Tencent Music Entertainment Group

Good evening and good morning and welcome to Tencent Music Entertainment's second quarter 2024 earnings conference call. I'm Nelson Tu, head of IR. We announced our quarterly financial results earlier today before the U.S. market opened. The earnings release is now available on our IR website and via PR Newswire services. During today's call, you will hear from Mr. Khushan Pang, our Executive Chairman, and Mr. Ross Liang, our CEO, who will share an overview of our company's strategies and business updates. 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 the Safe Harper Statement in our earnings release, which applies to this call as well made forelooking statements. Please note that we've discussed non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under IFRS in our earnest release and filings for the SEC. All participants are muted at this time. After management's remarks, there will be a Q&A session. And please be advised that today's call is being recorded. With that, I'm very pleased to turn the call over to Khuson, Executive Chairman of TME Khuson,

Thank you, Melissa. Hello, everyone, and thank you for joining our call today. We are excited to report another solid quarter, underpinned by a 28% year-over-year growth in online music services, as well as a 26% year-over-year growth increase in adjusted net profit. The outstanding lead addition of over 10 million music subscribers in the first half of 2024, coupled with a rise in ARPPU, once again demonstrated our strong ability to break new ground within China's streaming landscape. We remain optimistic about the music industry's long-term potential and are committed to our long-term goals. In the meantime, we are consistently adjusting ourselves to better adapt to changing external environments, evolving user mindsets, and our different business development stage to continuously innovate and achieve sustainable growth at a healthy pace and with the right balance. Let me now share some recent highlights on our expensive content ecosystem, which is getting increasingly rewarding. First of all, we continue to expand and reinforce partnerships with artists and record labels to enrich our music library and to bring the best content available to our users. Our longstanding and extensive win-win partnerships with music labels enable us to secure more content-centric privileges for users, including but not limited to early access to the latest hits, This quarter, we extended our collaborative licensing agreements with some well-known Chinese bands, such as Soda Green, Suda Lu, and a top Korean label, CJ E&M, which would sense the highly popular K-pop boy band, Zero Base One. All these contract renewals include a 30-day head start pre-fetch of their new songs. Overall, we are pleased to see that such privilege has effectively improved the membership's conversion and engagement. Second, we continue to explore more engaging ways for users to enjoy music. During the quarter, we combine the proprietary fans-artists interaction benefits, such as live video calls with digital album releases, and you can effectively increase the sales. The new digital album of a popular Chinese singer is a recent success. It features artist-themed in-app decorations and virtual souvenirs and exceeded 1 million copies in sales within three months of release, ranking as the top seller here today on our platform. We have also seen solid digital album sales results from other artists, such as Chinese singer Lei Zhang, Zhang Yixing, and the popular K-pop girl group aespa. Third, as the demand for offline live performances continues to surge, we stepped up our efforts to host concerts and music festivals with more value added services. In July, we host our upgraded flagship annual event, TMEA Tencent Music Entertainment Awards 2024 in Macau. We broadened our horizons this time, featuring A-list domestic singers and rising musicians, as well as international idols. Notably, over 60 household names, including Joseon Ah, and the K-pop girl group Babymonster performed at this year's event. TMDA 2024 sparked billions of social media buzz, showcasing our elevated industry influence. We are also bolstering our capabilities to organize large-scale concerts for top-notch singers. For instance, the host tier raised landmark concert tour and helped her all achieve a milestone of over 10,000 attending fans. We are happy to see a significant year over year growth in our revenues from offline performances in the second quarter. This quarter, as a new initiative, we customized the event-themed artist merchandise for Karen Mock, Mo Wen Hui, concerts with head-started sales on our platform. We also provided our subscribers with member-only access to the online premier concerts of a popular Chinese band, Teens in Time, Shi Lai Shao Lian Tuan, as remarkable benefits. Fourth, our self-produced content continue to win popularity and boost user conversion. We strategically leveraged our extensive resources, effort, advantage in TV, films, IPs, and artists to elevate production, promotion, and success of our self-produced content. For example, we invited popular artists Zhou Shen, Kenji Wu, Wu Kequn, and Mika to perform the original soundtracks for Tencent Video's blockbuster TV series. Joy of Life 2, Qing Yun and Dear Jin, and The Tale of Rose. This self-produced songs amassed over 200 million streams in total on our platform within three months of debuts, ranking top three on OSD charts each day. In addition, our self-produced pop songs, Heard of You, Ting Suo Ni, and Who Am I, He Wu, went viral on short video platforms soon after being featured on the national music variety show, The Treasured Voice Season 5, which significantly boosted streams on our platform. Our high quality original content, combined with unique fan artist interactions, fulfills diverse music tastes and entertainment needs, fostering an increasingly dynamic content ecosystem. We always try to inspire society and share our love for music. In the second quarter, we jointly launched another Little Red Flower Concert with Tencent Charity, partnering with volunteer artists and teachers to support the local education for children in rural areas through online and offline performances. We amplified its online reach and social influence this time by deeply collaborating with wasting video accounts to livestream the concerts. In summary, we record a solid second quarter performance, finishing the first half of the year on a strong note, both operationally and financially. We believe the power of our platform, the value of premium music content and expanding members' privileges will have a snowball effect, leading to a healthy and sustainable growth. Guided by our long-term view, our goal is to lay a strong, solid foundation for future progress and to promote the vibrant win-win development of the industry. Now, I would like to turn the call over to Ross for more details on our overall platform development. Ross, please go ahead. Thank you.

Thank you, Kaishen. Hello, everyone. Our focus on user-centric innovation has effectively increased the music subscribers and enhanced retention during this quarter. This reflected our ongoing efforts to advance our products and services, especially the focus on the high-value subscription plan, the Super VIP membership. Our approach to continuously delight users keeps us at the forefront of the streaming industry. A few quarterly highlights to share. First, we further enhanced sound quality and effects as part of our premium offerings. For example, QQ Music upgraded its self-developed Audio 3D 2.0 and Kugoo Music launched Viper Ultra Sound while featuring ultra-clear sound quality. They also presented users with new ways to enjoy the music, including sound quality for certain high-end headphones and playlists with best in-class audio quality. These improvements have led to not only higher user adoption, but also increased music consumption. Second, to meet the user's personalized needs, We have launched a series of benefits, including customized printers and ringtones based on well-known IPs and artists. These features resonate with users' desire for self-expression and proved effective in user convention and retention. Third, our premium SVIP membership is gaining more traction, employing a holistic and seamless listening experience across various devices and multiple scenarios. SVIP integrates music with long-form audio and online karaoke services, always superior sound quality. It wins the hearts of our higher active members with comprehensive online and offline privileges, such as priority access to digital albums and the ticket booking for live music events, including our TMEA. We are pleased with the early progress of SVIP membership adoption and are looking forward to sharing more exciting news down the road. Next, our more personalized music discovery and optimized listening experiences. A few key projects to spotlight. We upgraded our recommendation mid-well across all our music apps, enabling users to discover songs by the card to their taste. During the quarter, nearly 40% of streams were generated from recommendations. Without involving large audio models, we continue to improve more efficient music distribution and the discovery of new and long-term content. We also animated our platform's overall experience with AIGC applications. For example, we introduced the data-saving AI-enhanced SQLite mode, Wusun Shengyou Moshi, while preserving superior sound quality, and the Google Music Virtual DJ filters and QQ Music 3D avatar offer users a sense of companionship. On the visual side, we refined our streaming UI design to offer a more inviting and effortless experience. For example, QQ Music launched an industry-first multi-device matching playback feature and a compact half-screen music player. Users can now enjoy seamless music streaming when switching across different devices and applications. Last but not least, we further expanded our rewards program to include more benefits, such as artist merchandise. Its growing popularity among users has effectively boosted music content consumption and increased user engagement. To sum up, all the above efforts contributed to a high stickiness on our platform, as reflected by both year-over-year and quarter-over-quarter increases in time spent per user in the second quarter. Moving forward, we are committed to offering more compelling services that better align with needs of diverse music lovers, ultimately expand our paying user base and increasing user loyalty. With that, I would like to turn the call over to Shirley, our CFO, for a deep dive into our financials.