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Tencent Music Entertainment Group’s earnings report reveal falling stock prices

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Tencent Music Entertainment Group’s (TME) shares fell by 6.24% by the end of 2018. Shares fell more than 7% in the extended session after the company reported its first results since its initial public offering in December 2018.

Tencent Music recorded a quarterly loss of $127 million. This is primarily due to a one-time, share-based accounting charge of $221 million related to its issuance of equity to music label partners Warner Music Group and Sony Music Entertainment.

“Our initial public offering in December 2018 has launched us onto the international stage, elevated the global recognition towards our brand, and endorsed our successful track record,” stated Cussion Kar Shun Pang, CEO of Tencent Music, adding, “During the fourth quarter of 2018, we recorded strong growth across our business lines, including both online music and social entertainment services, and solidified our market leadership.”

Tencent Music Entertainment Group earnings breakdown

Revenue in the quarter ended Dec. 31 was up 50.5 percent year-over-year to $785 million. For the full year ended Dec. 31, total revenue was up, even more, jumping 73 % to $2.76 billion, the company said.

Tencent said the number of paying online music service listeners grew by nearly 40 percent over the same period a year earlier. Subscriber count reached 27 million by the end of 2018.

Fees for content and other production costs grew by more than 60 percent. Tencent has also reported a staggering 644 million online music mobile MAU’s (monthly active users). It is a 6.8 % increase over the 603 million subs reported at the same time in 2017.

Spotify’s 96 million premium subscribers represent 46.4% of its total monthly users. In comparison, the number of Tencent Music users paying for online services was 27 million, an increase of 39.2%. Although this figure represents just 4.2% of the 644 million online music mobile monthly active users.

Revenues from social entertainment services for Q4 increased by 52.8% year-on-year to RMB 3.88 billion ($564m). This was driven by the revenue growth in both TME’s online karaoke and live streaming services. Tencent Music Entertainment Group encompasses three music platforms – QQ Music, Kugou Music, and Kuwo Music along with karaoke service WeSing.

 

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