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China’s Cloud Music Posts 34% Revenue Growth in First Half of 2022 as Subscriptions Spike

Despite the spike in subscriptions, the streamer's shares are down over 55% in 2022.

Strong gains in subscriptions helped Cloud Music, China’s second-largest music streaming company, post revenue of RMB 4.3 billion ($636 million) in the first half of 2022, up 33.8% year-over-year, the company announced Thursday (Aug. 18). Adjusted net loss improved to RMB 217 million ($32.4 million) from RMB 533 million ($79.6 million) in the prior-year period.

In Cloud Music’s second earnings report since being spun off by tech giant NetEase in Dec. 2021, the music streamer’s monthly active users dropped 1.5% to 181.9 million from 184.5 million in the first half of 2021, though music streaming revenue increased 11.2% to RMB 1.7 billion ($263 million). Music subscription revenue grew 37.6% to RMB 1.5 billion ($218 million), while the company’s membership ratio — the percentage of music users who are paying subscribers — rose to 20.7% from 14.2% in the first half of 2021. Cloud Music — named Cloud Village until July — attributed the improvement to “ongoing initiatives in content enhancement (from more labels) and premium and innovative functions” such as high-resolution audio.

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In addition to the NetEase Cloud Music streaming platform, Cloud Music operates social entertainment platforms LOOK Live Streaming, Sheng Bo and Xin Yu, with social entertainment revenues growing 56.7% to RMB 2.5 billion ($365 million). Cloud Music also recently launched a music-focused social networking app, MUS, that integrates users’ NetEase Cloud Music consumption behavior into their homepages.

Cloud Music shares, which trade on the Hong Kong Stock Exchange, fell 0.1% to HKD 70.50 ($7.99) on Thursday (earnings were released after the market closed). Its share price has fallen 55.2% year to date and is 65.5% below its HKD 205.00 ($26.31) IPO price. Like the leading Chinese music streamer, Tencent Music Entertainment, whose share price is down 32.7% year to date, Cloud Music’s market value has declined despite achieving double-digit subscriber growth. Chinese companies in particular have faced volatility since 2021 due to Chinese regulators’ efforts to clamp down on tech companies’ anticompetitive behaviors and online advertising practices.

But music streaming companies outside of China have also struggled while posting strong growth in revenues and subscribers. Through Wednesday, Spotify’s share price is down 50.8% and Anghami is off 74% since its Nasdaq debut on Feb. 4 following a merger with a special purpose acquisition corporation.

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