Key Takeaways:
Tencent Music Entertainment Group reported second-quarter revenue of RMB8.93 billion (US$1.32 billion), up 5.8% year over year, driven by music related services growth of 11%.
"Our second-quarter results reflect the continued strength of our content-and-platform strategy," Cussion Pang, executive chairman of TME, said. "Concerts, merchandise, and other IP-driven experiences drove another quarter of solid growth in our marketing and consumption services."
Music related services revenue reached RMB7.61 billion, with membership services up 8.1% to RMB4.79 billion. Marketing and consumption services, which include advertising, offline performances and artist merchandise, rose 16.2% to RMB2.81 billion. Ximalaya, the long-form audio platform acquired May 18, contributed RMB407 million. Social entertainment services and other revenue fell 16.4% to RMB1.33 billion. Gross margin was 44.2%, compared with 44.4% a year earlier.
Non-IFRS net profit attributable to equity holders rose 4.4% to RMB2.69 billion, with adjusted EBITDA of RMB3.25 billion, up 5.2%. The company repurchased 43.5 million ADSs for about US$400 million at an average price of US$9.2 per ADS. Shares closed at US$9.90 on Aug. 10, up 3.9%, before the earnings release.
On an IFRS basis, net profit attributable to equity holders was RMB2.47 billion, with diluted earnings per ADS of RMB1.57. Cost of revenues rose 6.2% to RMB4.98 billion, driven by higher offline performance costs and long-form audio content expenses. Operating expenses rose 12% to RMB1.30 billion, partly from amortization of intangible assets tied to the Ximalaya acquisition. The company held RMB44.22 billion in cash, cash equivalents, term deposits and short-term investments as of June 30, up from RMB41.00 billion at the end of March.
CEO Ross Liang said SVIP membership continues to grow as the company deepens engagement with core users. The Ximalaya acquisition broadens TME's reach into long-form audio, adding audiobooks, podcasts and talk shows to its existing portfolio of QQ Music, Kugou Music, Kuwo Music and WeSing.
TME's earnings history shows mixed market reactions. The stock fell 24.6% after Q4 2025 results and 8.4% after Q3 2025, but rose 11.8% after Q2 2025. Tag-specific earnings reactions have averaged negative 4%. The company trades at 11.4 times trailing earnings with a market capitalization of about US$16.2 billion.
The results come as Tencent Holdings, which holds more than 50% of TME shares, prepares to report its own second-quarter earnings on Aug. 12. The Ximalaya integration will be a key focus for investors watching whether the acquisition can offset continued declines in social entertainment revenue. Competition from ByteDance's Soda Music app remains a risk to subscriber growth, though analysts at Morningstar have called the threat overdone.
This article is for informational purposes only and does not constitute investment advice.
