Tencent’s Shift Deeper Into Music-Led Growth Drives Q2

China headquartered music streaming company Tencent Music Entertainment (TME) has released its Q2 results, demonstrating a continued shift toward higher-value music and IP businesses, with membership, concerts and the newly acquired Ximalaya driving growth as legacy social entertainment revenues decline.

Q2 revenue:

• TME reported revenue of RMB 8.93bn (USD $1.32bn), up 5.8% YoY.

• Adjusted EBITDA rose 5.2% to RMB 3.25bn (USD $480m).

Music drives growth:

• Music-related services revenue increased 11.0% to RMB 7.61bn (USD $1.12bn), now representing 85.1% of total revenue.

• Membership services grew 8.1% to RMB 4.79bn (USD $706m), supported by continued expansion of the higher-priced Super VIP tier.

Ximalaya adds scale:

• TME consolidated its $2.4bn acquisition of Ximalaya for the first time following its May 18 completion.

• Ximalaya contributed RMB 407m (USD $60m) in Q2 revenue, meaning some of the group’s growth was acquisition-driven.

IP monetization accelerates:

• Marketing and consumption services rose 16.2% to RMB 2.81bn (USD $415m), driven by strong growth in offline performances, alongside merchandise and other IP-driven experiences.

• TME highlighted events including SMTR25 fan meetings in Macau and its expanded TIMA event.

Legacy business declines:

• Social entertainment services, covering karaoke and livestreaming, fell 16.4% to RMB 1.33bn (USD $196m) as TME continues shifting toward music and IP-led revenues.

What they said:

• Cussion Pang, Executive Chairman of TME: “Our second-quarter results reflect the continued strength of our content-and-platform strategy. Concerts, merchandise, and other IP-driven experiences drove another quarter of solid growth in our marketing and consumption services, underscoring our ability to unlock greater value from premium music IP. Our expansion into digital audio through the integration of Ximalaya broadened our reach and enriched our ecosystem. As the industry evolves, we continue to champion copyright protection, foster a healthy ecosystem, and safeguard the value of creative work.”