Q2 2025 Tencent Music Entertainment Group Earnings Call
Speaker #2: Good evening, good morning, and welcome to Tencent Music Entertainment Group's second quarter 2025 earnings conference call. I'm Millicent T, head of IR. We announced our quarterly financial results earlier today before the U.S. market opened.
Millicent T: Good evening, good morning, and welcome to Tencent Music Entertainment Group's second quarter 2025 earnings conference call. I am Millicent T, Head of IR. We announced our quarterly financial results earlier today before the U.S. market opened. The earnings release is now available on our IR website and via newswire services. During today's call, you will hear from Mr. Kar Pang, our Executive Chairman, and Mr. Ross Liang, our CEO, who will share an overview of our company strategies and business updates. Then Ms. Shen Lihui, our CFO, will address our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statements in our earnings release, which applies to this call as we will make forward-looking statements.
Speaker #2: The earnings release is now available on our IR website and via newswire services. During today's call, you will hear from Mr. Kar Pang, our Executive Chairman, and Mr. Ross Liang, our CEO, who will share an overview of our company's strategies and business updates.
Speaker #2: Then Ms. Zhu Liang, our CFO, will address our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statements in our earnings release.
Speaker #2: Which applies to this call, as we'll make forward-looking statements. Please note that we'll discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures.
Millicent T: Please note that we will discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under IFRS in our earnings release and filings with the FCC. All participants are muted at this time. After management's remarks, there will be a Q&A session, and please be advised that today's call is being recorded. With that, I am very pleased to turn the call over to Kar Pang, Executive Chairman of TME. Kar Pang, please.
Speaker #2: Reported under IFRS in our earnings release and filings with the SEC. All participants are muted at this time. After management's remarks, there will be a Q&A session. Please be advised that today's call is being recorded.
Speaker #2: With that, I'm very pleased to turn the call over to Kar Pang, Executive Chairman of TNG. Kar Pang, please.
Speaker #3: Thank you, Millicent. Hello, everyone, and thank you for joining our call today. We delivered high-quality growth in the second quarter, with solid year-over-year increases in both revenue and profitability.
Kar Pang: Thank you, Millicent T. Hello, everyone, and thank you for joining our call today. We delivered high-quality growth in the second quarter, with solid year-over-year increases in both revenue and profitability. On one hand, our music subscription business remains a core growth driver and continues to gain traction. On the other hand, we are also seeing impressive results from our expanding suite of music-related services. Key initiatives like advertising, concerts, and artist merchandise all achieved rapid growth in the second quarter, and that strong momentum is carrying into the third quarter. By constantly enhancing our content ecosystem, expanding our offerings, and fostering new ways for artist-fan engagement, we are shaping a vibrant all-in-one music service platform. Now, let me share some of the key highlights on the content business.
Speaker #3: On one hand, our music subscription business remains a core growth driver and continues to gain traction. On the other hand, we are also seeing impressive results from our expanding suite of music-related services.
Speaker #3: Key initiatives like advertising, concerts, and artist merchandise all achieved rapid growth in the second quarter. That strong momentum is carrying into the third quarter.
Speaker #3: Icons, by constantly enhancing our content ecosystem, expanding our offerings, and fostering new ways for artists' and fans' engagement, are shaping a vibrant, all-in-one music service platform.
Speaker #3: Now, let me share some of the key highlights on the content business. First, we began cooperating with well-known Korean labels, The Black Label and H Music, for the first time.
Kar Pang: First, we began cooperating with well-known Korean labels like The Black Label and HMusic for the first time, further strengthening and differentiating our K-pop offerings. We also extended collaboration with renowned Chinese artist Wang Feng, offering both of his classics and latest work on our platform. Secondly, we continue to focus on co-creation and original content production to further enrich and diversify our content offerings. From concept origination, creations, to production and promotion, we are actively involved in every stage to build a more dynamic and innovative music ecosystem. A prime example is our recent collaboration with SM Entertainment on NCT's Chinese special EP "Lucid Dream." Our integrated promotions across music festivals, debut concerts, and variety shows attract a large audience. 10,000 music lovers participated in a sing-along at the music festival and variety show.
Speaker #3: Further strengthened and differentiated our K-pop offerings, we also extended collaboration with renowned Chinese artist Wang Feng, offering both his classics and latest work on our platform.
Speaker #3: Second, we continue to focus on co-creation and our original content production to further enrich and diversify our content offerings. From concept origination to creation, production, and promotion, we are actively involved in every stage to build a more dynamic and innovative music ecosystem.
Speaker #3: A prime example is our recent collaboration with SM Entertainment on NCT's Chang'e, Zhong Chang'e, Chinese special EP, Lucid. Our integrated promotions across music festivals, savior concerts, and variety shows attract a large audience.
Speaker #3: Ten thousand music lovers participated in a sing-along at the music festival, and variety show clips generated over one million likes, highlighting the power of end-to-end industry collaboration across borders and cultural exchange through music.
Kar Pang: Clips generated over one million likes, highlighting the power of the end-to-end industry collaboration across borders and cultural exchange through music. We also work closely with artists to develop original pieces, like the theme song for the acclaimed film "The Light She Rose" with Chen Chuxun. This song topped multiple music charts and garnered extensive praise from national media. Additionally, our strategic partnership with Zhejiang Satellite TV has further supplemented our music copyright portfolio of popular variety shows such as "The Treasure of the Voice" and "Shining Summer," and opened new opportunities for collaboration in content co-creation, musician promotion, and more. We have also shown strong capabilities in staging artists and connecting them with the users through other music-related service offerings. These efforts have further energized our ecosystem, boosted user loyalty, and cultivated content creation, all together reinforcing our platform's unique position in the evolving music industry.
Speaker #3: We also worked closely with artists to develop original pieces, like the theme song for the acclaimed film The Lychee Row, "Chang'an the Lychee," with Chen Zhu Sheng.
Speaker #3: This song topped multiple music charts and garnered extensive praise from national media. Additionally, our strategic partnership with Zhejiang Satellite TV and Zhejiang Weishi has further supplemented our music copyright portfolio of popular variety shows, such as The Treasured Voice, Jin Pyeongchi the Singing, and Shining Summer.
Speaker #3: 闪光的夏天, and opened new opportunities for collaboration in content co-creation, musician promotion, and more. We have also shown strong capabilities in staging artists and connecting them with the users through other music-related service offerings.
Speaker #3: These efforts have further energized our ecosystem, boosted user loyalty, and cultivated content creation, all together reinforcing our platform's unique position in the evolving music industry.
Speaker #3: First, we successfully hosted leading Korean artist G-Dragon's first major tour since 2017 in Macau, which attracted over 36,000 attendees to immerse in the cultivated atmosphere. The event's merchandise was quickly sold out.
Kar Pang: A few examples: First, we successfully hosted leading Korean artist G-Dragon's first major tour since 2017 in Macau, which attracted over 36,000 attendees to immerse in the captivating atmosphere, and the event's merchandise was quickly sold out. This marked our first large-scale international concert production, significantly pushing our industry reputation. Following a strong kickoff, we are scheduled to expand the tour into other regions this year. Additionally, we organized a series of stadium concerts for Fiona Sit, Xue Kaiqi, Tia Wei, Yuan Yao Wei, and Rapid Guy, helping them to reach a broader, younger audience. Due to the overwhelming demand, we quickly responded and worked with Tia Wei to schedule additional shows to accommodate fan interest. Second, we have become an important partner for staging and curating live performances for emerging talents.
Speaker #3: This marked our first large-scale international concert production, significantly pushing our industry reputation. Following a strong kickoff, we are scheduled to expand the tour into other regions this year.
Speaker #3: Additionally, we organized a series of stadium concerts for Beyoncé, Shikaji, PLA, Yuan Yawei, and rapper Sky, helping them to reach a broader, younger audience.
Speaker #3: Due to the overwhelming demand, we quickly responded and worked with PLA to schedule additional shows to accommodate fan interests. Second, we have become an important partner for staging and curating live performances for emerging talents.
Speaker #3: In the first half of the year, we leveraged our proprietary IPs, Citylife and Bufflife, to host over 300 offline shows for nearly 110 musicians.
Kar Pang: In the first half of the year, we leveraged our proprietary IPs, CityLive and BubbLive, to host over 300 offline shows for nearly 100 Tencent musicians. Our cross-platform promotions also boosted a number of works into trending hits, connecting them with a broader audience of music lovers. For instance, after we promoted Zhang Sisi's first "Why Not Wait for the Wind" on short video platforms, it quickly went viral, sparking a wave of user-generated content on social media and surprising 20 million streams on our platform. Third, we created more opportunities for music lovers to meet and interact with artists, both online and offline. For example, buyers of Jason Zhang Jie's physical album "Not Bad Yao De" could win opportunities to attend his offline signing events. Such privileges not only deepened fans' engagement but also helped drive the album's outstanding performance.
Speaker #3: Our cross-platform promotions also boost a number of works into trending hits, connecting them with a broader audience of music lovers. For instance, after we promoted Zhang Ziyi's first "Why Not Wait for the Win, Fu Ru ????" on short video platforms, it quickly went viral.
Speaker #3: Sparkling a wave of user-generated content on social media and surprising 20 million streams on our platform. Third, we created more opportunities for music lovers to meet and interact with artists, both online and offline.
Speaker #3: For example, buyers of Jason Zhang Jie's physical album, Not Bad, ??, could win opportunities to attend his offline signing events. Such privileges not only deepened fans' engagement but also helped drive the album's outstanding performance.
Speaker #3: In late June, we partnered with DAU, a global fan communication platform company, to launch the interactive community bubble on QQ Music. Bubble enables users to engage directly with hundreds of K-pop artists from labels such as SM, JYP, and Cube Entertainment.
Kar Pang: In late June, we partnered with Dear U, a global fan communication platform company, to launch the interactive community Bubble on QQ Music. Bubble enables users to engage directly with hundreds of K-pop artists from labels such as SM Entertainment, JYP, and Cube Entertainment, providing artists an avenue to share members-only content. To cater to a wider audience, we also plan to invite some popular Chinese artists to the community, allowing them to foster deeper and more personal connections with their fans. Finally, reflecting on our commitment to serving the music industry and supporting its healthy growth, we hosted the third Wave Music Awards, which was designed to honor the most outstanding Chinese music work of 2024. Fifteen top-tier music creators, including Wu Zhenshen, Li Haiying, and Xiao Ke, presented the awards. The chart's professionalism earned industry-wide acclaim and endorsements, amassing over 200 million social media views.
Speaker #3: Providing artists an avenue to share members-only content. Together, to a wider audience, we also plan to invite some popular Chinese artists to the community.
Speaker #3: Allowing them to foster a deeper and more personal connection with their fans. Finally, reflecting our commitment to serving the music industry and supporting its healthy growth, we host the Third Wave Music Awards, which was decided to honor the most outstanding Chinese music work of 2024.
Speaker #3: Fifteen top-tier music creators, including Wu Jianfeng, Li Haiying, and Xiao Ke, presented the awards. The chart’s professionalism earned industry-wide acclaim and endorsement, amassing over 200 million social media views.
Speaker #3: This quarter, we also cooperated with professional institutions, music labels, and artists, leveraging AI technology to unlock the social value and healing power of music.
Kar Pang: This quarter, we also collaborated with professional institutions, music labels, and artists, leveraging AI technology to unlock the social value and healing power of music. For example, we launched the "Healing Guizhou" project, featuring natural soundscapes to enhance sleep quality. In summary, our dedication to diversifying music services and delivering well-rounded music entertainment has set the stage for long-term sustainability growth. With a strong foundation in place, we will continue to enhance our content and platform ecosystem, offer richer experiences, and unlock greater opportunities for both music lovers and stakeholders across the music value chain. Now, I would like to turn the call over to Ross Liang for more details on our overall platform development. Ross Liang, please go ahead. Thank you.
Speaker #3: For example, we launched the Healing Guizhou project, featuring natural soundscapes to enhance sleep quality. In summary, our dedication to diversifying music services and delivering well-rounded music entertainment has set the stage for long-term sustainable growth.
Speaker #3: With a strong foundation in place, we will continue to enhance our content and platform ecosystem. We will offer richer experiences and unlock greater opportunities for both music lovers and stakeholders across the music value chain.
Speaker #3: Now, I would like to turn the call over to Ross for more details on our overall platform development. Ross, please go ahead. Thank you.
Speaker #4: Thank you, Kar Pang. Hello, everyone. In the second quarter, our platform demonstrated robust growth, driven by our commitment to continuous product improvement and operational excellence.
Ross Liang: Thank you, Kar Pang. Hello, everyone. In the second quarter, our platform demonstrated robust growth, driven by our commitment to continuous product improvement and operational excellence. Online music recorded strong performance, supported by a sustained expansion in both our subscriber base and ARPPU. This positive trajectory was underpinned by our innovations across product features, artist merchandise, and artist-fan interactions, which has further strengthened our appeal among Super VIP members. Overall, user average time spent reached a record high, and Super VIP subscribers exceeded 15 million, a new milestone that reflects the deep trust and loyalty within our user community. To enhance the Super VIP experience, we introduced a range of new and upgraded features during this quarter. Here are some key highlights. First, high-quality sound quality remains the most popular Super VIP membership benefit. This is effective in fulfilling users' robust demand for more premium and immersive listening experiences.
Speaker #4: Online music recorded strong performance, supported by sustained expansion in both our subscriber base and ARPPU. This positive trajectory was underpinned by our innovations across product features.
Speaker #4: Artist merchandise and artist fan interactions have further strengthened our appeal among SVIP members. Overall, user average time spent reached a record high, and SVIP subscribers exceeded 15 million.
Speaker #4: A new milestone that reflects the deep trust and loyalty building within our user community. To enhance the SVIP experience, we introduced a range of new and upgraded features during this quarter.
Speaker #4: Here are some key highlights. First, high-quality sound remains the most popular SVIP membership benefit. This is effective in fulfilling users' robust demand for more premium and immersive listening experiences.
Speaker #4: In the second quarter, Google Music pioneered vapor hi-fi sound quality and one-click audio enhancement 2.0 by delivering superior audio fidelity and louder speaker volumes.
Ross Liang: In the second quarter, Kugou Music pioneered Viper Hi-Fi sound quality and one-click audio enhancement 2.0. By delivering superior audio fidelity and louder speaker volumes, we let users easily transform their smartphones into portable speakers. We also upgraded voice extraction technologies with the industry-first AI Chorus function. Users can now plug in a live concert, sing along experiences anytime and anywhere without the user's fuss. Second, to further drive Super VIP adoption, artist-centric privileges became increasingly effective. Such achievements are powered by our deeper collaborations with libraries and artists that unlock a wide range of compelling benefits for our users. Digital albums are a great example. Recently, we premiered G-Dragon, Lin Junjie, and Lin's new digital single "Hold Me Close" 在月十里抱紧我. We also launched Zhao Lingtai Zhaiyi Lin's new album "Pleasure" by integrating these albums as Super VIP sign-up privileges, which significantly boosted Super VIP conversions.
Speaker #4: We let users easily transform their smartphones into portable speakers. We also upgraded voice extraction technologies with the industry-first AI Coral function. Users can now plug in a live concert and enjoy a sing-along experience anytime and anywhere.
Speaker #4: Without the fast second, to further drive SVIP adoption, artist-centric privileges became increasingly effective. Such achievements are powered by our deeper collaborations with libraries and artists.
Speaker #4: That unlocked a wide range of compelling benefits for our users. Digital albums are a great example. Recently, we premiered JJ Lin (Junjie) and Lin's new digital single, "Hold Me Close."
Speaker #4: That year's release, we also launched Zhou Lin Cai's Hai Lin's new album, "Pleasure." By integrating this album's SVIP sign-up privileges, we significantly boosted SVIP conversions.
Speaker #4: Another example is priority access to concert tickets for in-demand events. This quarter, SVIP users had the opportunity to secure tickets for G-Dragon and BLACKPINK's concert tours in advance on our platform.
Ross Liang: Another example is priority access to concert tickets for in-demand events. This quarter, Super VIP users had the opportunity to secure tickets for G-Dragon and Blackpink's concert tours in advance on our platform, sparking significant buzz among music fans. We also cooperated with both domestic and international artists, including JCT Tan Jianci, Silent One, Wang Sulong, and iTwin, to release market-star cars series. These initiatives successfully met users' growing demand for collectibles. Third, we elevated users' engagement by introducing new ways for artists and fans to connect. For example, beyond launching Bubble in May, we partnered with TF Entertainment's Xi Lai Feng Jun to live stream Teens in Time's Xi Lai少年团 and Transform Project's Top Top 登陆少年组合's two concerts. These events garnered over 33 million viewers, with SVIP members enjoying dedicated access to solo camera angles, bringing fans even closer to the artists.
Speaker #4: Sparking significant buzz among music fans, we also cooperated with both domestic and international artists, including JCT, Tan Jianci, Silence One, Wang Sulong, and Aespa to release the market star cards series.
Speaker #4: This initiative successfully met users' growing demand for collectibles. Third, we elevated users' engagement by introducing new ways for artists and fans to connect. For example, beyond launching Bubble in May, we partnered with TF Entertainment and Shi Lai Feng Jun to live stream events in real-time, Shi Lai Shang Yan Tuan, and transform projects into top Donglu Shang Yan Zhuge concerts.
Speaker #4: This event garnered over 33 million viewers, with SVIP members enjoying dedicated access to solo camera angles, bringing fans even closer to the artists. We also upgraded our virtual fan community, Tanguig Ireland, introducing special avatar outfits and gestures for SVIP members.
Ross Liang: We also upgraded our virtual fan community, Penguin Island, introducing special avatar outfits and gestures for SVIP members to make online meetups more personalized. During last Huang Huang Zihong fan's birthday and song releases, we hosted fun team-building activities and live voice calls with him, attracting over 100,000 users to his Island page. Next, as our entire music service gained recognition from SVIP members, we broadened our alliance with prominent automakers. For instance, this quarter, we formed a comprehensive partnership with Geely, and collaborated with Xiaomi on its first SUV, the U7 model. This partnership integrated Dolby Atmos and the premium series sound effects, elevating users' music listening experience. We also built an AI-powered music cabin for Great Wall Motor, offering personalized on-demand features like AI vocal extraction and a healing music playlist to facilitate a more enjoyable journey.
Speaker #4: To make online meetups more personalized, during Wang Zuhong Fan's birthday and song releases, we hosted fan team-building activities and a live voice call with him.
Speaker #4: Attracting over 100,000 users to his Ireland page, we gained recognition from SVIP members for our in-car music service. Next, we broadened our alliance with prominent automakers.
Speaker #4: For instance, this quarter, we formed a comprehensive partnership with Geely and collaborated with Xiaomi on its first SUV, the U7 model. This partnership integrated Dolby Atmos and premium series sound effects, elevating users' music listening experience.
Speaker #4: We also built an AI-powered music cabin for Great Wall Motor, offering personalized on-demand features like AI vocal extraction and healing music playlists to facilitate a more enjoyable journey.
Speaker #4: Alongside the success of our SVIP offerings, the power of our platform and innovative ad formats led to solid advertising growth, both quarter-over-quarter and year-over-year.
Ross Liang: Alongside the success of our SVIP offerings, the power of our platform and innovative ad formats led to accelerated advertising growth, both quarter over quarter and year over year. In particular, we optimized interactive and tough ads and enriched redemption benefits, significantly boosting users' engagement and receiving positive feedback from advertisers. Lastly, our initial pilot on an AD-based membership gained positive momentum. It gave us more room to provide tailored solutions to advertisers and users with various needs. Looking ahead, we see great potential in the music entertainment space and are committed to investing in new initiatives that create lasting value and impact on music creation and consumption. Along this journey, we will continue to push boundaries, innovate, and enhance user experiences to deliver more premium and immersive experiences to all of our users.
Speaker #4: In particular, we optimized interactive tasks and enriched reception benefits. Significantly, we boosted users' engagement and received positive feedback from advertisers. Lastly, our initial pilot on ad-based membership gained positive momentum.
Speaker #4: It gave us more room to provide tailored solutions to advertisers and users with various needs. Looking ahead, we see great potential in the music entertainment space, and we are committed to investing in new initiatives that create lasting value and impact on music creation and construction.
Speaker #4: Along this journey, we will continue to push boundaries, innovate, and enhance user experiences to deliver more premium and immersive experiences to all of our users.
Speaker #4: With that, I would like to turn the call over to Shirley, our CFO, for a deep dive into our financials.
Ross Liang: With that, I would like to turn the call over to Shen Lihui, our CFO, for a deep dive into our financials.
Speaker #2: Thank you, Ross. And greetings to everyone. Let me now turn to our financial results in Q2 2025. Our total revenues hit a record high of $88.4 billion, up by 18% year-over-year.
Shen Lihui: Thank you, Ross, and greetings to everyone. Let me now turn to our financial results in Q2 2025. Our total revenues hit a record high of $108.4 billion, up by 18% year-over-year, successfully overcoming the challenges from adjustments in social entertainment services in recent years. This was driven by continued strong growth in music subscription and advertising services, as well as robust growth from artist-related merchandise sales and offline performances. Online music revenues grew 26% year-over-year to RMB 6.9 billion. Music subscription revenues grew 17% year-over-year to RMB 4.4 billion in Q2 2025, driven by continued expansion in subscriber base and monthly ARPPU. Monthly ARPPU reached RMB 9.7 this year, compared to RMB 10.7 in the same period of last year, primarily driven by expansion in SVIP subscribers and ARPPU.
Speaker #2: Successfully overcoming the challenges from adjustments in social entertainment services in recent years was driven by continued strong growth in music subscription and advertising services, as well as robust growth from artist-related merchandise sales and offline performances.
Speaker #2: Online music revenues grew 26% year-on-year to R&D 6.9 billion. Music subscription revenues grew 17% year-on-year to R&D 4.4 billion in Q2 2025, driven by continued expansion in subscriber base and monthly ARPPU.
Speaker #2: Monthly ARPPU reached R&D $9.7 this year, compared to R&D $10.7 in the same period of last year, primarily driven by expansion in SVIP subscribers and ARPPU.
Speaker #2: As discussed earlier, to enhance the SVIP members' experience, we continued to broaden and strengthen SVIP benefits, including enhanced sound quality and effects, as well as artist-centric privileges such as free shipping for our merchandise.
Shen Lihui: As discussed earlier, to enhance the SVIP members' experience, we continued to broaden and strengthen SVIP benefits, including enhanced sound quality and effects, artist-centric privileges such as free shipping for our merchandise, priority access to concert tickets, and artist-related merchandise. These efforts effectively have helped us enhance our SVIP membership base and achieve higher monthly ARPPU this quarter. Advertising revenue continued its strong growth successfully on both year-over-year and quarter-over-quarter basis, primarily driven by the following: First, our innovative AD formats, such as AD-supported model, keep gaining traction and significantly contributed to our advertising revenue growth. Second, the 618 Shopping Festival provided a great opportunity to showcase our recent product optimization results, leading to an increased number of advertisers, higher entrance rates, and eCPM. Third, sponsorship advertising also had strong growth this quarter, which benefited from an increased number of offline events and performances.
Speaker #2: Priority access to concert tickets and artist-related merchandise has effectively helped enhance our SVIP membership base and achieve higher monthly ARPPU this quarter.
Speaker #2: Advertising revenue continued its strong growth trajectory on both year-on-year and quarter-on-quarter basis. Primarily driven by the following: first, our innovative AD formats, such as AD-supported model, keep the gaming trajectory and significantly contributed to our advertising revenue growth.
Speaker #2: Second, the 6/18 shopping festival provided a great opportunity to showcase our recent product optimization results, leading to an increased number of advertisers, higher entrance rates, and ECPM.
Speaker #2: Third, sponsorship advertising also had strong growth this quarter, benefiting from an increased number of offline events and performances. Additionally, artist-related merchandise sales and offline performances delivered robust results this quarter, further contributing to overall revenue growth.
Shen Lihui: Additionally, artist-related merchandise sales and offline performance delivered robust results this quarter and further contributed to overall revenue growth in music services. The shipping for the physical album of Xiao Zhan this quarter, together with the offerings of artist-related merchandise such as Zhukou Share's physical albums and G-Dragon's offshore light sticks, significantly enhanced the revenues from artist-related merchandise sales in Q2. Meanwhile, we continued our strategic initiatives in the offline performance market. This quarter, leading Korean artist G-Dragon started his first major tour since 2017, and we successfully hosted his concert in Maku in Q2, with more locations to come in Q3. We also hosted other high-profile concerts for artists such as Willpan this quarter. Social entertainment services and ad revenues were RMB 1.6 billion, down by 9% year-over-year.
Speaker #2: In music services, the shipping for the physical album of Xiao Zhan this quarter, together with the offerings of artist-related merchandise, such as Joker shirts, physical albums, and G-Dragon's offshore light sticks, significantly enhanced the revenues from artist-related merchandise sales in Q2.
Speaker #2: Meanwhile, we continued our strategic initiatives in the offline performance market. This quarter, leading Korean artists like G-Dragon started his first major tour since 2017.
Speaker #2: And we successfully hosted his concerts in Macau in Q2. With more locations to come in Q3, we also hosted other high-profile concerts for artists such as Will Pan this quarter.
Speaker #2: Social entertainment services and art revenues were $1.6 billion, down by 9% year-on-year. The year-on-year decrease was mainly due to adjustments to certain live streaming interactive functions and more stringent compliance procedures.
Shen Lihui: The year-over-year decrease was mainly due to the adjustments to certain live streaming, interactive functions, and most stringent compliance procedures previously implemented. Our gross margin rose by 2.4 percentage points year-over-year to 44.4%, primarily driven by the following factors: First, strong growth in music subscription and advertising revenues, together with improved cost efficiency thanks to our long-standing win-win relationships with labels and artists have benefited our gross margin. Second, as the market landscape evolved, we successfully lowered our revenue sharing ratio in social entertainment services without materially impacting revenues. Meanwhile, the growth in revenues from artist-related merchandise and offline performances, which require higher investment, had offset gross margin increase. Moving on to operating expenses, sales and marketing expenses as a percentage of revenues were 2.6%, down from 2.9% in the same period of last year.
Speaker #2: Previously implemented, our gross margin rose by 2.4% year-on-year to 44.4%. This was primarily driven by the following factors: first, strong growth in music subscription and advertising revenues.
Speaker #2: Together with improved cost efficiency, thanks to our long-standing win-win relationships with labels and artists, we benefit our gross margin. Second, as the market landscape evolves, we have successfully lowered our revenue-sharing ratio in social entertainment services.
Speaker #2: With all the material impacting revenues, meanwhile, the growth in revenues from artist-related merchandise and offline performances, which require higher investment, had an upside gross margin increase.
Speaker #2: Moving on to operating expenses, sales and marketing expenses as a percentage of revenues was 2.6%, down from 2.9% in the same period of last year.
Speaker #2: General and administrative expenses as a percentage of revenues were 11.1%, down from 13.1% in the same period of last year. Reflecting our strong operating efficiency, the majority of our sales and marketing spending has been in the category of content promotion and channel spending.
Shen Lihui: General and administrative expenses as a percentage of revenues were 11.1%, down from 30.1% in the same period of last year. Reflecting our strong operating efficiency, the majority of our sales and marketing spending have been in the category of content promotion and channel spending. We will keep monitoring market conditions and increase spending as needed with financial discipline. Our effective tax rate for Q2 2025 was 17.3%, compared to 19.4% in the same period of 2024. We include withholding income tax of RMB 118 million in the second quarter of 2025. In Q2 2025, our net profit increased by 38% to RMB 2.5 billion, and the net profit attributable to active holders of the company increased by 43% to RMB 2.4 billion.
Speaker #2: We will keep monitoring market conditions and increase spending as needed with financial discipline. Our effective tax rate for Q2 2025 was 17.3%, compared to 19.4% in the same period of 2024.
Speaker #2: We accrued withholding income tax of R&D 108 million in the second quarter of 2025. In Q2 2025, our net profit increased by 38% to R&D 2.5 billion.
Speaker #2: And net profit attributable to exporters of the company increased by 43% to RMB 2.4 billion. Now, I'd like to increase it by 33% to RMB 2.6 billion.
Shen Lihui: Non-IFRS net profit increased by 33% to RMB 2.6 billion, reaching a historical high, and the non-IFRS net profit attributable to active holders of the company increased by 37% to RMB 3.6 billion. Our diluted earnings per ADS this quarter was RMB $1.55, up by 45% year-over-year. The non-IFRS diluted earnings per ADS was RMB $1.66, up by 39% year-over-year. These results underscore our effective monetization, enhanced operating efficiency, and the benefit from our shared reparties. As for Q3 2025, our combined balance of cash, cash equivalents, term deposits, and short-term investments were RMB $34.9 billion, as compared to RMB $37.7 billion as of March 31, 2025. This combined balance was also affected by a change in the exchange rate of RMB to USD at different balance states.
Speaker #2: Reaching our historical high, the non-advertised net profit attributable to exporters of the company increased by 37% to R&D $2.6 billion. Our diluted earnings per ABI this quarter were R&D $1.55.
Speaker #2: Up by 45% year-over-year, and non-advertised diluted earnings per ABI were R&D $1.66, up by 39% year-on-year. This result underscores our effective monetization, enhanced operating efficiency, and the benefits from our zero repurchase program.
Speaker #2: As of June 1, 2025, our combined balance of cash equivalents, term deposits, and short-term investments was R&D $34.9 billion, compared to R&D $37.7 billion as of March 31, 2025.
Speaker #2: This combined balance was also effective, with changes in the exchange rate of R&D to USD at different balance sheet states. Going forward, we will keep focusing on expanding our SVIP membership and introducing more enhanced SVIP privileges.
Shen Lihui: Going forward, we will keep focusing on expanding our Super VIP (SVIP) membership, introducing more and enhanced Super VIP (SVIP) privileges, such as high-quality content, artist-centric privileges, including early access to artist merchandise and concerts. Meanwhile, we will continue to invest in our products and innovative technologies globally. We remain optimistic in the health growth prospects of the music entertainment industry and are confident about the high-quality growth of our business. This concludes our prepared remarks. Later, we are ready to open the call for questions.
Speaker #2: Such as high-quality content and artist-centric privileges, including early access to artist merchandise and concerts. Meanwhile, we will continue to invest in our products and innovative technologies globally.
Speaker #2: We remain optimistic about the healthy growth prospects of the music entertainment industry and are confident in the high-quality growth of our business. This concludes our prepared remarks.
Speaker #2: Later, we are ready to open the call for questions. Thank you, Shirley. If you are dialing in by phone, please press 5 to ask a question, and then press 6 to unmute yourself.
Millicent T: Thank you, Shen Lihui. If you are dialing in by phone, please press 5 to ask a question, then press 6 to unmute yourself. If you are asked to attend the call from the Tencent Meeting or VoLTE Meeting application, please click the raise hand button at the bottom left. For the benefit of all participants on today's call, please be reminded to limit yourself to one question. If you have more than one, please re-enter the queue. If you ask your questions in Chinese, please repeat in English. The third question comes to the line from Lincoln from Goldman Sachs. Lincoln, your line is open. Hello, Lincoln. Can you hear us? Yeah, we can hear you. Your line is open, Lincoln.
Speaker #2: If you are accessing the call from the Tencent Meeting application, please click the raise hand button at the bottom left. For the benefit of all participants on today's call, please be reminded to limit yourself to one question. If you have more than one, please reenter the queue.
Speaker #2: If you ask your questions in Chinese, please repeat them in English. And the first question comes from Lincoln from Goldman Sachs. Lincoln, your line is open.
Speaker #2: Hello, Lincoln, can you hear us? Yeah, we can hear you. Your line's open, Lincoln.
Speaker #4: Okay. Sounds better. Yeah, thank you for taking my question. So, congrats on the very strong quarter. My question is about the outlook. Given that in the first half we have had very solid momentum, how should we think about the second half in terms of revenue as well as the profit outlook?
Kar Pang: Okay. Sounds better. Thank you for taking my question. Congratulations on the first quarter. My question is about the outlook. Given that the first half we have a very solid momentum, how should we think about the second half in terms of revenue and as well as the profit outlook? Thank you.
Speaker #4: Thank you.
Speaker #2: 非常感谢, 谢谢管理层。来, 接受我的提问。那首先我想恭喜管理层在本季度取得了非常强劲的表现。那我的问题更多的是关注于公司的一些发展前景。鉴于今年的上半年, 我们整体的业务发展非常的强有力。那我们应该如何看待接下来下半年的收入和利润的一些展望呢? 谢谢。
Speaker 10: 非常感谢谢谢管理层来接受我的提问。那首先我想恭喜管理层在本季的取得了非常强劲的表现。那我的问题更多的是关注于公司的一些发展前景。鉴于今年的上半年我们整体的业务发展非常的强有力, 那我们应该如何看待接下来下半年的收入和利润的一些展望呢? 谢谢。
Speaker #4: Thank you so much, Lincoln, for your questions. Actually, we are really encouraged by this quarter's solid and well-rounded performance, with both our top line and bottom line coming in strong.
Kar Pang: Thank you so much, Lincoln, for your questions. Actually, we are really encouraged by this quarter's solid and well-rounded performance, with both of our top line and bottom line coming in strong. While our music subscription business remains robust, we will continue to focus on the high-quality growth. As mentioned before, our subscriber base right now has already reached over 124 million, and the pace for the net adds may fluctuate from quarter to quarter. We do have the confidence that it will continue to have a high-quality growth in a healthy and dynamic manner. For the ARPPU, I think we are seeing a steady upward trend as we continue to enhance our offerings and the value we provide to users. We believe these efforts will further strengthen our value propositions and users' willingness to pay over time.
Speaker #4: While our music subscription business remains robust, we will continue to focus on high-quality growth. As mentioned before, our subscriber base right now has already reached over 124 million, and the pace for the net ads may fluctuate from quarter to quarter.
Speaker #4: But we do have confidence that it will continue to have high-quality growth in a healthy and dynamic manner. As for the ARPPU, I think we are seeing a steady upward trend as we continue to enhance our offerings and the value we provide to users.
Speaker #4: We believe this effort will further strengthen our value propositions and users' willingness to pay over time. So, besides the good performance in the subscription business, I think the traction that we are seeing in our non-subscription services is also very exciting.
Kar Pang: Besides a good performance in the subscription business, I think the traction that we are seeing in our non-subscription services is also very exciting. On one hand, the advertising continues to be an important growth driver. Innovative formats tailored to different user cohorts are particularly welcomed by the advertisers. On the other hand, as we keep innovating and collaborating with more artists and labels, the new revenue streams from concerts and artist merchandise are becoming more scalable. In the second quarter, revenue will more than double from a year-over-year basis, which really validates our strategy of building a comprehensive music entertainment platform. For the visibilities, as you can probably understand, the concerts, for example, we experienced some short-term quarter-over-quarter fluctuations as they are involving a lot of things like scheduling, venue selections, and other logistical coordinations. But overall, we are really optimistic and focused on driving a sustainable long-term growth.
Speaker #4: On one hand, advertising continues to be an important growth driver. Innovative and format-tailored approaches for different user cohorts are particularly welcomed by the advertisers.
Speaker #4: And on the other hand, as we keep innovating and collaborating with more artists and labels, the new revenue streams from concerts and artist merchandise are becoming more scalable.
Speaker #4: In the second quarter, revenue more than doubled on a year-over-year basis, which really validates our strategy of building a comprehensive music entertainment platform.
Speaker #4: So for the visibilities, as you can probably understand, the concerts, for example, we are experiencing some short-term quarter-over-quarter fluctuations. As they evolve in a lot of things like scheduling, venue selections, and other logistical coordinations.
Speaker #4: But overall, we are really optimistic and focused on driving sustainable long-term growth. So in a nutshell, for the full year of 2025, I think backed by the solid performance year to date, we now see the revenue expected to come in higher than our previous expectations.
Kar Pang: In a nutshell, for the full year of 2025, I think backed by the solid performance year to date, we now see the revenue expected to come in higher than our previous expectations. With our focus on the operational efficiencies, we see more room for bottom line improvement as well. Thank you for your questions.
Speaker #4: With our focus on operational efficiencies, we see more room for bottom-line improvement as well. Thank you for your questions.
Speaker #2: Thank you, Kar Pang. The next question comes from Alicia Yap from Citigroup. Alicia, please.
Millicent T: Thank you, Kar Shen. The next question comes from Alicia, yeah, from Citigroup. Alicia, please.
Speaker #5: Hi, good evening, management. Thanks for taking my questions. Congrats on the solid results. I have a question on Bubble. Can management share with us the traction of your recently launched Bubble?
Ross Liang: Hi. Good evening, management. Thanks for taking my questions. Congrats on the solid results. I have a question on Bubble. Can management share with us the traction of your recently launched Bubble? What is the user feedback and user experience so far for this new product? Can Bubble become a meaningful product in the coming future with potentially decent revenue contribution? Thank you.
Speaker #5: You know, what is the user feedback and user experience so far for this new product? And can Bubble become a meaningful product in the coming future with potentially decent revenue contribution?
Speaker #5: Thank you.
Speaker #2: 非常感谢, 谢谢管理层。也非常感谢管理层接受我的问题。那首先恭喜公司在本季度取得了非常亮眼的成绩。我这边有一个问题是和Bubble平台所相关的。是否可以请管理层简单和我们分享一下最近一段时间公司推出的Bubble的一个平台的基本表现? 到目前为止, 这款新的产品用户的反馈和用户的体验如何? 它是否能够在未来成为一款真正有意义的产品? 能够为公司带来可观的收入贡献? 谢谢。
Speaker 10: 非常感谢，谢谢管理层，也非常感谢管理层接受我的问题。首先恭喜公司在本季度取得了非常亮眼的成绩。我这边有一个问题是和 Bubble 平台所相关的，是否可以请管理层简单和我们分享一下最近一段时间公司推出的 Bubble 的一个平台的基本表现？到目前为止，这款新的产品用户的反馈和用户的体验如何？它是否能够在未来成为一款真正有意义的产品，能够为公司带来可观的收入贡献？谢谢。
Speaker #4: 对, 我们首先我们非常高兴在我们这个应该说在这个季度我们跟DOU去紧密合作。我们发布了Bubble这样的一个产品。
Kar Pang: 对, 我们首先我们非常高兴在我们这个应该说在这个季度我们跟 Dear U 去紧密合作, 我们发布了 Bubble 这样的一个产品。
Speaker #5: Thank you very much. Thanks for your question. First of all, the company has been very happy that we worked with DOU in this quarter to release the product named Bubble.
Ross Liang: Thank you very much. Thanks for your question. First of all, the company has been very happy that we worked with Dear U in this quarter to release the product named Bubble.
Speaker #4: 实际上我们为什么要做这个事情的原因, 我们也是从整个用户的反馈中也看到了, 其实有大量的这样的粉丝群体。实际上他们是比较在这边是比较难的去开通Bubble的服务, 然后和它的这些它所关注的这些明星们去交流的。
Kar Pang: 实际上我们为什么要做这个事情, 其实我们也是从整个用户的反馈中也看到了, 其实有大量的这样的粉丝群体, 实际上他们是比较在之前是比较难的去开通 Bubble 的服务, 然后和他的这些他所关注的这些明星们去交流的。
Speaker #5: Talking about the reason why we launched this service, the reason is because we have the feedback from the entire user group. There are some of the fan groups.
Ross Liang: Talking about the reason why we launched this service, the reason is because we have the feedback from the entire user group. There are some of the fan groups right before Bubble. It would be very challenging for them to communicate with the artists they follow.
Speaker #5: Right before Bubble, it would be very challenging for them to communicate with artists they follow.
Speaker #4: 所以我们基本上在Q2因为一粉这部分仍然是Q1中的一个优势, 所以我们在里面去通过这样的紧密合作, 我们在这个季度推出了这样的一个结合的这样一个版本。
Kar Pang: 所以我们基本上在 QQ 因为呃一粉这部分仍然是 QQ 运营中的一个优势, 所以我们在里面去呃通过这样的紧密合作, 我们在这个季度推出了这样的一个呃结合的这样一个版本。
Speaker #5: So, within the Q2 message, we still would like to continue to enhance the user experience. So, that's the reason we continue to strengthen our cooperation with DOU by launching such a service in this quarter.
Ross Liang: Within the QQ Music, we still would like to continue to enhance the user experience. That is the reason we continue to strengthen our cooperation with Dear U of launching such a service in this quarter.
Speaker #4: 所以我们在这次上线以后, 我们继续持续优化了更多Bubble的季度体验, 尤其是在韩语跟中文的这个翻译能力上, 是我们能够提供了。在目前的用户反馈册来看, 是提供了用户是非常承认的这样一个效果。
Kar Pang: 所以我们在这次上线以后, 我们继续持续优化了更多 Bubble 的基础体验, 尤其是在韩国韩语跟中文的这个翻译能力上, 是我们能够提供了在目前的用户反馈侧来看是提供了用户是非常承认的这样一个效果。
Speaker #5: So, once the Bubble community has been launched and we continue to optimize its basic experience for the user, especially the translation and the language proficiencies within the South Korean language and Chinese, this is a feature that we do see very wide recognition from the user feedback.
Ross Liang: Once the Bubble community is being launched, we continue to optimize its basic experience to the user, especially the translation and the language proficiencies within the South Korean language and Chinese. This is a feature that we do see very wide recognition from the user feedback.
Speaker #4: 所以像刚才Kar Pang所提到的, 我们三家厂牌的韩国艺人以外, 未来我们也将去引入用户所喜欢的中国的艺人。
Kar Pang: 所以，像刚才 Kar Pang所提到的我们三家厂牌的韩国艺人以外，未来我们也将去引入用户所喜欢的中国的艺人。
Speaker #5: As Kar Pang stated in his statement, besides the South Korean artists from the three labels who are working now, in the near future, we're also going to introduce the Chinese artists to the Bubble community.
Ross Liang: So, as Kar Pang stated in his statement, besides the South Korean artists from the three labels we are working now, in the near future, we are also going to introduce the Chinese artists to the Bubble community.
Speaker #4: 这样的话, 其实我们就相当于是能够去在中国这样一个大的区域去提供相比于之前Bubble里面更深度的和更广度的这样的用户体验。这也是我们的合作方他们所期待的。
Kar Pang: 这样的话其实我们就相当于是能够去在中国这样一个大的区域去提供相比于之前 Bubble 里面更深度的和更广度的这样的用户体验, 这也是我们的合作方他们所期待的。
Speaker #5: In that way, we will be able to get the Greater China region of providing the user experience that is within the human touch and the broad coverage and what then Bubble used to have.
Ross Liang: In that way, we will be able to give the greater China region of providing the user experience that is within the human touch and the broad coverage and what Bubble used to have. This is also the expectation from our partner.
Speaker #5: This is also the expectation from our partner.
Speaker #4: 同时因为我们也做了单独的这个Bubble包月以及SVIP的一个绑定的服务, 所以其实这也是未来我们也认为, 我们也希望Bubble这样的一个服务能够成为我们SVIP后续的一个很强劲的一个增长的驱动力。
Kar Pang: 同时因为我们也做了单独的这个 Bubble 包月以及 Super VIP 的一个绑定的服务, 所以其实这也是未来我们也认为我们也希望 Bubble 这样的一个服务能够成为我们 Super VIP 后续的一个很强劲的一个增长的驱动力。
Speaker #5: But at the same time, we also have the bundled service for Bubble and the subscription and SVIP business. We do hope such a bundled service will become a key growth driver for the future SVIP growth.
Ross Liang: But at the same time, we also have the bundled service for Bubble and the subscription and Super VIP program business, and we do hope such a bundled service would become a key growth driver for the future Super VIP program growth.
Speaker #4: 所以从现有的付费数据, 用户数据来看, Bubble的这样目前的用户群体肯定还是以年轻用户为主的。所以他们也展现出来比较高的一个活跃度。这一趋势也就是让我们对于未来的用户增长和商业化的前景是充满了信心的。
Kar Pang: 所以从现有的付费数据用户数据来看, Bubble 的这样目前的用户群体肯定还是以年轻用户为主的, 所以他们也展现出来比较高的一个活跃度, 这一趋势也就是让我们对于未来的用户增长和商业化的前景是充满了信心。
Speaker #5: According to the existing user profile, we can see many of the pay-to-go users are still young users. In the near future, they are also expected to demonstrate very high activity.
Ross Liang: According to the existing user profile, we can see many of the pay-to-grow users, they are still the young users. In the near future, they also demonstrate a very high activity, and this trend also allows us to build more confidence for the future user growth and commercialization.
Speaker #5: And this trend also allows us to build more confidence for the future user growth and commercialization.
Speaker #4: 实际上Bubble因为在海外已经是一个比较成功的社交产品了, 所以我们相信对于我们与Bubble的合作是为了能够为我们未来Q1音乐, 包括TME去推进在音乐领域里面的社交化的这样产品, 能够提供一个非常坚定的一个基础。
Kar Pang: push forward a social product in the music field that can provide a very solid foundation.
Speaker #5: As many of you may have noticed, indeed, Bubble is a well-established social product in the overseas market. We surely believe having Bubble on board will help us continue to consolidate our QQ Music and assist TME in launching socialized apps and services in our existing music business.
Ross Liang: As many of you may notice, Bubble is a well-established social product in the overseas market. We surely believe having Bubble on board will help us to continue to consolidate our QQ Music and help TME to continue to launch socialized apps and the service in our existing music business.
Speaker #4: 所以我们相信如果随着我们后续中国艺人的引入, 我们将会去增加更多的产品功能, 比如说直播, 这样的话能够为我们整个这样一个包月服务提供更加丰富的一个商业化的机会。
Kar Pang: 所以我们相信如果随着我们后续中国艺人的引入, 我们将会去增加更多的一个产品功能, 比如说直播, 这样的话能够为我们整个这样一个包月服务提供更加丰富的一个商业化的机会。
Speaker #5: I truly believe, as we consider introducing Chinese artists into the Bubble community, and we’re also going to add additional features, for example, live streaming. In that way, we will be able to provide richer commercialization opportunities to our entire subscription business in the near future.
Ross Liang: I surely believe as we consider to introduce Chinese artists into the Bubble community, and we are also going to add additional features, for example, like live streaming. In that way, we will be able to provide a retail commercialization opportunity to our entire subscription business in the near future.
Speaker #4: 所以最后我们强调一下, 就是这样的一个服务实际上是我们在对于TME来说, 对于社交领域中一个非常重要的一步。我们相信对于在社交这个领域中所看到的这样的一个用户的诉求跟商业机会都是非常庞大的。
Kar Pang: 所以最后我们强调一下，这样的一个服务实际上是我们在对于 TME 来说，对于社交领域中一个非常重要的一步。我们相信对于在社交这个领域中所看到的这样的一个用户的诉求跟商业机会都是非常庞大的。
Speaker #5: I also would like to emphasize that for Bubble to TME, it is a very important step for us to embrace social entertainment. We have noticed that our customers need such a service, and we believe it has great potential for future commercialization.
Ross Liang: I also would like to emphasize for Bubble to TME, a very important step for us to embrace the social entertainment, and because we do notice the customer needs such a service. We do believe it has a great potential for its future commercialization.
Speaker #2: Thank you. And the next question comes from Thomas Chung from Jefferies. Thomas, please.
Millicent T: Thank you. The next question comes from Thomas Chung from Jeffries. Thomas, please.
Speaker #6: Hi, good evening. Thanks, management, for taking my questions, and congratulations on a very strong set of results. My question is about our recent deal with Sima Lian.
Shen Lihui: Hi, good evening. Thanks, management, for taking my questions, and congratulations on a very strong set of results. My question is about our recent deal with Ximalaya. Can management comment about the synergies with Ximalaya, such as cost optimization, enhancement in product offerings, and any areas that we can benefit the Super VIP program offerings as well? Thank you.
Speaker #6: Can management comment about facilities with Sima Lian, such as the cost optimization enhancement in port offerings, and any areas that we can benefit the SVIP offerings as well?
Speaker #6: Thank you.
Speaker #2: ?????? ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? SPIP ????????????????????????????????
Speaker 10: 非常感谢谢谢管理层, 感谢管理层接受我的提问。那首先我想恭喜公司在本季度取得了非常优秀的和亮眼的成绩。我的问题是最近一段时间和Ximalaya交易所相关的一些内容, 能不能请管理层简单的介绍一下目前和Ximalaya项目的一些进展? 我们如何做到进一步的双方优化, 以及包括在产品的提供, 以及包括产品的一个权益方面, 目前的一个进展是什么? 我们的Super VIP program的一个业务是否能够从Ximalaya的产品和服务当中来进行服务? 谢谢。
Speaker #4: 相关喜马拉雅的相关情况, 目前这个交易实际上我们从按照规定还是在等待着监管部门的进一步审批吧。所以在这阶段下, 其实你这些问题是我们是很难去做出更能够对应的一个评论的。
Kar Pang: comment on these questions.
Speaker #5: Regarding our deal with Sima Lian, according to the regulation in China, we're still waiting for further approval from the regulatory authorities. So now it would be very difficult for us to make any corresponding comments.
Ross Liang: Regarding our deal with Ximalaya, according to the regulation in China, we are still waiting for further approval from the regulatory authorities. Now it would be very difficult for us to make any corresponding comment.
Speaker #4: 但是我们实际上也可以看到, 我们之所以做这个交易, 是因为我们长音频本身就是我们一直对于我们管理层来说非常重视的一个领域。
Kar Pang: 但是我们实际上也可以看到, 我们之所以做这个交易, 也是因为长音频本身就是我们一直对我们管理层来说非常重视的一个领域.
Speaker #5: But the reason why we go for the Sima Lian deal is because for the management team and for the whole company, we always believe in the value of long-form audio.
Ross Liang: The reason why we go for the Ximalaya deal is because for the management team and for the whole company, we always believe in the value of long-form audio.
Speaker #4: 所以长音频作为我们现在一个重要的内容形式, 已经能够成为跟音乐相一个互补的一个形态。
Kar Pang: 所以长音频作为我们现在一个重要的内容形式啊, 已经能够成为跟音乐相一个互补的一个形态。
Speaker #5: Long-form audio is a very important content form to us. It's already played a complementary role to our existing music business.
Ross Liang: Long-form audio content is a very important content form. To us, it already plays a complementary role to our existing music business.
Speaker #4: 所以从我们自己的实践来看, 无论是在懒人听书上的独立会员和广告, 以及在我们各个音乐APP里面的长音频的内容, 我们在用户规模跟商业化上面都取得了很好的一个进展。
Kar Pang: 所以从我们自己自己的实践来看,无论是在懒人听书上的独立会员和广告,以及在我们各个音乐 APP 里面的长音频的内容,我们在用户规模跟商业化上面都取得了很好的一个进展。
Speaker #5: So, at least from our own perspective, for the good listening individual members, as well as the advertisement and also the long-form audio content in different music apps, we do see that nice progress being made on the subscriber base, as well as commercialization.
Ross Liang: That leads to, from our own perspective, for the book listening, the individual members, as well as the advertising, and also the long-form audio content in different music apps, we do see that nice progress being made on the subscriber base as well as commercialization.
Speaker #4: 同时我们也看到长音频的消费实际上在SVIP里面的这样一个渗透率也是在稳步提升的。
Kar Pang: Super VIP program 里面的这样一个渗透率也是在稳步提升的。
Speaker #5: And we also see that consumption of long-form audio and its penetration ratio with SPIP continue to go up.
Ross Liang: Consumption of the long-form audio and its penetration ratio with Super VIP program continues to go up.
Speaker #4: 所以如果我们未来我们的交易如果能顺利的推进的话, 我们相信我们在尤其是在无论是从收入角度, 包月收入跟广告的一个角度, 以及我们在用户规模上的互相的合作方面, 应该都有非常大的空间。
Kar Pang: 所以如果我们未来就是我们的交易,如果能顺利的推进的话,我们相信我们在尤其是在无论是从收入角度,包包包月收入跟广告这个角度,以及我们在用户规模上的互相的合作方面,应该都有非常大的空间。
Speaker #5: So, if the deal goes smoothly in the near future, I surely believe that, regardless of the subscription revenues or the ad revenue, we will have every opportunity to continue to grow our user base.
Ross Liang: If the deal goes smoothly in the near future, I surely believe no matter for the subscription revenues or the ad revenue, we will have every opportunity to continue to grow our user base.
Speaker #4: 所以如果后续如果进一步的进展的话, 我们也会及时向市场去披露相关的信息。
Kar Pang: 所以如果后续有进一步的进展的话, 我们也会及时向市场去披露相关的信息。
Speaker #5: If there's any further progress regarding this deal, we will also discuss the information with the market in due time.
Ross Liang: If there's any further progress regarding this deal, we will also disclose the information to the market in due time.
Speaker #2: Thank you. And the next question comes from Morgan Stanley's Liu Yang. Liang, your line's open.
Millicent T: Thank you. The next question comes from Morgan Stanley Liu Yang. Yang, your line is open.
Speaker #6: Thank you. Congratulations on the very strong results. I have a question about the other music revenue. Does management believe that, in the long run, this part of the business will account for a bigger pie of the total revenue?
Speaker 13: Thank you. Congratulations for the very strong results. I have a question on the other music revenue. Does management believe that in the long run, this part of the business will account for a bigger part of the total revenue? What will be the impact to the gross margin? We understand that advertising is a very high-margin business, but how about offline performance, concerts, and merchandise, the overall impact to gross margin? Thank you.
Speaker #6: And what will be the impact on the growth margin? Because we understand that advertisement is a very high-margin business, but how about offline performance, concerts, and merchandise?
Speaker #6: The overall impact to growth margin. Thank you.
Speaker #2: 非常感谢, 谢谢管理层。首先恭喜管理层在本季度取得了非常优异的业绩。我这边有个问题是针对于其他音乐收入的。就管理层来说, 如果从长远角度来看, 其他音乐收入是否会在我们的营收比重当中持续走高? 它对于我们的毛利会带来什么样的影响? 因为我们都知道广告它其实是高利润的业务。但是从线下表演、演唱会, 以及包括其他的一些周边的角度来说, 它们对于我们的毛利率会带来如何的整体的影响? 谢谢。
Speaker 10: 非常感谢，谢谢管理层。首先恭喜管理层在本季度取得了非常优异的业绩。我这边有个问题是针对于其他音乐收入的，就管理层来说，如果从长远角度来看，其他音乐收入是否会在我们的营收比重当中持续走高？它对于我们的毛利会带来什么样的影响？因为我们都知道广告它其实是高利润的业务，但是从线下表演、演唱会以及包括其他的一些周边的角度来说，他们对于我们的毛利率会带来如何的整体的影响？谢谢。
Speaker #7: 关于这个其他的这个收入这一块, 因为我们现在是整体在一体内容在平台一体两意, 所以整体在发展。那么关于这个线下的这个演唱会和这个粉丝经济这一块, 其实也是我们未来发展的重点。所以它也是我们的一些战略业务。所以从长期来看, 这一块应该是一个比较我们未来一个发展的一个重点吧。
Shen Lihui: 关于其他的收入这一块,因为我们现在是整体在内容加平台一体两地,所以整体在发展.关于这个线下的演唱会和粉丝精力这一块,其实也是我们未来发展的重点,所以它也是我们的一些战略业务.所以从长期来看,这一块应该是一个我们未来发展的一个重点.
Speaker #5: Thank you very much. The company is adopting the strategy of having content and the platform at the same time. It is an all-in-one development.
Ross Liang: Thank you very much. The company is adopting the strategy of having content and the platform at the same time. It is an all-in-one development. Regarding the Earthlight concert as well as the fans economy, I think it is going to be a very important direction for us to go in the near future. It is also part of our strategic business. In the long run, the arts and music are going to be the key for our future development.
Speaker #5: We're regarding the offline concerts as well as the fans economy; I think it's going to be a very important direction for us to go in the near future.
Speaker #5: It is also part of our strategic business. So in the long run, the other music is going to be a key for our future development.
Speaker #7: Good. 对于像粉丝经济这种业务来讲, 它其实跟这个明星的排期和跟这个我们的发货的这个节奏其实是相关的。所以在收入上, 它的整体趋势是往上增长的。但是它可能在季节这边会有些波动。那么演唱会其实也是同样的一些情况。那么演唱会可以可能受制于这个明星的这个排期和有场地规模等的一些影响。那么它也是属于这个会在季节性的一些波动。
Shen Lihui: they also experience some seasonal fluctuations.
Speaker #5: Well, let's talk about the fans' economy. As you may see, it is actually subjected to the scheduling of the artists, as well as the merchandise treatment.
Ross Liang: Let's talk about the fans economy. As you may see, it is actually subjected to the scheduling of the artists as well as the merchandise shipment. From the revenue perspective, fans economy, the revenue continues to ramp up, but it will have some fluctuation. I mean the seasonal fluctuation, the same as the Earthlight concert and events. Due to the artist scheduling as well as the venue selection, there might be some seasonal fluctuations.
Speaker #5: From the revenue perspective, the fans economy and the revenue continue to ramp up, but it will have some fluctuations. I mean, the seasonal fluctuation.
Speaker #5: The same as the offline concerts and events. Due to artist scheduling as well as venue selection, there might be some seasonal fluctuations.
Speaker #7: 对于毛利率来讲, 确实粉丝经济和这个演唱会的这个毛利是比较, 毛利率是比较低的。所以它对我们整体的毛利的增长是有一定的影响的。
Shen Lihui: our overall gross margins.
Speaker #5: Well, regarding the GDP P margin, I have to admit, for fans' economy and the offline concert, indeed, both GDP margins are relatively low. So, it will have some impact on the overall GDP margin of the company.
Ross Liang: Regarding the gross margins, I have to admit for fans economy and the Earthlight concert, indeed, both gross margins are relatively low. So it will have some impact on the overall gross margins of the company.
Speaker #7: 一方面的就是说我们整体的毛利率还是会有所提升。那比如说我们的这个会员收入的增加, SVIP的这个扩大和我们广告收入的增加, 包括我们的这个社交分层的这个下调。那么整体而言对于毛利率来讲是有不错的利好的。
Shen Lihui: 收入的增加, 包括我们的这个社交分层的这个下降, 那么整体而言对于 gross margins 来讲是有不错的利好。
Speaker #5: But generally speaking, on one side, we will continue to ramp up the GDP margin. For example, we have increased our subscriber base, and we also have more revenue from the advertising business.
Ross Liang: Generally speaking, on one side, we will continue to ramp up the gross margins. For example, we have ever-increased subscriber base, and we also have more revenue from the advertising business, and we embrace the social entertainment. At the same time, all those factors are indeed blessing our gross margins.
Speaker #5: And we embrace the social entertainment. But at the same time, all those factors are indeed blessing our GDP margin.
Speaker #7: 在目前我们可见的这个粉丝经济和演唱会的规模的这个增长的情况下, 跟相对而言, 它对于我们现在本身的这个在线音乐的这个包月也好, 广告收入也好, 它的比例其实是比较小的。
Shen Lihui: 在目前我们可见的这个粉丝经济和演唱会的规模的这个增长的情况下,跟相对而言,它对于我们现在本身的这个在线音乐的这个包月也好,广告收入也好,它的比例其实是比较小的。
Speaker #5: So, generally speaking, according to our existing observation of the fans economy and the offline concert, I have to say that, compared with our existing online music—no matter for the subscription business or advertisement business—the revenue contribution from the fans economy and the offline concert is relatively small.
Ross Liang: Generally speaking, according to our existing observation of the fans economy and the Earthlight concert, I have to see that compared with our existing online music, no matter for the subscription business or advertisement business, the revenue contribution from the fans economy and the Earthlight concert is relatively small.
Speaker #7: 那目前来看, 对我们的毛利率的影响也是有限的。
Shen Lihui: 对, 那目前来看对我们的毛利率的影响也是呃有限的。
Speaker #5: As if revenue contribution is relatively small, its impact on the GDP margin is also small.
Ross Liang: As its revenue contribution is relatively small, its impact over the gross margins is also small.
Speaker #7: 对, 不过刚刚谈到说这两项主要的收入的季节性, 那在某些季节的这个收入比较, 这两项收入比较高的季节, 那么对毛利率来讲会有些波动。但整体我们对未来来看, 我们的毛利率还是向上的。
Shen Lihui: 对, 不过刚刚我们谈到说这两项主要的收入的季节性, 那在某些季节的这个收入比较, 这两项收入比较高的季节, 那么对毛利来讲会有些波动, 但整体我们对未来来看, 我们的gross margins还是向上的。
Speaker #5: I also mentioned the revenue seasonality for the fans' economy and the offline concert. In certain ways, when the revenue from both services is relatively high, it will surely affect the overall GDP margin.
Ross Liang: I also mentioned about the revenue seasonality for the fans economy and the Earthlight concert. In certain reasons, when the revenue from both services is relatively high, it will surely fluctuate the overall gross margins. Overall speaking, we are still very confident on the uprising trend of our gross margins.
Speaker #5: But overall speaking, we're still very confident in the upward trend of our GDP margin.
Speaker #4: 我稍微补充一下, 就除了刚才Shirley讲到的层面, 我们其实从来都把我们刚才讲到的一个线下演出、粉丝经济, 还有刚才讲到的一些周边的生意, 我们都不会单独把它当成是一个独立的一个业务。我们更多是把它成为一个可以反哺到我们平台线上的业务的一个非常重要的一个能力吧。
Kar Pang: 我稍微补充一下哈。就除了刚才 Shen Lihui 讲到的层面，我们其实从来都把我们刚才讲到的一个线下演出、粉丝经济，还有刚才讲到的一些周边的生意，我们都不会单独把它当成是一个独立的一个业务。我们更多是把它成为一个可以反哺到我们平台线上的业务的一个非常重要的一个能力吧。
Speaker #5: I also would like to make a comment on Kar Pang. In addition to what has been mentioned by Shirley, I have to say that we never take the offline event concert, or even the fans economy and the merchandise, as a separate business.
Ross Liang: I also would like to make a comment on Kar Pang. Besides what has been mentioned by Shen Lihui, I have to say that we never take the concerts or even the fan economy and the artist merchandise as a separate business. We take it as a business that can be complementary to our existing online music services.
Speaker #5: We take it as a business that can be complementary to our existing online business.
Speaker #4: 所以我们随着做这些新的业务创造出来的这些特权, 最终会帮助我们线上在线音乐的一个继续的一个健康的发展。所以对于TME来讲呢, 我们这个内容跟平台确实是一体两意的这三个最终会给我们带来更多在商业里面的更多的可能性跟竞争的优势。
Kar Pang: 所以我们随着做这些新的业务创造出来的这些特权, 最终会帮助我们线上在线音乐的一个继续的一个健康的发展。所以对于 TME 来讲呢, 我们这个内容跟平台确实是一体两翼的, 这三个最终会给我们带来更多在商业里面的更多的可能性跟竞争的优势。
Speaker #5: So we actually leverage the privileges generated from the offline business to continue to support the housing growth of our online musical business. To TME, as we have already mentioned, we have the content and the platform, the two win in one body strategy.
Ross Liang: We actually leverage the privilege generated from the Earthlight business to continue to support the healthy growth of our online musical business. For TME, as we have already mentioned, we have the content and the platform, the two-in-one body strategy, and we hope that in the near future, such strategy will help us to explore more possibilities and a competitive edge.
Speaker #5: And we hope that in the near future, such strategy will help us explore more possibilities and gain a competitive edge.
Speaker #4: 对, , 另外我最后补充一下, 就是我们现在正在做, 正在准备可能在这个季度会推出基于商城周边的SVIP的年卡会员, 其中会提供商城商城的商品的打折这样一个服务。这个其实也是跟目前电商会员的逻辑是一样的。所以通过这样一个举措, 我们也能够去提升我们在周边这边的一个利润率。
Kar Pang: 对, 另外我最后补充一下, 就是我们现在正在做正在准备可能在这个季度会推出基于商城周边的SVIP的年卡会员。其中会提供商城商城的商品的打折这样一个服务, 这个其实也是跟目前电商会员的逻辑是一样的。所以通过这样一个举措, 我们也能够去提升我们在周边这边的一个利润率。
Speaker #5: I also would like to make a comment, Ambrose. I think in this quarter, we plan to launch the SVIP annual membership card for the shopping malls, especially for the merchandise product.
Ross Liang: I also like to make a comment on gross, and I think in this quarter we plan to launch the Super VIP (SVIP) annual membership card for the shopping malls, especially for the merchandise product. In other words, provide a discounted offering of the merchandise we have in our shopping malls. Fundamentally speaking, it is within the same nature as the e-commerce membership card. We hope by initiating such a great strategy, we will continue to improve the profitability of the merchandise.
Speaker #5: In other words, we are offering a discounted selection of the merchandise available in our shopping malls. Fundamentally speaking, this is similar in nature to the e-commerce membership card.
Speaker #5: We hope that by initiating such a great strategy, we will continue to improve the profitability of the merchandise.
Speaker #2: Thank you. And the next question comes from Alex Yao from J.P. Morgan. Alex, please.
Millicent T: Thank you. The next question comes from Alex Yao from J.P. Morgan. Alex, please.
Speaker #6: Thank you, management, for taking my question, and congrats on a solid quarter. I just want to follow up on this fancy economy development. As you guys expand from online music distribution into the broader fancy economy, including artist-related merchandise, offline performances, connectivity between artists and fans, etc., where do you see the biggest opportunity, and what do you see as the biggest challenge?
Speaker 13: Thank you, management, for taking my question, and congrats on a solid quarter. I just want to follow up with this fans economy development. As you guys expand from online music distribution into the broader fans economy, including artist merchandise, offline performance, connectivity between artists and fans, etc., where do you see the biggest opportunity, and what do you see as the biggest challenge, let's say, on a one to two years view? Thank you.
Speaker #6: Let's say on a one to two years view. Thank you.
Speaker #2: 非常感谢, 谢谢管理层接受我的提问。首先恭喜公司在本季度取得了非常优异的表现。那我这边有个根据性的问题想来问一下粉丝经济的发展。因为公司从整体负的角度已经从传统的在线音乐进一步的扩展到了更加广泛维度的一个粉丝经济。包括艺人的相关周边, 以及包括线下的演唱会表演, 以及包括我们的艺人和粉丝之间的一些互动的平台。那就公司管理层而言, 你们认为未来发展特别是在接下来的一到两年, 最大的机会点在哪里? 而最大的挑战又是什么? 谢谢。
Speaker 10: 非常感谢谢谢管理层接受我的提问。首先恭喜公司在本季度取得了非常优异的表现。那我这边有个根据性的问题想来问一下粉丝经济的发展, 因为公司从整体出的角度已经从传统的在线音乐进一步的扩展到了更加广泛维度的一个粉丝经济, 包括艺人的相关周边, 以及包括线下的演唱会表演, 以及包括我们的艺人和粉丝之间的一些互动的平台。那就公司管理层而言, 你们认为未来发展, 特别是在接下来的一到两年, 最大的机会点在哪里, 而最大的挑战又是什么? 谢谢。
Speaker #4: 最大的机会点主要还是我们仍然就像K Pang提到的, 我们实际上还是要去建立一个就是你的版权内容和周边也好, 周边包括权益里面一个综合的一个服务。实际上粉丝经济并不是我们认为是单独的一个单独的一个业务形态。
Kar Pang: 最大的机会点主要还是我们仍然就刚像 Kar Pang 提到的,我们实际上还是要去建立一个就是你的版权内容和周边也好,周边包括权益里面一个综合的一个服务。实际上粉丝经济并不是我们认为是单独的一个业务形态。
Speaker #5: Talking about the biggest opportunity, as Kar Pang has already mentioned, fundamentally speaking, the company is still committed to building a comprehensive service platform, including the copyright content, the merchandise, as well as the privileges.
Ross Liang: Talking about the biggest opportunity, as Kar Pang has already mentioned, fundamentally speaking, the company is still committed to building a comprehensive service platform, including the copyright content, the merchandise, as well as the privilege. We believe that fans economy is not something separate; it is already within our system.
Speaker #5: So we believe that fancy economy is not something separate; it's already within our system.
Speaker #4: 所以对于我们来说, 我们更关注的仍然是我们的这样的一个周边, 包括演唱会如何跟我们的线上的平台有一个更紧密的联动。同时去推进我们的用户规模, 这个其实是我们更加在意的。
Kar Pang: 所以对于我们来说,我们更关注的仍然是我们的这样的一个周边,包括演唱会如何跟我们的线上的平台有一个更紧密的联动,同时去推进我们的用户规模,这个其实是我们更加在意的。
Speaker #5: So, at least for the company, what we truly care about is leveraging the merchandise as well as the offline concert to continue to put a deep bond between the offline and online platform.
Ross Liang: But at least for the company, what we truly care about is leveraging the artist merchandise as well as the artist concert to continue to forge a deep bond between the artist and online platform. In that way, we will be able to continue to grow our subscriber base. This is something the company really counted on.
Speaker #5: In that way, we will be able to continue to grow our subscriber base. This is something the company is really counting on.
Speaker #4: 所以如果说机会来说, 就是我们目前来看, 我们在版权合作方面的优势, 能够上我们期待其实是延展开, 其实我们现在等于是在能够让我们从版权上, 比如从国际化的, 以及内地的版权的优势, 能够延展到我们现在目前的综合性的这样的一个音乐服务。
Kar Pang: 所以如果说机会来说，就是我们目前来看，从我们在版权合作方面的优势，那能够上我们期待其实是延展开，其实我们现在等于是在能够让我们从版权上，比如从国际化的行以及内地的版权的优势能够延展到我们现在目前的综合性的这样的一个音乐服务。
Speaker #5: So now, we do enjoy a great advantage in copyright. What we are trying to do is further expand our advantage in copyright in both China and internationally.
Ross Liang: We do enjoy a great advantage on copyright, but what we do is trying to further expand our advantage in copyright in both China and internationally. We hope what we could be is a comprehensive music entertainment service to our users.
Speaker #5: And we hope what we could be is a comprehensive music entertainment service to our users.
Speaker #4: 所以对于挑战来说, 可能在一定程度上主要还是我们自己本身平台的这样的一个规模, 平台自身的发展的问题, 能够帮助我们下面整体的这样一个内容跟权益能够有更综合性的发展吧。
Kar Pang: 所以对于挑战来说, 可能在一定程度上主要还是我们自己平台这样的一个规模, 平台自身的发展的问题能够帮助我们下面整体的这样一个内容跟权益能够更综合性的发展吧。
Speaker #5: Regarding the challenge, and I think to some extent, we really need to make sure the size and development of the platform can help us to make sure we have integrated development for both content and the privilege.
Ross Liang: Regarding the challenge, I think to some extent, we really need to make sure the size and development of the platform can help us to make sure we have an integrated development for both content and the privilege.
Speaker #4: ????????????????????? GD?????????????????????????????????????????????????????????????????????????????????????????????????????????
Kar Pang: 那么另外一个最大的一个机会就相当于这次我们做 G-Dragon, 实际上我们是相当于在境外, 那未来可能还有其他的东南亚地区, 那所以基本上我们的周边跟我们演唱会这些综合的服务啊, 我们认为可能在后面国际化这部分应该有一个比较在未来几年之内应该有一个比较也有一个我们期待的发展。
Speaker #5: Another opportunity I do notice is that for this quarter, we organized the concert for GD Dragon. It was staged in overseas countries, and there is a likelihood of extra stations in the Southeast Asia market.
Ross Liang: Another opportunity I do notice is that for this quarter, we organized the concert for G-Dragon. It was staged in overseas countries and very likely to have extra stations in Southeast Asia markets. At the same time, besides providing the Earthlight concert, we also have the merchandise as a comprehensive service. This will help us to continue our international expansion.
Speaker #5: And at the same time, besides providing the offline concert, we also have the merchandise as a comprehensive service. This will help us to continue our international expansion.
Speaker #2: Thank you. And the next question comes from a quarry. Ellie, please.
Millicent T: Thank you. The next question comes from Macquarie. Alicia, please.
Speaker #8: Good evening, management. Thank you for taking my question. Congrats on a strong result. We are very encouraged to see all of these exciting developments and initiatives.
Ross Liang: Good evening, management. Thank you for taking my question and congratulations on a strong result. We are very encouraged to see all of these exciting developments and initiatives. My question is really on our long-term positioning. Could management share how we foresee our longer-term revenue mix and how this could further evolve, especially it seems like we are expanding into more diversified kind of music offerings and also taking a much longer-term view? How do you see TME positioned on the entire entertainment value chain? Thank you.
Speaker #8: So my question is really on our long-term positioning. Could management share how we foresee our longer-term revenue mix and how this could further evolve, especially as it seems like we are expanding into more diversified music offerings?
Speaker #8: And also, taking a much longer-term view, how do you see TME positioned on the entire entertainment value chain? Thank you.
Speaker #2: 非常感谢, 谢谢管理层。晚上好, 非常感谢接受我的问题。首先恭喜公司在本季度取得了亮眼的成绩。我们作为投资人也非常高兴能够看到公司所采取的各种发展的举措和相关的项目。我的这个问题更多是关于公司的一个长期定位。管理层是否能够帮助我们分享一下从长期角度来说, 公司的一个收入构成会是怎么样的? 未来的进一步发展会是怎样的? 特别是看到目前我们在音乐产品, 以及包括我们的服务上实现了更多的多样化。那从更加长远的角度来说, 公司如何看待我们整个集团, 以及包括业务在娱乐价值链上整体的一个定位是怎样的? 谢谢。
Speaker 10: 非常感谢, 谢谢管理层。晚上好, 非常感谢接受我的问题。首先恭喜公司在本季度取得了亮眼的成绩, 我们作为投资人也非常高兴能够看到公司所采取的各种发展的举措和相关的项目。我的这个问题更多是关于公司的一个长期定位, 管理层是否能够帮助我们分享一下, 从长期角度来说, 公司的一个收入构成会是怎么样的, 未来的进一步发展会是怎样的, 特别是看到目前我们在音乐产品, 就包括我们的服务上实现了更多的多样化。那从更加长远的角度来说, 公司如何看待我们整个集团, 就包括业务在娱乐价值链上整体的一个定位是怎样? 谢谢。
Speaker #4: 公司整体的那个发展呢, 我觉得我们还是会一如以往的以我们的一体两意, 就是平台加上内容生态的这样的一个战略来继续往前推动。
Kar Pang: 公司整体的发展呢, 我觉得我们还是会一如以往的以我们的一体两翼, 就是平台加上内容生态的这样的一个战略来继续往前推动。
Speaker #8: Well, regarding the overall
Ross Liang: Regarding the overall positionings of the company, for this, we are still going to leverage our one body two wing strategies. That is the platform plus the content ecosystem to continue to advance our strategy.
Speaker #5: Positioning of the company: as always, we are still going to leverage our one-body, two-ring strategies. That is, the platform plus the content ecosystem, to continue to advance our strategy.
Speaker #4: 随着我们之前的那个在音乐流媒体的平台里面的那个业务的那个稳定的发展呢, 我们未来的那个主要的收入以及利润的那个来源也会主要来源于我们的在线音乐的部分。
Kar Pang: 随着我们之前的在音乐流媒体的平台里面的业务的稳定发展,我们未来的主要的收入以及利润的来源也会主要来源于我们的在线音乐的部分。
Speaker #5: As we have a very steady development for the live streaming music platform business, I do believe that in the near future, the key source of the revenue and profit will come from our online music business.
Ross Liang: As we have a very steady development for the live streaming music platform business, I do believe in the near future, the key source of the revenue and profit are coming from our online music business.
Speaker #4: 广告业务的过去的增长呢, 也是一个非常亮眼的一个亮点了。所以我们未来的那个增长的那个速度来讲呢, 广告业务的收入的增长的速度会稍微的比我们的那个在线音乐的快一点点, 但它们都是我们当前的在线音乐里面那个重点增长的一个两大的那个driver。
Kar Pang: in our current online music.
Ross Liang: Regarding the advertisement business, it is also another highlight of our overall business. In the longer run, I believe the advertising revenue growth is even going to be kind of faster than the online music revenue growth. But indeed, both are all very important growth drivers with our online music revenue.
Speaker #5: Well, regarding the advertisement business, it is also another highlight of our overall business. So, in the longer run, I believe the advertisement revenue growth is even going to be kind of fostered more than the online music revenue growth.
Speaker #5: But indeed, both are very important growth drivers for our online music revenue.
Speaker #4: 说到娱乐的部分, 我们的收入整体已经相对平稳下来了。然后未来呢, 我们会有新的一个增长点, 就像刚才我跟Shirley跟Ross跟大家介绍的, 我们在内容还有演出以及艺人粉丝经济周边等等的收入也会其实有一个比较好的一个增长。
Kar Pang: 社交娱乐的部分，我们的收入整体已经相对平稳下来了。未来，我们会有新的一个增长点，就像刚才我跟 Shen Lihui 跟 Ross Liang 跟大家介绍的，我们在内容还有演出以及 artist-fan engagement initiatives 周边等等的收入也会持续有一个比较好的一个增长。
Speaker #5: Well, regarding social entertainment, our revenue has already been stabilized. In the near future, we will have new growth drivers, as Shirley and Ross have already introduced to you.
Ross Liang: Regarding the social entertainment, our revenue has already been stabilized, but in the near future, we will have new growth drivers, as Shen Lihui and Ross Liang has already introduced to you. Besides the content, we also have the performance, Earthlight concert, fans economy, including the artist merchandise. Those will also continue to contribute revenue to the company with nice growth.
Speaker #5: Besides the content, we also have performance, offline concerts, fancy economy, and artist merchandise. Those will also continue to contribute revenue to the company with nice growth.
Speaker #4: ?????? TME ???????????????????????????????????????????????????????????????????????????????????????????????????????
Kar Pang: TME 整体集团的那个发展的导向来讲呢, 我们会致力于在我们当前的核心的商业模式上继续来做更好的一个发展。同时间我们也希望可以在未来包括一些新的业务来自补偿, 包括了刚才讲到的 long-form audio content 以及我们海外的一个新的拓展, 都希望能为我们带来更多新的业务的增长的机会。
Speaker #5: So generally speaking, and for TME, we're still going to take a development or retention in the near future. Our key focus is to continue to develop the company based upon our existing model, while at the same time, we will also continue to keep an eye on the new business, for example, long-form audio, as well as our international business expansion.
Ross Liang: Generally speaking, for TME, we are still going to take a development or retention in the near future. Our key focus is to continue to develop the company based upon our existing model, where at the same time, we will also keep an eye on the new business, for example, long-form audio, as well as our international business expansion. I surely believe they will also provide extra acceleration for our existing business.
Speaker #5: I surely believe there will also be extra acceleration for our existing business.
Speaker #2: Thank you. And the next question comes from Wei Xiong from UBS. Please, your line is open.
Millicent T: Thank you. The next question comes from Wei Xiong from UBS. Please, your line is open.
Speaker #9: Sure. Good evening, management. Thank you for taking my question, and congrats on a solid quarter. Earlier, management mentioned the strong advertising revenue growth year-over-year, which was partly helped by a newly launched ad-based membership.
Ross Liang: Sure. Good evening, management. Thank you for taking my question and congrats on a solid quarter. Earlier, management mentioned the strong advertising revenue growth this year, which was partly helped by a newly launched ad-based membership. Could management share more detail about the revenue and subscriber contribution from this new membership, and what is the operational strategy to scale it up and maximize the revenue opportunity here without affecting the conversion to a standardized subscription plan? Thank you.
Speaker #9: So could management share more detail about the revenue and subscriber contribution from this new membership? And was the operational strategy to scale it up and maximize the revenue opportunity here without affecting the conversion to the standardized subscription plan?
Speaker #9: Thank you.
Speaker #2: 非常感谢, 谢谢管理层。感谢大家来回答我的问题。首先恭喜管理层在本季度取得了非常亮眼的成绩。刚才的话我也特别听到管理层说, 我们看到了非常强劲的广告收入的一个增长。就从某种程度上来说, 也得益于我们之前推出的网赚会员这样的一个模式。有没有可能和我们共同分享一下这样的一个新的网赚会员模式之下, 它的收入, 以及包括从订阅角度来说的一些具体的细节? 在不影响我们的标准的订阅化转换的一个情况之下, 我们如何能够利用这一新的方式或者是新的模式来进一步最大化我们未来的收入? 我们具体的运营策略是什么? 谢谢。
Speaker 10: 非常感谢谢谢管理层, 感谢大家来回答我的问题, 先恭喜管理层在本季度取得了非常亮眼的成绩。刚才的话我也特别听到管理层说, 我们看到了非常强劲的广告收入的一个增长, 这从某种程度上来说也得益于我们之前推出的网赚会员这样的一个模式。有没有可能和我们共同分享一下这样的一个新的网赚会员模式之下, 它的收入以及包括从订阅角度来说的一些具体的细节。在不影响我们的标准的订阅化转换的一个情况之下, 我们如何能够利用这一新的方式或者是新的模式来进一步最大化我们未来的收入? 我们具体的运营策略是什么? 谢谢。
Speaker #4: 首先我们广告收入的进一步, 今年快速的发展是得益于网赚这个模式, 并不是网赚会员。
Kar Pang: 首先，我们广告收入的进一步快速发展是得益于网赚这个模式，并不是网赚会员。
Speaker #5: Actually, I think the fast growth of the advertisement business is coming from the online advertising rather than the ad-based membership growth.
Ross Liang: Actually, I think the vast growth of the advertising business is coming from the online advertising rather than the ad-based membership growth.
Speaker #4: 所以在未来广告这边的一个驱动的发展仍然, 我们认为激励广告这个方式仍然是我们后面这几年里面一个重要的发展方向。
Kar Pang: 所以在未来广告这边的一个驱动的发展仍然我们认为激励广告这个方式仍然是我们后面这几年里面一个重要的发展方向。
Speaker #5: Therefore, in the near future, I think at least for the advertisement business, incentive-based advertisement is still going to be the key in the next few years.
Ross Liang: Therefore, in the near future, I think at least for the advertising business, incentive-based advertising is still going to be the key in the next few years.
Speaker #4: 因为不同于标准的免费广告, 那网赚模式是能够针对于全量用户去来做对应的一个推进的, 因为它是全量的用户的一个激励模式。所以我们对这网赚广告这部分的收入的进展是比较充满期待的。
Kar Pang: 因为不同于标准的免费广告，那网赚模式是能够针对于全量用户去来做对应的一个推进的，因为它是一个全量的用户的一个激励模式。所以我们对这网赚广告这部分的收入进展是比较充满期待的。
Speaker #5: Different from the standardized free advertising, the incentive-based advertisement is for all the users. It is a common and general incentives model for all users.
Ross Liang: Different from the standardized free advertising, the incentive-based advertisement is for all the users. It is a common and general incentive model to all users. So we are still confident in the future growth from the incentive-based advertisement business.
Speaker #5: So we are still confident in the future growth from the incentive-based advertisement business.
Speaker #4: 那么在这样的一个用户规模之下呢, , 在激励广告这样的用户规模之下, 所以我们在应该是在上两个月, 我们才开始去尝试去做类似于广告会员的这样一个形态。
Kar Pang: 那么在这样的一个用户规模之下呢,在激励广告这样的用户规模之下,所以我们在应该是在上上两个月我们才开始去尝试去做类似于广告会员的这样一个形态。
Speaker #5: Actually, with the existing user base of the incentivized ad business, about two months ago, we started to pilot only advertisement membership format.
Ross Liang: Actually, with the existing user base of the incentivized ad business, about two months ago, we started a pilot on the advertisement membership format.
Speaker #4: 所以就像我刚才在提到的, 就是说我们这个相对来说UP值相对比较低的这样一个网赚会员, 它是能够去给到不同的这样的用户层提供一个不同的一个差异化的一个解决方案的。
Kar Pang: 对, 就像我刚才在提到的就是我们这个相对来说 up 是相对比较低的这样一个网赚会员, 它是能够去给到不同的这样的用户层提供一个不同的一个差异化的一个解决方案的。
Speaker #5: Just now, I have already mentioned that for ad-based membership, the ORAP is relatively low, but it can provide a differentiated solution to different user groups.
Ross Liang: Just now, I have already mentioned to add based membership. The ARPU is relatively low, but it can provide a differentiated solution to different user groups.
Speaker #4: 所以我们相信说我们对于未来来说, 网赚会员以及我们的普通会员, 加上我们的SVIP, 我们认为这样一个三级模式能够让我们更加有机会去扩大我们自己的这样的一个会员的规模。
Kar Pang: 所以我们相信说我们对于未来来说网赚会员啊以及我们的普通会员啊加上我们的 Super VIP 啊我们认为这样一个三级模式啊能够让我们更加有机会去扩大我们自己的这样的一个会员的规模。
Speaker #5: So I think in the near future, for ad-based membership, plus our standard member, as well as SVIP, it's a sweet tier membership system. It can help us to continue to broaden the size of our subscribers and the user.
Ross Liang: I think in the near future, for ad-based membership plus our standard member as well as SVIP, it is a three-tier membership system. It can help us to continue to broaden the size of our subscribers and the users.
Speaker #4: 所以这是我们应该说是我们比较相对来说比较重要的一个运营的方向吧。所以这也是这两个月之内我们在对于平台方面比较关注的内容。但是目前确实还处在比较早期, 未来我们如果有了更进一步的进展, 可以分享给大家。
Kar Pang: 所以这是我们应该说是我们比较相对来说比较重要的一个运营的方向吧。所以这也是在这两个月之内我们在对于平台方面比较关注内容,但是目前确实还处在比较早期,未来我们如果有了更进一步的进展,可以分享给大家。
Speaker #5: So this is indeed a very important strategic operational direction for us to go. That's the reason for the past two months, we actually attached great importance to the content of the platform.
Ross Liang: This is indeed a very important strategic operational direction for us to go. That is the reason for the past two months, we actually attach great importance to the content of the platform. I have to say it is still in the infancy stage. If there is any nice progress to be made in the near future, we will surely share it with all of you.
Speaker #5: But I have to say, it's still in the infancy stage. If there's any nice progress being made in the near future, we will surely share it with all of you.
Speaker #2: We will still have some questions, and we take the last two. So, Roger from Berkeley, your line's open. Roger, please. Hello, Roger, can you hear us?
Millicent T: We still have some questions, and we will take the last two. So, Roger from Berkeley, your line is open. Roger, please? Hello Roger, can you hear us?
Speaker #10: Hi, Kar Pang. Thank you, management for taking my question. And congrats. And congrats on a very solid quarter. So my question is on operating expenses.
Speaker 13: Thank you, management, for taking my question and congrats on a very solid quarter. My question is on operating expenses. For the last couple of quarters, our bottom line continued to outpace our top line growth, thanks to very successful cost reduction in terms of the sales to marketing expenses and G&A expenses. Should we see this trend to continue for the rest of 2025 and 2026, given that we have identified so many growth opportunities? Management has to talk about how should we think about our operating leverage from this point on. Thank you.
Speaker #10: For the last couple of quarters, our bottom line continued to outpace our top line growth. Thanks to very successful cost reduction in terms of the sales and marketing expenses and then G&A expenses.
Speaker #10: Should we continue this trend to continue for the rest of '25 and '26? Given that we have identified so many growth opportunities, management has to talk about how should we think about our operating leverage from this point on.
Speaker #10: Thank you.
Speaker #2: 非常感谢, 谢谢管理层。谢谢管理层接受我的提问。首先恭喜公司在本季度取得了非常亮眼的成绩。我的问题是跟运营费用所相关的。在过去几个季度, 我们可以看到公司整体的一个利润增长的话, 其实是超过了我们的一个收入增长。这主要是得益于公司在成本上的进一步压降。那鉴于公司在业务发展过程当中有如此多的增长机会, 那我想了解一下, 目前这样的一个费用, 以及包括相关的一个利润趋势, 能否在2025年全年, 以及包括在2026年继续保持同一趋势, 我们会如何去考虑我们后期的经营杠杆? 谢谢。
Speaker 10: 非常感谢，谢谢管理层，谢谢管理层接受我的提问。首先恭喜公司在本季度取得了非常亮眼的成绩。我的问题是跟运营费用所相关的。在过去几个季度，我们可以看到公司整体的一个利润增长，其实是超过了我们的一个收入增长，这主要是得益于公司的成本上的进一步压降。那鉴于公司发展过程当中有如此的增长机会，那我想了解一下，目前这样的一个费用以及包括相关的一个利润趋势，能否在2025年全年，包括在2026年，这些保持同一趋势？
Shen Lihui: 我们会如何去考虑我们后期的运营方法? 谢谢。
Shen Lihui: 目前我们的营销费用中间的销售费用这一块，其实主要投资是在内容的宣发和渠道的量的购买上。
Speaker #7: 目前我们的这个营销费用中间的销售费用这一块, 其实主要投资是在这个内容的宣发和那个渠道的量的购买上。
Speaker #5: Thank you very much. Thanks for your question. Our marketing expenses, especially the sales expense, are actually being used for the promotion of the content, as well as traffic gain for the channel.
Shen Lihui: Thank you very much. Thanks for your question. Our market expenses, especially the sales expense, is actually being used to promote the content as well as traffic gain for the channels.
Speaker #7: 那这两部分呢, 我们会根据市场的竞争情况去做一些调整。那目前来看呢, 我们会继续增加对于这个音乐内容的这个宣发的投入和这个音乐渠道推广的投入。
Shen Lihui: 那这两部分呢, 我们会根据市场的竞争情况去做一些调整。那目前来看呢, 我们会继续增加对于这个音乐内容的宣发的投入和这个音乐渠道推广的投入。
Shen Lihui: For both, we were going to make an adjustment according to the market competition. As of now, what we do is to continue our investment for the musical content promotion investment as well as the music channel promotion.
Shen Lihui: 然后我们在这个研发费用上呢, 还会持续关注这个技术赋能和积极探索新技术带来的产业创新以及新的机会。
Shen Lihui: Regarding the R&D expenses, we will always keep an eye on the new technological empowerment to see how the new technology will bring the industrial innovation and the new opportunities.
Shen Lihui: 我们预计，2025年的整体运营费用在绝对值上会有所增长，相对于2024年。
Shen Lihui: We do foresee that compared with 2024, the absolute value of the operating expenses will grow compared with the baseline of 2024.
Shen Lihui: room for growth.
Shen Lihui: The way we make sure we control the expenses growth would always be slower than the revenue growth. In other words, we still leave enough growth for the net profit rate and the net profit.
Millicent T: Okay, in the interest of time, we take the last question from Maggie from CLSA. Maggie, please.
Millicent T: Thanks for taking my question and congrats on the very impressive set of results. My question goes back to the online music subscription business. Can you share a bit more on the Super VIP penetration? It is an upward trend and the overall retention rate in this quarter and overall. We noticed that many of the drivers behind Super VIP penetration are time-based or event-driven type of activities. Just wondering, how shall we think about the sustainability of such growth? What would be management's top priority in driving a sustainable revenue growth in the superfan economy? Thank you.
Um thanks for taking my question and congrats on the very impressive set of results. My question goes back to online music. Subscription business. Can you share a bit more? Uh, on the super VIP penetration. It's up to Trend and the overall retention rate in this quarter and overall uh we noticed that many of the drivers behind super VIP penetration or time based or event driven type
Shen Lihui: Super VIP (SVIP) 渗透率背后的一个主要驱动因素都是一些基于时间或者是事件驱动的一些活动。我想了解, 这样的一个 Super VIP (SVIP) 的一个增长是可持续的吗? 公司以及包括管理层是如何通过相应的战略, 以及包括相应的一些做法, 能够确保我们的粉丝经济的可持续收入的一个增长? 谢谢。
Of activities just wondering how shall we think about the sustainability of such growth? What would be management top priority in driving a sustainable Revenue growth in the superfan economy. Thank you.
Kar Pang: 我们的首先我们的 Super VIP program目前的驱动力不是来自于时间或者是事件。这个仅仅是一个在偶尔有新歌手发的时候，他出现的一些可能会出现的一些毛出的增长。
Shen Lihui: Thank you very much. First of all, I think there will be some misunderstanding here I need to clear. The key growth driver of Super VIP (SVIP) penetration ratio is not on time or not on any single event. It just happens to be when there is a new sound or new albums being released, there might be some marginal growth from this release.
Kar Pang: VIP, 那我们现在有1.24亿的这样的一个包月用户数, 这就是目前的在包月里面的一个渗透率。我们目前我们也看到我们发展它的渗透率还会再持续的提升吧, 我们整个的 up 值的变化, 包括留存率都是在持续的增长, 这是我们比较欣喜的看到它是按照我们的一个路径去完成的。
Shen Lihui: As already been stated in our prepared remarks, we now have 50 million SVIP members and 124 million subscribers. You can then calculate the SVIP penetration ratio. We are also going to see the penetration ratio will continue to go up, including the ARPPU and retention, they are all ramping up. We are very likely and happy to see the growth trajectory is in line with our expectation.
Um, thank you very much. But, uh, first of all, I think there will be some misunderstanding here. I need to clear and, first of all, the key growth driver of the SBI penetration ratio is not on time or not on any single event; it just happened to be when there's a new song or new album being released. There might be some marginal growth from this release.
Kar Pang: Super VIP program, 所以它核心的 Super VIP program 的增长主要还是来自于这样的一个基础体系的。
To see the penetration ratio continue to go up, including the ARPU and retention. They are all ramping up, and we are very likely and happy to see that the growth trajectory is in line with our expectations.
Shen Lihui: The key growth drivers are still coming from the premier sound quality, as well as the long-form audio content, as well as the digital album. To some extent, we also have the revenue members who have been converted into the Super VIP program. So the fundamental logic of Super VIP program growth is still coming from our well-consolidated business growth.
Kar Pang: 我们其实在 Super VIP 在这张专辑上的一个销售其实已经达到我们一个预期的一个比例的效果, 已经不是像以前这样一个按条收入, 一个非音乐收入的应该说按条收入的这样一个规模了。
Shen Lihui: For example, let me just share a case with you. For example, the Eastern Transit new album and the sales of the base album with our Super VIP program is already hitting our expectation. We no longer record it as a single album sales.
Well, actually, the key growth drivers are still coming from the primary sound quality, as well as the longing for quality content and the digital eibon. To some extent, we also have the rapid members who have been converted into the FCIP. So, the fundamental logic of our growth is still coming from our consolidated business growth.
Kar Pang: VIP program 应该还是会稳健地去发展。那另外最后你一个问题问的关于这个粉丝经济是否能持续，我们实际上当然讲了，我们会预先做更多长时间的半年到一年内的商机的排期，所以我们力图也是把我们整个跟艺人的这样的一个有关联的这个业务能够做到更稳健的发展。
For example, let me just share a case with you. For example, the East entrance, new album and the sales of the base album with our svip is already heating our expectation. We no longer to record it as a single album sales.
Shen Lihui: That is the reason I think our Super VIP program will continue to grow in a very robust manner. To the second part of the question regarding whether the fancy economy business is going to be sustainable, as I have already mentioned, we did many preparations at least 6 months to 12 months before the event happened for the scheduling. In that way, we will be able to make sure we will be able to run the artist-related business in a more robust and sustainable manner.
Kar Pang: 同时我们现在还有一个更重要的对于团队里面更重要的任务,就是在日常没有大事件发生的时候,我们对于我们周边的销售能够保持一个比较稳定增长节奏。目前我们也看到这个日常的这样的一个销售也是在稳步增长的,所以基本上我们都是在去力图让我们粉丝经济这样的收入能够按照一个我们的节奏去发展。
So that's the reason I think our sip will continue to grow in a very robust manner to the second part of the question. Regarding whether the fancy economy business is going to be sustainable. As I have already mentioned, we did many preparations, at least, 6 months, to 12 months before the event happened for the scheduling. In that way, we will be able to make sure we will be able to run the artist related business in a more robust and sustainable manner.
Shen Lihui: One more additional comment to our team is if there's no major offline concert event happened, we need to maintain a rapid growth of the artist merchandise sales. As you may see, we already have a steady growth on sales. What we are committed to do is to make sure our fancy economy revenue will continue to grow as we expect it.
Millicent T: Thank you, and thank you everyone for joining us today. If you have any further questions, please feel free to reach out to the team. This concludes today's call, and thank you once again, and look forward to speaking to you next quarter. This concludes today's call.
One more additional comment to our team. If there's no major concept in events happening, we're definitely going to maintain a rapid growth of the merchandise itself. As you may see, we already have steady growth on that. What we are committed to do is to make sure our fancy economy revenue will continue to grow as we expected.
Kar Pang: Thank you so much.
Question, please. Feel free to reach out to this team. This concludes today's call, and thank you once again. We look forward to speaking to you next quarter. This concludes today's call.
Millicent T: Thank you.
Kar Pang: Bye-bye.
Shen Lihui: Bye-bye.
Thank you so much. Thank you, bye, bye. Bye bye.