Tencent Music Entertainment Group reported a surge in revenues for its second quarter, however, the company warned a recent regulatory decision in China will impact its operations going forward.
In its results for the quarter ended June 30, reported overnight, the music streaming giant reported revenues in the period of around US$1.24bn, up 15.5% year-on-year, boosted by 32.8% growth in online music services revenues to US$277mln.
The revenue bounce was also supported by the number of online music paying users, which surged 40.6% in the period to 66.2mln.
Despite this, operating profits dipped in the quarter to US$160mln from US$171mln in 2020.
“In the second quarter, we delivered steady growth overall. Our strong momentum in online music monetization was supported by solid subscriptions and advertising revenue growth, while social entertainment services continued to progress at a good pace,” Tencent Music’s executive chairman Cussion Pang said in a statement.
Looking ahead, Pang warned that a decision by Chinese regulators in July to force the company to give up exclusive rights to music labels it uses to compete with smaller rivals in the country is expected to cause “some impact” to its business operations.
Despite this, the company said it will continue to broaden its content offering, with Pang saying the company has made “strategic upgrades” to the business model of its live streaming service TME Live to integrate “online concerts with offline events to offer differentiated services and solutions for artists ranging from notable superstars to up-and-coming and indie musicians”.
The strong revenue growth seemed to have overcome any regulatory worries for investors, with Tencent Music shares rising 3.4% to US$9.22 in after-hours trading on Wall Street.