Tencent Music Entertainment Group Q4 FY2024 earnings call

• Content ecosystem: Vast library of over 260 million licensed tracks, renewed contracts with international labels, partnerships with Chinese artists, and production of soundtracks for video and movies.
• User experience innovations: AI-powered audio effects, music navigation in maps, in-car entertainment features, virtual fan communities, and interactive advertising.
• SVIP membership: Strong growth in membership and ARPPU, with added privileges like high-definition concerts and personalized experiences.
• ESG efforts: Support for female musicians and initiatives like 'writing songs for Pandas' to promote biodiversity awareness.

In the fourth quarter of 2024, online music revenues increased by 16% year-over-year to RMB5.8 billion. Music subscription revenues in Q4 2024 reached RMB4 billion, up 18% year-over-year. The number of online music paying users was 121 million, a 13% year-over-year increase. For the full year 2024, total revenues were RMB28.4 billion, up 2% y-o-y. Revenues from online music services were RMB21.7 billion, up 25% y-o-y. Music subscription revenues for the full year were RMB15.2 billion, up 26% y-o-y.

• Focus on strengthening the music value chain in 2025 to offer diverse and engaging experiences.
• Optimistic about online music growth driven by increasing paying users and ARPPU.
• Continue to explore new business opportunities in content ecosystem, IoT, long-form audios, and international markets.
• Expect gross margin to continue expanding due to factors like subscription and advertising revenue growth, content scoring, and cost optimization.

Q: Can management share guidance on 2025 growth outlook, especially for music subscription revenue growth, net add expectations, and advertising growth?

A: In 2025, will focus on strengthening business across the music value chain, optimistic about growth trajectory, online music expected to see healthy growth from paying users and ARPPU, and explore new opportunities like content ecosystem, IoT, etc.

Q: What's the balance between subscriber and ARPU growth and priority?

A: Subscriber number and ARPPU will continue to grow, not sacrificing interest for short-term growth, leveraging content and product portfolio to drive ARPPU growth, SVIP business expected to advance with high user retention.

Q: Any consumer sentiment changes towards discretionary spending like music and concerts?

A: Fans seek live concerts and merchandise, music live shows business in China to continue strong, market size and ticket price stable in 2025 but with higher user expectations for quality shows.

Q: Strategy around AI in 2025 and financial implications?

A: Leveraging DeepSeek in products, using AI for better user interactions, audio technology improvement, controllable cost in AI investment, and continuing to invest in AI applications for user experience and revenue/margin benefits.

Q: Sequential revenue growth for social entertainment?

A: Q4 2024 saw growth due to new interactive features, compliance changes, stabilized size, and new futures like net earnings and VIP membership growth, but 2025 expected to be stabilized with possible downward trend but new innovations to complement.