Tencent Music Entertainment Group (TME) Q2 2024 earnings summary

Executive summary

• Online music services revenue grew 28% year-over-year, with adjusted net profit up 26% year-over-year.

• Over 10 million net new music subscribers added in H1 2024, with ARPU rising to RMB 10.7.

• Net profit reached RMB1.79 billion ($247 million), up 33.1% year-over-year, with non-IFRS net profit at RMB1.99 billion ($273 million), up 25.7%.

• Strong digital album sales and successful offline events, including TMEA 2024, drove engagement and revenue.

• Self-produced content, exclusive privileges for members, and AI-driven sound quality improvements enhanced user conversion and retention.

Financial highlights

• Total Q2 2024 revenue was RMB 7.2 billion, down 2% year-over-year.

• Online music revenue rose 28% to RMB 5.4 billion; music subscription revenue up 29% to RMB 3.7 billion.

• Online music paying users reached 117 million, up 18% year-over-year, with 3.5 million net adds in Q2.

• Non-GAAP net profit increased 33% year-over-year to RMB 1.8 billion; diluted earnings per ADS hit RMB 1.07, up 30%.

• Gross margin improved to 42%, up 7.7 percentage points year-over-year.

Outlook and guidance

• Expect continued healthy revenue and profit growth for 2024, with ARPU expansion outpacing net adds in H2.

• SVIP membership and premium offerings to drive ARPU and margin improvement.

• Confident in achieving mid- and long-term subscriber targets and maintaining steady user base growth.

• Management remains optimistic about the long-term potential of the music industry and is committed to sustainable, balanced growth.

• Focus continues on user-centric innovation, content enrichment, and technological advancement to drive subscriber growth and retention.