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- **Revenue Surge**: 21% YoY growth to RMB 8.5 billion, driven by 70% subscription expansion and triple-digit offline concert revenue.
- **SVIP Dominance**: ARPPU +9% to RMB 11.9, with SVIP benefits (DTS, Starlight cards) fueling premiumization.
- **Live Event Breakthrough**: G Dragon's 14-city tour and TMEA/TMA concerts highlight global artist monetization.
- **AI & Platform Edge**: Liquid glass themes, Automix, and AI assistants create differentiated user experiences.
- **Profitability Boost**: Gross margin up 0.9ppts to 43.5%, with disciplined expense control driving 28% non-IFRS profit growth.

**【Management Opening Remarks】**
- TME reported strong Q3 2025 results, driven by online music and offline performance growth.
- The call featured Executive Chairman Kar Shun Pang, CEO Liang Zhu, and CFO Min Hu, who outlined financials and strategic updates.
- Non-IFRS measures were emphasized, with forward-looking statements subject to safe harbor provisions.

**【CEO (Kar Shun Pang) Summary Section】**
- **Content Expansion**: Added 50 game soundtracks, partnered with King Records for anime music, and renewed contracts with Korean labels.
- **Live Concert Success**: G Dragon's 14-city tour drew 150,000 attendees, while TMEA and TMA concerts showcased international artist collaborations.
- **Artist Partnerships**: Integrated music into Tencent Games (e.g., *Honor of Kings* theme song) and expanded SVIP benefits with collectible albums and NFC cards.
- **ESG Initiatives**: 380,000 users participated in music education programs via WeSing points redemption.

**【CEO (Liang Zhu) Product & Strategy Update】**
- **AI & Platform Innovation**: Introduced liquid glass themes, HarmonyOS app alignment, and Automix for seamless sound transitions.
- **Subscription Growth**: SVIP penetration and ARPPU increased, with freemium users upgrading to ad-supported memberships.
- **Sound Quality & Features**: DTS external speakers and Starlight cards drove SVIP adoption, while AI assistants enabled personalized playlists.
- **Offline Integration**: Expanded Starlight cards to Hong Kong and Thailand, linking concerts with merchandise sales.

**【CFO (Min Hu) Financial Commentary】**
- **Revenue Growth**: Total revenue rose 21% YoY to RMB 8.5 billion, with online music up 27% to RMB 7 billion.
- **Subscription Dominance**: Music subscriptions grew 70% YoY to RMB 4.5 billion, driven by SVIP expansion (ARPPU +9% to RMB 11.9).
- **Gross Margin**: Improved to 43.5% (up 0.9ppts YoY), benefiting from subscription and ad growth, offset by lower-margin offline events.
- **Expenses**: Operating expenses fell to 15.5% of revenue, with disciplined spending on content promotion and employee costs.
- **Profitability**: Non-IFRS net profit rose 28% YoY to RMB 2.5 billion, with diluted EPS up 33% to RMB 1.44.

**【Q&A Highlights】**
- **2026 Outlook**: Subscription growth to slow from high base, but non-subscription (concerts, ads) will drive faster expansion.
- **Competition Strategy**: Differentiate via content depth (e.g., DTS sound quality), fan engagement (Starlight cards), and ecosystem integration.
- **Concert Pipeline**: 2026 will replicate G Dragon's success, with international tours and flagship events like TMEA.
- **Subscription Drivers**: SVIP penetration targets remain ambitious, with AI features lowering barriers to creative expression.
- **Gross Margin Risks**: Short-term pressure from offline events, but long-term diversification will stabilize margins.

Tencent Music Entertainment Group(TME)-20251112-2025 Q3 Earnings call transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

TME

TME fundamentals

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