06:20 AM EDT, 05/13/2024 (MT Newswires) -- Tencent Music Entertainment's ( TME ) first-quarter results topped analyst expectations, as paying users and revenue gains in the company's online music services segment countered declines in the social entertainment unit.

The Chinese music and audio entertainment platform's revenue declined to 6.77 billion renminbi ($937 million) for the March quarter from 7 billion renminbi a year earlier, it said Monday, but topped the Capital IQ-polled consensus of 6.57 billion renminbi.

Monthly active users in Tencent's online music business dipped 2.4% to 578 million, while mobile MAUs in its social entertainment business tumbled by 29% to 97 million.

Revenue from online music services increased 43% to 5.01 billion renminbi, boosted by growth in music subscriptions and aided by advertising. Social entertainment services and other revenue dropped by 50% to 1.76 billion renminbi.

"Drawing on our extensive industry experience and capitalizing on the Chinese New Year seasonality, our effective marketing campaigns led to higher-than-expected first-quarter music subscriber growth," Chief Executive Ross Liang said in a statement. "Meanwhile, we are pleased to see a steady user base recovery thanks to our optimized operations efforts."

American depositary receipts of Tencent Music spiked 5.5% in premarket activity.

Revenues from music subscriptions climbed about 39% to 3.62 renminbi, as the number of paying users climbed 20% to 113.5 million. Monthly average revenue per paying user, or ARPPU, rose about 15% in the music business as people were more willing to pay for membership privileges, expanded content and interactive features, the company said. Social entertainment paying users inclined 13%, although the unit's monthly ARPPU plummeted by 55%.

"Online music continued to grow robustly, registering record-high net (additions) of 6.8 million music subscribers with healthy ARPPU for the first quarter," according to Chairman Cussion Pang. "Our focus on high-quality growth also yielded solid net profit margin expansion."

Non-IFRS earnings rose to 1.09 renminbi per American depositary share from 0.89 renminbi in the prior-year quarter, ahead of the Street's view for 1.01 renminbi. Cost of revenues decreased 15% to 4 billion renminbi, which Tencent said can be attributed to the decline in revenue-sharing fees due to lower social entertainment service sales. Total operating expenses narrowed 8% to 1.14 billion renminbi.

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