Tencent Music Entertainment Group (TME) Q1 2026 earnings summary

Executive summary

• Achieved total revenue of RMB7.90 billion in Q1 2026, up 7.3% year-over-year, driven by strong growth in music related services and diversified monetization.

• Membership services revenue reached RMB4.57 billion (+6.6% YoY), with other music services up 28% year-over-year.

• Gross margin expanded to 44.9% (+0.8ppt YoY), and adjusted EBITDA rose 10.5% to RMB2.83 billion.

• Net profit attributable to equity holders was RMB2.09 billion, down from RMB4.29 billion in Q1 2025 due to a one-time gain last year; non-IFRS net profit rose 7% to RMB2.33 billion.

• Continued investment in premium IP, AI-driven content creation, and innovative fan engagement offerings, including digital albums and artist merchandise.

Financial highlights

• Total revenue: RMB7.90 billion (+7.3% YoY); music related services revenue: RMB6.51 billion (+12.2% YoY); membership services: RMB4.57 billion (+6.6% YoY).

• Gross margin: 44.9% (+0.8ppt YoY); adjusted EBITDA: RMB2.83 billion (+10.5% YoY); non-IFRS net profit: RMB2.33 billion (+7% YoY).

• Cash, term deposits, and short-term investments totaled RMB41.00 billion as of March 31, 2026.

• Non-IFRS diluted earnings per ADS: RMB1.46.

• Operating expenses as a percentage of total revenues decreased to 15.3% from 15.5% year-over-year.

Outlook and guidance

• Focus on scalable growth, durable monetization, and expanding user reach through tiered subscriptions and pan-IP engagement.

• Continued investment in premium IP, AI, and offline offerings to drive future revenue streams.

• Expect some short-term volatility in gross margin due to competition and seasonality, but long-term outlook remains optimistic.

• Guidance for gross margin in Q2 is to remain on par with last year; selling expenses will rise moderately for the year.