Q2 2026 Tencent Music Entertainment Group Earnings Call

August 11, 2026

[Audio Clip]: 一点星光。

[Audio Clip]: 那你准备的

Operator: During today's call, you will hear from Mr. Kashyap, our Deputy Chairman, and Mr. Vasya, our CEO, who will share an overview of the company's challenges and business updates. Then Mr. Shen will ask both of them for financial results before we open the floor for questions. Before we continue, I would like you to please have a look at our entity, which applies to this call as we move forward. Please note that we discuss non-IFRS measures today, which are not always fully in looking forward to the most comparable measures reported under IFRS in our earnings release and filings with the SEC. All participants are muted at this time. After management remarks, there will be a Q&A session, and please be advised that today's call is being recorded. With that, I am pleased to turn the call over to Chairman and CEO, Mr. Kashyap.

Speaker #2: During today's call, you will hear from Mr. Kar Pang, our Executive Chairman, and Mr. Wa, our CEO, who will share an overview of the company's strategies and business activities.

Speaker #2: You can share it with us before we discuss the financial results, before we open the call for questions. Before we continue, I would like you to see how the theme in our MTV—which applies to this call—will be forwarded to you.

Speaker #2: Please note that we discuss non-IMI measures today, which are not very important in reconciling to the most comparable measures reported under IMIs in our MTVs and provided to the SEC.

Speaker #2: All participants are muted at this time. After management remarks, there will be a Q&A session. Please be advised that today's call is being recorded.

Speaker #2: With that, I'm pleased to attend the call and join the discussion. Executive Chairman, Kashan P.

Speaker #3: Thank you, Melison. Hello everyone, and thank you for joining our call today. In the second quarter, we delivered resilient performance while navigating a complex and evolving market.

[Company Representative] (Tencent Music): Thank you, Millicent. Hello, everyone, and thank you for joining our call today. In Q2, we delivered resilient performance while navigating a complex and evolving market. Our second growth engine continued to strengthen. Revenue from marketing and consumption service achieved another quarter of solid growth as we further expanded the value of music IP through live concerts, merchandise, and other IP-driven experiences. The addition of Ximalaya marks another important step in our content and platform strategy. By bringing music and audio together, we are enriching our content offering, reaching users across more listening occasions, and giving them more ways to discover, enjoy, and engage with great content. Our strategy is clear. We are strengthening our content ecosystem by deepening strategic partnerships, developing more proprietary IP, and expanding premium content across a wider range of experiences.

Cussion Pang: Thank you, Millicent. Hello, everyone, and thank you for joining our call today. In Q2, we delivered resilient performance while navigating a complex and evolving market. Our second growth engine continued to strengthen. Revenue from marketing and consumption service achieved another quarter of solid growth as we further expanded the value of music IP through live concerts, merchandise, and other IP-driven experiences. The addition of Ximalaya marks another important step in our content and platform strategy. By bringing music and audio together, we are enriching our content offering, reaching users across more listening occasions, and giving them more ways to discover, enjoy, and engage with great content. Our strategy is clear. We are strengthening our content ecosystem by deepening strategic partnerships, developing more proprietary IP, and expanding premium content across a wider range of experiences.

Speaker #3: Our second growth engine continued to strengthen. Revenue from marketing and consumption services achieved another quarter of solid growth, as we further expanded the value of music IP through live concerts, merchandise, and other IP-driven experiences.

Speaker #3: The addition of Simalaya marks another important step in our content and platform strategy. By bringing music and audio together, we are enriching our content offering, reaching users across more listening occasions, and giving them more ways to discover, enjoy, and engage with great content.

Speaker #3: Our strategy is clear: we are strengthening our content ecosystem by deepening strategic partnerships, developing more proprietary IP, and expanding premium content across a wider range of platforms.

Speaker #3: First, premium content remains at the heart of this strategy, and the recent momentum we are seeing with classic catalogs is a perfect example. Hit variety shows and concert tours have amplified the reach of this work.

[Company Representative] (Tencent Music): First, premium content remains at the heart of this strategy, and the recent momentum we are seeing with classic catalogs is a perfect example. Hits variety shows and concert tools have amplified the reach of this work, making loyal fans more engaged while drawing in new generation of listeners. This has led to continuous growth in their streaming share. Second, we continue to expand our partnerships beyond traditional content licensing. Recently, we deepened our partnerships with Dream Music Group. In addition to securing digital first releases for its top artists, we expanded our collaboration into new areas, including content co-creation, physical offerings, and offline experiences. At the same time, we partnered with Huace Film & TV, Ruyi Film Entertainment, and Zhejiang Satellite TV to bring original soundtracks and popular music variety shows to our platform, creating a more immersive connection between music and visual entertainment.

Cussion Pang: First, premium content remains at the heart of this strategy, and the recent momentum we are seeing with classic catalogs is a perfect example. Hits variety shows and concert tools have amplified the reach of this work, making loyal fans more engaged while drawing in new generation of listeners. This has led to continuous growth in their streaming share. Second, we continue to expand our partnerships beyond traditional content licensing. Recently, we deepened our partnerships with Dream Music Group. In addition to securing digital first releases for its top artists, we expanded our collaboration into new areas, including content co-creation, physical offerings, and offline experiences. At the same time, we partnered with Huace Film & TV, Ruyi Film Entertainment, and Zhejiang Satellite TV to bring original soundtracks and popular music variety shows to our platform, creating a more immersive connection between music and visual entertainment.

Speaker #3: Making loyal fans more engaged while drawing in the new generation of listeners has led to continuous growth in our streaming share. Second, we continue to expand our partnerships beyond traditional content licensing.

Speaker #3: Recently, we deepened our partnerships with three music groups, in addition to securing digital-first releases for its top artists. We expanded our collaboration into new areas, including content co-creation, physical offerings, and offline experiences.

Speaker #3: At the same time, we partnered with Hua Frame and TV, Rui Frame Entertainment, and Jang Satellite TV to bring original soundtracks and popular music variety shows to our platform.

Speaker #3: Creating a more immersive connection between music and visual entertainment. These deeper partnerships allow us to work more closely with creators and rights holders across the whole music value chain, enabling us to create more value from premium IP.

[Company Representative] (Tencent Music): These deeper partnerships allow us to work more closely with creators and rights holders across the whole music value chain, enabling us to create more value from premium IP. Third, another key focus is developing more high-quality proprietary content, which is becoming an increasingly important differentiator for TME and giving users more reasons to engage with our platform. Examples include Joseon's Blossoms Into Bloom, "热烈盛开," the theme song for the 2026 Jiangsu Football City League, Liu Yuning's Borrow a Little Light from Ordinary Days, "平凡的日子借一点光," Kugou Music's new brand anthem, and the theme song and insert song for the hit animated film All Wishes Come True, "八仙," all of which recorded strong streaming performance since their release. Fourth, Ximalaya further strengthens our content advantage with its premium audiobooks and podcasts.

Cussion Pang: These deeper partnerships allow us to work more closely with creators and rights holders across the whole music value chain, enabling us to create more value from premium IP. Third, another key focus is developing more high-quality proprietary content, which is becoming an increasingly important differentiator for TME and giving users more reasons to engage with our platform. Examples include Joseon's Blossoms Into Bloom, "热烈盛开," the theme song for the 2026 Jiangsu Football City League, Liu Yuning's Borrow a Little Light from Ordinary Days, "平凡的日子借一点光," Kugou Music's new brand anthem, and the theme song and insert song for the hit animated film All Wishes Come True, "八仙," all of which recorded strong streaming performance since their release. Fourth, Ximalaya further strengthens our content advantage with its premium audiobooks and podcasts.

Speaker #3: Third, another key focus is developing more high-quality proprietary content, which is becoming an increasingly important differentiator for TME and giving users more reasons to engage with our platform.

Speaker #3: Examples include Joseon's "Blast into Bloom," "Real al Shanghai," the theme song for the 2026 Jangsu Football City League, Liu Yilin's "Borrow a Little Light from Ordinary Days," Google Music's new brand anthem, and the theme song and insert song for the hit animated theme "All Wishes Come True," all of which recorded strong streaming performance since their release.

Speaker #3: Fourth, Simalaya further strengthens our content advantage with its premium audiobooks and podcasts. By adding popular categories like online novels, history, kids' content, and education, we can reach users across many more listening occasions, ultimately enhancing user time spent and engagement within our ecosystem.

[Company Representative] (Tencent Music): By adding popular categories like online novels, history, kids content, and education, we can reach users across many other more listening occasions, ultimately enhancing user time spent and engagement within our ecosystem. What really stands out is Ximalaya's ability to create its own hits. Its original productions have consistently driven strong engagement and paid conversion. In fact, 9 of its top 10 new online novel titles this year were produced in-house, underscoring both the strength and scalability of its original content capabilities. Just as importantly, owning these hits also means better economics. With the strength of our content and platform ecosystem, deep user insights, expansive services, and a strong commitment to upholding copyright protection, a growing number of artists are turning to us as we expand talent development and artist management. This is a natural extension of our ecosystem that creates value for artists we are uniquely positioned to deliver.

Cussion Pang: By adding popular categories like online novels, history, kids content, and education, we can reach users across many other more listening occasions, ultimately enhancing user time spent and engagement within our ecosystem. What really stands out is Ximalaya's ability to create its own hits. Its original productions have consistently driven strong engagement and paid conversion. In fact, 9 of its top 10 new online novel titles this year were produced in-house, underscoring both the strength and scalability of its original content capabilities. Just as importantly, owning these hits also means better economics. With the strength of our content and platform ecosystem, deep user insights, expansive services, and a strong commitment to upholding copyright protection, a growing number of artists are turning to us as we expand talent development and artist management. This is a natural extension of our ecosystem that creates value for artists we are uniquely positioned to deliver.

Speaker #3: What really stands out is Simalaya's ability to create its own hits. Its original productions have consistently driven strong engagement and pay conversion. In fact, 9 of the top 10 new online local titles this year were produced in-house, underscoring both the strength and scalability of its original content capabilities.

Speaker #3: Just as importantly, owning these hits also means better economics. With the strength of our content and platform ecosystem, deep user insights, expansive services, and a strong commitment to upholding copyright protection, our growing number of artists are turning to us as we expand talent development and artist management.

Speaker #3: This is a natural extension of our ecosystem that creates value for artists and that we are uniquely positioned to deliver. This is exciting, as it empowers us to be more entrepreneurial and innovative in bringing more premium content and IP-driven immersive music experiences to music lovers.

[Company Representative] (Tencent Music): This is exciting as this empowers us to be more entrepreneurial and innovative in bringing more premium content and IP-driven, immersive music experiences to music lovers. First, take rapper Zhou Yan, GAI, for instance. As his strategic partner, we have supported him across content promotion, IP development, and concerts planning, helping him expand into new markets and formats and grow from arena shows to stadium concerts. Following the success of his Evolution tour in Asia, we launched the REAL G, the first Chinese language rap stadium tour in China. More than 30,000 fans attended his opening show in Xi'an. Tia Ray, Yuan Yawei, is another good example. Her Once Upon A Moon tour wrapped up with 2 consecutive sold-out arena shows in Hangzhou and is now reaching international markets, showcasing her rising profile and growing fan base. We are also helping artists expand into new opportunities.

Cussion Pang: This is exciting as this empowers us to be more entrepreneurial and innovative in bringing more premium content and IP-driven, immersive music experiences to music lovers. First, take rapper Zhou Yan, GAI, for instance. As his strategic partner, we have supported him across content promotion, IP development, and concerts planning, helping him expand into new markets and formats and grow from arena shows to stadium concerts. Following the success of his Evolution tour in Asia, we launched the REAL G, the first Chinese language rap stadium tour in China. More than 30,000 fans attended his opening show in Xi'an. Tia Ray, Yuan Yawei, is another good example. Her Once Upon A Moon tour wrapped up with 2 consecutive sold-out arena shows in Hangzhou and is now reaching international markets, showcasing her rising profile and growing fan base. We are also helping artists expand into new opportunities.

Speaker #3: First, take rapper Zhou Yan, for instance. As his strategic partner, we have been supporting him across content promotion, IP development, and concert planning, helping him expand into new markets and formats, and grow from arena shows to stadium concerts.

Speaker #3: Following the success of his evolution tool in Asia, we launched WG, the first Chinese language web stadium tool in China. More than 30,000 fans attended his opening show in Xi'an.

Speaker #3: Here with Yuan Yawei is another good example. Her Once-Upon-a-Moon tour wrapped up with two consecutive sold-out arena shows in Hangzhou and is now reaching international markets.

Speaker #3: Showcasing her rising profile and growing fan base, we are also helping artists expand into new opportunities. For renowned actor and singer Steven Zhang, we produced his debut arena tour, "New Journey," and his opening show in Shenzhen sold out quickly during Pixels.

[Company Representative] (Tencent Music): For renowned actor and singer Steven Zhang Xincheng, we produced his debut arena tour, New Journey, and his opening show in Shenzhen sold out quickly during presales. Second, recently, we invested in THEBLACKLABEL to deepen our collaboration on a broader range of IP-related initiatives, including artist promotion and merchandise development, helping leading artists to build deeper connections with their audience in China. This strategic partnership reflects our commitment to exploring cross-border opportunities and deepening the fan base economy. By integrating content creation, music streaming, artist development, live experiences, merchandise, and fans engagement, we are able to create more value from premium IP, truly bringing the IP to life. We are already seeing encouraging results. IP-related consumption services, particularly live events and artist merchandise, continue to deliver strong double-digit year-over-year growth during the quarter.

Cussion Pang: For renowned actor and singer Steven Zhang Xincheng, we produced his debut arena tour, New Journey, and his opening show in Shenzhen sold out quickly during presales. Second, recently, we invested in THEBLACKLABEL to deepen our collaboration on a broader range of IP-related initiatives, including artist promotion and merchandise development, helping leading artists to build deeper connections with their audience in China. This strategic partnership reflects our commitment to exploring cross-border opportunities and deepening the fan base economy. By integrating content creation, music streaming, artist development, live experiences, merchandise, and fans engagement, we are able to create more value from premium IP, truly bringing the IP to life. We are already seeing encouraging results. IP-related consumption services, particularly live events and artist merchandise, continue to deliver strong double-digit year-over-year growth during the quarter.

Speaker #3: Second, recently, we invested in the Black Label to deepen our collaboration on a broader range of IP-related initiatives, including artist promotion and merchandise development, helping leading artists to build deeper connections with their audience in China.

Speaker #3: This strategic partnership reflects our commitment to exploring cross-border opportunities and deepening the fan base economy. By integrating content creation, music streaming, artist development, live experiences, merchandise, and fan engagement, we are able to create more value from premium IP, truly bringing the IP to life.

Speaker #3: We are already seeing encouraging results. IP-related consumption services, particularly live events and artist merchandise, continue to deliver strong double-digit, year-over-year growth during the quarter.

Speaker #3: First, in live entertainment, we host three fan meetings in Macau for SM Entertainment's trainee group SMTR25. The event attracted tens of thousands of fans and generated strong merchandise sales.

[Company Representative] (Tencent Music): First, in live entertainment, we hosted 3 fan meetings in Macau for SM Entertainment's trainee group, SMTR25. The event attracted tens of thousands of fans and generated strong merchandise sales. TMEA, our proprietary flagship concert IP for International Music Awards, is becoming a larger and more influential brand in just its second year. Building on last year's success, we scaled up the venue to Kai Tak Sports Park in Hong Kong, increasing audience capacity by more than threefold, capturing music lovers' growing enthusiasm. Second, artist merchandise also continues to gain momentum. By bringing together our capabilities in IP development, product design, merchandising, and distribution, we are creating more meaningful connections between artists and their fans. During the quarter, we produced Joseon's physical albums in both CD and vinyl formats, complemented by a range of collectible merchandise that generated strong fan demand.

Cussion Pang: First, in live entertainment, we hosted 3 fan meetings in Macau for SM Entertainment's trainee group, SMTR25. The event attracted tens of thousands of fans and generated strong merchandise sales. TMEA, our proprietary flagship concert IP for International Music Awards, is becoming a larger and more influential brand in just its second year. Building on last year's success, we scaled up the venue to Kai Tak Sports Park in Hong Kong, increasing audience capacity by more than threefold, capturing music lovers' growing enthusiasm. Second, artist merchandise also continues to gain momentum. By bringing together our capabilities in IP development, product design, merchandising, and distribution, we are creating more meaningful connections between artists and their fans. During the quarter, we produced Joseon's physical albums in both CD and vinyl formats, complemented by a range of collectible merchandise that generated strong fan demand.

Speaker #3: PIMA, our proprietary flagship concert IP for international music awards, is becoming a larger and more influential brand in just its second year. Building on last year's success, we are scaling up the venue to Kaitak Sports Stadium in Hong Kong.

Speaker #3: Including audience capability by more than threefold—threefold—capturing music lovers' growing enthusiasm. Second, artist merchandise also continues to gain momentum. By bringing together our capabilities in IP development, product design, merchandising, and distribution, we are creating more meaningful connections between artists and their fans.

Speaker #3: During the quarter, we produced Joseon's physical albums in both CD and vinyl formats, complemented by a range of collectibles and merchandise that generated strong fan demand.

Speaker #3: Physical album releases from 昆蔡徐坤, 陈楚生, and 蒲叶心 also delivered impressive results. Protecting copyright is fundamental to preserving the long-term value of premium IP. During the quarter, we continued to strengthen our copyright protection efforts through proactive screening and takedowns.

[Company Representative] (Tencent Music): Physical album releases from Cai Xukun, Chen Chusheng, and 蒲叶心 also delivered impressive results. Protecting copyright is fundamental to preserving the long-term value of premium IP. During the quarter, we continued to strengthen our copyright protection efforts through proactive screening and takedown, legal action, and closer collaboration across the industry. As AI continues to evolve, we are stepping up our engagement with regulators, music labels, artists, and other industry partners to strengthen copyright protection in the new era. By working together across the industry, we believe we can foster a healthier environment for creators, reinforce the long-term value of premium IP, and support the sustainable development of the music industry. We remain committed to providing a safe and enjoyable music experience for users of all ages.

Cussion Pang: Physical album releases from Cai Xukun, Chen Chusheng, and 蒲叶心 also delivered impressive results. Protecting copyright is fundamental to preserving the long-term value of premium IP. During the quarter, we continued to strengthen our copyright protection efforts through proactive screening and takedown, legal action, and closer collaboration across the industry. As AI continues to evolve, we are stepping up our engagement with regulators, music labels, artists, and other industry partners to strengthen copyright protection in the new era. By working together across the industry, we believe we can foster a healthier environment for creators, reinforce the long-term value of premium IP, and support the sustainable development of the music industry. We remain committed to providing a safe and enjoyable music experience for users of all ages.

Speaker #3: Legal action and closer collaboration across the industry. As AI continues to evolve, we are stepping up our engagement with regulators, music labels, artists, and other industry partners to strengthen copyright protection in the new era.

Speaker #3: By working together across the industry, we believe we can foster a healthier environment for creators, reinforce the long-term value of premium IP, and support the sustainable development of the music industry.

Speaker #3: We remain committed to providing a safe and enjoyable music experience for users of all ages. During the second quarter, we've implemented comprehensive upgrades across our core products, and recreated a dedicated library of age-appropriate music, helping younger users discover and enjoy music in a safer and more trusted environment.

[Company Representative] (Tencent Music): During the second quarter, with comprehensive upgrades to Youth Mode across our core products, we created a dedicated library of age-appropriate music, helping younger users discover and enjoy music in a safer and more trusted environment. To conclude, while challenges remain, we believe we are still in the early innings of unlocking the full potential of premium IP. We are excited about the opportunities ahead and remain confident in our ability to deliver sustainable long-term growth. With that, I will turn the call over to Ross.

Cussion Pang: During the second quarter, with comprehensive upgrades to Youth Mode across our core products, we created a dedicated library of age-appropriate music, helping younger users discover and enjoy music in a safer and more trusted environment. To conclude, while challenges remain, we believe we are still in the early innings of unlocking the full potential of premium IP. We are excited about the opportunities ahead and remain confident in our ability to deliver sustainable long-term growth. With that, I will turn the call over to Ross.

Speaker #3: To conclude, while challenges remain, we believe we are still in the early innings of unlocking the full potential of premium IP. We are excited about the opportunities ahead and remain confident in our ability to deliver sustainable, long-term growth.

Speaker #3: With that, I will turn the call over to Ross.

Speaker #2: Thank you, Kaitan. Hello, everyone. While our competitive landscape continues to evolve, our commitment has not changed: delivering the best music and audio experiences for all users.

Ross Liang: Thank you, Karsten. Hello, everyone. While the competitive landscape continues to evolve, our commitment has not changed, delivering the best music and audio experiences for all users. Every user listens differently. That is why we continue to innovate our products, broaden our user reach, and enrich our membership offering. In the second quarter, our focus on user experience translated into stronger engagement, with average daily time spent continuing to improve, supporting steady growth in membership revenue. Product innovation remains at the heart of everything we do to serve our users. This quarter, we created a more seamless discovery-to-playback journey through improvements in content discovery and audio quality. Enhanced content discovery features such as swipe tabs and video feeds help users explore more relevant content in a more engaging way. Newly introduced 3D spatial audio also allowed premium users to experience premium sound quality from their very first listen.

Speaker #2: Every user listens differently. That's why we continue to innovate our products, broaden our user reach, and enrich our membership offering. In the second quarter, our focus on user experience translated into stronger engagement, with average daily time spent continuing to improve.

Speaker #2: Supporting and driving growth in membership revenue, product innovation remains at the heart of everything we do to serve our users. This quarter, we created a more seamless discovery-to-playback journey through improvements in content discovery and audio quality.

Speaker #2: Enhanced content discovery features, such as swipe taps and video feeds, help users explore more relevant content in a more engaging way. Newly introduced 3D Nikon, 3D in audio, also allowed premium users to experience premium sound quality from their very first listen.

Speaker #2: Thoughtful application of AI also made music discovery more intuitive and personalized. We upgraded our AI agents across QQ Music and Google. Enabling them to better understanding new launched user intents.

Ross Liang: Thoughtful application of AI also made music discovery more intuitive and personalized. We upgraded our AI agents across QQ Music and Kugou, enabling them to better understand nuanced user intents. Acting as personal DJs, these AI agents can now instantly create personalized playlists tailored to users' listening needs in the moment. Together, these improvements help users discover more content, foster their time spent on our platform, and increase the share of recommendation-driven streams. While delivering great services is the foundation, reaching more users is equally important. That is why we are continuing to deepen our integration with the Tencent ecosystem to expand our presence across more user touchpoints. First, we deepened our cooperation with Weixin Channels by bringing leading labels, top artists, and independent musicians into its ecosystem. We are creating a more seamless journey from music discovery to full-track listing on TME.

Speaker #2: Acting as personal DJs, these AI agents can now instantly create personalized playlists tailored to users' listening needs in the moment. Together, these improvements help users discover more content, both with their time spent on our platform and increase the share of recommendation-driven streams.

Speaker #2: Delivering great services is a foundation. Reaching more users is equally important. That's why we are continuing to deepen our integration with the Tencent ecosystem to expand our presence across more user touchpoints.

Speaker #2: First, we deepened our cooperation with Vision Video Comms by bringing leading labels, top artists, and independent musicians into its ecosystem. We are creating a more seamless journey from music discovery to full track listening on PME.

Speaker #2: Collaborations with Vision Pay also helped our lightweight products, such as Body & Music and Google Concept, attract users looking for a simple music experience and deepen their engagement.

Ross Liang: Collaborations with Weixin Pay also helped our lightweight products such as Bodian Music and Kugou Concept attract users looking for simple music experience and deepen their engagement. Furthermore, we recently integrated with Weixin's AI agent, Xiaowei. We are pleased that by tapping into Weixin's massive user base, more users can now discover songs, generate playlists, stream music with easy commands, and instantly share favorite tracks with friends. Together, these initiatives are expanding our user reach, improving conversion and engagement, as well as enhancing content distribution across the Tencent ecosystem. Second, we are also extending our user reach beyond mobile and PC into cross-device listening scenarios. During the quarter, we broadened our smart vehicle coverage through deeper collaborations with leading automakers, including Changan, Li Auto, and XPeng, and introduced LLM Pod Search to deliver a smarter in-car experience.

Speaker #2: Furthermore, we recently integrated with Vision's AI agent, Xiaowei. We are pleased that by tapping into Vision's massive user base, more users can now discover songs, generate playlists, stream music with easy commands, and instantly share favorite tracks with friends.

Speaker #2: Together, this initiative is expanding our user reach, improving conversion and engagement, as well as enhancing content distribution across the Tencent ecosystem. Second, we are also extending our user reach beyond mobile and PC into cross-device listening scenarios.

Speaker #2: During the quarter, we broadened our smart vehicle coverage through deeper collaborations with leading automakers, including Changan, Li Auto, and Xiaopeng, and introduced RM Pod Search to deliver a smarter in-car experience.

Speaker #2: We are also among the first music platforms to integrate with HarmonyOS, expanding our reach within its fast-growing ecosystem. Such a move has strengthened our presence among HarmonyOS users and positions us to capture new opportunities for further monetization.

Ross Liang: We are also among the first music platform to integrate with HarmonyOS, expanding our reach within its fast-growing ecosystem. Such a move has strengthened our presence among HarmonyOS users and positioned us to capture new opportunities for further monetization. We are excited to welcome Ximalaya to the TME family. Music and audio naturally complement each other. They broaden our content offering and create more listening occasions throughout the day. This helps us strengthen our position as a comprehensive music and audio platform. We are still in the early stages of unlocking the full potential of this combination, and we are seeing significant opportunities ahead. By bringing together our complementary strengths, we can deliver compelling content to a much broader audience. We are starting to enrich our VIP offering with premium audio content to create richer listening experiences.

Speaker #2: We are excited to welcome Himalaya to the PME family. Music and audio naturally complement each other. They broaden our content offering and create more listening occasions throughout the day.

Speaker #2: This helps strengthen our position as a comprehensive music and audio platform. We are still in the early stages of unlocking the full potential of this combination, and we are seeing significant opportunities ahead.

Speaker #2: By bringing together our complementary strengths, we can deliver compelling content to a much broader audience. We are beginning to enrich our SYP offering with premium audio content to create richer listening experiences.

Speaker #2: Over time, we also see opportunities to strengthen our advertising business and improve efficiency. Leveraging our shared technology and infrastructure, we believe these efforts will create lasting value for our users, creators, partners, and shareholders.

Ross Liang: Over time, we also see opportunities to strengthen our advertising business and improve efficiency, leveraging our shared technology and infrastructure. We believe these efforts will create lasting value for our users, creators, partners, and shareholders. Finally, we are further elevating the VIP value proposition by transforming it into multidimensional experience centered on IP engagement. Premium music remains at its core, now complemented by premium audio and a growing portfolio of IP-driven member benefits. This quarter, digital albums and the tailored VIP package continue to drive stronger member adoption and user engagement. Packages for Ren Jun, Huang Renjun, Lay Zhang Yixing, aespa, and the rest featured popular member benefits such as photo cards and NFC cards. We also expanded our Starlight Card line-up by adding artists from THEBLACKLABEL, including Taeyang, Somi, Miroh, and the AllDay Project.

Speaker #2: Finally, we are further elevating the SYP value proposition by transforming it into a multi-dimensional experience centered on IP engagement. Premium music remains at its core, now complemented by premium audio and a growing portfolio of IP-driven member benefits.

Speaker #2: This quarter, digital albums and tailored SYP packages continue to drive stronger member adoption and user engagement. Packages for Renjun, Huang Renjun, Lei Zhang, Zhang Yixing, Aespa, and Rise feature popular member benefits such as photo cards and NFC cards.

Speaker #2: We also expanded our stylized card lineup by adding artists from the Black Label, including Taeyang, Soumi, Miwo, and All Day Project. Meanwhile, collaborations with popular gaming IPs such as Rising Waves, Ming Chao, Light and Night, Guang Yu, and Ye Zhilian brought new themed decorations to SYP users.

Ross Liang: Meanwhile, collaborations with popular gaming IPs such as Wuthering Waves and Light and Night brought new themed decorations to VIP users, generating stronger user engagement and conversion. Together, these offerings contribute to highest growth in our VIP user base, ARPPU, time spent, retention, as well as consumption of other premium ancillary experiences. They reinforce our value proposition of one membership, richer experiences. To conclude, our journey reflects how we have evolved from a gateway for content into a strategic platform that actively shapes the music and audio entertainment landscape. Our focus remains steadfast: creating deeper and more meaningful connections between creators, content, and audiences. We are uniquely positioned and are confident that we can translate these deep connections into long-term sustainable value across music and audio.

Speaker #2: Generating stronger user engagement and conversion. Together, these offerings contribute to healthy growth in our SYP user base, RPPU, timespan, retention, as well as consumption of other premium ancillary experiences.

Speaker #2: They reinforce our value proposition of one membership, richer experiences. To conclude, our journey reflects how we have evolved from a gateway for content into a strategic platform that actively shapes the music and audio entertainment landscape.

Speaker #2: Our focus remains steadfast: creating deeper and more meaningful connections between creators, content, and audiences. We are uniquely positioned and confident that we can translate these deep connections into long-term, sustainable value across music and audio.

Speaker #2: 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 Shirley, our CFO, for a deep dive into our financials.

Speaker #3: Thank you, Ross. I'm greeting everyone. Let me now turn to our financial results and an evolving competitive industry landscape. We delivered steady financial results in the second quarter of 2026, with 6% year-on-year revenue growth.

[Company Representative] (Tencent Music): Thank you, Ross, and greetings, everyone. Let me now turn to our financial results and an evolving competitive industry landscape. We delivered a steady financial result in Q2 2026, with 6% year-on-year revenue growth. Total revenues were RMB 8.9 billion, up by 6% year-on-year, primarily driven by strong growth in revenues from music-related services. The consolidation of Ximalaya contributed approximately RMB 0.4 billion to our overall revenues in Q2 2026. Revenues from music-related services grew 11% year-on-year, driven by solid growth in revenues from membership services and offline performance-related services. Revenues from membership services were RMB 4.8 billion, up by 8% year-on-year in Q2 2026. Our VIP membership program continues to expand. Our diversified VIP privileges, such as artist membership sales, photo cards, and Starlight Cards, continued to drive VIP user adoption and revenue growth.

Shirley Hu: Thank you, Ross, and greetings, everyone. Let me now turn to our financial results and an evolving competitive industry landscape. We delivered a steady financial result in Q2 2026, with 6% year-on-year revenue growth. Total revenues were RMB 8.9 billion, up by 6% year-on-year, primarily driven by strong growth in revenues from music-related services. The consolidation of Ximalaya contributed approximately RMB 0.4 billion to our overall revenues in Q2 2026. Revenues from music-related services grew 11% year-on-year, driven by solid growth in revenues from membership services and offline performance-related services. Revenues from membership services were RMB 4.8 billion, up by 8% year-on-year in Q2 2026. Our VIP membership program continues to expand. Our diversified VIP privileges, such as artist membership sales, photo cards, and Starlight Cards, continued to drive VIP user adoption and revenue growth.

Speaker #3: Total revenues were under $8.9 billion, up by 6% year on year. Primarily driven by strong growth in revenues from music-related services, the consolidation of Himalaya contributed a promising RMB 0.4 billion to our overall revenues in the second quarter of 2026.

Speaker #3: Revenues from music-related services grew 11% year-on-year, driven by solid growth in revenues from membership services and offline performance-related services. Revenues from membership services were under $4.8 billion.

Speaker #3: Up by 8% year on year in the second quarter of 2026, our SYP membership program continues to expand. Our diversified SYP privileges, such as artist membership, sales, photo cards, and stylized cards, continued to drive SYP user adoption and revenue growth.

Speaker #3: This quarter, we collaborated with our SYP ambassadors to offer special packages and improve our SYP adoption. The consolidation of Himalaya also contributed to revenue growth in membership services, raising marketing and consumption services. Offline performance-related services delivered robust results, as we successfully staged several concerts for our strategically leveraged artists.

[Company Representative] (Tencent Music): This quarter, we collaborated with our VIP ambassadors to offer special packages and improve our VIP adoption. The consolidation of Ximalaya also contributed to revenue growth in membership services. Within marketing and consumption services, our live performance-related service delivered robust results as we successfully staged several concerts for our strategically collaborated artists, including Silence Wang and Chen Zixian. Sales of digital albums also achieved solid performance, primarily driven by the launch of Jay Chou's album, "Children of the Sun." We continue to prioritize our IP-related offerings and build deeper collaborations with strategic artists across music promotion, offline performances, artist merchandise, and digital albums. In a challenging macro environment and a competitive market, our advertising business, especially the ad-supported model, are experiencing some headwinds. We continue to take actions to improve ad culture, enhance entry rate and eCPM, and offer more engaging and actual products for users.

Shirley Hu: This quarter, we collaborated with our VIP ambassadors to offer special packages and improve our VIP adoption. The consolidation of Ximalaya also contributed to revenue growth in membership services. Within marketing and consumption services, our live performance-related service delivered robust results as we successfully staged several concerts for our strategically collaborated artists, including Silence Wang and Chen Zixian. Sales of digital albums also achieved solid performance, primarily driven by the launch of Jay Chou's album, "Children of the Sun." We continue to prioritize our IP-related offerings and build deeper collaborations with strategic artists across music promotion, offline performances, artist merchandise, and digital albums. In a challenging macro environment and a competitive market, our advertising business, especially the ad-supported model, are experiencing some headwinds. We continue to take actions to improve ad culture, enhance entry rate and eCPM, and offer more engaging and actual products for users.

Speaker #3: Including "Silence One" and "Sensation." Sales of digital albums also achieved solid performance, primarily driven by the launch of Jay Charles' album, "Charging of the Sun."

Speaker #3: We continue to prioritize our IP-related offerings and build deeper collaborations with strategic artists across music promotions, offline performances, artist merchandise, and digital albums. In a challenging macro environment and a competitive market, our advertising business, especially the ad-supported model, is experiencing some headwinds.

Speaker #3: We continue to take actions to improve ad exposure, enhance entry rate and SPF, and offer more engaging interactive products for users. We are also deepening collaboration with the Tencent ecosystem to reach more users.

[Company Representative] (Tencent Music): We are also deepening collaboration with the Tencent ecosystem to reach more users. The consolidation of Ximalaya contributed to revenue growth in advertising positively, and we see growth potential in this area through the leverage of expanded content and shared resources and technologies. Our gross margin in Q2 2026 was 44.2%, compared with 44.4% in the same period of last year. Revenue mix impacts our gross margin. Offline performance-related services continue to grow. We are happy to see continued cost efficiency improvement for offline performance-related services. The consolidation of Ximalaya, after considering the amortization of intangible assets reported on the purchase accounting, had a favorable impact on overall gross margin this quarter. We are confident that our gross margin will remain competitive in the industry over time. Moving on to operating expenses.

Shirley Hu: We are also deepening collaboration with the Tencent ecosystem to reach more users. The consolidation of Ximalaya contributed to revenue growth in advertising positively, and we see growth potential in this area through the leverage of expanded content and shared resources and technologies. Our gross margin in Q2 2026 was 44.2%, compared with 44.4% in the same period of last year. Revenue mix impacts our gross margin. Offline performance-related services continue to grow. We are happy to see continued cost efficiency improvement for offline performance-related services. The consolidation of Ximalaya, after considering the amortization of intangible assets reported on the purchase accounting, had a favorable impact on overall gross margin this quarter. We are confident that our gross margin will remain competitive in the industry over time. Moving on to operating expenses.

Speaker #3: The consolidation of Himalaya contributed to revenue growth in advertising, positively, and we see growth potential in this area. Through leveraging our expanded content and shared resources and technologies, our gross margin in Q2 2026 was 44.2%, compared with 44.4% in the same period last year.

Speaker #3: Revenue mix impacts our gross margin. Offline performance-related services continue to grow. We are happy to see continued cost efficiency improvement for offline performance-related services.

Speaker #3: The consolidation of Himalaya after considering the amortized intangible assets recorded under purchase accounting and observable impact on overall gross margin this quarter. We are confident that our gross margin will remain competitive in the industry over time.

Speaker #3: Moving on to operating expenses, they amounted to only $1.3 billion, representing 14.5% of our total revenues for Q2 2026, compared with 13.7% in the same period last year.

[Company Representative] (Tencent Music): They amounted to RMB 1.3 billion, representing 14.5% of our total revenue in 2026, compared with 13.7% in the same period of last year. This quarter, we adjust our channel spending strategies by reducing channel spending and deepening collaborations with the Tencent ecosystem. For example, we strengthened our cooperation with Weixin official account for content distribution and user conversion and collaborated with Weixin Xiaowei to drive traffic to our live data pages. The consolidation of Ximalaya, including the amortization of intangible assets recorded on the purchase accounting, drives the increase in operating expenses. Going forward, we expect to dynamically adjust our channel spending strategies for all our business according to the growing market condition with our requirements. Our net profit attributable to equity holders was RMB 2.5 billion, compared with RMB 2.4 billion in the same period of 2025. Diluted earnings per ADS this quarter were RMB 1.57.

Shirley Hu: They amounted to RMB 1.3 billion, representing 14.5% of our total revenue in 2026, compared with 13.7% in the same period of last year. This quarter, we adjust our channel spending strategies by reducing channel spending and deepening collaborations with the Tencent ecosystem. For example, we strengthened our cooperation with Weixin official account for content distribution and user conversion and collaborated with Weixin Xiaowei to drive traffic to our live data pages. The consolidation of Ximalaya, including the amortization of intangible assets recorded on the purchase accounting, drives the increase in operating expenses. Going forward, we expect to dynamically adjust our channel spending strategies for all our business according to the growing market condition with our requirements. Our net profit attributable to equity holders was RMB 2.5 billion, compared with RMB 2.4 billion in the same period of 2025. Diluted earnings per ADS this quarter were RMB 1.57.

Speaker #3: This quarter, we adjusted our general spending strategies by reducing overall expenses and deepening collaborations within the Tencent ecosystem. For example, we strengthened our cooperation with Weixin legal accounts for content distribution and user conversion, and collaborated with Weixin Xiaowei to drive traffic to our lightweight IPs.

Speaker #3: The consolidation of Himalaya, including the amortization of intangible assets recorded under purchase accounting, drives the increase in operating expenses. Going forward, we expect to dynamically adjust our general spending strategies for all our businesses according to evolving market conditions and our requirements.

Speaker #3: Our net profit attributed to equity holders was under $2.5 billion. Compared with under $2.4 billion in the same period of 2025, that looks like the earnings per ADS this quarter were under $1.57.

Speaker #3: For Q2 2026, our adjusted EBITDA was under $3.3 billion, up by 5% year on year. Non-IFRS net profit attributable to equity holders of the company was under $2.7 billion.

[Company Representative] (Tencent Music): For Q2 2026, our adjusted EBITDA was RMB 3.3 billion, up by 5% year-on-year. Non-GAAP net profit attributable to equity holders of the company was RMB 2.7 billion, up by 4% year-on-year. As of 30 June 2026, our combined balance of cash equivalents, term deposits, and short-term investments was RMB 44.2 billion as compared to RMB 41 billion as of 31 March 2026. This combined balance was affected by changes in exchange rate of RMB to USD and different balance sheet dates. In addition to our strong operating cash flow, we maintain diversified finance options to meet our future expenditure requirements. Under the share repurchase program announced in March 2025, we have repurchased 43.5 million ADSs from the open market for total cash consideration of USD $400 million in the second quarter of 2026.

Shirley Hu: For Q2 2026, our adjusted EBITDA was RMB 3.3 billion, up by 5% year-on-year. Non-GAAP net profit attributable to equity holders of the company was RMB 2.7 billion, up by 4% year-on-year. As of 30 June 2026, our combined balance of cash equivalents, term deposits, and short-term investments was RMB 44.2 billion as compared to RMB 41 billion as of 31 March 2026. This combined balance was affected by changes in exchange rate of RMB to USD and different balance sheet dates. In addition to our strong operating cash flow, we maintain diversified finance options to meet our future expenditure requirements. Under the share repurchase program announced in March 2025, we have repurchased 43.5 million ADSs from the open market for total cash consideration of USD $400 million in the second quarter of 2026.

Speaker #3: Up by 4% year on year. As of June 30, 2026, our combined balance of cash, credit term deposits, and short-term investments was under $44.2 billion.

Speaker #3: As compared to under $41 billion as of March 21, 2026, this combined balance was affected by changes in exchange rates to USD and different balance sheet states.

Speaker #3: In addition to our strong operating cash flow, we maintain diversified financing options to meet our strategic expenditure requirements. Under the share repurchase program announced in March 2025, we have repurchased 43.5 million ADSs from the open market for a total cash consideration of US$400 million in the second quarter of 2026.

Speaker #3: As part of our long-term commitment to shareholder returns, we remain on track to complete the 2025 stock repurchase program on time. Looking ahead, we continue to focus on the development of SYP membership.

[Company Representative] (Tencent Music): As part of our long-term commitment to shareholder returns, we remain on track to complete the 2025 stock repurchase program on file. Looking ahead, we continue to focus on the development of SVIP membership, creating more innovative products, and providing more diversified benefits and privileges to our users. We also keep investing in quality content and IP development to build a comprehensive content ecosystem. Additionally, we continue to deepen collaboration with Tencent ecosystem. The combination of Ximalaya brings exciting opportunities for us as our company continues its audio platform. All these factors pave the way for long-term health growth of our business. This concludes our prepared remarks. We are now ready to open the call for questions.

Shirley Hu: As part of our long-term commitment to shareholder returns, we remain on track to complete the 2025 stock repurchase program on file. Looking ahead, we continue to focus on the development of SVIP membership, creating more innovative products, and providing more diversified benefits and privileges to our users. We also keep investing in quality content and IP development to build a comprehensive content ecosystem. Additionally, we continue to deepen collaboration with Tencent ecosystem. The combination of Ximalaya brings exciting opportunities for us as our company continues its audio platform. All these factors pave the way for long-term health growth of our business. This concludes our prepared remarks. We are now ready to open the call for questions.

Speaker #3: We are creating more innovative products and providing more diversified benefits and privileges to our users. We also continue to invest in quality content and IP development to build a comprehensive content ecosystem.

Speaker #3: Additionally, we continue to deepen collaboration with the Tencent ecosystem. The combination with Himalaya brings exciting opportunities for us as we consolidate new and older platforms.

Speaker #3: All these factors pave the way for the long-term healthy growth of our business. This concludes our 2023 remarks. We are now ready to open the call for questions.

Speaker #1: Thank you, Shelley. If you're joining by phone, please specify to ask a question and then click submit yourself. You'll get access to the call from the Tencent Meeting or GoMeeting application.

Operator: Thank you, Shirley. If you are joining by phone, please press 5 to ask a question, and then star 9 to unmute yourself. If you are accessing the call from the Tencent Meeting or Zoom meeting application, please click the raise hand button at the bottom left. For the benefit of all participants on today's call, please limit yourself to one question. If you have more than one, please re-enter if you are asking questions in Chinese, please press 2. The first question comes from Alex Liu from Bank of America. Alex Liu, the line is yours.

Speaker #1: Please click the resend button at the bottom left. For the benefit of all participants on today's call, please remember to ask one question. If you have more than one, please re-enter your questions in Chinese.

Speaker #1: Please ask them to repeat. And the first question comes from Alex Leo from Bank of America. Alex, you're welcome to open now.

Speaker #2: Hi, thanks for this opportunity to ask questions. Congratulations on a very strong result. My question has two parts. The first part is about IP-related business.

Alex Liu: Hi. Thanks for this opportunity for asking questions. Congratulations on very strong results. My question is there are two questions. The first question is on IP-related business. IP has been a key driver for our revenue in the H1 of 2026. I was wondering how the IP related business will drive the revenue growth for the rest of this year. How the momentum and outlook looks like there? The second question is really on Ximalaya consolidation. Now that Ximalaya is already part of the TME group, how should we think about the financial outlook after Ximalaya's consolidations and its impact to the TME financials in the H2 of this year? Thank you.

Speaker #2: So, IP has been a key driver for our revenue in the first half of 2026. I was wondering, how will the IP-related business drive revenue growth for the rest of this year, and how is the momentum?

Speaker #2: And outlook looks like there. And the second question is really on Himalaya consolidation. So now that Himalaya is already part of the TME group, how should we think about the financial outlook after Himalaya's consolidation and its impact on the TME financials in the second half of this year?

Speaker #2: Thank you.

Speaker #4: 我有两个问题。第一个是关于IP的业务。我们可以看到今天上半年IP的话，也是我们整个业务增长率核心的驱动力。想了解一下，如果展望今年下半年的话，IP业务的趋势会是怎么样？能不能给我们展望一下未来的前景？第二个问题是关于Himalaya。我们也知道Himalaya现在已经完全整合到腾讯音乐的集团内部了。那么能不能给我们讲一下Himalaya未来的一个财务的前景？也就是在整合之后，包括对于整个腾讯音乐的整体影响。

[Translator]: 我有两个问题，第一个是关于IP的业务，我们可以看到今年上半年的IP也是我们整个业务增长一个核心的驱动力。想了解一下，如果展望今年下半年的话，IP业务的趋势会是怎么样？能不能给我们展望一下未来的前景？第二个问题是关于喜马拉雅，我们也知道喜马拉雅现在已经完全整合到腾讯音乐的集团内部了。那么能不能给我们讲一下喜马拉雅未来的财务的前景，在整合之后，包括对于整个腾讯音乐的整体影响。

[Translator]: [Foreign language]

Speaker #2: 好。谢谢Alex的问题。第一个问题关于我们IP上面的发展，其实当前基于我们第二季度的整体的业绩的实现，我们是一个非常稳健的增长。而且当前是基于我们多年以来的一个比较有前瞻性的一个布局。所以我们当前已经构建到一个比较有差异化的背靠平台跟内容线上线下，以及虚拟跟实体的完整的音乐生态。所以这个事情里面就让我们可以更好地体现我们的IP的多元化。而且在这个过程里面，我们给我们带来更多的特别是营销，还有消费类的服务，让我们整体的收入在过去几个月、几个季度里面都有强劲的增长。

[Company Representative] (Tencent Music): 好，谢谢Alex的问题。第一个问题关于我们IP上面的发展。其实当前基于我们第二季度的整体的业绩的实现，我们是一个非常稳健的生长。而且当前是基于我们多年以来的一个比较有前瞻性的布局，所以我们当前已经构建到一个比较有差异化的背靠平台跟内容，线上线下以及虚拟跟实体的一个完整的音乐生态。所以这个事情里面就让我们可以更好地体现我们IP的多元化，而且在这个过程里面给我们带来更多的，特别是营销，还有消费类的服务，让我们整体的收入在过去几个月，几个季度里面都有强劲的增长。About your first question is about IP related business.

Cussion Pang: [Foreign language]

[Translator]: About your first question is about IP related business. As you can see that we have achieved a solid growth in our Q2 results. That is mainly due to our many years of deployment of forward-looking strategies. We have already built a differentiated platform that features content plus platform that combines both offline, online services and products, also combines virtual and non-virtual products. This is a Tencent Music ecosystem, and that also can fully leverage the diversified IPs, which you can see also that we have a lot of contribution from marketing and consumption related services. All of this have contributed a lot to this quarter's result.

Speaker #4: 我 about your first question is about IP-related business. As you can see that we have achieved a solid growth in our Q2 results. That is mainly due to our many years of deployment of our forward-looking strategies.

[Company Representative] (Tencent Music): As you can see that we have achieved a solid growth in our Q2 results. That is mainly due to our many years of deployment of forward-looking strategies. We have already built a differentiated platform that features content plus platform that combines both offline, online services and products, also combines virtual and non-virtual products. This is a Tencent Music ecosystem, and that also can fully leverage the diversified IPs, which you can see also that we have a lot of contribution from marketing and consumption related services. All of this have contributed a lot to this quarter's result.

Speaker #4: And we already viewed a differentiated platform that features content plus a platform that combines both offline and online services and products. It also combines virtual and non-virtual products.

Speaker #4: So this is a complete music ecosystem, and that also can fully leverage the diversified IPs. You can see that we also have a lot of contribution from marketing and consumption-related services.

Speaker #4: And all of this has contributed a lot to this quarter's result.

Speaker #2: 虽然今年的竞争的环境给我们整体的会员订阅以及广告的业务带来一定的压力，但像我刚才讲到的，像演唱会等等的IP相关的消费类型的服务，基于我们当前的优势，我们觉得还是我们可以持续地给我们业务带来一个比较稳定的增长。这个最主要的是有以下几个不同的层面的。第一个，我们在IP里面相关的生态的供给，我们当前除了内部我们自主的研发以外，我们也会跟不同的外部的合作方有深度的合作，让我们在整体的IP的打造里面，我们可以有产生更多的高品质的IP。第二个维度，我们也看到整体因为我们是通过内容的深度的合作，再到内容的宣发，以及衍生产品等等的全过程的一个掌握，这个也是TME的一个相关的优势。最后一个层面就是我们有多元化的一个变现的场景。所以我们可以通过平台的能力，我们IP的价值不仅仅限于演唱会、周边产品等等，这个也帮助我们有更多的一些相关的特权跟反哺到我们SVIP的会员的包月的业务里面。所以这些多场景的价值也成为我们一个非常坚实的护城河。

[Company Representative] (Tencent Music): 虽然今年的竞争的环境给我们整体的会员订阅以及广告的业务带来一定的压力，但像我刚才讲到的，像演唱会等等的IP相关的消费类型的服务，基于我们当前的一个优势，我们觉得还是可以持续地给我们的业务带来一个比较稳健的增长。这个最主要的是有以下几个不同的层面的。第一个，我们在IP里面相关的生态的供给。我们当前除了内部自主的研发以外，我们也会跟不同的外部的合作方有深度的合作，让我们在整体的IP的打造里面，可以产生更多的高品质的IP。第二个维度，我们也看到整体，因为我们是通过内容的深度的合作，再到内容的宣发以及衍生产品等等的全过程的一个掌握，这个也是TME的一个相关的优势。而最后一个层面，就是我们有多元化的一个变现的场景，所以我们可以通过平台的能力，我们IP的价值，不仅仅限于演唱会、周边产品等等。这个也帮助我们有更多的一些相关的特权可以返补到我们SVIP的会员的包月的业务里面。所以这些多场景的价值也成为我们一个非常坚实的护城河。For this year competition, we do see some headwinds from the competitive area, be it in the membership and ads business.

Cussion Pang: [Foreign language]

[Translator]: For this year competition, we do see some headwinds from the competitive area, be it in the membership and ads business. Our IP related services, including concerts and performance, are experiencing steady growth mainly because of the following reasons. Number one is our IP supply. Apart from our in-house research and development, we are also carrying out a lot of deep collaboration with external suppliers, which help us build high quality IPs across the board. Second, you can also see that in terms of content collaboration, apart from that on the promotion, distribution, and derivative products, we are also in a very good position. Number three is the diversified monetization. Through our platform, it will not only provide performance, concerts or merchandise. Through our member benefits, it could also contribute more to the increase of our SVIP numbers. All of this have helped us build a very solid competitive mode.

Speaker #4: For this year, in terms of competition, we do see some headwinds from the competitive area, be it in the membership and ads business. But our IP-related services, including live concerts and performance, are experiencing steady growth, mainly because of the following reasons.

[Company Representative] (Tencent Music): Our IP related services, including concerts and performance, are experiencing steady growth mainly because of the following reasons. Number one is our IP supply. Apart from our in-house research and development, we are also carrying out a lot of deep collaboration with external suppliers, which help us build high quality IPs across the board. Second, you can also see that in terms of content collaboration, apart from that on the promotion, distribution, and derivative products, we are also in a very good position. Number three is the diversified monetization. Through our platform, it will not only provide performance, concerts or merchandise. Through our member benefits, it could also contribute more to the increase of our SVIP numbers. All of this have helped us build a very solid competitive mode.

Speaker #4: Number one is our IP supply. Apart from our in-house research and development, we're also carrying out a lot of deep collaboration with external suppliers.

Speaker #4: And this helps us build high-quality IPs across the board. Second, you can also see that in terms of content collaboration—apart from that—on the promotion, distribution, and merchandise derivative products, we're also in a very good position.

Speaker #4: Number three is the diversified monetization. Through our platform, we not only provide performance concerts or merchandise, and through our member benefits, it could also contribute more to the increase of our SVIP numbers.

Speaker #4: And all of this has helped us build a very solid competitive moat.

Speaker #2: 关于你第二个问题提到的是Himalaya，我们也非常的欣喜。随着Himalaya加入到TME的大家庭之后，我们可以让整个TME的集团，我们能实现像有一站式的音乐加音频的服务平台的战略去升级。所以这个也扩大了我们的用户群体，丰富我们用户的画像，这个也进一步的提升用户的时长还有忠诚度。所以整合了Himalaya加上我们刚才在平台内容里面的独特的优势，我们对于整个集团中长远的发展，我们觉得是能释放一个更好的一个动力，为我们未来的增长打了一个更好的基础。

[Company Representative] (Tencent Music): 关于你第二个问题提到的喜马拉雅，我们也非常的欣喜。随着喜马拉雅加入到TME的大家庭之后，我们可以让整个TME的集团能实现三六一三式的音乐加音频的服务平台的三六区域升级，所以这个也扩大了我们的用户群体，丰富我们用户的画像，也进一步地提升用户的时长，还有忠诚度。所以整合了喜马拉雅，加上我们刚才在平台内容里面那个独特的优势，我们对于整个集团中长远的发展，我们觉得是能释放一个更好的动力，为我们未来的增长打了一个更好的基础。About your second question on Ximalaya.

Cussion Pang: [Foreign language]

[Translator]: About your second question on Ximalaya. We are very pleased to have Ximalaya to be part of TME family. With Ximalaya on board, we have already build a one-stop music plus audio platform, which help us amplify the user base and also enrich the user profile, and also increase time spent on our platform. Overall, in the medium to long run, we can see that Ximalaya joining to TME family will also unlock more potential of future growth. This also set a solid base for future growth.

Speaker #4: About your second question on Himalaya, we are very pleased to have Himalaya be part of the TME family. And with Himalaya on board, we have already built a one-stop music plus audio platform, which helps us amplify the user base, enrich the user profile, and also increase time spent on our platform.

[Company Representative] (Tencent Music): We are very pleased to have Ximalaya to be part of TME family. With Ximalaya on board, we have already

[Translator]: build a one-stop music plus audio platform, which help us amplify the user base and also enrich the user profile, and also increase time spent on our platform. Overall, in the medium to long run, we can see that Ximalaya joining to TME family will also unlock more potential of future growth. This also set a solid base for future growth.

Speaker #4: So overall, in the medium to long run, we can see that Himalaya's joining into the TME family will also unlock more potential for future growth. And this has also set a solid base for future growth.

Speaker #1: Thank you. And the next question comes from Lincoln Colm from Goldman Sachs. Lincoln, please go ahead.

Operator: Thank you. The next question comes from Lincoln Kong from Goldman Sachs. Lincoln, please.

Speaker #3: Thank you, management, for taking my question. My question is about the subscription business. So basically, in the first half, or the second quarter, if we exclude Himalaya, we do see some moderation in subscription revenue growth.

Lincoln Kong: Thank you, management, for taking my question. My question is about the subscription business. Basically, in H1 or in Q2, if we excluding Ximalaya, we do see some moderation in subscription revenue growth. How should we think about the prospects into H2 of the year? What's sort of the growth trend for SVIP or the overall ARPU to contribute to the overall growth? Could management also elaborate a bit more on the latest status in terms of the competition, especially against Xiami? Thank you.

Speaker #3: So, how should we think about the prospects into the second half of the year? What's the growth trend for SVIP or the overall output to contribute to overall growth?

Speaker #3: And could management also elaborate a bit more on the latest status in terms of the competition, especially against Soda? Thank you.

Speaker #4: 我的问题是关于我们的订阅业务，其实看整个上半年尤其是第二季度的话，如果Himalaya这一部分的话，我们可以看到这个订阅业务实际上收入是在放缓的。所以管理层能不能给我们展望一下，就今年下半年的整个的一个前景，包括SVIP还有Harbour的整个的一个趋势。然后另外的话，也能不能给我们讲一下现在这个整个的一个音乐行业的一个竞争的一个现状，以及说这个趋势之间的竞争。

[Translator]: 我的问题是关于我们的订阅业务的。其实看整个上半年，尤其是第二季度，如果喜马拉雅这一部分的话，可以看到这个订阅业务实际上收入是在放缓的。所以管理层能不能够给我们展望一下，今年下半年的整个的一个前景，包括SVIP啊，还有ARPU的整个的一个趋势。然后另外的话，也能不能够讲一下现在整个音乐行业竞争的一个现状，和趣识之间的竞争。

[Translator]: [Foreign language]

Speaker #2: 对，我们现在可以看到在第二季度的时候，我们在这种竞争的持续的影响下，我们的音乐相关的会员收入的增速是有所放缓的。我 with the competition

Ross Liang: 对，我们确实可以看到在第二季度的时候，我们在这种竞争的持续的影响下，我们的音乐相关的会员收入的增速是有所放缓。

Ross Liang: [Foreign language]

[Translator]: Well, with the competition in hand, we can see that the growth in music-related business is slowing down.

Speaker #4: In hand, we can see that the growth in music-related business is slowing down.

Speaker #2: 对，但这个其实主要还是确实是一个流量上面的一些影响。那我们就像我刚才提到的，我们最重要的一部分主要还是我们跟微信识别号的合作。

Ross Liang: 但这个其实主要还是确实是一个流量上面的一些影响。就像我刚才提到的，我们最重要的一部分主要还是我们跟微信视频号的合作。

Ross Liang: [Foreign language]

Speaker #4: Well, it's mainly some impact on traffic, but as we said, the most important thing is our collaboration with WeChat video app.

[Translator]: Well, it is mainly some impact on traffic, but as we said, the most important thing is our collaboration with WeChat Video.

Speaker #2: 所以从我们其实已经很欣喜可以看到我们目前已经TME现在已经开始整体的去负责腾讯微信识别号中音乐这个垂直类目的运营，同时我们也能够可以看到在从识别号到我们的整个APP的从Q到Q音乐这边的一个链路基本上已经打通了。

Ross Liang: 所以说我们其实已经很欣喜，可以看到目前TME现在已经开始整体地去负责微信视频号中音乐这个垂直lane的运营。同时我们也能够可以看到，从视频号到我们的整个app，从QQ到QQ音乐这边的一个链路基本上已经打通。

Ross Liang: [Foreign language]

Speaker #4: We're also very pleased to see that TME is already taking charge of the music business operation under the WeChat video account. And the connection between WeChat video accounts and the Q2 app has already been very smooth.

[Translator]: We are also very pleased to see that TME is already taking charge of the music business operation under WeChat Channels. The connection between WeChat Channels and QQ app has already been very smooth.

Speaker #2: 从实际的收入表现来看，我们其实可以看到就最我们应该说最重要的高价用户和SVIP高价值用户这部分并没有受到太多的影响，主要还是确实受到轻度用户的一个冲击。

Ross Liang: 从实际的收入表现来看，我们其实可以看到，我们应该说最重要的高价用户和SVIP高价的用户这部分并没有受到太多的影响，主要还是确实受到轻度用户的一个冲击。

Ross Liang: [Foreign language]

Speaker #4: Well, if you look at it revenue-wise, our high-value users, or SVIP, have not been heavily affected. What has been most heavily affected is those casual on-live users.

[Translator]: If you look at revenue-wise, our high-value users or SVIP has not been heavily affected. What has been most heavily affected is for those casual and light users.

Speaker #2: 所以从订阅用户的运营上来看，我们还是一定还是在稳固我们目前的SVIP的基本盘，同时把更多的权益放到我们的SVIP的权益包里面去提升它的规模跟up。

Ross Liang: 所以从订阅用户的运营上来看，我们一定还是在稳固我们目前的SVIP的基本盘，同时把更多的权益放到我们的SVIP的权益包里面，去提升它的规模跟ARPU。

Ross Liang: [Foreign language]

Speaker #4: So if you look at our subscribers, we've stabilized our SVIP base and tried to put more benefits into the SVIP package to increase its total number of days.

[Translator]: If you look at our subscribers, we try to stabilize our SVIP base and try to put more benefits into the SVIP package to increase its total number of base.

Speaker #2: 所以这里面就包含了刚才Kagan提到的我们的周边衍生品，然后演唱会，以及我们在Himalaya收购进来以后，我们的能够提供更有价值的长音频的内容。

Ross Liang: 所以这里面就包含了刚才Karsten提到的我们的周边衍生品，然后演唱会，以及我们在喜马拉雅收购进来以后，我们能够提供更有价值的长音频的内容。

Ross Liang: [Foreign language]

Speaker #4: Well, this includes the cushion set merchandise, performance concerts, and with Himalaya, we can also provide more high-value long-form audios.

[Translator]: This includes, like Karsten said, merchandise, performance, concerts, and with Ximalaya, we can also provide more high-value long-form audios.

Speaker #2: 所以相比于其他的竞品，我们的其实核心的音乐业务实际上是能够保持很强的差异化和健康的增长。

Ross Liang: 所以相比于其他的竞品吧，我们的其实核心的音乐业务实际上是能够保持很强的差异化和健康的增长。

Ross Liang: [Foreign language]

Speaker #4: Compared with our peers, our core music business is having solid and healthy growth.

[Translator]: Compared with our peers, our core music business is still having a solid and healthy growth.

Speaker #2: 而对于在轻量用户这部分，我们还是重点的会去发掘我们现在新的小的轻量级APP的一个增长，这里面主要是播点音乐跟Core概念板，以及我们在这个季度所推出的酷狗免费版。

Ross Liang: 而对于在轻量用户这部分，我们还是重点会去发掘我们现在新的小的轻量级app的一个增长。这里面主要是播演音乐跟酷狗概念版，以及我们在这个季度所推出的酷狗免费版。

Ross Liang: [Foreign language]

Speaker #4: Well, to acquire more users, we're also seeing potential from those light and small apps, especially like 播点 Music, 酷狗 Concept, and the 酷狗 Free version, which we released this quarter.

[Translator]: To acquire more light users, we are also tapping potential from those light and small apps, especially the audio music, Kugou Concept, and the Kugou free version, which we released at this quarter.

Speaker #2: 所以基本来看，我们相信就是在我们目前这样的一个从跟识别号的是紧密合作，以及我们自己去稳守稳固我们的大盘，然后去深入挖掘我们的高价值用户，我们相信我们能够有我们自己这边能够受能够更积极的去面对这样的竞争环境。

Ross Liang: 所以基本来看，我们相信在我们目前这样的一个跟视频号的紧密合作，以及我们自己去稳守、稳固我们的大盘，然后去深入挖掘我们的高价值用户，我们相信我们自己这边能够更积极地去面对这样的竞争环境。

Ross Liang: [Foreign language]

Speaker #4: We believe that, through our collaboration, and by deepening our partnership with Weixin video accounts, while stabilizing our main business and tapping more potential from high-value users, we can maintain a very good position against the competition.

[Translator]: We believe through our collaboration, a deeper collaboration with WeChat Channels by stabilizing our main business and tapping more potential from high-value users. I believe we can stay in a very good position against competition.

Speaker #2: 从竞争这个角度来说，我们其实在来看就是我们首先对于TME来说其实一直都是在面对着在这么多年来一直其实是面对着竞争的环境的存在。所以我们其实最重要的一点还是做好我们自己。

Ross Liang: 从竞争这个角度来说，首先对于TME来说，其实这么多年来一直面对着竞争的环境的存在。所以我们其实最重要的一点还是做好我们自己。

Ross Liang: [Foreign language]

Speaker #4: In terms of competition, TME has never been absent from competition over the years. So, the most important thing for us is to do our own job well.

[Translator]: In terms of competition, TME has never been absent from competition over years. The most important thing for us is to do our own job well.

Speaker #2: 所以相比于其他的竞品来说，我们应该就像刚才我们也提到，我们已经完成了通过Himalaya的加入，我们已经完成了我们从音乐业务向音乐家音频整个综合性的服务平台的转型。

Ross Liang: 所以相比于其他的竞品来说，就像刚才我们也提到，通过喜马拉雅的加入，我们已经完成了从音乐业务向音乐加音频整个综合性的服务平台的转型。

Ross Liang: [Foreign language]

Speaker #4: Well, compared with our peers, with the consolidation of Himalaya, we've already finished our transition from a music platform to a music-plus-audio comprehensive service platform.

[Translator]: Compared with our peers, with the consolidation of Ximalaya, we have already finished our transition from a music platform to a music plus audio comprehensive service platform.

Speaker #2: 所以未来其实在TME的平台上，我们相比竞争对手，我们就能够提供比其他更丰富的内容、更多元化的渠道，以及我们在线上线下更加丰富的权益。

Ross Liang: 所以未来其实在TME的平台上，我们相比竞争对手，我们就能够提供比其他更丰富的内容，更多元化的渠道，以及我们在线上线下更加丰富的权益。

Ross Liang: [Foreign language]

Speaker #4: Compared with our peers, in the future TME platform, we can provide more enriching content, more channels, and also more benefits that cover both online and offline.

[Translator]: Compared with our peers, in the future on TME platform, we can provide more enriching content, more channels, and also more benefits that cover both online and offline.

Speaker #2: 所以无论对方怎么演变，我们仍然还是会坚定的沿着我们自己条路。我们相信在这条路径之下，我们的整体的一个业务还是应该是能够保持比较稳定的一个增长，稳健的发展的吧。

Ross Liang: 所以无论对方怎么演变，我们仍然还是会坚定地沿着我们自己的一条路。我们相信在这条路径之下，我们的整体的一个业务还是应该是能够保持比较稳定的增长，稳健的发展。

Ross Liang: [Foreign language]

Speaker #4: No matter what happens in competition, we will stay firm on our own track of development, and we also believe that our business will continue to experience stable and steady growth.

[Translator]: No matter what happens in competition, we stay firm on our own track of development. We also believe that our business will continue to have a stable and steady development.

Speaker #1: Thank you. And the next question comes from Alice Yao from JP Morgan. Please.

Operator: Thank you. The next question comes from Alex Xiao from Goldman Sachs. Alex, please.

Speaker #3: Thank you, management, for taking my question. Especially, thank you for playing such soothing music ahead of the conference call. I really enjoyed listening to 给平凡的日子点光, and also, all the best to the business transition.

Alex Xiao: Thank you management for taking my question. Especially thank you for playing such a soothing music ahead of the conference call. I really enjoy listening to and all the best to the business transition. My question is about the integration and synergy with the WeChat Xiaowei, the WeChat agent services. You guys highlighted the WeChat Xiaowei integration and upgraded AI agents acting as personal DJs in QQ Music and Kugou. What measurable changes have these products produced in discovery, listening time, retention or conversion? What is the intended monetization path? Does management primarily view AI as an engagement and a cost efficiency tool, or can AI become a direct revenue contributor? Thank you.

Speaker #3: My question is about the integration and synergy with the微信小微, the微信 agent services. You guys highlighted that微信小微 integration and upgraded AI agents acting as a personal DJs in QQ music and the酷狗.

Speaker #3: What measurable changes have these products produced in discovery, listening time, retention, or conversion? And what is the intended monetization path? Does management primarily view AI as an engagement and cost-efficiency tool, or can AI become a direct revenue contributor?

Speaker #3: Thank you.

Speaker #4: 谢谢管理层，非常感谢管理层在这个会议之前播放的几首非常好听的音乐。我的问题是关于这个微信小微和这个AI agent的事情，包括这个我们最近也是这个AI agent也有一个升级，可以在音乐和酷狗音乐当做这个个人DJ。那我想问问就是这些包括微信小微和这个AI agent，它有没有实质性的，比如说增加了留存，增加了转化，或者增加了用户的这个使用时长。那么关于它的这个具体的变现的路径，管理层是怎么想的？那关于这个AI的技术，那么咱们是把它当做一个降本的，或者是这个提升，就是成本管理的一个工具，还是说它能够成为一个真正的收入的一个贡献来的？

Ross Liang: 谢谢管理层，非常感谢管理层在这个会议之前播放的这首非常好听的音乐。我的问题是关于Weixin Xiaowei和AI agent的一些事情，包括我们最近也是AI agent有一个升级，可以在QQ音乐和酷狗音乐当做个人DJ。那我想问问这些包括Weixin Xiaowei和AI agent，它有没有实质性的，比如说增加了留存，增加了转化，或者增加了用户的使用时长。那么关于它的具体的变现的路径，管理层是怎么想的？关于AI的技术，那么咱们是把它当做一个降本的，或者这个提升成本管理的一个工具，还是说它能够成为一个真正的收入的一个贡献来源？对，我们实际上在，应该说首先Xiaowei目前还是在测试中，所以我们目前在跟Xiaowei的这样的一个，其实我们是作为一个其中的一个很重要的scale来存在的。

[Translator]: [Foreign language]

Ross Liang: [Foreign language]

Speaker #2: 对我们实际上在应该说首先小微目前还是在测试中，所以我们目前在跟小微的这样的一个其实我们是作为一个其中的一个很重要的一个skill来存在的。

Speaker #4: Well, first of all, 微信小微 is still under testing, and we take it as a very important skill.

[Translator]: First of all, WeChat Xiaowei is still under testing, and we take it as very important scale.

Speaker #2: 所以从他们早期的测试里面，我们可以也比较欣喜的看到，对于从用户去建立自己的歌单，然后去分享自己的歌曲，已经成为在微信这个助手里面比较常用的一个应用。

Ross Liang: 所以从他们早期的测试里面，我们可以也比较欣喜地看到，对于从用户去建立自己的歌单，然后去分享自己的歌曲，已经成为在微信这个助手里面比较常用的一个应用。

Ross Liang: [Foreign language]

Speaker #4: Well, though it's still at an early testing stage, we're very happy to see that users are already using it to set their own song lists, share songs, and they're using it very frequently.

[Translator]: Though it is still at an early testing stage, we are very happy to see that users are already using it to set their own song list, share songs, and they are using it very frequently.

Speaker #2: 对我们自己现在目前在我们自己的APP中所升级的这样就我们自己的一个基于大模型的，尤其是跟会员密切合作，就基于会员的这样的一个音乐AI agent，我们其实发现确实对我们的里面的高价值的用户，就高活跃人群的留存提升是非常明显的。

Ross Liang: 对我们自己现在目前在我们自己的app中所升级的，就我们自己的一个基于大模型的，尤其是跟Tencent Hunyuan密切合作，就基于Tencent Hunyuan的这样的一个音乐AI agent，我们其实发现确实对我们里面的高价值的用户，就高活跃人群的留存提升是非常明显。

Ross Liang: [Foreign language]

Speaker #4: Well, with our app's internal upgrading, especially with the integration of HY3, and plus our music AI agent, we can tell that it does increase the retention.

[Translator]: With our app internal upgrading, especially with the integration of Hunyuan plus our music AI agent, we can tell that it does increase the retention, especially for the high-value users.

Speaker #4: Especially for the high-value users.

Speaker #2: 而且我们在最近期大家可以去体验一下，我们在最近的我们的Mac版本里面，我们发布两个重要功能，一个是刷歌，一个是AI的DJ。那在Mac上的一个AI陪伴电台能够充分的在Mac这个办公场景下去体现用户的一个参与度。

Ross Liang: 而且我们在最近期大家可以去体验一下，我们在最近的我们的Mac版本里面，我们发布两个重要功能，一个是刷歌，一个是AI的DJ。在Mac上的一个AI陪伴电台，能够充分地在Mac这个办公场景下去体现用户的一个参与度。

Ross Liang: [Foreign language]

Speaker #4: Well, recently you can also try some new features on the mic version, especially two new features. One is that you can swipe to listen to music, and the second is the AI DJ.

[Translator]: Recently, you can also try some new features on a Mac version, especially two new features. One is you can swipe to listen to music, second is the AI DJ. Basically, you can use it as like a companion DJ station.

Speaker #4: Basically, you can use it as a sort of companion DJ station.

Speaker #2: 朋友们也发现其实通过我们最近在算法上，通过GPT模式所提升的我们的算法，已经能够很好的去推进我们推荐的参与度。我们最近的一个算法也被顶级的这样一个会议所采纳了。

Ross Liang: 同时我们也发现，其实通过我们最近在算法上，通过GPT模式所提升的我们的算法，已经能够很好地去推进我们推荐的参与度。我们最近的一个算法也被顶级的这样一个会议所采纳了。

Ross Liang: [Foreign language]

Speaker #4: And with our latest algorithm, the GPT model, we can see that it also increased engagement with recommendations, and our recommendation has also been adopted by one of the top-tier conferences.

[Translator]: With our latest algorithm, the GPT model, we can see that it also increased engagement recommendation, our recommendation has also been adopted by one of the top-tier conferences.

Speaker #2: 那基于助手刚才说基于助手这边呢，其实商业模式是相对比较清晰，它主要还是去提升用户的活跃度，然后同时在分享跟听歌的时候还是根据我们的那本身的内容策略，就是基于我们目前的付费墙这个模式去提升我们这种订阅用户的那个增长。

Ross Liang: 那基于助手，刚才说基于助手这边的其实商业模式是相对比较清晰，它主要还是去提升用户的活跃度，然后同时在分享跟听歌的时候，还是根据我们本身的内容策略，就是基于我们目前的付费墙这个模式，去提升我们这种订阅用户的增长。

Ross Liang: [Foreign language]

Speaker #4: Well, about the monetization of AI agent, I think the business model is very clear. We will use that to increase the engagement and activity of our users, so they will use it more often.

[Translator]: About the monetization of AI agents, I think the business model is very clear. We will use that to increase engagement and activity of our users, so they will use it more often to share and listen to songs, especially for those paid users. That will further drive the growth of subscription.

Speaker #4: To share and listen to songs, especially for those paid users, will further drive the growth of subscriptions.

Speaker #2: 那对于整体的AI技术这部分，其实我之前我们在几个前面几个季也都谈到了，当然就是说本身跟其他的普通其他的公司来说，当然降本身的去提效跟降本是AI工具本身一个比较标准的用法。

Ross Liang: 对于整体的AI技术这部分，其实我们在前面几个季度也都谈到了。当然本身跟其他的公司来说，降本身的去提效，跟降本是AI工具本身一个比较标准的用法。

Ross Liang: [Foreign language]

Speaker #4: About AI technology in general, we talked about this topic in the previous quarter's call as well. Well, AI itself, compared with others in nature, is also a tool to improve efficiency and cut costs.

[Translator]: About AI technology in general, we talked about this topic in its previous quarters' call as well. AI itself compared with others, in nature is also a tool to improve efficiency and cut costs.

Speaker #2: 但是我们特别要提我们特殊的地方，主要还是在于对于C端消费端用户的AI去使用大模型去产生音乐这部分的业务。那么经过这两年的发展，我们这两部分这部分业务在比如在酷狗的AIK和在Q音乐里面的AI做歌都取得了非常好的商业化的进展。所以我们其实核心目的我们还是确实像你刚才我们仍然是希望通过AI技术采用能够帮助我们更好的去找到其中的这种商业化的机会去提升我们本身的收入。

Ross Liang: 但是我们特别要提，我们特殊的地方主要还是在于对于C端消费端用户的AI，使用大模型去产生音乐这部分的业务。经过这两年的发展，我们这部分业务，比如在酷狗的AI K和在QQ音乐里面的AI作歌，都取得了非常好的商业化的进展。所以我们其实核心目的，我们仍然是希望通过AI技术的采用，能够帮助我们更好地去找到其中的那种商业化的机会，去提升我们本身的收入。

Ross Liang: [Foreign language]

Speaker #4: Forever, what is special about us is on the consumer side: you can use AI, especially large language models, to generate music. And over the past couple of years, we've already used that in our app, like Google AIK, and QQ is also using AI to generate songs.

[Translator]: However, what is so special about us is, on the consumer side, we can use AI, especially large language models, to generate music. Over the past couple of years, we already use that in our app, like Kugou AI K. QQ Music also using AI to generate songs. All of these have also generated very good commercial returns. We hope that we can use AI technologies to tap more commercial opportunities and increase our revenue.

Speaker #4: All of these have also generated very good commercial returns. We hope that we can use AI technologies to tap more commercial opportunities and increase our revenue.

Speaker #1: Thank you. And the next question comes from Citi Group. I appreciate it. Alicia, please.

Operator: Thank you. The next question comes from Citigroup. Alicia. Alicia, please.

[Company Representative] (Citigroup): Hello. Can you hear me?

Alicia Yap: Hello. Can you hear me?

Speaker #3: Hello. Yeah. Can you hear me?

Speaker #1: Yes, we can.

Operator: Yes, we can.

Speaker #3: Okay. Hello. 感谢管理层，晚上好。谢谢接受我的提问。我想问一个关于我们TME在音乐和长音频IP这方面的一个竞争优势和护城河是什么？然后整体就是我们的overall IP的这个战略能够跟我们梳理一下吗？我自己翻译一下。就I wonder management can share your insight. What is the competitive advantage and competitive mode of TME on the music and also the long-form audio IP and also the overall IP strategy?

[Company Representative] (Citigroup): Okay. Hello. I wonder if management can share your insight. What is the competitive advantage and competitive mode of TME on the music and also the long-form audio IP and also the overall IP strategy? Thank you.

Alicia Yap: Okay. Hello. I wonder if management can share your insight. What is the competitive advantage and competitive mode of TME on the music and also the long-form audio IP and also the overall IP strategy? Thank you.

Speaker #3: Thank you.

Speaker #2: 对，首先我们要注意就是说我们其实应该在这部分上我们不能完全去谈护城河，尤其或者当然主要是以独家这部分肯定是不能以这个，因为我们根据市场技术总局的规定，我们自己现在已经基本上是放跟还是保持一个非独这样的一个版权的形态。

Ross Liang: 首先我们要注意，其实在这部分上我们不能完全去谈护城河，当然主要是以独家这部分，肯定是不能以这个，因为我们根据国家市场监督管理总局的规定，我们自己现在已经基本上还是保持一个非独这样的一个版权的形态。

Ross Liang: [Foreign language]

Speaker #4: First, regarding the exclusive content, we are not in a position to talk about competitive mode because, according to SAMR's rules, we cannot use those exclusives on content.

[Translator]: Well, first of all, about exclusive concepts, we are not in a good position to talk about competitive modes because according to SAMR's rules, we cannot use those exclusively on concepts.

Speaker #2: 但是相比于其他家，其实我们的竞争优势非常明显。首先就是喜马拉雅本身仍然聚集了大量的一二线的白领跟女性用户。

Ross Liang: 但是相比于其他家，其实我们的竞争优势非常明显。首先就是喜马拉雅本身仍然聚集了大量的一二线的白领跟女性用户。

Ross Liang: [Foreign language]

Speaker #4: However, compared with our peers, our competitive advantage is quite clear. First of all, Himalaya still has a lot of user legacy that covers white-collar and female users in tier-one and tier-two cities.

[Translator]: However, compared with our peers, our competitive advantage is quite clear. First of all, Ximalaya still has a lot of user legacy that covers white-collar and female users in Tier 1 and Tier 2 cities.

Speaker #2: 所以我们基本上应该你们可以注意到就是在我们整个的儿童业务，就在喜马拉雅本身的儿童业务仍然在市场上占据了非常重要的一个地位。而且它其中的很多的故事IP都跟我们形成了很好的合作。

Ross Liang: 所以你们可以注意到，在我们整个的儿童业务，就在喜马拉雅本身的儿童业务，仍然在市场上占据了非常重要的一个地位，而且它其中的很多的故事IP都跟我们形成了很好的合作。

Ross Liang: [Foreign language]

Speaker #4: As you probably can see, our kids' business on Himalaya is still taking considerable market share, and especially the story part has also complemented our own business.

[Translator]: As you probably can see, our kids business on Ximalaya is still taking considerable market share, and especially the story part has also complemented with our own business.

Speaker #2: 然后第二部分其实就是乐本身的其实在整个的网络文学部分，就是因为小说仍然是就像其实Spotify的Audiobook一样，就是小网络小说肯定是我们最重要的一部分。那在这部分上我们主要还是跟继续跟我们的乐文集团跟乐文达成一个很好的深度的战略合作，集中其中的它的全部作品都第一时间内都可以在我们本身的平台上完成有声化以及分发。

Ross Liang: 第二部分其实就是本身在整个的网络文学部分，因为小说仍然是就像Spotify的audiobook一样，网络小说肯定是我们最重要的一部分。那在这部分上，我们主要还是继续跟我们的阅文集团，跟阅文达成一个很好的深度的战略合作，其中的它的全部作品第一时间内都可以在我们本身的平台上完成有声化以及分发。

Ross Liang: [Foreign language]

Speaker #4: Another part is internet literature, especially novels like audiobooks. We'll continue to deepen our collaboration with China Literature and 乐文. All the new works will be turned into audiobooks and efficiently distributed on our platform.

[Translator]: Another part is the internet literature, especially the novels like audiobooks. We will continue to deepen our collaboration with China Literature, Yuewen, and all the new works will turn into audiobooks and will be efficiently distributed on our platform.

Speaker #2: 而且最近我们在跟乐文正在做的漫剧的合作，我们也相信说对于在漫剧和有声之间能够更好的去使这样的有声文这样文学的IP能得到最大化的一个发展。

Ross Liang: 而且最近我们在跟阅文正在做的漫剧的合作，我们也相信说对于在漫剧和有声之间能够更好地去使这样的有声文学，这样文学的IP能得到最大化的一个发展。

Ross Liang: [Foreign language]

Speaker #4: Recently, we're also partnering with China Literature 乐文 on comic plays, comedies, or comic plays, and we hope—we also believe—that comic plays and audios can also complement each other.

[Translator]: Recently, we are also partnered with China Literature, Yuewen, on comic plays, and we also believe that comic plays and audios can also complement with each other.

Speaker #2: 那第三块其实就是我们跟本身腾讯视频的一个深度的合作。那我们相信本身在于长视频平台，比如说最近的百花杀这样的一个头部的影视剧，包括人间就这类的，只要在腾讯视频上相对比较爆火的S剧，那同样的在我们喜马拉雅里发现了它有非常大的有声书的这种消费的是消费的那个增长。

Ross Liang: 第三块其实就是我们跟本身腾讯视频的一个深度的合作。我们相信本身在于长视频平台，比如说最近的《百花杀》这样的一个头部的影视剧，包括《人间》这类的，只要在腾讯视频上相对比较爆火的S剧，同样在我们喜马拉雅也发现了它有非常大的有声书的那种消费的增长。

Ross Liang: [Foreign language]

Speaker #4: In addition, we also have a deep collaboration with Tencent Video for some long-form videos like 百花杀 or 人间—those hit shows. So once we find those hit shows, Tencent Video—especially those S-tier plays—we also spot there is a great consumption scenario on Himalaya.

[Translator]: In addition, we also have a deep collaboration with Tencent Video for some long-form videos like "Bai Hua Sha" or "Renjian," those hit shows. Once we found those hit shows on Tencent Video, especially those S plays, we also thought there is a great consumption scenario on Ximalaya.

Speaker #2: 所以我们最近也正在推进跟腾讯视频在产品上合作，也就刚才说的本身在所有的热剧的排播的所有的有声剧都可以在我们这边上线，同时从腾讯视频完成导流。那么从我们我们这边的喜马拉雅里面所有的有价值的有声内容也会同时授权给腾讯视频以完成在让他们在那边的用户也能得到一个在听书上的一个需求的满足。

[Company Representative] (Tencent Music): 所以我们最近也正在推进跟腾讯视频在产品上的合作，也就刚才说的本身在所有的热剧的排播的所有的有声剧，都可以在我们这边上线，同时从腾讯视频完成导流。那么从我们这边的喜马拉雅里面所有的有价值的有声内容，也会同时授权给腾讯视频，以完成让他们在那边的用户也能得到一个在听书上的需求的满足。

Ross Liang: [Foreign language]

Speaker #4: So with the Tencent Video for those hit shows, we can turn those into audiobooks very quickly and put them online. And we can also attract—so, have some traffic diverted from Tencent Video.

[Translator]: With the Tencent Video, for those hit shows, we can turn those into audiobooks very quickly and turn it online. We can also have some traffic diverted from Tencent Video. For the audio resources on Ximalaya platform, we will also license it to Tencent Video so that Tencent Video users can also listen to this audio content.

Speaker #4: And for the audio resources on the Himalaya platform, we will also license them to Tencent Video so that Tencent Video users can also listen to this audio content.

Speaker #2: 所以从一句话来解决，其实我们现在长音频的业务仍然也是以IP为centric的这样的一个业务。那么我们得以本身把我们可以本身聚焦在本身最经典的儿童的故事和儿童故事，然后以乐文为核心的网络文学以及跟腾讯视频所结合的S级的影视剧，也仍然能在中间去创造更好的这样一个商业化的机会。

[Company Representative] (Tencent Music): 所以从一句话来解决，其实我们现在长音频的业务仍然也是以IP为centric的这样的一个业务。那么我们可以本身聚焦在最经典的儿童故事，然后以阅文为核心的网络文学，以及跟腾讯视频所结合的S级的影视剧，也仍然能在中间去创造更好的这样一个商业化的机会。

Ross Liang: [Foreign language]

Speaker #4: We are not sure long-form audio is still an IP-centric business, and we'll keep focused on classic kid stories, the internet literature from China Literature, 乐文, and the S-level shows from Tencent Video. We believe all of this will have a very good commercial outlook.

[Translator]: In a nutshell, long-form audio is still IP-centric business, and we will keep a focus on classic kids stories, the internet literature from China Literature Yuewen, and the S-level shows from Tencent Video. We believe all of this will have very good commercial outlook.

Speaker #1: 关于音乐内容生产的部分呢，其实TM也一起来做了多年的前瞻性的部署。

[Company Representative] (Tencent Music): 关于音乐内容生产的部分，其实TME也一起来做了多年的前瞻性的部署。

Cussion Pang: [Foreign language]

Speaker #4: Regarding music creation, TME has also deployed many forward-looking strategies.

[Translator]: About music creation, TME has also deployed many forward-looking strategies.

Speaker #1: 我们除了跟国际以及国内的很多的厂牌做一个不同的共同的音乐的共同的创作，以及我们也成立了不同的joint venture的分公司，加上我们公司内部的资源的工作室，我们已经大力的投入在音乐内容的创作上。

[Company Representative] (Tencent Music): 我们除了跟国际以及国内的很多的厂牌做一个不同的共同的音乐的共同的创作，以及我们也成立了不同的joint venture的分公司，加上我们公司内部的艺人的工作室，我们已经大力地投入在音乐内容的创作上。

Cussion Pang: [Foreign language]

Speaker #4: Apart from our collaboration with domestic and international labels, we co-produce a lot of artworks. We also set up some joint ventures, and we have also spent lots of effort on our in-house studio in music creation.

[Translator]: Apart from our collaboration with domestic and international labels, we co-produce a lot of artworks. We also set up some joint ventures, and we also spent lots of efforts in in-house studio in music creation.

Speaker #1: 另一个很关键的就是我们必须要跟腾讯的大的生态有更多的紧密的合作。当前包括腾讯游戏、腾讯视频里面很多不同的主题曲，OST我们在过去都出了打造了很多不同的非常亮眼的一些的头部的歌曲。

[Company Representative] (Tencent Music): 另一个很关键的就是我们必须要跟腾讯的大的生态有更多的紧密的合作。当前包括腾讯游戏、腾讯视频里面很多不同的主题曲，OST，我们在过去都出了打造了很多不同的非常亮眼的一些的头部的歌曲。

Cussion Pang: [Foreign language]

Speaker #4: In addition, we will also continue to forge closer collaboration within the Tencent ecosystem—with gaming, with Tencent Video—and over the years, we have generated many hit songs.

[Translator]: In addition, we will also continue to forge a closer collaboration within the Tencent ecosystem, with gaming, with Tencent Video, and over the years, we have generated many hit songs.

Speaker #1: 除了歌的制作以外呢，我们在过去几年也开始实现了我们自己的艺人信息管理。我们也有很多的在行业里面的出名的著名的歌手也加入到我们的那个阵营里面，但同时间我们也跟很多的海外的公司，比如说SM Entertainment韩国的，我们也开始来培养新一代的一些新的艺人歌手，这个也是我们在打造歌手的层面我们也投入更多的精力跟资源。

[Company Representative] (Tencent Music): 除了歌的制作以外，我们在过去几年也开始实现了我们自己的艺人经纪管理。我们有很多在行业里面著名的歌手也加入到我们的那个阵营里面。但同时间我们也跟很多的海外的公司，比如说SM Entertainment，韩国的，我们也开始来培养新一代的一些新的艺人歌手。这个也是我们在打造歌手的层面，我们也投入更多的精力跟资源。

Cussion Pang: [Foreign language]

Speaker #4: Apart from music creation, we're also entering deeper into artist or singer generation and nurturing, as well as artist management. For example, we partner with SM Entertainment from Korea so that it can help us better nurture more talented artists.

[Translator]: Apart from our music creation, we are also entering deeper into artist or singer generation or nurturing, and artist management. For example, we partner with SM Entertainment from Korea, so that it could help us better nurture more talented artists.

Speaker #1: 最后我们可以把这些非常好的歌以及歌手在通过不同的场景，比如说帮他们主办他们的那个个人的演唱会，也有TME自己的内部IP的盛典等等，我们也可以把演出的不同的内容来打造起来。最后呢就是希望我们以一体化的那个整体来打造更长久的IP，而且这次是高品质的，而且在过去的几年里面我们的在这方面的业务的增长已经证明了这里面的空间还是有非常大的一个发展的空间。

[Company Representative] (Tencent Music): 最后我们可以把这些非常好的歌以及歌手，再通过不同的场景，比如说帮他们主办他们的个人的演唱会，也有TME自己的内部IP的盛典等等，我们也可以把演出的不同的内容再打造起来。最后就是希望我们以一体化的整体来打造更长久的IP。而且这些是高品质的，而且在过去的几年里面，我们的在这方面的业务的增长已经证明了这里面的空间还是有非常大的一个发展的空间。

Cussion Pang: [Foreign language]

Speaker #4: So, with song creation and singer nurturing, we can also help a lot of singers to hold their own concerts, and we can also organize a lot of IP-based events.

[Translator]: With song creation and singer nurturing, we can also help a lot of singers to make their own concerts, and we can also organize a lot of IP-based events, and all of this will further contribute to the business growth. With our integrated or one-stop platform, we will further nurture more high-quality IP. If you look at our business performance over the past several years, such rapid growth is already a proven record of the huge potential of this business.

Speaker #4: And all of this will further contribute to business growth. So, with our integrated, one-stop platform, we will further nurture more high-quality IP.

Speaker #4: And if you look at our business performance over the past several years, such rapid growth is already a proven record of the huge potential of this business.

Speaker #1: 最终我们也希望通过这些的特权会反哺到帮助我们包约业务，甚至说SVIP的增长。

[Company Representative] (Tencent Music): 最终我们也希望通过这些的授权，可以反哺到帮助我们包月业务，甚至说SVIP的增长。

Cussion Pang: [Foreign language]

Speaker #4: Ultimately, with more benefits, it will further contribute to the growth of our subscription or SVIP growth.

[Translator]: Ultimately, with more of that, it will further contribute to the growth of our subscription or SVIP approach.

Speaker #3: Thank you. The next question comes from Maggie from CRSA.

Operator: Thank you. The next question comes from Maggie from CICC.

[Company Representative] (Citigroup): Thanks management for taking my question. My first question is related to margin. In Q2, sales and marketing increase appeared to be quite modest year-over-year, even taking into consideration of Ximalaya, which was believed to entail higher sales and marketing cost ratio. Could management help us better understand the driver behind that, and what is the overall gross margin and net margin outlook in Q3 and Q4 upon a full quarter consolidation of Ximalaya? My second question is related to shareholder return. Our total cash short-term long-term deposit reached CNY 44 billion by the end of Q2, and is almost 40% of our current market cap. Could management share with us your latest thoughts on enhancing shareholder return going forward? Thank you.

Maggie Ge: Thanks management for taking my question. My first question is related to margin. In Q2, sales and marketing increase appeared to be quite modest year-over-year, even taking into consideration of Ximalaya, which was believed to entail higher sales and marketing cost ratio. Could management help us better understand the driver behind that, and what is the overall gross margin and net margin outlook in Q3 and Q4 upon a full quarter consolidation of Ximalaya? My second question is related to shareholder return. Our total cash short-term long-term deposit reached CNY 44 billion by the end of Q2, and is almost 40% of our current market cap. Could management share with us your latest thoughts on enhancing shareholder return going forward? Thank you.

Speaker #5: Thanks, management, for taking my question. My first question is related to margin. In the second quarter, the sales and marketing increase appears to be quite low year over year, even taking into consideration Himalaya, which was believed to entail a higher sales and marketing cost ratio.

Speaker #5: Could management help us better understand the driver behind that? And what's the overall gross margin, and not net margin, outlook in the third quarter and fourth quarter upon a full quarter consolidation of Himalaya?

Speaker #5: And my second question is related to shareholder return. So our total cash, short-term, and long-term deposits reached RMB 44 billion by the end of the second quarter, and that's almost 40% of our current market cap.

Speaker #5: Could management share with us your latest thoughts on enhancing shareholder return going forward? Thank you.

Speaker #4: 谢谢管理层给我提供的机会。第一个问题是关于这个整个这个就是利润率，包括第二季度我们可以看到整个销售的支出其实同比增长还蛮多的，其实考虑到这个喜马拉雅的合并的这个事情，能不能管理层跟我们分析一下背后的这个主要的驱动力到底是什么，而然后给我们展望一下今年下半年，包括整个毛利和净利的一个具体的情况。第二个问题呢是关于这个股东回报的，我们可以看到在截止到二季度末的话，我们账上现金已经达到了440亿人民币，这基本上占到了我们大约40%的市值。所以想问一下管理层对于现在这个股东回报市场的计划。

[Translator]: 谢谢关总给我提供的机会。第一个问题是关于整个利润率的情况，包括第二季度我们可以看到销售的支出其实同比增长还是蛮多的，考虑到喜马拉雅合并的事情。能不能分析一下背后的主要驱动力到底是什么？然后给我们展望一下今年下半年，包括整个毛利和净利的一个具体的情况。第二个问题是关于股东回报的。可以看到在截止到二季度末，我们账上现金已经达到了440亿人民币，这基本上占到了我们大约40%的市值。所以想问一下管理层对于现在股东回报有什么计划。

[Translator]: [Foreign language]

Speaker #5: 对，我们的毛利率同比的稍有降低的主要原因呢，其实主要是因为线下活动的收入增长是较快的。那么在总收入的比例较大，那么另外一方面呢，其实线下活动中的经济类的业务增长也比较快，那么占比也逐步提高。那么同时演唱会和实体粉丝类业务积累了一个运营的一个经验，也提升了这个运营效率。那对整体的毛利率还是有一个正向影响的。所以综合下来，那同比的这个毛利率下降是比较少的。

[Company Representative] (Tencent Music): 对，我们的毛利率同比稍有降低的主要原因，其实主要是因为线下活动的收入增长较快，在总收入的比例较大。另外一方面，其实线下活动中的经纪类的业务增长也比较快，占比也逐步提高。同时演唱会和实体粉丝类业务积累的一个运营经验，也提升了运营效率，对整体的毛利率还是有一个正向影响的。所以综合下来，同比的毛利率下降是比较少的。

Shirley Hu: [Foreign language]

Speaker #4: My first question is about the slight decline of our GP margin, which is mainly due to the following reasons. Number one is our offline business is growing very rapidly, which means that it takes a bigger share of our total revenue.

[Translator]: Well, first question about the slight decline of our GP margin is mainly due to the following reasons. Number 1 is our offline business is growing very rapidly, which means that it takes a bigger share of our total revenue. Our offline artist brokerage business is also growing very rapidly and also taking a bigger share of our overall revenue. Plus concerts and live performance, which also contribute positively to our GP margin. These are why our GP margin is just declining slightly.

Speaker #4: In addition, our offline artist brokerage business is also growing very rapidly and is taking a bigger share of our overall revenue. Furthermore, concerts and live performances also contribute positively to our GP margin.

Speaker #4: And these are why our gross profit margin is just declining slightly.

Speaker #5: 环比来看呢，毛利率下降的比较多，其实纯粹是因为这个线下活动的这个收入的这个季节性的波动。那么Q2的占比是显著高于Q1的，那么对毛利率产生了一定的负向影响。

[Company Representative] (Tencent Music): 反比来看，毛利率下降得比较多，其实纯粹是因为线下活动的收入的季节性波动，Q2的占比是显著高于Q1的，对毛利率产生了一定负向影响。

Shirley Hu: {Foreign language}

Speaker #4: 我 if you look at a quarter over quarter, the slight decline of GP margin is mostly the seasonal changes of the offline performance business because the offline performance business in Q2 is a greatly higher than Q1.

[Translator]: Well, if you look at quarter-over-quarter, the slight decline of GP margin is mostly the seasonal changes of the offline performance business, because the offline performance business in Q2 is greatly higher than Q1.

Speaker #5: 对，那么考虑这个喜马的这个并入呢，就是在考虑了我们的这个会计政策下的这个无形资产摊销后呢，对整体的这个毛利率的这个正向的影响。

[Company Representative] (Tencent Music): 对。那么考虑喜马拉雅的并入，在考虑了我们的会计政策下的无形资产摊销后，对整体的毛利率的正是正向的影响。

Shirley Hu: [Foreign language]

Speaker #4: Considering the amortization of intangible assets of Himalaya, it has some positive impact over our gross profit margin.

[Translator]: Considering the amortization of intangible assets of Ximalaya, it has some positive impact over our GP margin.

Speaker #5: 长期来看呢，合并了喜马后呢，我们持续会进行音频和音乐的内容组合，丰富整个内容生态。那么整合好这个差异化的这个用户结构，然后提升SVIP的留存和付费转化。那么相信呢，对整体的这个毛利率有一定的提升空间。

[Company Representative] (Tencent Music): 长期来看，合并了喜马拉雅后，我们持续会进行音频和音乐的内容整合，丰富整个内容生态，整合好差异化的用户结构，提升VIP的留存和付费转化。相信对整体的毛利率有一定的提升空间。

Shirley Hu: [Foreign language]

Speaker #4: In the long run, with the consolidation of Himalaya, we'll continue to build our music plus audio platform, to have a more enriching ecosystem, and to provide a more differentiated user experience. With that, we believe we can increase the retention and conversion rate.

[Translator]: In the long run, with the consolidation of Ximalaya, we will continue to build our music plus audio platform, to have a more enriching ecosystem, and to provide a more differentiated user experience. With that, we believe we can increase the retention conversion rate.

Speaker #5: 根据这个目前对于下半年的这个收入的这个预期的情况来看，我们预计这个整体的这个毛利率比去年同期稍有下降。

[Company Representative] (Tencent Music): 根据目前对于下半年的收入的预期的情况来看，我们预计整体的毛利率比去年同期稍有下降。

Shirley Hu: [Foreign language]

Speaker #4: For our projection into the second half of our revenue expectation, we project that our GP margin will decrease slightly year over year.

[Translator]: Our projection into the H2 of our revenue expectation, we project that our GP margin will be decreasing slightly year-over-year.

Speaker #5: 对。关于销售费用的问题，我可能要说一下，就是其实Q2来讲，我们相对而言其实是控制了这个销售费用的这个投入。那么整体来讲就是调整了整个渠道费用的一个策略。那么对渠道费用有更高的这个ROI的要求，减少了这个渠道费用。同时加强了与腾讯整个生态的合作，包括视频号、微信支付和游戏的。那么与视频号的合作也逐步取得一些成效，引流效率有一定的提升。

[Company Representative] (Tencent Music): 关于销售费用的问题，我可能要说一下，其实Q2来讲，我们相对而言其实是控制了销售费用的投入。整体来讲就是调整了整个渠道费用的策略，对渠道费用有更高的ROI的要求，减少了渠道费用，同时加强了与腾讯整个生态的合作，包括视频号、微信支付和游戏等。与视频号的合作也逐步取得一些成效，也有效率有一定的提升。

Shirley Hu: [Foreign language]

Speaker #4: About sales expenses, I would say in Q2 we have controlled the sales expenses because, in general, we have changed our channel expenses strategy, which means that we will seek more projects with higher ROI.

[Translator]: About sales expenses, I would say in Q2, we have controlled the sales expenses because in general, we have changed our channel expenses strategy, which means that we will seek more products with higher ROI. In addition, we are also strengthening our collaboration within the Tencent ecosystem, Tencent Video, Tencent Pay, and Tencent Games. As you can see in our collaboration with Tencent Video, it has already helped us increase the traffic and conversion.

Speaker #4: In addition, we're also strengthening our collaboration within the Tencent ecosystem—Tencent Video, Tencent Pay, and Tencent Gaming. As you can see, our collaboration with Tencent Video has already helped us increase both traffic and conversion.

Speaker #5: 那合并喜马以后呢，其实6月份其实喜马几乎是停投的。那我们将集团中台的能力逐步适配到喜马。那么形成更优的投放模型，从7月起呢会在集团相同的ROI要求的前提下逐步恢复投放。

[Company Representative] (Tencent Music): 在合并喜马拉雅以后，其实在6月份，喜马拉雅几乎是停投的。我们将集团中台的能力逐步适配到喜马拉雅，形成更优的投放模型。从7月起，会在集团相同的ROI要求的前提下逐步恢复投放。

Shirley Hu: [Foreign language]

Speaker #4: 我 with the consolidation of Himalaya, basically the input in June has already suspended, but with the technology and platform convergence and we have resumed the expanding for Himalaya, but with the same ROI standard since July.

[Translator]: Well, with the consolidation of Ximalaya, basically the inputs in June has already suspended. But with the technology and platform convergence, we have resumed the spending for Ximalaya, but with the same ROI standard since July.

Speaker #5: 对，我们不会进行大水漫灌式的烧钱去做营销，我们将持续的投入优质内容，精细化的这个推广策略，聚焦核心价值用户和生态优势，稳固付费用户的基本盘。预计全年的销售费用和GMA都会有合理的增加，主要是含了喜马的一些支出。那么运营费率呢，相比25年有小幅的提升，加上贷款利息支出的增加，那么净利率会小幅的承压。预计全年的经调整的EBITDA会有小幅提升。

[Company Representative] (Tencent Music): 对。我们不会进行大水漫灌式地烧钱去做营销。我们将持续地投入优质内容，精细化的推广策略

Shirley Hu: [Foreign language]

[Company Representative] (Tencent Music): 聚焦核心价值用户和生态优势，稳固付费用户的基本盘。预计全年的销售费用和GMV都会有合理的增长，主要是含了喜马拉雅的一些支出。运营费率相比2024年有小幅的提升，加上贷款利息支出增加，净利润会小幅承压。预计全年经调整的EBITDA会有小幅提升。

Speaker #4: We will not just spend broadly in marketing, and we'll fine-tune our strategy in marketing to do more targeted things and stay focused on our ecosystem and to try to tap more value from our users.

[Translator]: We will not just spend broadly in marketing. We will fine-tune our strategy in marketing and do more targeted marketing and stay focused on our ecosystem and to try to tap more value from our users. So for the whole year, our sales expenses will go up a little bit, and our operating expenses will slightly go up. But considering the loans, our net margin for the whole year will go down slightly, and EBITDA will edge up a little bit.

Speaker #4: So for the whole year, our sales expenses will go up a little bit, and operating expenses will slightly go up. But considering the loans, our net margin for the whole year will go down slightly, and EBITDA will edge up a little bit.

Speaker #3: 关于股东回报上，我们当前有一个10亿美元的股票的回购计划，而且在第二个季度呢，我们总计完成了金额达到4亿美元的那个股票的回购。

[Company Representative] (Tencent Music): 关于股东回报上，我们当前有一个10亿美元的股票回购计划，而且在第二个季度，我们已经完成金额达到4亿美元的股票回购。

Cussion Pang: [Foreign language]

Speaker #4: About shareholder return, currently we're still under that one billion shareholder return program. In Q2 alone, we're ready completed 400 million USD share buyback.

[Translator]: About shareholder return, currently, we are still under that USD 1 billion shareholder return program. in Q2 alone, we already completed USD 400 million share buyback.

Speaker #3: 管理层当前是对整个公司的长期价值呢是非常有信心的，所以我们也会在当前除了完成我们剩余的那个股票的回购的计划之后，我们也会积极的去准备新一轮的回购计划。我们目标就是以不同的模式可以提高股东的回报作为我们的目的。

[Company Representative] (Tencent Music): 管理层当前是对整个公司的长期价值非常有信心的，所以我们除了完成我们剩余的股票的回购的计划之后，我们也会积极地去准备新一轮的回购计划。我们的目标就是以不同的模式可以提高股东的回报。

Cussion Pang: [Foreign language]

[Translator]: The management is very confident for the future of the company. Apart from finishing the rest of the previous share buyback program, we are also preparing for another round of share buyback. We will try to use different approach to increase shareholders.

Speaker #4: The management is very confident about the near-term future of the company—so far, far from finishing the rest of the previous share buyback program—for another round of share buyback.

Speaker #4: We will try to use different approach to increase shareholders time. I would like to wrap up today's call. Thank you again for joining me today.

Operator: As we are out of time, I would like to wrap up today's call. Thank you again for joining us today. If you have any further questions, please feel free to send them to our team. We look forward to speaking with you next quarter. Thank you and bye.

Speaker #4: If you have any further questions, please feel free to include them in today's call. We will see you next quarter. Thank you and goodbye.

Speaker #3: Thank you. Thank you.

[Translator]: Thank you.

Cussion Pang: Thank you.

Speaker #5: Thank you.

[Company Representative] (Tencent Music): Thank you.

Ross Liang: Thank you.

Operator: Thank you.

Shirley Hu: Thank you.

[Translator]: Bye.

Ross Liang: Bye.

Q2 2026 Tencent Music Entertainment Group Earnings Call

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