Rumour: Tencent Music’s revenue surges up by 91.5% year-on-year

TME revenue surges amidst plans to reduce IPO size.

Following media reports of Tencent Music Entertainment Group’s (TME) seeking less than earlier anticipated in its upcoming IPO, Sina Tech新浪科技) is now shedding some light on Tencent Music’s latest financial performance.

The music streaming giant who owns 3/4 of China’s music streaming market is said to have 700 million active users (MAU) on its platform. Around 17% of these are paying subscribers.

According to an unofficial report, which Sina Tech says was circulated among brokers, the company is expecting to achieve RMB 18 billion (US$ 2.6 billion) in revenue for 2018, essentially a 91.5% increase from the RMB 9.4 billion (US$ 1.4 billion) in revenue it made in 2017. TME’s revenue comes mainly via live broadcast, paying subscribers, and advertising.

More importantly, TME’s net profit is also growing at a compound annual growth rate (CAGR) of 148%. This is in contrast with competitor Spotify. In 2017, TME realized a net profit of RMB 1.9 billion (US$ 276 million), while the latter made a loss of US$ 1.48 billion.

Takeaways:

— There seems to be a growing disparity in TME’s financial performance and the market sentiments for its upcoming public debut. This might indicate how closely the market links TME’s performance with Tencent, which has seen some dramatic drops in recent months.

— This could be an important lesson for Chinese tech giants. The performance of the parent company can have an unspoken but strong influence on the other subsidiaries, even after a spin-off.

Editor: Nadine Freischlad