(Reuters) - China’s Tencent Music Entertainment Group (TME.N) beat Wall Street estimates for fourth-quarter revenue on Monday, as the music streaming service added more paying users, sending its shares up 3% in U.S. extended trading.
Tencent Music, which has been shifting to a paid streaming model, has entered into multiple partnerships with international and domestic music labels in a bid to boost the number of paying users.
In December, a consortium comprising Tencent Music and its parent Tencent Holdings (0700.HK) said it would take a 10% stake in Vivendi’s Universal Music Group, the world’s biggest music label which houses Lady Gaga and The Beatles, giving Tencent Music more access to U.S. artistes.
Although Tencent Music’s user base is nearly three times that of Spotify Technology SA (SPOT.N), which is the world’s largest music streaming service, its paying users are comparatively fewer.
Spotify, a stakeholder in Tencent Music, has currently about 124 million paid subscribers, while Tencent Music reported a 47.8% jump to 39.9 million in the fourth quarter.
While Tencent Music has more users in its music streaming unit, the biggest revenue drivers are social entertainment services, including karaoke platforms, where users can live stream concerts and shows.
Monthly average revenue per paying user from Tencent Music’s social entertainment services rose 9.3% to 138.5 yuan ($19.81) in the fourth quarter. The company reported 12.4 million users for the segment, a rise of 21.6% from a year earlier.
Excluding items, the company earned 0.80 yuan per American depositary share, above analysts’ average estimate of 0.70 yuan per ADS.
Revenue of the company rose 35.1% to 7.29 billion yuan, above estimates of 7.08 billion yuan, according to IBES data from Refinitiv.
Reporting by Munsif Vengattil in Bengaluru and Pei Li in Beijing; Editing by Maju Samuel
