Tencent Music Entertainment Group (TME) Q1 2026 earnings summary

Executive summary

• Achieved steady performance in Q1 2026 amid intense competition, with diversified monetization and triple-digit year-over-year growth in offline concert-related business.

• Total revenues reached RMB 7.90 billion (US$1.15 billion), up 7.3% year-over-year, driven by strong growth in music related services.

• Focused on building a multidimensional commercialization model, strengthening copyright protection, and investing in premium IP and AI-driven content creation.

• Enhanced catalog with renewed contracts for classic music and deepened partnerships with major artists and labels.

• Expanded fan engagement through digital albums, SVIP memberships, and artist merchandise.

Financial highlights

• Q1 2026 revenue grew 7.3% year-on-year to RMB 7.90 billion, with music-related services revenue up 12.2% year-on-year.

• Membership services revenue reached RMB 4.57 billion, up 6.6% year-on-year.

• Gross margin was 44.9%, up from 44.1% in Q1 2025, aided by higher membership and advertising revenues and lower channel fees.

• Net profit attributable to equity holders was RMB 2.09 billion, down from RMB 4.29 billion in Q1 2025 due to a one-time gain last year.

• Adjusted EBITDA was RMB 2.83 billion, up 10.5% year-on-year; non-GAAP net profit was RMB 2.27 billion, up 7% year-on-year.

• Cash, term deposits, and short-term investments totaled RMB 41 billion as of March 31, 2026.

Outlook and guidance

• Expect some short-term volatility in gross margin due to competition and seasonality, but long-term outlook remains optimistic for IP-based monetization.

• Management emphasized scalable growth, durable monetization, and expanding user reach through a tiered subscription strategy.

• Continued investment in premium IP and AI to drive differentiation and engagement.

• Guidance for gross margin in Q2 is to remain on par with last year; selling expenses will rise moderately for the year.