Shares of Tencent Music Entertainment Group (NYSE:TME) rose more than 3% in pre-market trading on Tuesday after the company reported first-quarter revenue in line with expectations, supported by continued growth in its music services business.
The stock advanced 3.2% even though earnings came in below Wall Street forecasts.
Tencent Music reported adjusted earnings of RMB1.34 per ADS ($0.19), missing analyst expectations of RMB1.43.
Quarterly revenue totaled RMB7.9 billion ($1.15 billion), matching consensus estimates and rising 7.3% from RMB7.36 billion in the same period last year.
Music Services Continue to Drive Growth
The company said revenue growth was primarily fueled by its music-related services segment, which increased 12.2% year-on-year to RMB6.51 billion.
Membership services revenue rose 6.6% to RMB4.57 billion, while revenue from other music-related offerings jumped 28.0% to RMB1.94 billion.
Tencent Music attributed the performance to expanded benefits for SVIP subscribers and strong momentum in offline performance-related services.
Meanwhile, revenue from the company’s social entertainment services business declined 11.0% year-on-year to RMB1.38 billion.
“This quarter’s steady results reflect the effectiveness of our holistic approach to the music ecosystem,” said Cussion Pang, Executive Chairman of Tencent Music.
“By expanding how we serve and engage our audience, we have built a more diversified and resilient model,” he added.
Profitability and Margins Improve
Adjusted EBITDA increased 10.5% year-on-year to RMB2.83 billion during the quarter.
Adjusted net profit attributable to equity holders rose 7.0% to RMB2.27 billion.
Gross margin improved to 44.9%, compared with 44.1% in the prior-year period, helped by stronger membership revenue and lower channel-related costs.
Tencent Music Maintains Strong Cash Position
As of March 31, 2026, Tencent Music held RMB41.0 billion in cash, cash equivalents, term deposits and short-term investments, highlighting the company’s strong liquidity position.