Tencent Music Entertainment ( TME ) shares slid on Tuesday after the company posted fourth-quarter results.

Revenue came in at $1.24 billion, up 15.9% year-over-year (Y/Y), driven by robust growth in online music services. Analysts had projected $1.20 billion.

China's online music and audio entertainment platform's adjusted EPADS of 23 cents (1.60 Chinese yuan) topped the analyst consensus estimate of 21 cents.

Subscription Momentum and User Trends

Revenues from music subscriptions were $653 million, up 13.2% Y/Y.

Monthly active users (MAUs) for online music declined by 5.0% Y/Y to 528 million.

Paying users for online music grew by 5.3% Y/Y to 127.4 million.

The monthly average revenue per user (ARPPU) for online music grew by 7.2% Y/Y to 11.9 Chinese yuan.

Margins and Profitability Improve

Gross margin increased to 44.7% from 43.6%, primarily due to increased revenues from music subscriptions and advertising services, alongside a lower revenue sharing ratio for social entertainment services, and partly offset by increased revenues from offline performances.

Adjusted net profit was $355 million, up by 9.0% Y/Y.

Total cash, equivalents, term deposits, and short-term investments as of December 31, 2025, were $5.44 billion.

Executive Chairman Cussion Pang said TME executed its content and platform strategy in 2025 with strong revenue growth and expanding margins, driven by subscription gains and momentum in music IP beyond subscriptions.

He added that the company is building an integrated, all-in-one music platform to unlock more value from its content, create opportunities for artists, and expand its market reach, while maintaining a competitive edge through disciplined investment and innovation.

CEO Ross Liang said product enhancements and a user-focused strategy boosted subscriber growth, engagement, and spending, with the SVIP user base surpassing 20 million and ARPPU rising. He also said the new ad-supported subscription plan is gaining traction and is expected to expand access and attract new users over time.

TME Price Action: Tencent Music shares were down 11.46% at $13.36 during premarket trading on Tuesday, according to Benzinga Pro data.