As a leading online music company, Tencent Music's performance has attracted much attention from the market. Just recently its financial report was released. How should we view Tencent Music's financial report performance? How to analyze the strong growth of Tencent Music?
1. Tencent Music’s net profit reaches a new high?
According to the Beijing News, Tencent Music Entertainment Group released its unaudited financial results for the fourth quarter and full year as of December 31, 2023. In the fourth quarter and full year of 2023, Tencent Music Entertainment Group's total revenue rebounded quarter-on-quarter, and its adjusted net profit continued to increase year-on-year.
In the fourth quarter of 2023, Tencent Music Entertainment Group’s total revenue was RMB 6.89 billion (USD 971 million), and non-IFRS net profit was RMB 1.68 billion (USD 236 million), a year-on-year increase of 12.5%. For the full year of 2023, Tencent Music Entertainment Group's total revenue was RMB 27.75 billion (USD 3.91 billion), and non-IFRS net profit was RMB 6.22 billion (USD 876 million), a year-on-year increase of 26.8%.
Online music business is a major business of Tencent Music. In the fourth quarter, online music service revenue increased by 41.1% year-on-year to RMB 5.02 billion (USD 707 million), accounting for 72.9% of the overall revenue, reaching Record high; online music subscription revenue increased 45.3% year-on-year to RMB 3.42 billion (USD 481 million). In addition, the number of online music paying users increased by 20.6% year-on-year to 106.7 million, and the average monthly income of a single paying user reached RMB 10.7, achieving seven consecutive quarters of growth.
Faced with the steady development trend of Tencent Music and the current music industry, the market generally holds a positive attitude. Among them, many securities firms such as UBS Securities, Jefferies, CMB International and China Merchants Securities have given overweight or buy ratings to Tencent Music.
2. What should we think about the strong growth of Tencent Music?
The release of Tencent Music’s fourth quarter and full-year financial reports for 2023 sparked heated discussions in the market. Its net profit hit a record high, and both its online music subscription revenue and the number of paying users achieved significant growth. So, what exactly is driving Tencent Music’s strong growth? How should we view this phenomenon?
First of all, Tencent Music delivered an eye-catching report card in the fourth quarter and full-year financial reports of 2023. Its online music subscription revenue increased by 45.3% year-on-year to 3.42 billion yuan, showing strong growth momentum. At the same time, the number of online music paying users increased by 20.6% year-on-year to 106.7 million, setting a new historical record. This series of data not only reflects Tencent Music’s outstanding performance in terms of user scale and profitability as a leading company in China and even the global digital music market, but also reveals its unique advantages in content, technology and strategic layout and its future sustainability. development potential.
Secondly, on the basis of maintaining the stable development of the traditional music business, Tencent Music continues to explore the diverse value of content and expand growth space. The core of the music industry lies in content, and the richness and diversity of content are the key to attracting users and increasing user stickiness. Tencent Music has built a differentiated content ecosystem through copyright cooperation, content production and co-creation, and is committed to providing users with the most comprehensive and extensive music content. This differentiated content strategy not only meets the diverse needs of users, but also increases users' willingness to pay, thus bringing more revenue sources to the company.
At the same time, Tencent Music also focuses on content innovation and quality. By introducing high-quality musicians, producers and professional music production teams, Tencent Music continues to improve the quality and level of production content. In addition, Tencent Music also actively cooperates with major music schools and music institutions to jointly cultivate music talents and promote the innovative development of the music industry. These measures have not only improved the content quality of Tencent Music, but also established a good reputation and image in the music industry.
Third, Tencent Music focuses on technological innovation and application, and improves the user experience and playability of its products by introducing advanced technologies such as AIGC. With the rapid development of artificial intelligence technology, its application in the music industry is becoming more and more extensive.Tencent Music keeps up with the trend of the times and actively introduces advanced technologies such as AIGC to provide users with more intelligent and personalized music services. For example, through aigc technology, Tencent Music can recommend music content that is more in line with users' listening habits and preferences. At the same time, it can also provide users with more convenient and efficient search and playback services through aigc technology. These innovative applications not only improve user satisfaction and loyalty, but also provide strong support for Tencent Music's commercial innovation.
In the long run, Tencent Music will continue to enhance the social value of music through the strategic layout of "one body and two wings", that is, with content as the core and platform as the support. A healthy music ecosystem has been created to promote the common prosperity of the upstream and downstream industry chains. This strategy not only helps to improve the standards of the entire industry, but also lays the foundation for Tencent Music's own sustainable development. Such Tencent Music is worth looking forward to.
