Release Date: March 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tencent Music Entertainment Group (TME, Financial) reported an 8% year-over-year growth in total revenues for Q4 2024, driven by strong performance in music subscription and advertising businesses.
- The company achieved a record high quarterly net profit, with a 47% year-over-year increase to RMB2.08 billion.
- TME's online music revenues increased by 16% year-over-year, supported by a robust growth in music subscriptions and advertising revenues.
- The company announced a new and expanded share repurchase program of up to USD1 billion, reflecting confidence in future growth prospects.
- TME's SVIP membership program saw strong sequential growth, enhancing user engagement and average revenue per paying user (ARPPU).
Negative Points
- Social entertainment services and other revenues declined by 13% year-over-year, indicating challenges in this segment.
- Despite the overall revenue growth, the social entertainment segment continues to face downward pressure due to market changes.
- The company faces potential competition in the market, which could impact subscriber growth and ARPPU.
- There is a need for continuous investment in AI and technology to maintain competitive advantage, which could increase operational costs.
- The company acknowledges the price sensitivity of subscribers, which may limit aggressive pricing strategies for short-term growth.
Q & A Highlights
Q: Can management share guidance on the 2025 growth outlook, particularly for music subscription revenue and online advertising growth?
A: Cussion Kar Shun Pang, Executive Chairman, highlighted that 2024 was a standout year with strong online music services performance. For 2025, TME will focus on strengthening its presence across the music value chain, expecting healthy growth in online music driven by increased paying users and ARPU. Min Hu, CFO, added that gross margin improvements are expected to continue, driven by subscription revenue growth and optimized content costs.
Q: What is the balance between subscriber and ARPU growth, and what are the expectations for 2025?
A: Zhu Liang, CEO, stated that TME remains confident in revenue and profit growth for 2025, with expectations for continued subscriber and ARPU growth. The company will not sacrifice long-term interests for short-term gains and will focus on leveraging content and innovative features to drive sustainable growth.
Q: How is consumer sentiment towards discretionary spending on music and concerts, and what are the trends in concert ticket pricing?
A: Cussion Kar Shun Pang noted that there is a growing demand for live music experiences, with fans willing to spend on concerts and merchandise. The music performance industry in China is experiencing robust growth, with stable ticket prices expected in 2025. TME aims to organize high-quality live shows to meet rising user expectations.
Q: What is TME's strategy around AI in 2025, and what are the financial implications?
A: Zhu Liang explained that TME will leverage Tencent's large language model capabilities to enhance user interactions and music experiences. The company will focus on AI-driven features like sound quality improvements and personalized music recommendations, while managing costs associated with AI investments.
Q: What is the plan for capital allocation, including dividends and share repurchases?
A: Min Hu stated that TME will continue to invest in growth opportunities while returning value to shareholders through share repurchases and dividends. The company announced a new USD1 billion share repurchase plan and increased dividend payouts, reflecting confidence in future operations and commitment to shareholder returns.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
