Tencent Music (TME) Misses Q1 EPS by 2c, Revenues Miss
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Tencent Music (NYSE: TME) reported Q1 EPS of $0.07, $0.02 worse than the analyst estimate of $0.09. Revenue for the quarter came in at $891 million versus the consensus estimate of $898.16 million.
"We achieved healthy first quarter performance primarily fueled by robust growth from online music subscription revenues. The year-over-year growth of our online music subscription revenues accelerated to 70.0%, up from 48.3% and 60.1% in the third and fourth quarters of 2019 respectively. Online music paying users reached 42.7 million in the first quarter of 2020, growing 50.4% year-over-year with underlying paying ratio reaching 6.5%, up from 4.3% for the same quarter last year. While acknowledging the impact on our social entertainment services from the COVID-19 pandemic, we have started to see a moderate recovery recently," said Mr. Cussion Pang, Chief Executive Officer of Tencent Music. "By ensuring our model offers a win-win situation for both the artists and ourselves, we were able to attract even more talented musicians and develop more original content. Leveraging our massive and in-depth user insights, we successfully discovered and promoted many hit songs to gain nationwide popularity, which reinforces our distinctive value proposition as a leading indie musician platform in China."
Mr. Tony Yip, Chief Strategy Officer of Tencent Music, said, "We are pleased to see strength in both our online music and social entertainment MAUs, especially during the COVID-19 outbreak which impacted businesses in many different ways. Most notably, we have made significant progress in expanding our long-form audio content offering. Apart from adding thousands of new audio works adapted from popular IPs, we have also begun attracting well-known vocal talents to produce more premium UGC content. This holistic approach will enable us to offer comprehensive audio entertainment user experience and build a solid foundation for our future development. Additionally, in our continuous efforts to explore new opportunities to better serve our users, we launched TME Live, an innovative model that integrates offline concerts with online live-streaming experience. The user responses we received on TME Live exceeded expectations, and affirmed the virtuous cycle between online music and social entertainment services."
"We achieved sustained strong performance in online music services with 27.4% year-over-year revenue growth for the first quarter of 2020," commented Ms. Shirley Hu, Chief Financial Officer of Tencent Music. "In particular, our music subscription services delivered an impressive year-over-year revenue growth of 70.0% with continuous ARPPU improvement resulting from the successes of paying user retention and content paywall strategy. Our IFRS and non-IFRS net profit attributable to equity holders of the Company for the quarter were RMB 0.9 billion and RMB 1.1billion, respectively, reflecting our capability in managing changes in macroeconomic conditions as a result of the COVID-19 pandemic. Looking forward, we continue to be optimistic about the future of the broader music industry and are confident in the overall ecosystem and product pipelines that we are building. We'll continue to focus on enhancing and expanding product and service offerings including long-form audio while maintaining core content investments."
For earnings history and earnings-related data on Tencent Music (TME) click here.
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