Tencent Music Entertainment Group Q3 FY2024 earnings call

• The five-star approach continues to drive post-subscriber base. Online music services revenue grew 20% y-o-y, with adjusted net profit up 29% y-o-y.
• Strengthened partnerships with domestic and international record labels, e.g., renewed contracts with YH and Signal Group, and strategic cooperation with Galaxy Corporation for G-Dragon content.
• Hosted offline music experiences like TME SeaWorld Music Festival and an offline concert for a singer-songwriter.
• Collaborated with celebrities for theme songs for games, boosting user engagement.
• Expanded SVIP memberships, with over 10 million members, offering priority access to digital albums, concert presales, and high-quality audio.
• Published 2024 ESG report and Tencent Musician platform recognized as a model case for national copyright powerhouse strategy.

Online music services revenue grew by 20% year-over-year to RMB 5.5 billion, contributing significantly. Social entertainment services and other revenue was RMB 1.5 billion, down by 24% year-over-year. Online music revenues accounted for a major portion of the total revenues, with social entertainment services and other revenue making up the remaining. The online music revenue's 20% y-o-y growth was driven by music subscription revenues which reached RMB 3.8 billion, up 20% y-o-y, and advertising revenues also saw growth.

• Expect to continue expanding paying user base and growing ARPU, with SVIP memberships and advertising business driving growth.
• Optimistic about 2025 growth prospects, expecting acceleration in top-line growth driven by subscribers and ARPU, along with improved profits and operating margins.
• Aim to drive high-quality growth in music business, invest in high-quality content and innovative technologies.

Q: Outlook for Q4 2024 and Q1 2025, especially on SuperVIP boosting performance.

A: Key is to continue expanding paying user base and growing ARPU, SuperVIP plan helps broaden user base and deepen loyalty, expecting healthy growth in future.

Q: Reason for Q3 net add of 2 million new subscribers, and fourth quarter subscriber growth.

A: Mainly due to stable operational strategy, attention to monthly subscriber privileges, leveraging festivals like mid-autumn with marketing strategies. In Q4, will keep tight control over marketing for healthy growth, focus on user retention and SVIP promotion.

Q: Breakdown of SVIP users added in Q3, conversion from regular VIP or new users.

A: Majority of SVIP users are upgraded from basic VIP, many are young users, and plans to extend cross-device privileges and combine with Starlight Card.

Q: Social and entertainment business revenue decrease narrowed, reasons and future outlook.

A: Better performance from WeSing (subscription, ad business) and Kugou (innovative live streaming games). Social entertainment business expected to have stable growth with further platform integration.

Q: MAU strategy and future growth opportunities.

A: Key is unique content driving MAU, optimizing play experience, promoting self-commissioned content, and leveraging integration into WeSing ecosystem for future growth