Q2 2026 Tencent Music Entertainment Group Earnings Call Transcript
Key Points
- Revenue from music-related services grew 11% year-over-year, driven by strong membership and offline performance growth.
- The consolidation of Ximalaya expanded TME's content ecosystem, adding premium audiobooks and podcasts, and contributed RMB0.4 billion to Q2 revenue.
- IP-related consumption services, including live events and artist merchandise, delivered strong double-digit year-over-year growth.
- SVIP membership program continued to expand, with diversified benefits driving higher user adoption, ARPPU, and retention.
- Deepened integration with Tencent ecosystem, including Weixin Video Accounts and XiaoWei AI, expanded user reach and engagement.
- Advertising business faced headwinds due to a challenging macro environment and competitive market, impacting ad-supported model.
- Subscription revenue growth moderated in Q2, excluding Ximalaya, due to competitive pressures on casual and light users.
- Gross margin slightly declined to 44.2% from 44.4% year-over-year, impacted by revenue mix from growing offline performance services.
- Operating expenses increased to 14.5% of total revenues from 13.7% year-over-year, partly due to Ximalaya consolidation and intangible amortization.
- Management expects gross margin to decrease slightly year-over-year in the second half of 2026, with net margin also expected to decline slightly.
Good evening, good morning, and welcome to Tencent Music Entertainment Group's second-quarter 2026 earnings conference call. I'm Millicent, Head of IR. We announced our quarterly financial results earlier today before the US market opened. The earnings release is now available on our IR website and via Newswire services.
During today's call, you'll hear from Mr. Kar Shun Pang, our Executive Chairman; and Mr. Ross Liang, our CEO. He will share an overview of the company's strategies and business updates. Then Ms. Shirley Hu, our CFO, will discuss our financial results before we open the call for questions.
Before we continue, I refer you to the Safe Harbor statement in our earnings release, which applies to today's call as we make forward-looking statements. Please note that we discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under IFRS in our earnings release and filings with the SEC.
All participants are on mute at this time.
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