腾讯-2019年Q1腾讯音乐财报（英文）-2019.5-6页.pdf

Tencent MusicTencent Music Entertainment Group Announces First Quarter 2019 Unaudited Financial ResultsSHENZHEN,China,May 13,2019/PRNewswire/-Tencent Music Entertainment Group(Tencent Music,TME,or the Company)(NYSE:TME),the leading online music entertainment platform in China,today announced its unaudited financial results for the first quarter endedMarch 31,2019.Financial HighlightsIn the three months ended March 31,2019:Revenues were RMB5.74 billion(US$855 million),an increase of 39.4%year-over-year.Operating profit was RMB1.15 billion(US$171 million),an increase of 22.9%year-over-year.Net profit attributable to equity holders of the Company increased by 17.4%year over year to RMB987 million(US$147 million).Non-IFRS net profit attributable to equity holders of the Company(excluding amortization of intangible assets and other assetsarising from business combinations,share-based compensation expenses,net gains or losses from investments,and fair value changeon puttable shares)increased by 14.9%year over year to RMB1.20 billion(US$179 million).We started 2019 with solid first quarter results and strong growth,stated Mr.Cussion Pang,Chief Executive Officer of Tencent Music.Ourbusinesses recorded healthy growth rates driven by product innovation,content diversification,and technological advancement.During thepast few quarters,we constantly expanded our online music subscriber base while steadily increasing our subscriber retention rate.As ourusers increasingly consume music content through streaming services,we are riding on this trend to gradually transition into a pay-for-streaming model over the coming years.We also strengthened our market leadership in music-centric social entertainment by focusing onproduct innovation and enhancing user experience through data analytics.We remain committed to investing in the provision of premiumcontent as well as innovative product features.We believe that these investments will significantly enhance the level of user engagement forour services and sustain our long-term growth going forward.Mr.Tony Yip,Chief Strategy Officer of Tencent Music,remarked,In the first quarter of 2019,both online music and social entertainmentservices maintained a healthy growth trajectory.Regarding content development,we not only forged additional partnerships with industry-leading music labels but also strengthened cooperation with other labels to promote and distribute original soundtrack music for popularmovies and TV shows.We added additional video and long-form audio formats to our content offering.For product development,wecontinued to launch social media initiatives and additional lite versions of our apps to attract a broader group of users.We alsodeveloped innovative ways for users to enjoy personalization by consistently improving our music content tagging process and analyzing ourplatforms data repository to better fulfill users music tastes and preferences.All of these initiatives are strategic,long-term investmentsthat will improve our user experience,attract more customers,and increase monetization capabilities going forward.We delivered solid financial results in the first quarter with revenues growing 39.4%year over year to RMB5.74 billion,while non-IFRS netprofit attributable to equity holders of the Company reached RMB1.2 billion,commented Ms.Shirley Hu,Chief Financial Officer of TencentMusic.We generated RMB926 million in operating cash flow in the quarter and as of March 31,2019,the combined balance of theCompanys cash and cash equivalents and term deposits amounted to RMB18.1 billion.Our strong profitability and cash flow enable us tocontinue investing in our products and content offering.These investments will help to expand our user base and improve user engagement,both of which are vital to our sustainable growth.We are confident that such efforts will create long-term shareholder value as well asincrease return on capital for investors.Company and business HighlightsTMEs key operating metrics*continue to grow across both online music and social entertainment services segments.1Q191Q18YoY%Mobile MAU-online music(million)6546254.6%Mobile MAU-social entertainment(million)2252240.4%Paying users-online music(million)28.422.327.4%Paying users-social entertainment(million)10.89.612.5%Monthly ARPPU-online music(RMB)8.38.4(1.2%)Monthly ARPPU-social entertainment(RMB)127.599.528.1%The Company continued to expand its industry-leading music library.As of March 31,2019,the Companys music library included over35 million tracks from domestic and international music labels.In the first quarter of 2019,the Company further solidified its leadership in content offering through the following initiatives:(i)establishing a strategic partnership with SM Entertainment Group,a premier music label in Asia that owns one of the largest musicrepositories in Korea;(ii)forging partnerships with other music labels to promote the original soundtrack music of popular movies andTV shows;(iii)collaborating with the Companys music label joint venture partner to release a highly popular song,which was streamedseveral hundred million times;and(iv)diversifying content offering through the addition of video content as well as long and short formaudio content,including talk shows,audiobooks,comedy sketches,and movie review shows.The Company continued to drive product innovation and technological advancement to further expand its monetization capabilities inthe following ways:(i)launching the Grab the Mic feature to further improve user engagement on the WeSing app;(ii)utilizing moresinging contest features to help emerging live streaming performers achieve better user-to-follower conversion rates;(iii)adding moreaudio settings including ones that mimic virtual surroundings;and(iv)enhancing music content tagging capabilities to increase theaccuracy of recommendation algorithms.*For the definitions of the above operating metrics,please refer to the introduction section in the Companys 20F filed on April 19,2019.First quarter 2019 Financial ResultsRevenuesTotal revenues for the first quarter of 2019 increased by RMB1.62 billion,or 39.4%,to RMB5.74 billion(US$855 million)from RMB4.12 billionin the same period of 2018.Revenues from online music services for the first quarter of 2019 increased by 28.0%to RMB1.61 billion(US$239 million)from RMB1.25billion in the same period of 2018,which was mainly driven by increased revenues from(i)user subscriptions;(ii)sublicensing musiccontent to other companies,including third-party music platforms and Tencent Group;and(iii)sales of digital music albums.Revenuefrom paid music through sales of subscription packages was RMB710 million(US$106 million),up from RMB565 million in the firstquarter of 2018.Revenues from social entertainment services and others for the first quarter of 2019 increased by 44.3%to RMB4.13billion(US$616million)from RMB2.86 billion in the same period of 2018,primarily driven by revenue growth in both online karaoke and live streamingservices.The Company expanded its paying user base by 12.5%and increased ARPPU by 28.1%in the first quarter of 2019,comparedto the same period of 2018.Cost of RevenuesCost of revenues for the first quarter of 2019 increased by 52.2%to RMB3.70 billion(US$552 million)from RMB2.43 billion in the sameperiod of 2018,primarily due to the increase in content fees and revenue sharing fees.The increase in content fees was mainly attributableto the increase in both market price and amount of music content licensed from music labels and other content partners,as well asincreased investments in the production of high-quality original music content.The increase in revenue sharing fees reflected the growth inthe Companys social entertainment services and the higher percentage of revenue contribution from professionally generated contentproviders.Gross ProfitGross profit for the first quarter of 2019 increased by 20.8%to RMB2.03 billion(US$303 million)from RMB1.68 billion in the same period of2018.Gross margin was 35.4%for the first quarter of 2019.Operating Expenses for the PeriodTotal operating expenses for the first quarter of 2019 increased by RMB229 million,or 28.3%,to RMB1.04 billion(US$155 million)fromRMB810 million in the same period of 2018.The ratio of operating expenses over revenue improved to 18.1%in the first quarter from 19.7%in the first quarter of 2018.Selling and marketing expenses for the first quarter of 2019 were RMB437 million(US$65 million),representing an increase of 20.1%year-over-year from RMB364 million in the same period of 2018.The increase was primarily due to increased spending to promote theCompanys brands,products,and content offering.General and administrative expenses for the first quarter of 2019 were RMB602 million(US$90 million),representing an increase of35.0%year-over-year from RMB446 million in the same period of 2018.The increase was mainly attributable to higher employee benefitexpenses,resulting from the increase in the scale and salary level of the Companys personnel.Operating profit for the PeriodOperating profit increased by 22.9%to RMB1.15 billion(US$171 million)in the first quarter of 2019 from RMB933 million in the same periodof 2018.Net Profit and Non-IFRS Net profit for the PeriodNet profit attributable to equity holders of the Company for the first quarter of 2019 was RMB987 million(US$147 million),compared toRMB841 million in the same period of 2018.Non-IFRS net profit attributable to equity holders of the Company was RMB1.20 billion(US$179million)for the first quarter of 2019,compared to RMB1.05 billion in the same period of 2018.Please refer to the section titled Non-IFRSFinancial Measure for details.Earnings per ADSBasic and diluted earnings per American Depositary Shares(ADS)were RMB0.61(US$0.09)and RMB0.59(US$0.09),respectively,for thefirst quarter of 2019.Excluding amortization of intangible assets and other assets arising from business combinations,share-basedcompensation expenses,net losses from investments,and fair value change on puttable shares,non-IFRS basic and diluted earnings perADS were RMB0.74(US$0.11)and RMB0.72(US$0.11),respectively,for the first quarter of 2019.During the first quarter of 2019,theCompany had weighted averages of 1.62 billion basic and 1.67 billion diluted ADSs outstanding,respectively.Each ADS represents two ofthe Companys Class A ordinary shares.Cash FlowNet cash provided by operating activities for the first quarter of 2019 was RMB926 million(US$138 million),compared to RMB74 million ofcash provided by operating activities during the same period of 2018.Net cash used in investing activities for the first quarter of 2019 wasRMB3.41 billion(US$508 million),compared to RMB322 million during the same period of 2018.The Company invested RMB3.4 billion(US$507 million)in term deposits during the first quarter of 2019.Cash and Cash EquivalentsAs of March 31,2019,the combined balance of the Companys cash and cash equivalents and term deposits amounted to RMB18.10 billion(US$2.70 billion),compared to RMB17.36 billion as of December 31,2018.The increase in cash and cash equivalents was primarily due tocash flow generated from operations of RMB926 million(US$138 million).The Companys cash and cash equivalents balance was alsoaffected by the change in the exchange rate of RMB to USD at different balance sheet dates.The exchange rate was 6.7112 to 1 on March29,2019,and 6.8755 to 1 on December 31,2018.Conference Call InformationTencent Musics management will hold a conference call on Monday,May 13,2019,at 8:00 P.M.Eastern Time or 8:00 A.M.Beijing Time onTuesday,May 14,2019,to discuss the financial results.Listeners may access the call by dialing the following numbers:United States TollFree:+1-888-317-6003International:+1-412-317-6061China Toll Free:400-120-6115Hong Kong Toll Free:800-963-976Access Code:1950032The replay will be accessible through May 20,2019,by dialing the following numbers:United States TollFree:+1-877-344-7529International:+1-412-317-0088Access Code:10130638A live and archived webcast of the conference call will also be available at the Companys investor relations website athttps:/ RateThis announcement contains translations of certain RMB amounts into U.S.dollars(USD)at specified rates solely for the convenience of thereader.Unless otherwise stated,all translations from RMB to USD were made at the rate of RMB6.7112 to US$1.00,the noon buying rate ineffect on March 29,2019,in the H.10 statistical release of the Federal Reserve Board.The Company makes no representation that the RMBor USD amounts referred could be converted into USD or RMB,as the case may be,at any particular rate or at all.For analyticalpresentation,all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.Non-IFRS Financial MeasureThe Company use non-IFRS net profit for the year/period,which is a non-IFRS financial measure,in evaluating its operating results and forfinancial and operational decision-making purposes.Tencent Music believes that non-IFRS net profit helps identify underlying trends in theCompanys business that could otherwise be distorted by the effect of certain expenses that the Company includes in its profit for theyear/period.Tencent Music believe that non-IFRS net profit for the year/period provides useful information about its results of operations,enhances the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metricsused by its management in its financial and operational decision-making.Non-IFRS net profit for the year/period should not be considered in isolation or construed as an alternative to operating profit,net profit/lossfor the year/period or any other measure of performance or as an indicator of its operating performance.Investors are encouraged to reviewnon-IFRS net profit for the year/period and the reconciliation to its most directly comparable IFRS measure.Non-IFRS net profit for theyear/period presented here may not be comparable to similarly titled measures presented by other companies.Other companies maycalculate similarly titled measures differently,limiting their usefulness as comparative measures to the Companys data.Tencent Musicencourages investors and others to review its financial information in its entirety and not rely on a single financial measure.Non-IFRS net profit for the year/period represents profit for the year excluding a share-based accounting charge in respect of the issuance ofordinary shares to music label partners,share-based compensation expenses,net loss from investments,amortization of intangible andother assets resulting from the business combinations,and fair value change on liabilities of puttable shares.Please see the Unaudited Non-IFRS Financial Measure included in this press release for a full reconciliation of Non-IFRS net profit for theyear/period to its net profit/loss for the year/pe