Tencent Music Entertainment Group – ADR (NYSE: TME) stock fell over 7.9% in the pre-market session of 14th May, 2019 (Source: Google finance) as the company posted mixed results for the first quarter of FY 19. The revenue grew 39% to 5.74 billion yuan ($835 million), which missed the analysts’ estimate of 5.797 billion yuan. Guomin Xie has sent his resignation as co-president and director due to personal reasons, which will be effective from June 6, 2019.
The company has reported a 17.4% jump in the net profit attributable to equity holders to $147 million for the first quarter of 2019 due to the product innovation, content diversification, and technological advancement. Operating profit grew by 22.9% to RMB1.15 billion (US$171 million)
During the first quarter of FY 19, the number of Mobile Monthly Active Users (MAU) for the online music service rose by 4.6% year-over-year to 654 million, and the Mobile MAU for social entertainment increased by 0.4% to 225 million. While the Mobile average revenue per paying user (ARPPU) for the social entertainment segment soared by 28.1% and online music Mobile ARPPU fell by 1.2%.
In the first quarter of FY 19, the company earned 0.72 yuan per American depositary share, excluding items.
Revenue from online music services rose by 28% due to the increased revenues from user subscriptions, sublicensing music content to third-party platforms to other companies, that includes the third-party music platforms and Tencent Group, and sales of digital music albums to users. The revenue from social entertainment services and others grew by 44.3% on the back of the revenue growth in both the company’s online karaoke and live streaming services.
Moreover, TME continued to boost product innovation and technological by (i) launching the Grab the Mic feature to further improve user engagement on the WeSing app (ii) utilizing more singing contest features to help emerging live streaming performers achieve better user-to-follower conversion rates (iii) adding more audio settings including ones that mimic virtual surroundings; and (iv) enhancing music content tagging capabilities to increase the accuracy of recommendation algorithms.
Also, Tencent Music has named Zhenyu Xie, co-president and board member, as the chief technology officer (CTO). Linlin Chen, a group vice president, has been appointed to oversee the company’s Kugou business and Lixue Shi, a group vice president, has been appointed to oversee the company’s Kuwo business.