On the afternoon of August 13th, Tencent Music Entertainment Group (hereinafter referred to as Tencent Music) released its second quarter financial results as of June 30, 2024: Tencent Music's total revenue for the second quarter was 7.16 billion yuan, a year-on-year decrease of 1.7%; Net profit was 1.79 billion yuan, a year-on-year increase of 33.1%; The adjusted net profit was 1.99 billion yuan, a year-on-year increase of 25.7%.
Online music paying users hit a new high, while social entertainment services and others fell by 40%
Online music services, social music services, and other services are Tencent Music's two main businesses, accounting for 75.7% and 24.3% of the total revenue in the second quarter, respectively. Among them, the online music subscription revenue in the second quarter increased by 29.4% year-on-year, reaching 3.74 billion yuan; However, social entertainment services and other service revenue experienced a "cliff like" decline of 42.8%.
The revenue of online music services increased by 27.7% compared to the same period in 2023, reaching 5.42 billion yuan, mainly due to the growth of online music subscription revenue and advertising service revenue. In addition, offline performance revenue also drove the growth of online music service revenue. Among them, the online music subscription revenue was 3.74 billion yuan, an increase of 29.4% compared to the same period in 2023, which was 2.89 billion yuan. The main driving factors were the increase in the scale of online music subscription users and the increase in per capita income of single paying users. In the second quarter of 2024, the number of online music paying users increased by 17.7% year-on-year to 117 million, reaching a historical high, with an average monthly income of 10.7 yuan per paying user.
The revenue from social entertainment services and other services decreased by 42.8% to 1.74 billion yuan compared to the same period in 2023, mainly due to Tencent Music adjusting some live interactive functions and implementing stricter compliance procedures since the second quarter of 2023. The per capita income of monthly active users and single paying users of social entertainment services in the second quarter was 93 million yuan and 73.2 yuan respectively, both showing a decline. The former decreased by 31.6%, while the latter decreased by 45.8%. However, the monthly paying users increased by 5.3% to 7.9 million.
Proper cost control resulted in a decrease in both operating costs and expenses
In the second quarter of 2024, Tencent Music's operating costs and total operating expenses both decreased, indicating proper cost control. Among them, the operating costs decreased by 13.3% year-on-year to 4.15 billion yuan. The main reason for the decrease in operating costs is the corresponding cost reduction in social entertainment service revenue, but partially offset by the increase in copyright content costs, offline performance related costs, and payment channel costs.
The total operating expenses of Tencent Music in the second quarter of 2024 decreased by 8.5% year-on-year to 1.15 billion yuan. The percentage of operating expenses to total revenue has decreased from 17.2% in the same period of 2023 to 16.0%. Among them, sales and marketing expenses amounted to 210 million yuan, which was basically the same as the same period last year; General and administrative expenses amounted to 938 million yuan, a year-on-year decrease of 10.2%.
On May 11, 2024, the board of directors of Tencent Music announced a dividend of $0.0685 per ordinary share or $0.1370 per ADS (American Depositary Receipt) for the year ended December 31, 2023. Tencent Music stated that the total cash dividend of $212 million was paid in June 2024.
As of June 30, 2024, Tencent Music's total cash, cash equivalents, term deposits, and short-term investments amounted to 35.03 billion yuan, compared to 34.18 billion yuan as of March 31, 2024.