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Tencent Music Entertainment Group, China’s leading digital audio platform, reported strong first-quarter results for 2025, with total revenue rising 8.7% year-over-year to $1.01 billion. Growth was driven by gains in music subscriptions and advertising, and significantly boosted by a windfall related to its stake in Universal Music Group.

Net profit attributable to equity holders soared 201.8% to $591 million, with total net profit reaching $605 million. Non-IFRS net profit attributable to equity holders rose 24.6% to $293 million.

Revenue from music subscriptions reached $581 million, up 16.6% year-over-year, as paying users grew to 122.9 million and monthly average revenue per paying user (ARPPU) rose to $1.57. Overall revenue from online music services totaled $800 million, a 15.9% increase, driven by subscriptions, ad sales, merchandise, and concerts.

Revenue from social entertainment services and other segments fell 11.9% to $214 million, largely due to regulatory compliance changes and adjustments in live-streaming functionality.

TME renewed its multi-year licensing deal with Sony Music Entertainment and expanded premium offerings like Dolby Atmos and 360 Reality Audio for SVIP members. Partnerships also deepened with Emperor Entertainment Group, Rock Records, Dream Music Group, and South Korea’s Starship Entertainment and YG Entertainment. The company also collaborated with Japan’s top animation, comics and games content producers to diversify its international catalog.

Original content saw strong traction, with Zhou Shen’s “To Time,” co-produced with CCTV News, and the theme song “One Thought to Eternity” for the game “CrossFire” topping local music charts. The platform ramped up artist merchandise, including an exclusive head-start presale of Teens in Times’ “Beyond Utopia,” which topped its 2025 physical album chart. Custom product lines for Silence Wang and K-pop icon G-Dragon delivered strong sales.

Offline events also proved successful. TME’s “Music For Passion” festival in Chengdu drew tens of thousands and featured artists such as JC-T, Roy Wang, Silence Wang, and Legend of Phoenix. The company also hosted exhibitions for Aespa and Babymonster, offering collectibles and interactive content.

Premium audio remains a major draw, with roughly 50% of SVIP members engaging with enhanced formats. Kugou Music debuted an industry-first Viper sound effect for external speakers.

SVIP perks such as early concert access, meet-and-greets, and exclusive merchandise have increased user retention. Long-form audio, especially “The Grave Robbers’ Chronicles” drama co-produced with author Nanpai Sanshu, quickly surpassed 10 million streams.

A major profit driver in Q1 was a one-time gain of $327 million from Tencent Music’s receipt of a 2% equity interest in Universal Music Group through a distribution-in-kind from an associate. This holding was reclassified as a financial asset, triggering a gain on the deemed disposal of the original associate investment.

Total operating profit jumped 146.9% to $666 million. Gross margin rose to 44.1%, up from 40.9% in Q1 2024, fueled by the growing share of subscriptions and advertising revenues, as well as a decrease in revenue-sharing costs from lower social entertainment activity.

Operating expenses held steady at $158 million, while income tax expenses totaled $61 million. Tencent Music ended the quarter with $5.19 billion in cash, equivalents, term deposits, and short-term investments.

The company repurchased 5.9 million shares for $64.5 million at an average price of $10.80 per share during the quarter.

In April, Tencent Music paid out a dividend of $0.18 per share (or $275 million total), following a March 17 board declaration.

“Our strong first-quarter performance, marked by robust revenue growth and solid profitability, underscores the successful execution of our high-quality growth strategy,” said Cussion Pang, executive chair of TME.

CEO Ross Liang attributed the company’s continued success to its “continued investment in compelling content and innovative, differentiated products delivered across diverse formats.”