Tencent Music Entertainment Grew Subscribers 10% to 4.6M In Third Quarter

Tencent Music Entertainment
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Tencent Music Entertainment logo is seen displayed on a smartphone. 

Chinese music streaming company Tencent Music Entertainment remained sturdy in the third quarter, losing just 0.8% of subscription revenue while gaining 4.6 million subscribers, a 9.8% increase from the previous quarter, according to its third quarter earnings release.

The company’s topline year-over-year results:

  • Total revenue grew 16.4% to 7.58 billion yuan ($1.12 billion)
  • Music subscription revenue grew 55% to 1.46 billion yuan ($215 million)
  • Operating profit grew 6.1% to 1.26 billion yuan ($186 million)
  • Net profit to shareholders grew 10.3% to 1.135 billion yuan ($167 million)

Tencent Music’s music apps fared relatively well, with paying users growing 7%, 10.3% and 9.8% in the first, second and third quarters. Revenue didn’t keep the pace as third quarter paying users were just 0.3% over the final 2019 count.

  • Music subscribers grew by 4.6 million to 51.7 million, up 46% year-over-year and up 9.8% from the second quarter. In unit terms, subscriber growth improved on the 2.8 million in the first quarter and 4.4 million in the second quarter.
  • Music monthly active users (MAU) fell 2.3% to 646 million, down from 661 million in the prior-year period
  • Monthly music ARPU (average revenue per user) grew 5.6% to 9.4 yuan ($1.42)

Signs of the COVID-19 pandemic are visible on Tencent Music’s metrics. In the first quarter, as much of China was under lockdown orders, Tencent Music’s monthly users of its social apps shot up 15.3% to 256 million and paying customers rose 3.2%. Social app growth slowed since then with social paying users sinking 16% in the third quarter.

  • Social MAUs fell 6.4% to 235 million
  • Social subscribers fell 14.6% to 10.5 million
  • Social users’ ARPU grew 32% to 166.7 million yuan ($25.20 million)

TME recently renewed its multi-year licensing agreement with Merlin, the independent music community's digital rights agency, and struck a separate digital licensing deal to promote and distribute peermusic's publishing catalog in China.