Tencent Music Entertainment Group

Good evening and good morning. Welcome to Tencent Music Entertainment Group's fourth quarter and full year 2022 earnings webinar. TME announced quarterly financial results today after market close. An earnings release is now available on our IR website at ir.tencentmusic.com, as well as via Newswire services. Today, you'll hear from Mr. Kushan Pang, our Executive Chairman, who will start the call with an overview of our recent updates. Next, Mr. Ross Liang, our CEO, and I, Tony Yip, a CSO, will offer additional thoughts on our product strategies, operations, and business developments. Finally, Ms. Shirley Hu, our CFO, will address our financial results before we open the call for questions. Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call as we will make forelooking statements. Please also note that the company will discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under IFRS in the company's earnings release and filings with the SEC. At this time, all participants are muted. After management's presentation, there will be a Q&A session. For participants who have dialed in by phone, please press five to ask a question. If you are accessing the call from Tencent meeting or VOOF meeting application, please click the raise hand button at the bottom left. And please be advised that today's webinar is being recorded. With that, I'm pleased to turn the call over to Kashin, Executive Chairman of TME.

Kashin. Thank you, Tony. Hello, everyone, and thank you for joining our call today. Looking back on 2022, firm execution of our dual-engine content and platform strategy viewed solid progress in a fast-changing macro environment. With a keen focus on high-quality growth and product innovation, as well as our highly effective cost optimization measures, we led the industry in the rebound of bottom-line growth and delivered steady growth in online music subscriptions throughout the year. Our diversified suite of monetization tools expanded and made progress during the years such as ad support mode, long-form audio, as well as audio live streaming, and our international expansion, among many more. With our confidence in the long-term prospects of the company, we had completed the US dollar 1 billion shares buyback program approved by the board in 2021. Looking ahead into 2023, as we are repositioning ourselves to better capture future growth areas, we currently expect our quarterly revenues from online music services will exceed those from social entertainment services at some point within this year. Meanwhile, with our relentless focus on executing our growth strategies and operating efficiencies, We are confident to achieve year-over-year growth in total revenues and profitability, as well as continuous improvement in user quality in 2023 while fueling the thriving user industry. Next, I would like to talk about remarkable achievements we have made in many aspects of our business's build-up point, our insistence on excellencies and innovation. One integral part of our strategy in 2022 was to continue improving TME's content ecosystem. First, we are building extensive collaboration with top artists, labels, and industry partners, both at home and abroad to bring our users and artists most compelling content and experiences. We have recently reached an agreement with JDR to extend our close strategic partnership and will continue to provide our users with the high quality music created by JDR, accentuated by the extraordinary experience on our platform in the fourth quarter. we deepened our strategic cooperation with leading records such as BEAM Music , providing users with songs from May Day and other renowned singers. Our flourishing library in various music verticals also reinforced our reputation as a go-to destination for music lovers. Importantly, we began extensively teaming up with Billboard, the industry bellwether. In addition to co-produce the playlist, we jointly released the 2022 Annual Music Report, which attracted participation from a record high number of unique visitors. Most recently, we announced the integration of TME Unichart on Billboard as its only music chart for Mainland China, introducing Chinese music to a global audience. Second, as we strive to increase the breadth and depth diversity of our music library, our ability to empower original content production has significantly improved with new tools launched. We have been investing in intelligent tools to support music-related content production with technology and have delivered promising results. With virtualization setting the trend, one strategic move in 2022 was to build a lineup of virtual performers In the fourth quarter, we unveiled our first hyper-real virtual pop idol, Lucy , who is also the whole music presenters for today's call. With a record-grade, automatically generated vocal print developed by PME, Nira Labs, Nira Singing Engine, Tianqin ShiYanShi de QinYunYiQing. Lucy, as a highly productive singer, has created three chart-dominating original songs across different styles within just one month of her debut, and has already received partnership interest for fashion shots or joint performances from a broad array of global brands, including Elle, Coca-Cola, and KFC. At the forefront for cutting-edge virtual idol field, our virtual performers also include Xiaoqin, Sanbao and Anke, who we brought to life with original content, unique voices, dance moves and more. Musicians are also increasingly flourishing on our Tencent Music platform. thriving content prosperity both on our platform and in the industry. By the end of fourth quarter, we have empowered our indie musicians to create more than 2.3 million musical works. Meanwhile, we consistently pay close attention to music ecosystem development. In the fourth quarter, we launched more smart features and tools for indie musicians to accelerate song composition and release, and foster deeper interactions with their fans. For example, in December, we unveiled a record release feature, which allows indie musicians to upload their original albums and earn revenue from listeners who want to show extra gratitude in addition to album sales. What's more, the tech tools we launched during the quarter enable our musicians to generate lyrics and album covers automatically, as well as assist in singing enhancement and song evaluation. all of which help form a modularized and automated music production process. We are proud that our end-to-end services have been instrumental in realizing a year of harvest for the creation of close to 1,000 original blockbusters. leading the streams exceeding 100 million each in 2022. In the fourth quarter, the hit song, Grant Me, Shi Wo, dominated trending lists on our platform and took the market by storm. ranking in nearly half a billion streams. Another hit was turned into fireworks and fall for you, which has been extensively used as background music and generated over 5 billion social media discussions. Meanwhile, we deepened our collaboration with the Tencent ecosystem and launched a total of 111 songs in the gaming and animation category in 2022. A number of our co-produced songs have garnered awards this year. Notably, Fairy Tale Love , made for peacemaker elite He Ping Jing Ying, was among the finalists for the best original songs in the mobile video game category of the 13th Hollywood Music in Media Awards. But behind this high-quality musical work, more up-and-coming artists are finding opportunities and stages to shine and realize their music dreams on the back of TME's all-round promotional resources. One example in the fourth quarter was the strategic musician's partner Recultivate, Crystal Chen . We invited well-known producers to launch her first EP from which the song, Skylights, Tian Fang topped the QQ Music's best new release music chart, helping her build her profile as a high-quality singer. Another standout fan was the campus musician Pan Yuqi, who was featured on the cover of Billboard's December issue with her first single, Let Us Alive, and also came in the third place in 2022 Sing China, with our co-chair. In addition, we collaborated with Coca-Cola to create a large-scale New Year's Eve music event and promote emerging musicians such as Pan Yuqi to the world stage through WeBoss global network. Many newly-joined musicians have grown quickly into rising stars with our support, representing just a few of our success stories among a strong pipeline of emerging talents we are grooming to fill the thriving music industry. That concludes my review of our growing content strategy. Now I would like to turn the call over to Ross, who will share more about our platform updates. Ross, please go ahead.

Thank you, Kashen. Hello everyone. With our refined mission in 2022 to create endless possibilities with music and technology, 2022 was a year of our continued exploration for TME. We stepped up creative efforts to satisfy our users' nuanced and diverse music tastes and to provide all-around musical companionship to our users through each of our four entertainment pillars, listen, watch, sing, and play. We have been deploying and developing breakthrough AIGC tools to further improve music-related content creation and enhance production efficiency. In addition to the Lyrai singing engine, which we used to develop our virtual idols such as Kashin mentioned. We rolled out the Muse engine in the fourth quarter, which enables automatic large-scale music posters production based on melody and lyrics. We have also expanded use cases for our patented technology, to launch several popular audio books, read by the synthetic voice of Yang Chaoyue, including the Gray Robber's Chronicles . What's more, ahead of the new year, receivers of QQMusic's newly launched VR greeting card can walk into the gift generated automatically and receive blessings as avatars in an exquisite virtual space. In the future, we will continue to explore the application of large language models in the field of pictures, text, video, and other content, as well as music recommendation and search to meet the massive demand for music-related content. Next, one of the biggest advancements in the year was to holistically improve our sound quality and sound effects and bring users a clearer and more vivid listening experience, which also contributes to the growth of music subscription as well as we are adding this compelling privilege to our memberships. For example, nearly half of our QQ Music music tracks now support a superior quality or above, and our high-rise standard has also been upgraded to high-rise loose-lice, high-rise , which parallelize the top tier studio qualities for a mass-mass resolution of 192 kilohertz, 24-bit. Second, we continue to optimize our preparatory technology for the premium sound series. Launching premium master type ZhenPin Mudai, premium surround sound ZhenPin QuanJingSheng and premium sound quality 2.0 ZhenPin YinZhi 2.0 to enhance sound clarify and expressiveness. We also extended the application of these premium sound quality features to TME Live's online concert, as well as Richie Sakamoto's concert. As we concentrated on building a new benchmark in sound quality for the domestic streaming industry, more users are opting for songs with high sound quality. On QQ Music, their number exceeded 5 million on a daily basis, totaling nearly 100 million daily streams. We also launched and enhanced a number of features to allow users to flexibly customize their listening experience. Google Music and QQ Music all unveiled a pitch and tempo alteration feature, ,, with which users can remark their favorite songs. Our algorithm upgrades also contributed to a more personalized listening experience, leading to sustained healthy year-over-year growth in QQ Music and Kugel Music's recommendations, streaming volumes, and time spent per user in the first quarter. Specifically, QQMusic's recommendation inspired more listening behavior than searches, which continues increase in the percentage of streams coming from our recommendation. Another focus in 2022 was to enrich users' virtual experiences on our platforms, particularly through comprehensive collaboration with Weixin video accounts in the Tencent ecosystem. First, through TME Live, our performance brand which hosted 63 online and offline events throughout 2022. We held hands with Weixin Video Accounts to innovate interactive formats and build new avenues to distribute music and video content. For instance, at Han Ken Lee, Li Keqin's concert, nearly 20,000 users cast their votes on either our platform or WeChat video accounts to select the final encore. We also joined attractive over 23,000 paying viewers to watch the eminent Japanese pianist, Ritchie Sakamoto, Banben Longyi's solo concert. which is the highest number to date among TME Live's musical instrument performance. Second, we further applied our song recognition feature to automatically identify the background music of videos from WeChat video accounts and direct users to QQ Music to listen, set their WeChat ringtone, or use in their own videos. What's more, by the end of 2022, over 60,000 Indian musicians on our Tencent Musician platform have used the one-click release feature to publish their original songs on WeChat video accounts. Beyond professional music content, during the fourth quarter, we also promoted youth engagement by allowing our WeChat users to share music videos of their own scene on WeChat video accounts. The head song on WeChat video accounts, Good Morning, 轮回, 早安, 轮回, racked up nearly 100 million music streams on TME's platforms in the fourth quarter. a stronger testament to the vibrancy of our joint built music ecosystem with virtual elements. The singing features have also been upgraded to create more enjoyable experiences for our karaoke users. In the fourth quarter, we rolled out several real-time features, namely the one-player model, SingMaster , two-player model, Karaoke King 2.0 and the multi-player model, Microm to install users with the excitement of simultaneous singing and computation. On top of these new entertainment choices, during the fourth quarter, we also continued to engage V-SYNC users with SYNC effect updates, such as the vocal enhancement, 人声增强 filter, for V-SYNC VIP users to create a studio-quality acoustic immersive SYNC environment. Music lovers, particularly the young ones, are getting attracted by our music-based virtual use cases. At TME Land, our immersive virtual theme park, 8 million users in their avatars join Coca-Cola and KFC's virtual parties and celebrate a super new year alongside artists joining the fourth quarter. We also released We Are Listening Together, We Are Yixi Ting Xiao Wo on TME LAN, which brings users' avatars together to listen to content in virtual scenarios such as camping, rooftop charts, and a New Year celebration. Lastly, to incubate a vibrant, young, and trendy culture community, we upgraded the Kugel concept, Kugel概念版, and the 播点音乐, two of our music products designed for Gen Z users. During the fourth quarter, these updates include more real-time interactive features to help the young generation identify people with shared music tastes and encourage them to actively create, share, and socialize. Thanks to the genuine swarm receptions and the adoption of their diverse functions, these two apps both tripled their MAUs year over year. With that, I'd like to give the floor to Tony to reveal our business operations.