Tencent Music Entertainment Group (NYSE:TME), based in China, announced a 5.5% year-on-year increase in second-quarter revenue on Tuesday. The growth was fueled by an uptick in user subscriptions. However, the company issued a warning that forthcoming revenue could dwindle due to the imposition of stricter controls on live-streaming activities.
During the quarter ending June 30, the music streaming company, often compared to Spotify, and controlled by Chinese tech titan Tencent Holdings Ltd (0700.HK), reported total revenue of 7.29 billion yuan ($1.00 billion), aligning with predictions from Wall Street and corroborated by Refinitiv data. The company achieved a significant milestone as the number of paying users for its online music streaming platform exceeded 100 million, marking a notable achievement.
Nevertheless, during an analyst call, the company disclosed the implementation of risk management measures across its live-streaming services, which could lead to a “low to mid-single-digit percent decrease” in total revenue this year compared to the previous year. Tencent Music’s stocks edged up by approximately 1% in New York as trading commenced on Tuesday.
Tony Yip, the Chief Strategy Officer, indicated that Tencent Music is presently making refinements to its live-streaming segment to proactively “manage potential risks that might arise for the platform in the future.” However, he refrained from elaborating on the nature of these risks.
Yip further explained that the company is in the process of “fine-tuning specific live streaming functionalities and implementing more rigorous compliance protocols,” citing their essential role in facilitating the “sound long-term evolution” of the platform.
Anticipating the next quarter, Yip projected “a low to mid-teens percent decrease” in the company’s total revenues in comparison to the corresponding period of the previous year. Despite this revenue projection, the company remained optimistic about profit growth for the current year. In the second quarter, the net profit attributable to equity holders surged to 1.30 billion yuan, up from 856 million yuan recorded a year earlier.
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