Tencent Music Entertainment Group reported its fourth‑quarter and full‑year 2025 results on March 17, 2026. Total revenue rose 15.9% year‑over‑year to RMB8.64 billion (US$1.24 billion), beating the consensus estimate of RMB8.44 billion. The beat was driven by a 21.7% increase in online music services revenue to RMB7.1 billion, a 13.2% rise in subscription revenue to RMB4.56 billion, and a 40.8% jump in other music‑related services to RMB2.54 billion. Gross margin expanded to 44.7% from 43.6% in the same quarter of 2024, reflecting a higher‑margin subscription mix and a lower revenue‑sharing ratio in social entertainment.
The company’s non‑IFRS diluted earnings per share fell short of expectations, reporting RMB1.41 (US$0.20) versus the consensus of RMB1.54 (US$0.23). The 8.4% miss was largely attributable to higher operating costs and a modest decline in advertising revenue, which offset the gains in subscription and other services. While revenue growth was strong, the EPS miss signals that the company’s cost base is not fully aligned with its revenue expansion.
Monthly active users declined 5% to 528 million, a drop that management attributed to competition from short‑form video platforms such as ByteDance’s Douyin. Paying users grew 5.3% to 127.4 million, and the average revenue per paying user rose 7% to RMB11.9. In response to the user‑engagement trend, TME announced it will discontinue quarterly reporting of MAU, paying users, and ARPPU, instead reporting total paying users annually. The shift signals a strategic focus on revenue and profit metrics over user‑engagement metrics.
Management highlighted the company’s dual‑engine strategy. Executive Chairman Cussion Pang said, "In 2025, we remained disciplined in executing our dual engine content and platform strategy, delivering accelerated revenue growth and sustained margin expansion. Our differentiated all‑in‑one music service platform has built a solid subscription growth and strong momentum across…" CEO Ross Liang added, "Our newly launched ad‑supported subscription plan is gaining initial progress and will, over time, allow us to broaden user access and attract audiences." Liang also noted, "Product enhancements and a user‑centric strategy boosted subscriber growth, engagement, and spending, with the SVIP user base surpassing 20 million and ARPPU rising."
The market reaction was negative, with investors focusing on the 5% decline in MAU and the EPS miss as key concerns. Despite the revenue beat, the combination of a weaker earnings outlook and a shrinking user base weighed on sentiment.
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