--- title: "TME (Trans): Agile amid intense competition, prioritizing shareholder returns ---" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/39312622.md" description: "Below is Dolphin Research's Trans of the FY2025 earnings call for $Tencent Music(TME.US) and $TME-SW(01698.HK). For our earnings take, see 'Tencent Music: Soda Music's big push — are the easy days over?'I. Key takeaways1) Shareholder returns: announced a FY2025 cash dividend of $0.24 per ADS, with total payout approx. $368mn, a sharp increase vs. last year. The buyback program still has sizable remaining authorization and will continue subject to market conditions..." datetime: "2026-03-17T14:13:53.000Z" locales: - [en](https://longbridge.com/en/topics/39312622.md) - [zh-CN](https://longbridge.com/zh-CN/topics/39312622.md) - [zh-HK](https://longbridge.com/zh-HK/topics/39312622.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/topics/39312622.md) | [繁體中文](https://longbridge.com/zh-HK/topics/39312622.md) # TME (Trans): Agile amid intense competition, prioritizing shareholder returns --- **Below is Dolphin Research's transcript of** $Tencent Music(TME.US) $TME-SW(01698.HK) **FY2025 earnings call. For our take on the print, see '**[**Tencent Music: 'Soda' goes aggressive — are the good times fading?**](https://longbridge.cn/topics/39307374?channel=SH000001&invite-code=355628&app_id=longbridge&utm_source=longbridge_app_share&locale=zh-CN&share_track_id=ac97ade7-5c97-453c-92ce-277ab5b6b4b8)**'.** **I. Key takeaways from the results** 1\. **Shareholder returns**: Declared a FY2025 cash dividend of $0.24 per ADS, for total payouts of approx. $368mn, a sharp step-up YoY. The buyback still has sizable authorization left and will continue subject to market conditions. 2\. **Outlook**: Subscription revenue in 2026 will face near-term pressure amid tougher competition, while the three-tier membership model and non-subscription streams should underpin healthy overall growth. GPM in 2026 is expected to be roughly flat YoY vs. FY2025 or slightly lower. Net income should increase in 2026, with margins similar to or a touch below FY2025. 3\. **Key financials**: Q4 revenue RMB 8.641bn (+15% YoY). FY2025 revenue RMB 32.902bn (+16% YoY). Online music services revenue RMB 26.7bn (+23% YoY). FY2025 GPM 44.2% (+190bps YoY). Non-IFRS net profit RMB 9.6bn (+25% YoY). 4\. **Notable disclosure changes**: Given the evolving model (ad-supported membership, SVIP, offline concerts and merch, etc.), starting next quarter TME will stop quarterly disclosure of paying users, ARPPU and similar ops metrics, and will instead only disclose year-end total paying music subscribers in the annual report. Cash and equivalents totaled RMB 38bn at end-2025. **II. Details from the call** **2.1 Management highlights** 1\. **Content & licensing** a. Renewed licensing deals with Warner Music and Believe, expanding into physical albums, merch and live performance collaborations. b. Partnered with Media Asia Music to bring Dolby Atmos to 300+ classics by artists such as Eason Chan and Andy Lau. c. Self-produced content keeps gaining share; the Mid-Autumn Gala program 'Sui Sui Nian Nian' charted in 17 countries/regions, with 100mn+ single-day social views. d. Produced custom OSTs for Tencent Video hit dramas, with several tracks going viral after the Spring Festival Gala. 2\. **Young users & K-Pop** a. Renewed with P Nation to secure 30-day exclusive windows for new releases from top Korean artists including PSY, CRUSH, Baby DONT Cry and TNX. b. The Tencent Musicians platform continues to scale the indie ecosystem, serving diverse music needs of younger users. 3\. **Non-subscription (live, merch, fandom)** a. 2025 revenue from IP-related merch and fan spending more than doubled YoY. b. Successfully staged G-Dragon's tour, drawing 260k+ fans across 20 APAC shows; two Taipei shows in Q4 attracted 75k+ attendees. c. First collaborations with top Western artists to launch 'key albums' and other innovative merch formats. d. Rolled out tour memorabilia and limited-edition gift sets, with strong sales performance. 4\. **Platform & membership** a. The three-tier system (ad-supported, Standard, SVIP) is performing well, with SVIP users surpassing 20mn. b. The ad-supported membership pilot is showing early traction, broadening the user base. c. Multi-end strategy: mobile remains core, with deeper penetration into PC, in-car and smart speaker scenarios. d. QQ Music added social features like Weibo integration; 170+ artists have joined to boost fan engagement. 5\. **AI applications** a. The one-stop AI music creation platform serves 10mn+ users and 150k+ professional creators. b. AI toolset spans track enhancement, AI vocal demos and auto-generated video snippets. c. QQ Music AI Agent (built on Jamba) executes complex multi-step tasks via natural language, covering music discovery and digital album purchases. d. A multimodal LLM powers recommendations, with the share of rec traffic at a record high. 6\. **Advertising** a. Q4 ad revenue grew strongly both YoY and QoQ. b. Advertiser count, unit pricing and CPM all increased, with dual-holiday demand driving QoQ gains. c. Offline concerts and festivals expanded reach and attracted more brand sponsorships. **2.2 Q&A** **Q: In light of the AI wave and intensifying competition, what is the company's growth outlook for 2026, and how will you capture opportunities and address challenges?** A: Internally, TME delivered solid execution in 2025, with healthy subscription growth and strong momentum in non-subscription. On music subscriptions, our three-tier membership framework drives effective conversion, high engagement and deeper wallet share, and SVIP surpassed 20mn within just two years. We also piloted ad-supported membership in late 2025 to broaden the user funnel and lay the groundwork for long-term growth. On non-subscription, we deepened cooperation with artists and labels, extending into offline shows and merch, and this is only the beginning. These moves enrich SVIP benefits, unlock new growth levers and strengthen our competitive moat. Externally, competition is not new to us, and our track record shows we stay agile. We firmly believe in the enduring value of content and the long life cycle of IP-driven models, whose value compounds through broad distribution, cross-media partnerships and diversified monetization. The rapid growth of non-subscription over the past two years underscores our capabilities. While subscription revenue may face short-term pressure in 2026 due to fierce competition, the three-tier model and a vibrant non-subscription engine should support steady, sustainable growth. On AI, we continue to embrace it to improve user experience and to enhance the efficiency of content creation and promotion. With our strengths in IP creation and management, we believe AI will further reinforce our edge and create long-term commercial value. **Q: How does AI impact the music value chain, and how is TME integrating AI into products and the ecosystem? What are the implications for labels, streaming platforms and user behavior?** A: Over the past three months, AI has been reshaping not only music but the entire content creation and distribution landscape. We have already seen some AI-created hits, which pose a challenge for streaming platforms because we remain committed to promoting original works. We will continue to embrace technology. For creation, we provide creators with highly efficient and user-friendly tools that dramatically lower the barrier to entry. Original music remains paramount, and we will continue to allocate more distribution resources to it. At the same time, we will grant some traffic to AI-generated content, but we have observed a large volume of low-cost content with copyright risks, and in some cases clear infringement, and we are investing significant effort in market education. TME holds a leading position in music and is among the first to integrate AI across the industry. Our one-stop AI music creation platform has served 100mn+ general users and 150k+ professional creators, and we are among the earliest in China to achieve solid commercialization of AIGC. More importantly, we are also operating an AI Agent to help users accomplish their goals on our platform. TME faces many challenges, but we see even bigger opportunities. Moreover, while AI makes creation and production easier, on copyright the key is not only scale but the strength of the IP itself. Offline music experiences such as concerts, fandom and merch are hard for AI to replace, and we will keep investing in IP while leveraging AI to improve production efficiency. **Q: From a financial perspective, how should we think about the 2026 GPM, operating expenses and earnings growth trajectory?** A: Overall, we expect 2026 GPM to be broadly flat vs. FY2025 or slightly lower. First, ongoing growth in subscriptions and advertising, together with cost optimization, will reduce COGS as a share of revenue. Second, recent rate adjustments are another positive driver. Third, we will continue to deepen cooperation with high-quality IP and increase self-produced content to bolster competitiveness. Fourth, we will expand concert revenue via deeper partnerships with top labels and artists, broadening monetization. That said, in the early stages these new businesses may have a modest negative impact on margins, and GPM could see seasonal fluctuations as the revenue mix evolves. Longer term, as services diversify to meet user needs, ARPU should rise, and investments in IP and licensing should improve content costs, keeping margins at healthy levels. On OpEx, amid intense competition and AI-driven change, we will continue to invest in content, and through strategic operations we will keep improving our one-stop music services to maximize music value by enhancing user perception. We will not blindly ramp marketing, but will stay focused on core value — users and the ecosystem, continuing to invest in self-produced content and optimizing channel costs. Based on granular ROI, we aim to create more value for paying users and deliver steady, sustainable growth. For 2026, we expect net income to increase, with margins similar to or slightly below FY2025. **Q: On the demand side, does AI-generated music create incremental consumption or is it a zero-sum game? Over the medium to long term, will lower creation costs erode the royalty pool, and if so, do we need to adjust the business model?** A: Fundamentally, AI is changing the nature of the industry. In the early internet era there were many popular covers where the original artist was unknown. The last three months have been interesting — we have indeed seen some AI tracks charting across platforms. Short-video platforms have given strong momentum to AIGC music, but most are not original songs and are more akin to covers, so the change is mainly in vocal quality. Over the long run, AI-sung content will develop rapidly, but for consumption of original songs, we have not observed a clear shift. For UGC, think of it like short videos — in future many people will be able to make music as easily as taking photos or videos. But looking at Facebook and TikTok/Douyin, UGC mostly circulates within friend networks, while royalties and revenue still accrue to PGC or ODC. The same applies to music: UGC music will spread among acquaintances, but we do not expect a material change in royalty or revenue sharing. We are investing heavily to build tools so users can create on TME, and over time TME can also become a social platform for music. As an addendum, if AI-composed music is performed by human vocals, the revenue split will follow the traditional model. If a track is fully generated by AI, there will be a different royalty-sharing framework. On UGC platforms, incentive schemes may be adopted, and these should not have a substantive impact on our current business. **Q: Any update on the Ximalaya acquisition? Any latest thoughts on the buyback program?** A: For the Ximalaya deal, we remain in communication with regulators, and will disclose promptly if there is any progress. On shareholder returns, we have always placed a high priority on them. This year's dividend is much higher than last year's, reflecting our stance. The share repurchase will continue under the existing plan, and we will respond to market demand while meeting revenue requirements. Risk disclosure and disclaimer:[Dolphin Research Disclaimer and General Disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [TME-SW (01698.HK)](https://longbridge.com/en/quote/01698.HK.md) - [Tencent Music Entertainment Group (TME.US)](https://longbridge.com/en/quote/TME.US.md) - [WB-SW (09898.HK)](https://longbridge.com/en/quote/09898.HK.md) - [Weibo Corporation (WB.US)](https://longbridge.com/en/quote/WB.US.md) - [TENCENT (00700.HK)](https://longbridge.com/en/quote/00700.HK.md) - [Tencent Holdings Limited (TCEHY.US)](https://longbridge.com/en/quote/TCEHY.US.md) - [TENCENT-R (80700.HK)](https://longbridge.com/en/quote/80700.HK.md) - [Tencent Holdings Limited (TCTZF.US)](https://longbridge.com/en/quote/TCTZF.US.md) - [Warner Music Group Corp. (WMG.US)](https://longbridge.com/en/quote/WMG.US.md) - [Tencent Holdings Limited (HTCD.SG)](https://longbridge.com/en/quote/HTCD.SG.md) ## Comments (1) - **Jack www · 2026-03-17T14:19:34.000Z**: Brother Butt works overtime every day.