Tencent Music.
The financial report was TME's first as a publicly traded company. It completed its initial public offering in New York in December, raising $1.1 billion after pricing its shares at the bottom of its targeted range of $13 to $15 apiece.
Tencent Music was formed in 2016 when its parent purchased China Music Corp., the owner of Kugou and Kuwo, for $2.7 billion. China Music subsequently merged with QQ Music, a music platform Tencent launched in 2003. WeSing, Tencent's online social karaoke platform, began operating in 2014.
Separately, the company announced its co-president and director, Guomin Xie, has resigned due to personal reasons and named Zhenyu Xie as its chief technology officer.
In pre-market trading Tuesday, shares in the music giant were down nearly 8 percent, at $14.80 apiece.
(Reuters contributed to this article)