Tencent Music Entertainment Group ("TME," or the "Company") TME, the leading online music and audio entertainment platform in China, announced its unaudited financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Financial Highlights:

Total revenues were RMB7.29 billion (US$1.01 billion), representing 5.5% year-over-year growth.

Revenues from online music services increased by 47.6% year-over-year to RMB4.25 billion (US$586 million), representing 58.3% of total revenues.

Revenues from music subscriptions were RMB2.89 billion (US$399 million), representing 37.2% year-over-year growth. The number of paying users reached 99.4 million, increasing by 20.2% year-over-year and by 5.0 million quarter-over-quarter.

Net profit attributable to equity holders of the Company was RMB1.30 billion (US$179 million), representing 51.6% year-over-year growth. Non-IFRS net profit attributable to equity holders of the Company was RMB1.53 billion (US$211 million), representing 48.6% year-over-year growth.

Diluted earnings per ADS was RMB0.82 (US$0.11) and the number of ADSs used in diluted earnings per ADS computation was 1.58 billion.

Total cash, cash equivalents and term deposits as of June 30, 2023 were RMB30.5 billion (US$4.21 billion).

In a statement, Mr. Cussion Pang, Executive Chairman of TME, said, "We are pleased to report a solid second quarter, supported by the continued strong growth of our online music services. As we continue driving the healthy development of China's online music industry, we have seen users become increasingly accustomed and willing to pay for copyrighted music, whether for songs they want to listen to or for premium listening features they enjoy. This trend is evidenced by the all-time high paying ratio and ARPPU recorded by our online music services in the reported quarter. Such achievements led to revenues from online music services exceeding that of social entertainment services for the first time in our Company's history. This marks a significant step along TME's growth trajectory."

Mr. Ross Liang, CEO of TME, added, "We are excited that we reached the milestone of 100 million online music paying users in June this year. This demonstrates our strength as China's leading online music platform and reflects our growing appeal to music lovers. As we see greater growth potential materializes from users' evolving music consumption mindset, we continually elevate the music experience to meet users' higher standards and preferences for quality."

For the second quarter of 2023, total revenues increased by 5.5% to RMB7.29 billion (US$1.01 billion) from RMB6.91 billion in the same period of 2022. Revenues from online music services delivered strong year-over-year growth of 47.6% to RMB4.25 billion (US$586 million). Revenues from social entertainment services and others decreased by 24.6% to RMB3.04 billion (US$419 million) from RMB4.03 billion in the same period of 2022.

Cost of revenues decreased by 1.1% year-over-year to RMB4.79 billion (US$660 million). Gross margin increased by 4.4 percentage points to 34.3% from 29.9% in the same period of 2022.

Total operating expenses decreased by 11.4% year-over-year to RMB1.26 billion (US$173 million). Operating expenses as a percentage of total revenues decreased to 17.2% from 20.5% in the same period of 2022.

The Company's operating profit grew to RMB1.54 billion (US$212 million) in the second quarter of 2023, representing an increase of 47.3% year-over-year.

Net profit attributable to equity holders of the Company was RMB1.30 billion (US$179 million), and non-IFRS net profit attributable to equity holders of the Company was RMB1.53 billion (US$211 million).

As of June 30, 2023, the combined balance of the Company's cash, cash equivalents and term deposits amounted to RMB30.5 billion (US$4.21 billion), compared with RMB28.5 billion as of March 31, 2023.

In terms of business updates, TME's online music services contributed 58.3% of total revenues, surpassing the revenue contribution from social entertainment services for the first time in the Company's history. The number of paying users reached 99.4 million in the second quarter of 2023, and monthly ARPPU expanded to RMB9.7.

TME also highlighted its efforts in strengthening partnerships with top-tier music labels and artists, exploring opportunities in the IoT areas, and fulfilling its social responsibilities through music-based social welfare activities.

Overall, TME remains confident in its ability to deliver year-over-year net profit growth for 2023, driven by the continued strong performance of online music services.