Tencent Music Entertainment Group

Good evening, good morning, and welcome to Tencent Music Entertainment Group's first quarter 2024 earnings conference call. I'm Osun Tu, head of IR. We announced our quarterly financial results today before the U.S. market opened. An earnings release is now available on our IR website and via Newswire services. Today, you'll hear from Mr. Kushan Pang, our executive chairman, and Mr. Ross Liang, our CEO, who will share an overview of our company's strategies and business updates. And then 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 statement in our earnings release, which applies to this call as we made four looking 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 earnest release and filings with the SEC. At this time, all participants are muted. After management's remarks, there will be a Q&A. And please be advised that today's call is being recorded. With that, I'm pleased to turn the call over to Khushan, Executive Chairman of TME Khushan.

Thank you, Melissa. Hello everyone, and thank you for joining our call today. 2024 is off to a great start. Strong execution of our dual engine content and platform strategy is yielding impressive results and pushing vitality industry-wide. In the first quarter, the number of music paying users increased to 113.5 million, propelling 43% year-over-year growth in online music revenues. Our high quality growth strategy also drove a robust net profit margin expansion. Subscriber growth in this quarter significantly exceeded our expectations, reaching a quarterly historic high of 6.8 million net ads, What's more, we maintain the ARPPU at a healthy level. Both achievements demonstrate our keen understanding of users' needs and our knack for anticipating and meeting their demands operationally. As you have seen in our earnings release, supported by our strong fundamentals, we are very pleased to announce an annual cash dividend policy and 210 million US dollars in cash dividends for the year of 2023. On top of our ongoing buyback program, this reflects our confidence in future growth and commitment to sharing our success with shareholders. Next, I would like to share an overview of this quarter's content development efforts. Through a balanced combination of copyright music and original content, we enable users to discover the latest and trendiest content and enjoy a superior experience on our platform. Let me go over a few highlights. First, we renewed and reinforced the partnership with Record Labels to broaden our music library's comprehensiveness and popularity. Our innovative value-added privileges, features, and promotion services extend far beyond mere licensing, further unlocking the value of music content industry-wide. We renewed our cooperation with Time Feng Jun Entertainment, Shi Lai Feng Jun, featuring 30-day Head Starts benefits on new songs, and adding Dolby Atmos upgrades for popular groups like TFBOYS and Teens In Time. We also expanded our agreement with HIM International Music, incorporating an industry-first component authorizing TME to use licensed AI feature to promote HIM's iconic CPOP content. This will ensure the authentic and responsibility double use of AI. Showcasing TME's commitment to protecting artists' rights and interests in the AIGC era. Artists benefits from TME's tech powered promotions and copyright protection while users enjoy the latest in interactive features, which is a win-win. Yoga Link's new album, Love Lord is one recent success. For its premiere on our platform, we connected our AI sync song along feature and TME live offline concerts, spurring fan interaction within new scenarios. We enriched our K-pop content and related offerings with various artist fan activities, digital albums, and artist merchandise for new generation groups like iLIT, Babymonster, and Rise. In the first quarter, K-pop user engagement and streams both grew year over year. Next, we expanded our original content, a key differentiator to attract users and enhance engagement. Based on our keen grasp of trends, we delivered an array of his catering to users' ever-changing taste, that's quota. We produced the original soundtracks for his TV dramas, The Legend of Sun Li, Yu Fengxin, and in Bronson, Hua Jianlin, including 17 songs and 38 scores. featuring top tracks by TME strategic partner artists, such as Jess Lee, Li Jiawei, and Wang Jingwen. These catchy OSTs create a massive social media buzz that boosts the streams and viewerships. Their outstanding performance showcases our ability to spot and set content trends while maximizing the value of content. Our OST for The Legend of Zeng Li produced by Tencent Video also highlighted the power of collaboration within the Tencent ecosystem. It smashed the records with over 150 million streams within 30 days of release, making it the number one OST debut so far this year. We also partnered with strategic artists and indie musicians on music production and promotion to build our performance qualities music offering. Our self-produced song, River Flow, Ru He, by Tia Wei, Yuan Ya Wei, and what I anticipate is Not Snow, Wo Qi Dai De, Bu Xi Xue, by Zhang Miao Ge, became the top-rated hits on social media this quarter. Moving on to our commitment to social responsibility. We cooperate with Tencent Charity for a third consecutive year on our film program to drive autism awareness. If music has a shape, this year, Fiona Shih, Shui Kai Qi, performed the project's theme song, Do You Understand What's Left of Me? More than 60 other renowned artists and groups, including Jay Chou, Zhou Jianlun, Su Kezhen, Shi Jixian, and New Jeans, also share songs in support of children with autism. We then host an art exhibition featuring artwork by children with autism inspired by these musical works, leveraging multimedia to amplify our caring message and boost music's social value. In conclusion, by expanding contents and introducing more tailored platform offers that resonate deeply with users, we continue strengthening our vibrancy to drive industry development. We are confident that our powerful contents and platform dual engines and ever deepening understanding of content will propel our sustainable growth in 2024 and beyond. Now, I would like to turn the call over to Ross for more color on our platform development. Ross, please go ahead. Thank you, Kaixin.

Hello, everyone. Strong execution once again resulted in solid online music growth. Record high net subscriber ads, steady AR PPU and the healthy emails all reflect this robust performance. Our efforts to attract and retain users were the driving force behind it. Utilizing our extensive industry experience and peerless insights into users and content, we are later focused on anticipating and meeting users' needs with enhanced experiences and trendy musical journeys. First, I want to talk about user retention. We have taken a multi-pronged approach to engaging users through constant innovation of trend-setting filters. I will walk you through a few examples. Our new AIGC applications make music discovery more fun, engaging, and convenient. In the first quarter, we launched a large audio model that increases promotion accuracy. helping users discovery more high quality music content. Initial results showed that streaming share of promoted songs increased notable following the model's release. We also tested an AI assistant that supports text and voice chatting for more customized search experiences, as well as an AI playlist assistant to curate playlists, a key personal music site that strengthens users' techniques. Recently, we introduced an interactive rewards program. Users can exchange the points they earn for benefits such as trail subscription, digital albums, and personalized privileges. We are enhancing user experience. The program also opens new avenues for commercialization for the future. Ongoing platform upgrades continue to reinforce our products appeal. This quarter, we introduce a light listening mode to facilitate a smooth listening experience in low bandwidth environments. Our enhancements allowing greater interface customization are driving increased user adoption of our platform's players. Beyond the listening experience, we captivated users with a variety of interactive activities, including themed song guest contests, subscriber badges, and more. These interactive features not only boosted the song streaming volumes, but also boosted more artists' follows and additions to favorites. As users' personal music assets on our platform grow, so does their loyalty to TME. Moving now to user acquisition, our focus here is on discovering and cultivating users with long-term paying potential through refund marketing and operations. During Chinese New Year, riding on the favorable seasonality, we utilized our deep understanding of users across various demographics to roll out a series of effective promotion activities. Our targeted multi-channel promotions with e-commerce, telecom operators, and long-form video platforms contributed to a stronger than expected subscriber growth in the first quarter. We also team up with auto companies to launch holiday themed playlists and common share promotions. This organically broadened our reach to new users and increased the user activity, contributing positively to the sequential MAO recover in our online music services. On partnerships, we recently followed the pre-installation partnership with Xiaomi Suqi. We also enhanced our collaboration with ride share leader, Cao Cao Chuxing. Our new self-service, real estate music selection filters, offers ride share passengers a easy to navigate music consumption, further extending our reach. Our trend-setting annual QQ Music Dianfeng Awards, QQ Music Dianfeng Shengdian, for the first time, included online merch offline offerings, participation in interactive online filters, rewarded fans with tickets to artists' meet and greets, artists' merchandise, and more. Thanks to a lineup of popular artists and inspired performance, This event reinforced our appeal among our core young user base. In short, our rich content and unparalleled product offerings continue to fill users' acquisition and engagement. With user needs at the heart of everything we do, we remain committed to creating a music platform that users cherish. With that, I will turn the call over to Shirley, our CFO, for a deep dive into our financials.