Chinese music entertainment industry achieves positive benefits in a complex and changing economic situation
Tencent Music Entertainment Group (Chinese: 腾讯音乐, NYSE:TME) released its third-quarter earnings results on 15 November 2022. The report shows that in the third quarter of this year, Tencent Music achieved total revenue of CNY 7.37 billion, down 5.6% year-on-year, and a net profit of CNY 1.09 billion, up 38.7% compared to the same period of the previous year.
The financial results showed that the increase in gross margin was mainly due to the company's effective control of content costs and improved operating cost efficiency while benefiting from the growth in advertising service revenue and digital album sales revenue.
Tencent Music is a Chinese online music entertainment provider offering two major services: online music and social entertainment. The company's products include QQ Music, Kugou Music, Cool My Music and Karaoke. The total number of monthly active users exceeds 800 million.
Online music service revenue increased to CNY 3.43 billion in Q3, up 18.8% year-on-year. The growth was driven by increased music subscriptions, digital album sales and advertising services revenue.
However, the decline in social entertainment services revenue impacted overall revenue. Social entertainment and other services revenue declined 20% year-on-year to CNY 3.94 billion in Q3. The decrease in paid subscribers was mainly affected by the macro environment.
Peng Jiaxin, executive chairman of Tencent Music, said effective cost optimization measures and operational efficiency improvements further helped the company improve profitability under the complex and changing macro environment in the third quarter.