Tencent Music Entertainment (1698.HK) beat estimates for second-quarter revenue on Tuesday as an expanded content library drove higher user engagement and robust subscriber growth in its online music services.
The Chinese streaming company's U.S.-listed shares rose 6.6% before the bell.
Tencent Music has significantly increased its investments to broaden its content portfolio to include long-form audio such as podcasts and audiobooks. It has also widened its music-related services such as advertising, concerts and artist merchandise, tied to the growth of its Super VIP program.
Serving about 15 million subscribers, the program offers a bundled experience featuring high-quality audio, online karaoke and access to exclusive events designed to boost user engagement.
The company also expanded tie-ups with domestic and overseas labels, tapping surging K-pop demand in China through first-time deals with The Black Label and H MUSIC and extending its collaboration with Chinese artist Wang Feng.
"We believe TME's strategic initiatives, including product innovation, content diversification and AI-powered personalization, position it well for sustained earnings growth ahead," said Ahmad Halim, an analyst at CFRA Research.
The company's total revenue rose 17.9% to 8.44 billion yuan ($1.17 billion) during the quarter. Analysts on average had estimated 7.96 billion yuan, according to data compiled by LSEG.
Revenue from music subscriptions grew 17.1% to 4.38 billion yuan, while that from social entertainment services decreased 8.5% to 1.59 billion yuan.
Tencent Music's adjusted profit of 1.66 yuan per American Depository Share was also above the estimate of 1.46 yuan.
($1 = 7.1903 Chinese yuan renminbi)
