Tencent Music Entertainment is increasingly incorporating artificial intelligence into music discovery, with upgraded AI agents inside QQ Music and Kugou Music now acting as personal DJs that create personalized playlists in real time.
The AI agents are designed to respond dynamically to what users want to hear in a given moment, forming part of Tencent Music’s broader effort to make discovery more personalized and increase engagement across its music platforms.
The AI rollout is occurring alongside Tencent Music’s integration of Ximalaya, which the company acquired on May 18. Ximalaya generated RMB407 million, or approximately $60 million, of revenue from the acquisition date through the end of Q2.
Tencent Music said Ximalaya’s long-form audio library broadens its user reach and strengthens its SVIP offering. The companies have begun backend integration work intended to generate operational efficiencies over time.
Overall Q2 revenue increased 5.8% to RMB8.93 billion, or approximately $1.32 billion. Music-related services revenue increased 11% to RMB7.61 billion, while membership revenue increased 8.1% to RMB4.79 billion.
The consolidation of Ximalaya contributed to membership revenue growth and had a positive impact on quarterly gross margin. Tencent Music’s overall gross margin was 44.2% compared with 44.4% a year earlier.
Tencent Music is also expanding monetization of music intellectual property beyond subscriptions. Concerts, offline performances, artist merchandise and physical releases are increasingly part of its music-related services strategy. The company reported robust year-over-year growth in offline performance-related revenue.
The company hosted fan meetings in Macau for SM Entertainment trainee group SMTR25, expanded its TIMA international IP event to a larger venue and continued developing physical music merchandise and collectibles.
Adjusted EBITDA increased 5.2% to RMB3.25 billion, or approximately $480 million. Non-IFRS net profit attributable to equity holders increased 4.4% to RMB2.69 billion, or $396 million. Tencent Music ended June with RMB44.22 billion, or approximately $6.52 billion, of cash, cash equivalents, term deposits and short-term investments.
KEY QUOTES:
“Amid a rapidly evolving market, we remain steadfast in building an ecosystem where our users can discover, connect, and be inspired through music and audio experiences.”
“The addition of Ximalaya is an exciting milestone that will allow us to deliver an even richer audio experience and serve our users more effectively.”
Ross Liang, CEO Of Tencent Music Entertainment
