Tencent Music Plummets Over 20%, Will Stop Disclosing Quarterly User Numbers

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Half a day plunge of 22.73%, closing at HKD 44.2 at noon. After announcing its earnings, Tencent Music (01698.HK) sharply declined on March 18.

Tencent Music’s (01698.HK) full-year earnings report shows that the company’s monthly active members decreased, subscription business slowed, and overall performance slightly missed market expectations. Starting next quarter, the company will stop disclosing some quarterly operational user data, raising investor concerns.

Industry insiders told Yicai that market expectations for emerging internet companies like Tencent Music were high, and performance slightly below expectations triggered a sell-off. The decision to stop disclosing quarterly user data is seen as reducing transparency, which worsens investor worries. Investors should prepare for risks and diversify investments as more tech companies release their earnings.

Financial Data Slightly Below Expectations

Q4 2025 financial data shows Tencent Music’s total revenue was RMB 8.64 billion, up 15.9% year-over-year. Online music service revenue increased 21.7% YoY to RMB 7.1 billion, subscription revenue grew 13.2% YoY to RMB 4.56 billion, non-subscription online music revenue rose 40.8% YoY to RMB 2.54 billion, and net profit attributable to shareholders was RMB 2.2 billion, up 12.6%. Non-IFRS net profit attributable to shareholders was RMB 2.49 billion, up 9.0%.

For the full year 2025, the company disclosed total revenue of RMB 32.9 billion, a 15.8% increase. Online music service revenue grew 22.9% YoY to RMB 26.73 billion, subscription revenue increased 16% to RMB 17.66 billion, non-subscription revenue rose 39.2% to RMB 9.07 billion. Net profit was RMB 11.06 billion, up 66.4%, mainly due to a one-time investment disposal gain of RMB 2.37 billion recognized in the first quarter.

CICC believes Tencent Music’s Q4 net profit (RMB 2.49 billion) was slightly below its forecast (RMB 2.53 billion), mainly due to lower-than-expected interest income. Considering AI music development, industry competition, and the company’s diversified music ecosystem, it is expected that online music revenue in Q1 2026 will grow about 11.5% YoY, with structural differentiation: subscription revenue up 6% and non-subscription revenue up 26%.

Guotai Junan Securities international strategist Wu Lixian told Yicai that Tencent Music’s previous growth trend was strong, and the market’s expectations for Q4 earnings were relatively high, but actual results fell short. Although the company’s fundamentals are stable, concerns about AI development impacts in the US and Hong Kong markets have affected stock performance. On March 18, the stock price broke downward, putting short-term pressure on the stock.

Discontinuation of Some Quarterly User Data Disclosure

Among Tencent Music’s disclosures, more concerning is the Q4 “monthly active users—online music services (used at least once that month)” which declined 5% YoY to 528 million. Meanwhile, average revenue per paying user increased 7.2% to RMB 11.9.

In the revised disclosure plan, Tencent Music states that at IPO, it used paid subscription users and average revenue per paying user as key operational indicators. However, in recent years, the business model has changed significantly. With the expansion of advertising and other IP-related businesses, and the company’s multi-tiered membership services for online music subscriptions, the contribution of each paying member varies. Therefore, the company is increasingly focusing on revenue and profit as core performance metrics. Starting next quarter, it will stop disclosing quarterly operational metrics such as online music monthly active users, paying users, and average revenue per paying user, and will only disclose the total number of paid music service users once a year at year-end.

Tencent Music Entertainment Group CEO Liang Zhu said that in 2025, the company effectively promoted subscription conversions, increased user activity and spending share. The number of super members exceeded 20 million, and average revenue per paying user continued steady growth. Recently launched advertising and membership subscription plans have also made initial progress, helping to further expand user reach and attract new audiences.

Wu Lixian believes that reducing disclosure frequency decreases the market’s ability to monitor daily operations, which is one reason for the stock price decline. However, from another perspective, less frequent disclosures do not necessarily mean operational decline; it reflects the company’s strategic choice, while investors’ information needs may differ.

A private equity professional in Guangzhou told Yicai that the discontinuation of quarterly user data may also indicate reduced transparency, which is one reason some investors are selling. If the company provided both average user spending and total user numbers, investors could better understand the development trend.

Tencent Holdings (00700.HK) will release its Q4 and full-year 2025 earnings on the evening of March 18. Latest holdings data show Tencent Holdings owns nearly 53% of Tencent Music. Many constituents of the Hang Seng Tech Index will also release their full-year results this week and next.

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