Tencent Music Entertainment Group

Good evening, good morning, and welcome to Tencent Music Entertainment Group's first quarter 2025 earnings conference call. I'm Millicent Tu, head of IR. We announced our quarterly financial results earlier today before the US market opened. The earnings release is now available on our IR website and via newswire services. During today's call, you'll hear from Mr. Kashan Pang, our executive chairman, and Mr. Ross Leung, our CEO, who will share an overview of our company's strategies and business updates. Then Ms. Shirley, who I'll set forward, discuss our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statement in our earnest release, which applies to this call as we'll make forelooking statements. Please note that we'll discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under IFRS in our earnings release and filings with the SEC. All participants are muted at this time. After management's remarks, there'll 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 Kassian, Executive Chairman of TME. Kassian.

Thank you, Madison. Welcome. Hello, everyone. And thank you for joining our call today. We kicked off 2025 with a strong first quarter performance, demonstrating robust top-line growth and stronger profitability. This underscores the successful execution of our high-quality growth strategy with the solid foundation we have built, a thriving music ecosystem, and healthy financial position. we are well-equipped to navigate global uncertainties with confidence. As music becomes more accessible and personalized, we see user preferences becoming increasingly diverse. Our platform is uniquely positioned to inspire deeper and broader music consumption through enriching our ecosystem and expanding suites of services. Let me share some of the key highlights. First, we strengthened our partnerships with record labels to further enrich our classic music library. Notably, we renewed the multi-year contracts with Sony Music Entertainment, bringing 360 reality audio sound privileges to SVIP members. We also extended collaborations with Empire Entertainment Group and Rock Records, enhancing the listening experience with immersive Dolby Atmos sound. Also, we partnered with Dream Music Group, Zhongmeng Yingyue, to further broaden our selection of popular music rap, which has grown growing engagement and positive feedback from our users. Meanwhile, our self and co-producer proprietary content is gaining increasing traction among music fans, offering a differentiated user experience that sets us apart from other music platforms. As for some highlights, in the first quarter, we partnered with CCTV News to produce The Time, Jing Shi Guang, for Zhou Shen, which ranked number one on the Google Mainland Chart and number four on the QQ Music Mainland Chart. We also produced One Thought to Eternity, Yi Nian Feng Shen, the theme song for the popular Tencent game Crossfire, 穿越火箭, which quickly topped multiple charts and resonated with both music lovers and gamers. Second, through our insights on contents and user-evolving preferences, we deepened and reverberated content consumption across different genres. While Chinese songs remain the mainstream choice, we are seeing increasingly popularity of Korean, English, and Japanese tracks. In this regard, we renew the contract with top South Korean labels Starship Entertainment and YG Entertainment, maintaining our leadership in Korean content while also launching merchandise collaborations, such as collectible star cards, our extended partnership with Japan's top ACG label Kadokawa Corporation, added thousands of tracks, including popular anime theme songs, further expanding genre coverage for the fans. Third, it fulfilled the users' demand for collectibles and providing them new ways to express their passion and appreciation of artists. Recent highlights included the 10-day headstart pre-sale of Beyond Eupopia, San Chong Lou, by Teens in Time, Shi Lai Shao Lian Tuan, which rose to number one on the 2025 physical album bestseller chart and number two on the all-time chart during this period. Another example is a physical album produced for Silence Wang, Wang Sulong, 100,000 Volts, Shi Wan Fu Te, which quickly became a favorite among his dedicated fans. We also collaborated with K-pop icon G-Dragon to be sell official light sticks and other products in mainland China. For fans who purchased his digital albums, we offered the privilege to buy China limited special edition merchandise, which achieved an impressive sales performance. Fourth, we offer the user more engaging and interactive music experience, both online and offline. In the first quarter, we seated nearly 40 well-known artists and groups, including JCT, Tan Jianchi, World Rang, Wang Yuan, Science Rang, Wang Sulong, and Legends of Phoenix, Fenghuang Chuanqi. In our annual Music for Passion, QQ Music's Chaoqi Dianfeng Zhiyue event in Chengdu, attracting tens of thousands of passionate fans We debuted ASPR's first-ever exhibition and Babymonster's pop-up store in Mainland China, offering fans limited collectibles, interactive displays, and behind-the-scenes content to deepen fan connections with the artists. Online, we invited artists such as Xin Liu, Liu Yuxing, Sean Tang, and from to engage directly with fans in the common sections. Sparkling waves of enthusiasm among their fans communities. Before I conclude, I also want to briefly touch on our ESG progress. In April, we released our 2024 ESG report to offer stakeholders enhanced transparencies and insights into our operations. The report details our practices and achievements in key areas, including intellectual property protection, user privacy, and data security. product inclusion and accessibility, and the fostering of diverse music communities. As we continue to unlock the potential of music and technology, we remain committed to advancing sustainable growth and creating social value. In summary, our sort of start to the year is a testament to the strength of our comprehensive content ecosystem and our operational excellence. These core capabilities together with our strategic focus ensure that we remain well positioned for sustainable growth in 2025 and into the future. 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, Ka-Shen. Hello, everyone. Our consistent focus on high-quality content and innovative product offerings has enabled us to build a dynamic music ecosystem that meets a wide range of user preferences. As a result, we have seen system enhancement in user engagement, illustrated by year-over-year growth in both paying user base and ARPPU in the first quarter. This positive trend was further supported by continued strength in SVIP adoption, reflecting the increasing recognition and engagement of our valued members. Here are some highlights to share. First, our premium sound quality and audio effect offerings remain a key attraction for SVIP members, penetrating about 15% of our SVIP user base. To illustrate, Kugel Music introduced the industry-first Vapor External Amplification Enhancement Sound Effect, which intelligently optimizes sound depth and clarity when using external speakers. We also launched a dedicated audio effect for iPods. enabling users to enjoy the advanced audio performance of the new models without upgrading devices. Second, a range of unique perks have proven effective in driven SVIP conversions, including unique album discounts, special badges, early access to merchandise and live events. As an example, at our annual Music for Passion event, SVIP members enjoyed special privileges such as priority ticket purchase. Moreover, those who bought tickets through this channel were also provided with exclusive services such as reception and transportation. We also have Fiona State, Xue Haiqi, staged her first 10,000-state Concert Hall in Mainland China, offering SVIPs early ticket access and a fun meeting and great opportunities. Additionally, we interest our system, enabling SVIPs to unlock expanded rewards, deepening their sense of identity and the community. Third, long-form audio content, particularly top IPs, contributed to boosting SVIP retention. In the first quarter, we created the audio drama, The Grave Robber's Chronicles, 盗墓笔记, and developed it with original author, Nanpai Sanshu, star voice actors, and the top 10 producers. Benefiting from interactive activities such as live streaming with the author and in character voice commentary by the leading voice actor, it quickly gained popularity, surpassing tens of millions of streams within just 14 days. On technology, We continued to use AI to elevate user engagement. One example was introducing an inductive commentary feature that transforms music charts into conversations, enhancing fun emotion. Users can also personalize music effects, switching between different vocals and instruments with one single click. In parallel, we adopted the DeepSeq LRM to help evaluate content quality and improve recommendation precision with user preferences. On the non-subscription side, advertising remains a key growth driver and continues to deliver solid year-over-year growth across the board, thanks to diversifying AD formats. In particular, our innovative AD supported mode grow from strength to strength in the past quarter. We have also introduced a variety of interactive tasks for both paid and unpaid users. We just saw upward trend in engagement and adoption. Such positive trends provided us further confidence to continue to grow our advertising business as a whole, unlocking more potential in the future. Looking ahead, we remain committed to enhance our competitiveness and pioneering new ways to inspire deeper and broader music engagement. With that, I would like to turn the call over to Shirley, our CFO, for a deep dive into our financials.