Tencent Music Entertainment Group

Good evening. Good morning. Welcome to Tencent Music Entertainment Group's third quarter 2023 earnings webinar. I'm Millicent Tu, Head of IR at the company. CME announced its quarterly financial results today before the US market opened. Our earnings release is now available on our IR website and via newswire services. Today, you'll hear from Mr. Kushan Pan, our executive chairman, who will start the call with an overview of our company's strategies and business updates. Next, Mr. Ross Liang, our CEO, will share additional thoughts on our platform strategies and developments. Finally, Ms. Shirley Hu, our CFO, will discuss our financial results before we open the call for questions. Before we continue, I refer you to our safe harbor statements in our earnings release, which applies to this call as well as the following statements. Please 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 for the SEC. At this time, all participants are muted. After management's prepared remarks, there will be a Q&A session. And please be advised that today's webinar is being recorded. With that, I'm very pleased to turn over the call to questions. Executive Chairman of the company, questions?

Thank you, Melissa. Hello, everyone, and thank you for joining our call today. We are pleased to report another quarter of strong growth in our online music services. Despite the top-line headwinds from the social entertainment business, while adjusting certain industry-wide live streaming interactive features represented some challenges for the product. It ultimately placed us on even stronger footing for our long-term sustainable development. As a case in point, our evolving businesses have become more resilient, illustrated by group-wide margin expansion and strong cash flows for the quarter. What's particularly worth mentioning is our online music subscriptions. This business has registered accelerated year over year revenue growth. Growth momentum carried into the third quarter with expansion in both of our subscriber base and ARPPU. Our paying user base grew further to 103 million, a strong testament to the board appeal and high value of our music products and services. Our impressive content offerings, compelling subscribers privileges and interactive product features together with strong execution enabled us to attract new subscribers while retaining existing ones. We are also pleased to see that monthly AR PPU expanded to 10.3 RMB thanks to disciplined promotions, effective member acquisitions and our high subscriber retention rates. These achievements will result from the solid execution of our dual-engine content and platform strategy. It further unlocks the value of music and paves the way for our long-term success. I'd like to share a few highlights. First, we cultivate deeper, mutually beneficial partnerships with record labels and artists. our insights across content and uses, as well as our holistic approach to growing the industry, supported our strengthened cooperations with music partners. For instance, we strengthened our collaboration with TFBOYS on the 30-day headstart release of their 10-year anniversary single, See You Tomorrow, as well as the sale of their themed album, 10 Years. To amplify user engagement and strengthen their bond with the artists, we launched several online song guessing contests and music-based interactive features for this single. We expanded our partnership with YG Entertainment into ticketing, where we opened a dedicated channel for users to purchase Blackpink's concert tickets, further expanding subscriber privileges. In addition, we formed a new partnership with Cube Entertainment, bringing in a prominent lineup of brands and groups such as B2B, Pentagon, G-IDLE, and Lightsum. This collaboration not only enriched our music catalog, but also granted us the privileges of a 30-day head start period on new song releases. Each of these examples strengthens our research cycle and creates a win-win situation. Our evolved relationships with artists and labels fortify our music ecosystem, bringing more entertainment privileges to our users, while also creating prosperity for all stakeholders along the industry value chain. Second, leveraging TME's integrated resources and expertise, we expanded our industry influence by assisting artists at different stages with their career growth. With respect to top tier artists, in August, we host an online offline concert for Zousen celebrating the nine year anniversary of his debut. Highlighted by sales of sought after tickets and social media buzz of nearly 2 billion event views in just three weeks. This event generated great excitement and acclaim among users. As for our strategic partnership artists, this quarter we assisted Tia Wei with her appearance at the Mid-Autumn Festival Gala organized by CCTV and Hulan Satellite TV, significantly increasing her influence nationwide. Among our emerging musicians, we have Wang Yi Luo. Our indie musicians perform and showcase his talents on the variety show The Treasured Voice. Through music exposure and social media, we helped him attract more users to explore his original songs on our platform. In Q3 this year, we also had over 20 up-and-coming musicians performing at Line Music Festival. Many rising musicians from our Tencent Musician Program showcased their talents at the Coca-Cola-sponsored 2023 Summer Limited Refreshing Music Festival. Such activities with high-quality brands also encouraged us to further explore sponsorship advertising opportunities. Third, we enhance our technology capabilities in content creation, promotion, and distribution. Some of this content also recorded initial success overseas. In the third quarter, Venus introduced its zero-shot AI-powered music production tool, featuring fast and convenient generation of a user's AI voice to produce musical works. Google Music's Vocal Producer also upgraded its functions to allow AI-generated music content in multiple languages. Through a brief training section, it can effectively and efficiently produce songs in Mandarin, Cantonese, English, Korean, and Japanese. Both tools substantially boosted creators' creativity TME's music promotion and distribution toolkits, such as the TME Music Cloud and Google's To More Music platform, make advancement in helping record labels, creators, and musicians efficiently promote their musical work. Our deep industry insights and assist data analytics enable us to successfully promote Chinese songs overseas. For example, we helped Angela Zhang's Biz and Yang Junnan Summer Love Chart on various popular music lists in Singapore during the quarter. Moving on to our continuous efforts on ESG. In the third quarter, we joined hands with Tencent's SSV and launched our 2023 Youth Music Tech X program, inviting high school students to explore our technology-inspired music journey. Working side by side with the student, we commissioned a film song, the most beautiful song in the world, to campaign the public here and support the hearing-inspired senior citizens. In addition, we organized a special music education project, Music Garden Space, to help children from ethnic minorities and remote areas appreciate the beauty and power of music. These initiatives demonstrate the value and positive influence we can bring to a wide range of communities. Summary, our holistic and strategic approach is strengthening and expanding our capabilities, making our platform and ecosystem increasingly robust. We continue to grow our music subscriptions and strengthen our partnerships with labels and artists, enriching our content and perpetuating our virtual circle. We are also fostering new talent and leveraging our advanced technology to support our efficient growth. This powerful combination and evolution will drive our company's sustainable development in the long run and support the broader industry advancement. Now, I would like to turn the call over to Ross for more color on our platform development. Ross, please go ahead.

Thank you, Ka-hsuan. Hello, everyone. Music is the heart and soul of TME. I would like to begin by commenting that Q3 results highlighted the efficiency gains across our platforms. Specifically, our ecosystem's strong platform skill and AI-important technology have enabled us to transition into an increasingly robust music powerhouse. From the operational level, one key highlight is our effort to expand the application of AI technologies across our products and services. based on our upgraded music LLM. This quarter, we integrated our LLM integration platform, allowing third-party models to be better integrated with an adaptive to the music vertical. With the power of AI, we enhanced the music discovery and the conception efficiency, creating a more engaging user experience. First, better content connection and discovery. This quarter, we continued to upgrade our recommendation middle platform and enhance personalized recommendations on each of our music apps. As a result, we reached a new record in the share of streams from recommendations, as well as an increase in the number of songs added to users' personal favorites. We also significantly allowed the barriers to music discovery. For example, QQ Music introduced its Quick Listen mode, which allows users to listen to a song's chorus and then quickly locate the full sound. Another example is Google Music's revived version, featuring faster discovery of multiple songs, song covers, as well as AI-rendered versions played by different instruments. Second, better for facilitating music consumption through more user cases and entertainment scenarios. In the in-car use case, we extended our mobile and offerings, such as our seamless user interface, premium sound quality, and a tailored playlist to enrich in-cabin music consumption. To increase our coverage, we recently sent additional car models including Mercedes-Benz Smart and more BYD models. Partnering with hardware manufacturers, we led the industry by leveraging Qualcomm's latest AI computer capabilities to enhance users' music listening experience with richer details and mobile sensations. In terms of broadening entertainment content consumption, we customized our music services, including content production, promotion and data analysis, across the areas of film and television, gaming and animation. Through tailored music works, We create unique touch points for original IPs, unlocking their value. For example, we co-produced both the theme and end credits songs for the blockbuster No More Bats, Gu Zhu Yi Zhi. We also produced original soundtracks for mobile games, including Peacekeeper Elite, Crossfire, and Dungeon and Fighter, all of which have received widespread acclaim. Third, for our immersive user connections, we have created a striving community where music lovers can bond, ultimately making their experience on our platform more enjoyable and long-lasting. For example, QQ Music launched over 30 interactive song-guessing contest featuring artists such as Jay Chou, Zhou Shen, Blackpink, and Teens In Time. These events quickly went viral across social media platforms and over in-app community and fun groups, amplifying TME's influence. To sum up, these three dimensions of connections inspire us to further unlock music's value. AI-powered technology is supporting us to provide better user experience and making the platform increasingly efficient. Our online music business has become a diversifying and crucial growth pillar. Social entertainment services remain adaptive as part of our holistic music offerings. For 2024 and years ahead, we will stay laser focused on providing enlightening user experiences while driving operational efficiencies across the platform. With that, I will turn the call over to Shirley, our CFO, for a deep dive into our financials.