China’s Tencent Music Entertainment Group on Monday beat quarterly results estimates, driven by strong growth in subscription and advertising revenue from its music streaming platform.
The company has been expanding its music library through new partnerships and multi-year licensing deals. That, coupled with efforts to diversify its content base through long-form shows and live talk shows have helped lure more paying users as well as advertisers.
Tencent Music, controlled by Chinese tech giant Tencent Holdings Ltd, and Sony Music Entertainment said on Monday they had signed a multi-year extension of their digital distribution agreement.
First-quarter revenue from music subscriptions grew over 40% to 1.69 billion yuan, primarily due to an increase in the number of paying users, Tencent Music said.
Although paying users for its music platform jumped, monthly active users (MAUs) for both music and social entertainment platforms declined by 6.4% and 14.2%, respectively, sending the company’s U.S.-listed shares down 1.4% in extended trading.
“Users have stopped growing in general; last year was a high base due to the COVID," said Tian Hou, analyst at T.H. Capital Research.
Profit attributable to equity holders of Tencent Music rose to 926 million yuan ($143.82 million) in the quarter from 887 million yuan a year earlier.
Excluding items, the company earned 69 yuan per American Depository Share (ADS), above estimates of 55 yuan per ADS.
Revenue rose 24% to 7.82 billion yuan ($1.21 billion), while analysts were expecting 7.73 billion yuan, according to IBES data from Refinitiv.
($1 = 6.4388 Chinese yuan renminbi)