Tencent Music (TME) Q4 Earnings Report in Focus

Tencent Music Entertainment Group (NYSE:TME) is the leading music streaming platform in China. It owns some of the most famous music apps in the country such as QQ Music and Kugou Music. The company went public in December 2018 by pricing its shares at $13 apiece for total proceeds of nearly $1.1 billion. Its stock price has more than doubled since its IPO.

The Chinese music giant performed well in 2020, as stuck-at-home users played more music during the peak of the Covid-19 crisis. Tencent Music benefitted from the elevated demand for its music services across all its music platforms. As a result, TME stock rose nearly 45 percent during 2020.

Tencent Music recently announced its financial results for the fourth quarter. It reported earnings of 1.21 billion yuan for the three months ended December 31, up from earnings of 1.04 billion yuan in the same period of 2019. Revenue for the quarter surged 14.3 percent on a year-over-year basis to 8.34 billion yuan, as paying users climbed more than 40 percent to 56 million.

Commenting on the quarter, CEO Cussion Pang said in a statement, “In 2020, we demonstrated resilience and agility during and after the COVID-19 pandemic. We forged ahead with our operations, invested in technologies to customize services, and introduced new products to meet the evolving demands of our users. Our fourth-quarter results were underpinned by strong performance in online music services, which registered outstanding year-over-year revenue growth of 42% from subscriptions and over 100% from advertising. Even against the backdrop of macro-economic uncertainty and a changing competitive environment, our social entertainment services delivered steady revenue growth alongside a moderation in margins as we proactively invested some profit to pave the way for future growth.”

If we look at the performance of different segments, revenue from online music services jumped 29 percent on a year-over-year basis to 2.76 billion yuan, while revenue from social entertainment and other services rose 8.2 percent on a year-over-year basis to 5.58 billion yuan.

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