Tencent Music posts strong Q4 profit but flags key metrics shift

<p>Tencent Music Entertainment Group (NYSE:TME) reported robust fourth-quarter earnings, driven by strong revenue growth in its online music business, but announced a change in disclosure of user metrics that sent its shares down more than 20% on Tuesday morning.</p>
<p>Total revenue for Q4 2025 rose 15.9% year-on-year to RMB8.64 billion (US$1.24 billion), boosted by a 21.7% jump in online music services to RMB7.10 billion (US$1.02 billion). Revenue from music subscriptions grew 13.2% to RMB4.56 billion (US$653 million), while other music-related services, including concerts, advertising, and artist merchandise, surged 40.8% to RMB2.54 billion (US$363 million).</p>
<p>Non-IFRS diluted earnings per American Depositary Share (ADS) reached RMB1.60 (US$0.23), up from RMB1.47 a year earlier, while IFRS diluted earnings per ADS increased to RMB1.41 (US$0.20) from RMB1.26.</p>
<p>CEO Ross Liang highlighted the company’s AI-driven initiatives and user-focused strategies. “Notably, driven by differentiated, expansive content privileges and immersive experiences, our SVIP user base surpassed 20 million, with ARPPU continuing to trend upward,” he said, adding that a newly launched ad-supported subscription plan is beginning to attract new audiences.</p>
<p>Despite the strong revenue and profit figures, Jefferies analysts flagged a key red flag: Tencent Music will discontinue disclosure of certain quarterly operating metrics, including monthly active users (MAU), paying users, and average revenue per paying user (ARPPU), starting next quarter. The company will report total paying users annually instead.</p>
<p>Jefferies noted that while the company continues to invest in music content and IP development, the focus on revenue and profit as primary performance indicators reduces transparency for investors tracking user engagement trends.</p>
<p>Q4 gross profit grew 19% year-on-year to RMB3.86 billion, with a non-IFRS net margin of 28.8%. Total monthly active users fell 5% year-on-year to 528 million, below analyst expectations.</p>
<p>Looking ahead, Tencent Music expects Q1 2026 revenue to decline 9% quarter-on-quarter but grow 7% year-on-year to RMB7.88 billion, with subscription and other music service revenues projected to continue steady growth amid a competitive market.</p>