The market responded positively to the recent announcements from China’s Tencent Music Entertainment Group (TME -1.96%). The company reported better-than-expected earnings on Tuesday, resulting in nearly a 12% rise in the stock price, as provided by data from S&P Global Market Intelligence.
This earnings report was the final release for Tencent Music’s 2024 fiscal year, covering both the fourth quarter and the entire year. The company reported total revenue of 7.46 billion yuan ($1.03 billion) for the quarter, marking an increase of more than 8% compared to the same period in 2023. A major contributor to this revenue was music subscriptions, which surged by 18% to 4.03 billion yuan ($557 million), driven by a 13% rise in the number of paying users.
On the profitability front, Tencent Music’s profit under IFRS standards grew to nearly 2.08 billion yuan ($287 million) from the previous year’s figure of 1.41 billion yuan ($195 million). This equates to 1.26 yuan ($0.17) per American depositary share (ADS).
Furthermore, Tencent Music surpassed analyst expectations for the quarter. Analysts had forecasted revenue of 7.30 billion yuan ($1 billion) and 1.22 yuan ($0.17) per ADS for IFRS net income.
In the earnings release, Cussion Pang, the executive chairman of Tencent, stated, “Our pioneering initiatives across the music value chain have reshaped the industry landscape and enriched our ecosystem, boosting subscriber penetration rate and lifetime value.”
While the commentary from the executive suite may be typical promotional language, Tencent Music’s performance reflects a well-functioning service that meets the demands of its audience in the modern music broadcasting space. The upward trend in revenue and profit suggests that the company is executing its strategies effectively. However, investors should remain mindful of the current state of the Chinese economy, which is not as vigorous as it has been in the past.
