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    TME
    Earnings call· Dec 2025(Q4 FY25)

    Tencent Music Entertainment Group Q4 FY25 earnings call TME

    Mar 17, 2026 Source

    Executive summary

    Tencent Music Q4 FY25 — Strong Revenue Growth Driven by Online Music Services and Non-Subscription Offerings

    Tencent Music Entertainment Group delivered robust Q4 FY25 results, driven by strong growth in online music services, particularly non-subscription offerings like advertising and merchandise. The company is strategically expanding its SVIP user base and leveraging AI for content creation and user experience, while navigating competitive pressures and a planned shift in reporting focus from subscriber counts to revenue and profit.

    Highlights

    6

    • Total revenues grew 15% year-on-year to RMB 8.6 billion in Q4 2025.

    • Revenues from online music services for FY25 grew 23% year-over-year to RMB 26.7 billion.

    • Music subscription revenues grew 13% year-on-year to RMB 4.6 billion in Q4 2025.

    • Revenues from music services other than music subscription grew 41% year-on-year to RMB 2.5 billion in Q4 2025.

    • Non-IFRS net profit attributable to equity holders increased 9% year-on-year to RMB 2.5 billion in Q4 2025.

    • SVIP users surpassed 20 million.

    Concerns

    4

    • Revenues from social entertainment service and others decreased 5% year-on-year to RMB 1.5 billion in Q4 2025.

    • Subscription revenue is expected to experience "short-term pressure" in 2026 due to intensive competition.

    • Gross profit margin in 2026 is expected to stay flat or be slightly lower than 2025.

    • Total net profit margin in 2026 is expected to be similar to or a bit lower than 2025.

    Guidance & targets

    3
    CategoryTargetConfidence
    Gross Profit Margin
    stay flat with 2025 or be a little bit lower than 2025
    high materiality
    Medium
    Net Profit Margin
    similar to 2025, might be a bit lower than 2025
    high materiality
    Medium
    Operating Metrics Disclosure
    discontinue quarterly disclosure of certain operating metrics; report total paying users annually at year-end
    high materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Online Music Services
    Full year 2025 revenue growth driven by strong growth in music subscription revenues supplemented by growth in revenues from off-line performances, advertising services and artist-related merchandise.
    		RMB 26.7 billion23%——
    Music Subscription
    Q4 2025 revenue growth driven by a multi-pronged membership system (ad-supported, standard, SVIP) increasing user retention and growth.
    		RMB 4.6 billion13%——
    Music Service (other than subscription)
    Q4 2025 revenue growth driven by advertising revenue and artist-related merchandise sales.
    		RMB 2.5 billion41%——
    Social Entertainment Service and Others
    Q4 2025 revenue decline.
    		RMB 1.5 billion-5%——
    Social Entertainment Service
    Full year 2025 revenue growth.
    		—7%——

    Operational metrics

    33
    Total revenues
    RMB 8.6 billionup 15% year-on-year
    Q4 2025

    Total revenues for the fourth quarter of 2025.

    Gross margin
    44.7%up 1.1 percentage points year-on-year
    Q4 2025

    Gross margin for the fourth quarter of 2025, mainly attributable to strong growth in music subscription and advertising revenues, alongside a lower revenue sharing ratio in social entertainment services.

    Operating expenses
    RMB 1.2 billion
    Q4 2025

    Total operating expenses for the fourth quarter of 2025, compared with 15.7% in the same period of last year.

    Selling and marketing expenses
    RMB 266 millionup 7% year-on-year
    Q4 2025

    Primarily due to higher channel spending and content promotion expenses.

    General and administration expenses
    RMB 981 millionup 6% year-on-year
    Q4 2025

    Primarily due to growth in employment-related expenses.

    Effective tax rate
    70.5%
    Q4 2025

    Effective tax rate for the fourth quarter of 2025.

    Net profit
    RMB 2.3 billionincreased by 10%
    Q4 2025

    Net profit for the fourth quarter of 2025.

    Net profit attributable to equity holders
    RMB 2.2 billionincreased by 13%
    Q4 2025

    Net profit attributable to equity holders of the company for the fourth quarter of 2025.

    Non-IFRS net profit
    RMB 2.6 billionincreased by 8%
    Q4 2025

    Non-IFRS net profit for the fourth quarter of 2025.

    Non-IFRS net profit attributable to equity holders
    RMB 2.5 billionincreased by 9%
    Q4 2025

    Non-IFRS net profit attributable to equity holders of the company for the fourth quarter of 2025.

    Diluted earnings per ADS
    RMB 1.41up 12% year-on-year
    Q4 2025

    Diluted earnings per ADS for the fourth quarter of 2025.

    Non-IFRS diluted earnings per ADS
    RMB 1.6up 9% year-on-year
    Q4 2025

    Non-IFRS diluted earnings per ADS for the fourth quarter of 2025.

    Cash, cash equivalents, term deposits and short-term investment
    RMB 38 billioncompared to RMB 36.1 billion as of Sep 30, 2025
    as of Dec 31, 2025

    Combined balance affected by changes in the exchange rate of RMB to USD at different balance sheet dates.

    Total revenues
    RMB 32.9 billionup 16% year-over-year
    FY25

    Total revenues for the full year 2025.

    Music subscription revenues
    RMB 17.7 billionup 16% year-over-year
    FY25

    Full year 2025 music subscription revenues, primarily driven by continuous expansion of membership priorities.

    Gross margin
    44.2%up 1.9 percentage points year-over-year
    FY25

    Gross margin for the full year 2025.

    Total operating expenses
    RMB 4.9 billionup 4% year-over-year
    FY25

    Full year 2025 total operating expenses, primarily due to growth in employee-related expenses and higher content promotion expenses and channel spending.

    Net profit
    RMB 11.4 billionincreased by 60%
    FY25

    Net profit for the full year 2025.

    Net profit attributable to equity holders
    RMB 11.1 billionincreased about 66%
    FY25

    Net profit attributable to equity holders of the company for the full year 2025.

    Gain from disposal of associate
    RMB 2.4 billion
    Q1 2025

    Recognized gain from the disposal of an associate in the first quarter of 2025.

    Non-IFRS net profit
    RMB 9.9 billionincreased by 22%
    FY25

    Non-IFRS net profit for the full year 2025.

    Non-IFRS net profit attributable to equity holders
    RMB 9.6 billionincreased by 25%
    FY25

    Non-IFRS net profit attributable to equity holders of the company for the full year 2025.

    Cash dividend per ordinary share
    USD 0.12
    FY25

    Cash dividend declared in March 2026 for the year ended December 31, 2025.

    Cash dividend per ADS
    USD 0.24
    FY25

    Cash dividend declared in March 2026 for the year ended December 31, 2025.

    Total cash dividend
    USD 368 million
    FY25

    Total cash dividend expected to be paid in the second quarter of 2026.

    SVIP users
    over 20 million
    as of Q4 2025

    SVIP users surpassed the 20 million milestone, achieved in just 2 years.

    WeSing large front mode adoption
    exceeding 50%
    Q4 2025

    Adoption rate for WeSing's upgraded large front mode.

    AI music production platform users
    over 10 million
    Q4 2025

    Number of users on TME's one-stop AI music production platform.

    AI music production platform professional creators
    over 150,000
    Q4 2025

    Number of professional creators using TME's one-stop AI music production platform.

    IP-related merchandise and fan-based consumption revenue
    more than doubled
    2025

    Revenue growth for IP-related merchandise and fan-based consumption in 2025.

    G-DRAGON's World Tour attendance
    over 260,000
    2025

    Total attendance for G-DRAGON's World Tour across Asia Pacific.

    G-DRAGON's Taipei Dome shows attendance
    over 75,000
    Q4 2025

    Attendance for two landmark shows at the Taipei Dome in the fourth quarter.

    CMG Spring Festival Gala songs streams
    surpassing 10 million
    Q4 2025

    Multiple tracks from co-produced songs featured on the 2026 CMG Spring Festival Gala quickly went viral.

    Industry KPIs

    7
    MetricValueDetails
    ARPU armtrending slightly upward
    Paid members subscribersover 20 millionusers
    Member quality and retention—
    Live sports events rights roi—
    Addressable market penetration—
    Share buyback capital returnedUSD 368 millionUSD
    Content spend title performanceover 260,000fans

    Product announcements

    8
    ProductTypeDetails
    QQ Music hearing protection modelaunch
    WeSing large front modeupdate
    QQ Music Weverse DMlaunch
    Bubble intelligent song recognitionupdate
    Live streaming for domestic artistslaunch
    New music report campaignupdate
    Yuanbao embedding into QQ Musicupdate
    QQ Music's AI agentupdate

    Deals & partnerships

    9
    Warner Music GroupRenewed contract

    Renewed contract exploring new avenues for physical albums, merchandise, and live performances.

    Bin MusicRenewed contract

    Renewed contract exploring new avenues for physical albums, merchandise, and live performances.

    Media Asian MusicDeepened alliance

    Introduced Dolby Atmos to over 300 iconic tracks by legendary artists, elevating the value of classics.

    P Nation CorporationRenewed partnership

    Secured a 30-day head-start benefit to new releases on top Korean artists and groups.

    Fine (indie band)Partnership

    Partnered with the indie band Fine, which has over 1 million followers, to drive community interaction among young users.

    Silence WangCollaboration for concerts

    Collaborated to deliver a series of successful concerts.

    Strategic artistsCooperation across music promotion, performances, merchandise

    Established cooperation with strategic artists to provide immersive experiences for fans and enrich SVIP privileges.

    TTIXCo-branded product

    QQ Music co-branded TTIX as part of enriched SVIP benefits.

    Chen Yixun, Silence Wang Sulong, and Zhou ShenCo-branding skins

    Co-branding skins with renowned artists for Kugou Music, adding to immersive listening experience and fan engagement.

    Risks & headwinds

    3
    Intensive competition in subscription business2026

    short-term pressure on subscription revenue

    Mitigation: Leveraging 3-tier membership system and vibrant non-subscription services for holistic and sustainable growth.

    Initial negative impact on GP margin from new business development

    minor negative impact

    Mitigation: Believes long-term diversification of services will generate higher ARPPU and improve content cost efficiency.

    AI-generated content challenges

    huge challenge

    Mitigation: Embracing AI to improve user experience, content creation, and promotion; spending efforts to educate the market on copyright infringement risks.

    What to watch in Q1 FY26

    5

    Subscription Revenue Trajectory

    next quarter
    Currentexpected short-term pressure in 2026
    Targetmitigation of pressure or stabilization

    Why it matters

    Subscription revenue is a core component of online music services, and its trajectory will indicate the effectiveness of TME's multi-tier membership system and competitive response.

    In year 2026, our subscription revenue will experience some short-term pressure due to the intensive competition. But we believe that our 3-tier membership and vibrant non-subscription services will allow us to grow historically, holistically and also sustainably.

    Q&A highlights

    5

    What is TME's strategic growth outlook for 2026, and how does the company plan to capture opportunities and address challenges from AI and growing industry competition?

    TME delivered solid 2025 results with healthy subscription growth and impressive non-subscription momentum. The 3-tier membership system and SVIP scaling to over 20 million users are key. Non-subscription offerings like live concerts and merchandise are expanding. While competition is not new, TME's content and platform strategy will drive high-quality growth. Subscription revenue may face short-term pressure in 2026, but diversified services will ensure holistic growth. AI will be embraced to improve user experience and content creation efficiency.

    “We remain focused on long-term value creation, and we believe that our unique content and platform strategy will continue to deliver the high-quality growth in a healthy way. Whether it's home or what we firmly believe that content will lasting value is IP-driven and robust IPs will always enjoy the long legacy and their value will be further enhanced through bought-in distribution, cross-media collaborations and diverse monetization opportunities and the rapid revenue growth of our expansive non-music subscription services over the past 2 years illustrated our strength and capability in this regard.”

    asked by Alicia Yap · answered by Unknown Executive

    2 min read6 chapters

    Detailed Narrative

    01

    Dual Engine Strategy & Content Advantage

    TME emphasizes its "dual engine content and platform strategy," leveraging an industry-leading music copyright portfolio and proprietary content. This includes renewed contracts with Warner Music Group and Bin Music, deepening alliances with Media Asian Music for Dolby Atmos tracks, and growing self-produced content. The company's unique content and platform ecosystem enables it to lead music consumption along the entire industry chain.

    02

    Expansion of Non-Subscription Offerings

    The company is seeing strong growth in non-subscription revenues, driven by high-quality live experiences, strategic artist collaborations across promotion and merchandise, and innovative merchandise formats. Examples include G-DRAGON's World Tour, which attracted over 260,000 fans, and the KIT album for Ed Sheeran. Revenues from IP-related merchandise and fan-based consumption more than doubled in 2025, contributing significantly to non-subscription growth.

    03

    SVIP Membership & User Engagement

    TME's multi-pronged membership system, including SVIP, standard, and ad-supported tiers, aims to drive conversion and engagement. SVIP users surpassed 20 million, with ARPPU trending slightly upward. The company uses brand ambassadors like Ryan Ding and Liu Yuning, exclusive perks, and co-branded initiatives to drive SVIP adoption and retention, fulfilling diverse user needs.

    04

    AI Integration Across Music Value Chain

    TME is harnessing AI to improve music creation, distribution, and consumption. Its one-stop AI music production platform is used by over 10 million users and 150,000 professional creators, accelerating music creation with features like AI-generated vocal demos. AI-driven recommendations have boosted stream share, and AI agents in QQ Music assist users with complex tasks from music discovery to purchases, enhancing user experience and conversion.

    05

    Strategic Shift in Reporting Metrics

    Reflecting its evolving business model and diversified monetization, TME will discontinue quarterly disclosure of certain operating metrics (paid subscribers, ARPPU) for online music services starting next quarter. Instead, the company will focus on revenue and profit as primary performance indicators and will report the total number of paying users across its music services annually at year-end.

    06

    Social Responsibility Initiatives

    TME integrates social responsibility into its core strategy, focusing on improving accessibility and inclusive design. Examples include QQ Music's new hearing protection mode for children, which uses AI to reduce harsh sounds, and WeSing's upgraded large front mode, which has seen adoption exceeding 50% among users, making products more user-friendly.

    AI-generated summary of the company’s earnings call. Not investment advice.