Tencent Music Leisure Group Declares Second Quarter 2022 Unaudited Monetary Outcomes

SHENZHEN, China, Aug. 15, 2022 /PRNewswire/ — Tencent Music Leisure Group (“TME,” or the “Firm”) (NYSE: TME), the main on-line music and audio leisure platform in China, in the present day introduced its unaudited monetary outcomes for the second quarter ended June 30, 2022.

Monetary and Operational Highlights

Within the three months ended June 30, 2022:

• Web revenue of the Firm was RMB892 million (US$133 million). Non-IFRS internet revenue of the Firm^[1] was RMB1.07 billion (US$159 million), representing an 8.3% lower year-over-year and a 13.4% enhance on a sequential foundation.
• Whole revenues had been RMB6.91 billion (US$1.03 billion), representing a 13.8% year-over-year lower and a 3.9% enhance on a sequential foundation.
• Revenues from music subscriptions had been RMB2.11 billion (US$315 million), representing a rise of 17.6% year-over-year. Paying customers reached 82.7 million, rising by 24.9% year-over-year. On a sequential foundation, the variety of on-line music paying customers grew by 2.5 million.
• Web revenue attributable to fairness holders of the Firm was RMB856 million (US$128 million) and Non-IFRS internet revenue attributable to fairness holders of the Firm^[1] was RMB1.03 billion (US$154 million).

“Amidst a posh and evolving setting, macro headwinds continued to have an effect on our whole income development. Nevertheless, development in subscription income remained resilient, rising by 18% year-over-year within the second quarter, demonstrating our success in executing a balanced strategy of driving development in each paying customers and ARPPU. In the meantime, our value optimization and working effectivity enhancements continued to bear fruit, leading to margin enhancements throughout the quarter,” mentioned Mr. Cussion Pang, Govt Chairman of TME. “In June 2022, we celebrated the primary anniversary of launching our twin engine content-and-platform technique, which has continued to empower our more and more vibrant music ecosystem. By authentic content material manufacturing and our Tencent Musician Platform, we’re not solely enhancing the size, high quality and market attraction of our content material, but in addition nurturing creators and connecting them with music lovers. We are going to proceed to empower music creators by serving to them to unlock each the cultural and industrial worth embedded in music. To show our confidence within the Firm’s prospects, by the top of the second quarter, we had accomplished over $700 million of the $1 billion share repurchase program introduced final 12 months, and plan to finish the remainder of this system all through the remainder of the 12 months.”

“Driving product and technological innovation is at all times our high precedence. Within the second quarter, we continued to improve the immersive music expertise throughout our 4 pillars – hear, watch, sing and play – enhancing every class to supply our customers with a stage to precise their musical tastes and construct their sense of id on TME’s platform. Notably, QQ Music and WeSing launched main model upgrades to carry dynamic visuals and a 3D avatar performance, respectively, to our customers,” mentioned Mr. Ross Liang, CEO of TME. “As a pure extension of music, our long-form audio continued to spherical out our music portfolio whereas additional differentiating our content material. We additionally strengthened our partnership with Tencent’s ecosystem in key areas, together with content material manufacturing, promotion and monetization. Moreover, by way of our modern mannequin that mixes music with public welfare, we organized quite a lot of philanthropic occasions within the second quarter, using the emotional energy of music to advance our social dedication. As we transfer ahead, we’ll proceed to leverage our enterprise and product improvements to develop the digital music ecosystem and assist the sustained, wholesome growth of China’s music business,” concluded Mr. Liang.

Current Operational Highlights

• TME’s on-line music and social leisure providers key working metrics^[2]

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• The year-over-year decline in on-line music cellular MAUs was primarily because of decreased advertising spending. Nevertheless, subscription income continued to ship strong year-over-year and quarter-over-quarter development together with paying person development and a sequential rebound of ARPPU, pushed by expanded gross sales channels and paying person loyalty because of the vary of high-quality content material and providers we offer, in addition to moderated promotions.
• Social leisure providers MAUs sequentially improved whereas paying customers declined year-over-year because of macro headwinds. We are going to proceed to enhance our competitiveness by way of ongoing product improvements and new initiatives in social leisure, reminiscent of audio stay streaming and digital interactive product offerings.
• Our content material technique continued to strengthen the size, high quality and attraction of our content material choices. 
• Deepened content material partnership, to counterpoint person expertise and discover further monetization avenues in digital music:
• We launched Jay Chou’s digital album “Biggest Works of Artwork” with copies bought exceeded 6 million by the top of July, marking one other blockbuster on our platform.
• We entered into strategic partnerships with main labels and artists throughout the Higher China area, reminiscent of Time Fengjun Leisure (the music label for TFBOYS and Teenagers in Occasions), avex China and the gifted feminine artist XIN Liu (Yuxin Liu), the place our platform has a head begin interval on their newest music, personalized artist merchandise or distinctive artist-fan interplay occasions.
• Joined fingers with YH Leisure Group to launch Artist Subscription packages for its 13 famend artists reminiscent of Meng Meiqi and Justin Huang, offering personalized audio and video content material for his or her subscribing followers.
• Authentic content material manufacturing capabilities, to systematically create, consider and promote music:
• We continued to put money into creating high-quality authentic content material, notable examples within the second quarter included “Blessing of Three Lifetimes” by Hai Lai A Mu, which dominated main music charts and generated social media buzz comprising over 2.5 billion views and 350 million streams since its launch in Could, in addition to 15 chart-topping sport songs we produced in collaboration with Tencent’s well-liked sport titles and “Time to Shine,” the primary Chinese language theme track to seem within the NBA finals.
• Leveraging our proprietary AI instruments and PDM predictive mannequin applied sciences, we launched a wise music assistant that permits extra environment friendly determination making at key levels of the music manufacturing course of, reminiscent of demo analysis.
• Tencent Musician Platform, an all-round service platform that helps indie musicians showcase their expertise and keenness in music:
• We continued to empower musicians with a wealth of on-line and offline promotion capabilities and monetization avenues. For instance, we launched a brand new service to simply mass distribute musical works globally to over 150 well-liked platforms, which has already introduced 190,000 songs by over 10,000 musicians to abroad audiences as of the top of the second quarter.
• TME Stay introduced an array of on-line and offline stay performances to counterpoint our customers’ expertise:
• Within the second quarter, along with on-line stay concert events for Roy Wang, amongst others, we introduced Leslie Cheung and Jay Chou’s AI-enhanced recorded concert events on-line. These two large hits amassed over 100 million distinctive viewers throughout the Tencent ecosystem and social media buzz of 6 billion views.
• As now we have strengthened our promoting monetization with further avenues, we efficiently attracted well-known manufacturers reminiscent of Sprite, Beijing-Hyundai and Pepsi to sponsor a wide range of personalized on-line and offline stay occasions not too long ago, attracting participation by dozens of well-liked artists and aspiring musicians.
• Our platform technique embodies our dedication to steady product improvements by way of our 4 pillars of leisure: hear, watch, sing and play, deepening customers’ recognition of and reference to our merchandise.
• Hear: We added extra refined options to our merchandise for a extra skilled and private music streaming expertise within the second quarter. Highlighted new options embody our pioneering synchronous lyrics show performance, a premium sound function which helps real-time sound high quality enhancement, and quite a lot of new search options to bolster music discovery effectivity.
• Watch: We continued to work with Weixin Video Accounts to draw a broader person base and increase our promotion capabilities for musicians. New visualization updates within the second quarter embody personalized dynamic photos on private playlists, our “Focus Station” that includes video components for learning, sleeping support and meditation listening eventualities, and a vinyl report participant interface that strengthens the visible expertise on our apps.
• Sing: WeSing launched a significant model improve in July to supply “KK Present,” our 3D avatar performance, which may function customers’ id card within the digital world, in addition to a brand-new AI-based voice synthesis singing device. Kugou additionally unveiled its first AI singer within the voice of Gen Z celeb Yang Chaoyue, enabling customers to customise and synthesize songs with only one click on.
• Play: Teaming up with Adidas Originals, TMELAND hosted China’s first digital avatar rap live performance, attracting over 7 million views, a brand new report in viewership for TMELAND. A complete of 13 stars have settled in our VR album rooms, together with singer and actress Cyndi Wang and musician Liu Shuang, who joined within the second quarter.
• Lengthy-form Audio: We continued to distinguish our providing with a wealth of high-quality long-form audio content material, enriching well-liked vertical content material reminiscent of sleeping support within the second quarter. We now have additionally been deepening our collaborations with Tencent Video to efficiently promote well-liked audiobooks and related IPs such because the third season of “Martial Universe” and “Who Guidelines the World.”
• We’re dedicated to fulfilling our social duties. Within the second quarter, we labored with Tencent to launch the Little Crimson Flower Charity Live performance to ship a heartwarming stay live performance to youngsters with particular wants. We additionally created environmental consciousness across the marine ecosystem by way of a particular public welfare live performance for World Oceans Day in partnership with La Mer.

Second Quarter 2022 Monetary Outcomes

Revenues

Whole revenues for the second quarter of 2022 decreased by RMB1.10 billion, or 13.8%, to RMB6.91 billion (US$1.03 billion) from RMB8.01 billion in the identical interval of 2021.

• Revenues from on-line music providers for the second quarter of 2022 decreased by 2.4% to RMB2.88 billion (US$430 million) from RMB2.95 billion in the identical interval of 2021. Revenues from music subscriptions had been RMB2.11 billion (US$315 million), representing a 17.6% development in comparison with RMB1.79 billion within the second quarter of 2021, primarily because of the enhance within the variety of paying customers by 24.9%. ARPPU decreased from RMB9.0 within the second quarter of 2021 to RMB8.5 this quarter and improved by 2.4% sequentially primarily because of the truth that we provided extra promotions to draw customers previously a number of quarters since 2021 and we’re extra targeted on the standard development of our subscription income whereas sustaining a wholesome ARPPU since final quarter. Revenues from promoting decreased on a year-over-year foundation because of the impression from business changes on splash advertisements and the COVID-19 pandemic in some main cities. Sublicensing revenues additionally decreased on a year-over-year foundation because of restructuring of agreements with sure music labels.
• Revenues from social leisure providers and others for the second quarter of 2022 decreased by 20.4% to RMB4.03 billion (US$601 million) from RMB5.06 billion in the identical interval of 2021. On a year-over-year foundation, ARPPU elevated by 10.8% within the second quarter of 2022, whereas paying customers of social leisure providers decreased by 28.2%. The lower was primarily because of the impression of evolving macro setting and elevated competitors from different platforms.

Price of Revenues

Price of revenues for the second quarter of 2022 decreased by 13.1% to RMB4.84 billion (US$723 million) from RMB5.57 billion in the identical interval of 2021. The lower was primarily because of lower in income sharing charges and company charges ensuing from lower in revenues from social leisure providers and promoting providers on a 12 months over 12 months foundation.

Gross Revenue and Gross Margin

Gross revenue for the second quarter of 2022 decreased by 15.3% to RMB2.06 billion (US$308 million) from RMB2.44 billion in the identical interval of 2021. Gross margin for the second quarter of 2022 barely decreased by 0.5% to 29.9% from 30.4% in the identical interval of 2021. This lower in gross margin was primarily as a result of the lower in our whole revenues outpaced the lower in our whole value of revenues as a few of them remained mounted in nature. We’re taking measures to handle prices successfully and enhance total effectivity.

Working Bills for the Interval

Whole working bills for the second quarter of 2022 decreased by 15.5% to RMB1.42 billion (US$212 million) from RMB1.68 billion in the identical interval of 2021. Working bills as a share of whole revenues decreased by 0.4% to twenty.5% within the second quarter of 2022 from 20.9% in the identical interval of 2021. After excluding the impression from the bills associated to our utility for secondary itemizing, working bills as a share of whole revenues would have decreased by 1% year-over-year.

• Promoting and advertising bills had been RMB303 million (US$45 million), representing a lower of 54.7% year-over-year from RMB669 million in the identical interval of 2021. This lower was primarily because of efficient management over advertising bills and optimization of the general promotion construction to enhance working effectivity. Our promoting and advertising bills additionally decreased sequentially on account of the development of exterior promotion channels’ effectivity and higher utilization of inner site visitors to draw customers and promote our model.
• Common and administrative bills had been RMB1.11 billion (US$166 million), representing a rise of 10.5% year-over-year from RMB1.01 billion in the identical interval of 2021. After excluding the impression from the bills associated to our utility for secondary itemizing, normal and administrative bills would have elevated by 6.2% year-over-year. The rise was primarily because of elevated funding in analysis and growth to increase our aggressive benefits in product and know-how improvements.

Working Revenue for the Interval

Working revenue was RMB1.05 billion (US$156 million) within the second quarter of 2022, in comparison with an working revenue of RMB1.04 billion in the identical interval of 2021.

Revenue Tax Bills

Efficient tax charge within the second quarter of 2022 was 12.2%, in comparison with 11.5% in the identical interval of 2021. The rise in efficient tax charge was primarily as a result of a few of our entities had been entitled to completely different tax advantages in 2021 and 2022.

Web Revenue and Non-IFRS Web Revenue for the Interval

Web revenue attributable to fairness holders of the Firm for the second quarter of 2022 was RMB856 million (US$128 million), in comparison with a internet revenue of RMB827 million in the identical interval of 2021. Non-IFRS internet revenue attributable to fairness holders of the Firm was RMB1.03 billion (US$154 million) for the second quarter of 2022, in comparison with RMB1.12 billion in the identical interval of 2021. Please consult with the part on this press launch titled “Non-IFRS Monetary Measure” for particulars.

Earnings per ADS

Fundamental and diluted earnings per American Depositary Shares (“ADS”) had been RMB0.53 (US$0.08) and RMB0.53(US$0.08), respectively, for the second quarter of 2022. Non-IFRS fundamental and diluted earnings per ADS had been RMB0.64 (US$0.10) and RMB0.63 (US$0.09), respectively, for the second quarter of 2022. In the course of the second quarter of 2022, the Firm had weighted averages of 1.61 billion fundamental and 1.62 billion diluted ADSs excellent, respectively. Every ADS represents two of the Firm’s Class A odd shares.

Money, Money Equivalents, Time period Deposits and Brief-term Investments

As of June 30, 2022, the mixed stability of the Firm’s money, money equivalents, time period deposits and short-term investments amounted to RMB25.80 billion (US$3.85 billion), in comparison with RMB25.93 billion as of March 31, 2022. In the course of the three months ended June 30, 2022, internet money generated from operations was RMB1.24 billion (US$185 million) and money utilized in share repurchases was RMB969 million (US$145 million). We additionally incurred a internet money outflow of RMB497 million (US$74 million) for acquisition of shares in varied subsidiaries and associates. Such mixed stability was additionally affected by the change within the trade charge of RMB to USD at completely different stability sheet dates. The trade charge was 6.6981 to 1 on June 30, 2022.

Share Repurchase Program

Pursuant to the US$1 billion 2021 Share Repurchase Program introduced on March 28, 2021, as of June 30, 2022, now we have repurchased roughly 86.8 million ADSs from the open market with money for a complete consideration of roughly US$735 million.

Convention Name Data

TME’s administration will maintain a convention name on Monday, August 15, 2022, at 8:00 P.M. Japanese Time or 8:00 A.M. Beijing Time on Tuesday, August 16, 2022, to debate its monetary outcomes. Listeners could entry the decision by dialing the next numbers:

The replay might be accessible by way of August 22, 2022, by dialing the next numbers:

A stay and archived webcast of the convention name can even be out there on the Firm’s investor relations web site at https://ir.tencentmusic.com/.

Trade Charge

This announcement accommodates translations of sure RMB quantities into U.S. {dollars} (“USD”) at specified charges solely for the comfort of the reader. Except in any other case said, all translations from RMB to USD had been made on the charge of RMB6.6981 to US$1.00, the midday shopping for charge in impact on June 30, 2022, within the H.10 statistical launch of the Federal Reserve Board. The Firm makes no illustration that the RMB or USD quantities referred may very well be transformed into USD or RMB, because the case could also be, at any explicit charge or in any respect. For analytical presentation, all percentages are calculated utilizing the numbers introduced within the monetary statements contained on this earnings launch.

Non-IFRS Monetary Measure

The Firm makes use of non-IFRS internet revenue for the interval, which is a non-IFRS monetary measure, in evaluating its working outcomes and for monetary and operational decision-making functions. TME believes that non-IFRS internet revenue helps establish underlying tendencies within the Firm’s enterprise that might in any other case be distorted by the impact of sure bills that the Firm consists of in its revenue for the interval. TME believes that non-IFRS internet revenue for the interval gives helpful details about its outcomes of operations, enhances the general understanding of its previous efficiency and future prospects and permits for larger visibility with respect to key metrics utilized by its administration in its monetary and operational decision-making.

Non-IFRS internet revenue for the interval shouldn’t be thought of in isolation or construed as a substitute for working revenue, internet revenue for the interval or every other measure of efficiency or as an indicator of its working efficiency. Buyers are inspired to evaluate non-IFRS internet revenue for the interval and the reconciliation to its most instantly comparable IFRS measure. Non-IFRS internet revenue for the interval introduced right here will not be akin to equally titled measures introduced by different corporations. Different corporations could calculate equally titled measures in a different way, limiting their usefulness as comparative measures to the Firm’s information. TME encourages buyers and others to evaluate its monetary data in its entirety and never depend on a single monetary measure.

Non-IFRS internet revenue for the interval represents revenue for the interval excluding amortization of intangible and different property arising from acquisitions, share-based compensation bills, internet losses/positive factors from investments and earnings tax results.

Please see the “Unaudited Non-IFRS Monetary Measure” included on this press launch for a full reconciliation of Non-IFRS internet revenue for the interval to its internet revenue for the interval.

About Tencent Music Leisure

Tencent Music Leisure Group (NYSE: TME) is the main on-line music and audio leisure platform in China, working the nation’s extremely well-liked and modern music apps: QQ Music, Kugou Music, Kuwo Music and WeSing. TME’s mission is to make use of know-how to raise the position of music in individuals’s lives by enabling them to create, take pleasure in, share and work together with music. TME’s platform contains on-line music, on-line audio, on-line karaoke, music-centric stay streaming and on-line live performance providers, enabling music followers to find, hear, sing, watch, carry out and socialize round music. For extra data, please go to ir.tencentmusic.com.

Protected Harbor Assertion

This press launch accommodates forward-looking statements. These statements are made beneath the “secure harbor” provisions of the U.S. Personal Securities Litigation Reform Act of 1995. Statements that aren’t historic details, together with statements concerning the Firm’s beliefs and expectations, are forward-looking statements. Ahead-looking statements contain inherent dangers and uncertainties, and quite a lot of elements may trigger precise outcomes to vary materially from these contained in any forward-looking assertion. In some circumstances, forward-looking statements may be recognized by phrases or phrases reminiscent of “could,” “will,” “count on,” “anticipate,” “goal,” “goal,” “estimate,” “intend,” “plan,” “imagine,” “potential,” “proceed,” “is/are prone to” or different comparable expressions. Additional data relating to these and different dangers, uncertainties or elements is included within the Firm’s filings with the SEC. All data offered on this press launch is as of the date of this press launch, and the Firm doesn’t undertake any responsibility to replace such data, besides as required beneath relevant regulation.

Investor Relations Contact
Tencent Music Leisure Group
[email protected]
+86 (755) 8601-3388 ext. 818415

SOURCE Tencent Music Leisure Group