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Tencent Music Entertainment Group (TME) reported on Tuesday (Aug. 11) that their second-quarter revenues rose nearly 6% to RMB 8.93 billion ($1.32 billion) thanks to the completion of its $2.4 billion acquisition of podcast platform Ximalaya and double-digit growth in music services revenue.
One of the leading global streaming platforms, TME announced plans to acquire the podcast and audiobook platform last June as a way to expand behind music and establish itself as a leader in audio entertainment. In 2023, Ximalaya reportedly had 303 million global active users.
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While Ximalaya will help TME compete with Spotify and Amazon on audiobooks and podcasts, music-related services — including membership services revenues — remains the growth engine for now.
Music related services revenues rose 11% from the year-ago quarter to RMB 7.61 billion ($1.12 billion) on an 8.1% increase in membership services — TME’s version of subscription — revenues of RMB 4.79 billion ($706 million). Ximalaya contributed RMB 407 million ($60 million) of revenue to the quarter. The company’s gross profit margin for the quarter ending June 30 expanded by nearly a percentage point to 44.9%.
In an effort to grow the hours per day users are on its platform, TME expanded freemium access, video feeds and introduced a TikTok-like vertical swipe feature to discover new music in the second quarter.
“Our focus on differentiated content and a vibrant community continues to deepen engagement with our core users, and SVIP membership continues to grow,” Ross Liang , TME’s CEO, said in a statement. “The addition of Ximalaya is an exciting milestone that will allow us to deliver an even richer audio experience and serve our users more effectively. Together, we are shaping the future of music and audio entertainment and unlocking long-term growth.”
Adjusted earnings before income, taxes, depreciation and amortization (EBITDA) rose 5.2% to RMB 3.25 billion ($480 million), with net profit attributable to shareholders totaling RMB 2.69 billion ($396 million) (YoY +4.4%), or RMB 1.70 ($0.25) per share, compared to RMB 1.66 last year.
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