Tencent Music Entertainment Group: Strong Q2 2025 Performance and Positive Outlook Boosts Buy Rating

Tencent Music Entertainment Group reported strong Q2 2025 performance with an 18% YoY increase in total revenue and a 37% rise in non-IFRS net income, surpassing Bloomberg's consensus estimates. Analyst Saiyi He of CMB International Securities maintained a Buy rating with a price target of $29.50 due to the company's robust expansion of non-subscription music revenue and emerging opportunities in the music industry.

Tencent Music Entertainment Group (TME) reported robust financial results for the second quarter of 2025, with total revenue increasing by 18% year-over-year (YoY) to RMB 8.44 billion (US$1.18 billion), surpassing Bloomberg's consensus estimates. The company's non-IFRS net income rose by 37% to RMB 2.409 billion (US$359 million), driven by strong performance in online music services and strategic management actions. Analyst Saiyi He of CMB International Securities maintained a Buy rating with a price target of $29.50, attributing the positive outlook to TME's expansion of non-subscription music revenue and emerging opportunities in the music industry [1].

Revenue from online music services, which includes music subscriptions and SVIP premium offerings, rose 26.4% YoY to RMB 6.85 billion (US$957 million). Music subscription revenue increased by 17.1% YoY to RMB 4.38 billion (US$611 million), while monthly average revenue per paying user (ARPPU) climbed to RMB 11.7 from RMB 10.7 in the same period last year. The number of paying users increased by 6.3% to 124.4 million, despite a 3.2% decrease in monthly active users to 553 million [2].

TME expanded its content ecosystem through strategic partnerships with K-pop companies The Black Label and H M Music, as well as collaborations with Chinese star Wang Feng and SM Entertainment. The company also staged live events, such as G-Dragon's concert tour in Macau, which drew 36,000 fans and sold out merchandise. Additionally, TME launched new features like Viper HiFi and one-click audio enhancement 2.0 on Kugou Music, along with an AI Chorus tool, to enhance user experience [2].

Executive Chair Cussion Pang and CEO Ross Liang highlighted the company's focus on product innovation and user experience, noting that SVIP subscribers recently surpassed 15 million. This milestone reflects the deep trust and loyalty of users, driving solid growth in the online music business [2].

TME's earnings release and strategic management actions likely added weight to the broader market gains, supporting its notable price movement. The company's strong performance and strategic initiatives position it well for continued growth in the music entertainment space [1].

References:
[1] https://variety.com/2025/music/news/tencent-music-q2-revenue-2025-1236487221/
[2] https://www.ainvest.com/news/tencent-music-entertainment-group-reports-q2-2025-net-income-cny-2-409-million-2508/