In its third-quarter earnings report Tuesday (Nov. 15), China’s leading music streaming company Tencent Music Entertainment Group (TME) said quarterly net profits soared 39% to RMB 1.09 billion ($154 million USD) from last year as the number of online music subscribers reached a record 85.3 million.
TME, which owns streaming platforms QQ Music, Kugou and Kuwo, plus karaoke app WeSing, reported that music subscriptions rose 18.3% to RMB 2.25 billion (USD $316 million) for the third quarter ending Sept. 30 compared to the same period in 2021. The number of subscribers rose by nearly 20%, up from 71.2 million in the third quarter 2021.
“As we are employing a balanced approach to grow paying users…revenues from online music services increased at a healthy pace in the third quarter, driven by year-over-year gains in subscriptions,” Cussion Pang, TME’s executive chairman, said in a statement. “Meanwhile, effective cost optimization measures and improved operating efficiency led to increased profitability amid challenging macro conditions this quarter.”
Overall, online music services revenues rose by 18.8% to RMB 3.43 billion (USD $482 million), but that wasn’t enough to offset a 20% decline in revenues from social entertainment and services, the company’s other main business unit. TME’s total revenues fell by 5.6% to RMB 7.37 billion (USD $1.04 billion).
Media companies have reported widespread declines in mobile revenues for the third quarter, as increased prices for many and the worsening economic outlook globally has caused consumers to rethink everyday expenses. TME was not spared from the trend. The number of monthly active mobile music users fell by 7.7% to 587 million in the quarter, compared to 636 million in the third quarter last year — a decline the company attributed to casual listeners dropping off the platform.
Monthly average revenue per paying user of TME’s online music edged 1% lower, to RMB 8.8 million (USD $1.24 million) compared to RMB 8.9 million (USD $1.25 million) during the year-ago period.
The company bought back $800 million of its own stock in the third quarter, part of a $1-billion stock buyback program it announced last spring.
In September, TME launched a secondary listing on the Hong Kong Stock Exchange; it was already publicly traded on the New York Stock Exchange in the United States. Its move to issue secondary shares in Hong Kong followed similar moves by other big Chinese companies seeking to safeguard themselves against potential ramifications of the geopolitical tensions between China and the U.S.