Tencent Music Entertainment Group

NYSE:TME

Q1-2025 Earnings Call

[Millicent T., executive]

Good evening, good morning, and welcome to Tencent Music Entertainment Group's First Quarter 2025 Earnings Conference Call. I am Millicent T., 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 Newswire services. During today's call, you'll hear from Mr. Kar Shun Pang, our Executive Chairman; and Mr. Ross Liang, our CEO, who will share an overview of our company strategies and business updates. Then Ms. Shirley Hu, who our CFO will discuss our financial results before we open the call for questions.

Before we continue, I refer you to the safe harbor statement in our earnings release, which applies to this call as we'll make forward-looking statements. Please note that we 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 will be a Q&A session. I'm pleased to be advised that today's call will be -- is being recorded.

With that, I'm very pleased to turn the call over to Kar Shung, Executive Chairman of TME. Kar Shung?

[Kar Shun Pang, executive]

Thank you, Millicent. Welcome. Hello, everyone, and thank you for joining our call today. We kick 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 sound foundations 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 suite 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 multiyear contracts with Sony Music Entertainment, bringing 360 reality audio sound privileges to SVIP members. We also expanded collaborations with Emperor Entertainment Group and Rock Records, enhancing the listening experience with immersive Dolby Atmos sound.

Also, we partnered with Dream Music Group, [Foreign Language], to further broaden our selection of popular music rap, which has 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 for Zhou Shen, which ranked #1 on the Kugou Mainland Chart and #4 on the QQ Music Mainland Chart. We also produced One Thought to Eternity, [Foreign Language], the theme song for the popular Tencent game CrossFire, [Foreign Language] which quickly topped the multiple charts and resonated with both music lovers and gamers.

Second, through our insights on content and user-evolving preferences, we deepened and we regulated content consumption across different genres. While Chinese songs remained the mainstream choice, we are seeing increasingly popularity of Korean, English and Japanese tracks.

In this regard, we renewed 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 our extended partnership with Japan's top ACG Corporation, and thousands of tracks, including popular anime theme songs, further expanding genre coverage for the fans.

Third, we fulfilled the users demand for collectables and providing them new ways to express their passion and appreciation of artists. Recent highlights include the 10-day head-start presale of Beyond Utopia, by Teens in Times, which rose #1 on the 2025 physical album best seller chart and #2 on the all-time chart during this period. Another example is the physical album producer for 100,000 bots which quickly became favorite among his dedicated fans.

We also collaborated with K-pop icon G-Dragon to be sell official light 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 is shipped an impressive sales performance.

Fourth, we offer the user more engaging and interactive music experience, both online and offline. In the first quarter, we stated nearly 40 well-known artists and groups, including JC-T, Roy Wang, Silence Wang and LEGEND OF PHOENIX in our annual MUSIC FOR PASSION, QQ Music event in Chengdu, attracting tens of thousands of passionate fans.

We debuted aespa's first-ever exhibition and BABYMONSTER's pop-up store in Mainland China, offering fans limited collectables, interactive displays and behind the scenes content to deepen fan connections. Sparkling waves of info and 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 enhance the transparencies and insights into our operations. The report details our practices and achievements in key areas, including intellectual property protection and data security, product inclusion and accessibility and the bolstering 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 solid 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 will 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.

[Liang Zhu, executive]

Thank you, Kar Shun. 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 certain 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 increase in recognition and engagement of our valued members. There 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, Kugou Music introduced the industry-first by amplification enhancement sound effect, [Foreign Language] which intelligent optimize the strong depth and when using external speakers.

We also launched a dedicated audio effects for ear pods, enabling users to enjoy the advanced audio performance of the new models without obligating devices.

Second, a range of products have proven effective in driven SVIP conversions, including discounts, special budgets, early access to merchandise and live events. I think example at our MUSIC FOR PASSION event, SVIP members enjoy the 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 stage their first 10,000 state hall in Mainland China, offering SVIP early ticket excise and fan meeting and great opportunities. Additionally, we increased our system, enabling SVIPs to unlock expanding rewards, given 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 Grand Chronicles, and development with original author star voice actors and the top producers.

Benefiting from interactive activities such as live streaming with and voice commentary by the leading voice actor. It quickly gained popularity surpassing tens of millions of streams in just 14 days.

On technology, we continue to use AI to elevate user engagement. One example was introducing an interactive commentary feature by the transformers music into conversations, increasing fund emotion. User can also personalized music effects switching between different and instruments with one single click.

In parallel, we adopted the DeepSeek ERM to help evaluate content quality and improved 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 In particular, our innovative AD supported mode grew from strength to strength in the past quarter. We have also introduced a variety of interactive tasks for both paid and unpaid users which saw an upward trend in engagement and adoption. That 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 paneling 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.

[Min Hu, executive]

Thank you, Ross, and greetings to everyone. Let me now turn to our financial results in Q1 of 2025, our effective monetization of online music services and operational expense management continued to drive robust financial results with strong performance in our musical subscription and advertising business.

Revenues continued growth momentum and reached RMB 7.4 billion with a 9% year-over-year growth. Online music revenues increased by 16% year-over-year to RMB 5.8 billion. The equation was mainly driven by strong growth of our music subscription revenues and advertising revenues, supplemented by growth in revenues from artist-released merchandising and off-line performances.

Building subscription revenues in Q1 of 2025 reached RMB 4.2 billion, representing a 17% increase year-over-year and a 5% rise sequentially, driven by continued expansion of the SVIP membership program and reduced the promotional activity, mostly up increased to [ RMB 9.4 ] this quarter compared with RMB 10.6 in Q1 2024.

To meet the evolving needs of our users, we keep enriched the rights and the privileges of our SVIP members such as premium audio content, enhance sound quality and effects and early access to artist-related merchandise and live events.

Advertising revenues also achieved strong year-over-year growth, primarily due to the growth in AD supported model revenues with more interactive features and reached benefits we boosted the rate for ad-supported model advertising, enhanced the ECPM and attracted more advertisers.

Meanwhile, sponsorship or advertising remains attractive to brand advisers. The sets of our flagship MUSIC FOR PASSION, [Foreign Language] event was a great example to evidence this through off-line event sponsorships, we adjacent advertiser partnerships while driving ecosystem monetization.

In addition to music subscription and advertising, we have also made good progress on artist-related merchandise sales and offline performance. In Q1, we started shipping the physical album of Sheldon released in Q4 2024 and the related revenues were recorded, resulting in a year-over-year revenue increase from artist-related merchandise sales.

In addition, with the increased opportunities in offline performance market, we have strengthened the partnership within the music industry and successful concerts, building renewed artists leading to revenue growth this quarter.

Social entertainment services and other revenues declined 12% year-over-year of RMB 1.6 billion. Starting this quarter, we have ceased disclosing operating metrics for social and tenant business on a quarterly basis. As we have shifted our strategic focus to our core music business, which has accounted for a growing dominant portion of our revenue. Operating metrics for social entertainment business are no longer considerably the key drivers to our growth and prospects.

Our gross margin improved to 44.1% and increased 3.2 percentage points year-over-year, driven by the following key factors. First, the strong growth of our subscription revenue, driven by increased monthly ARPPU and advertising revenues has contributed to the growth of gross margin. Revenues from leasing membership and advertising in social entertainment services has also positively impacted our gross margin. Second, the scaling of our own content further improved our gross margin. Third, for social and entertainment services, the decline in revenue sharing fees outpaced the revenues. Fourth, with years of dedicated efforts and investments, we have established the win-win relationships with labels and artists. This has enabled us to explore more partnership opportunities and monetization models with them and further improve our cost efficiency.

On the operating efficiency side, we have maintained a strict financial discipline and focus promotional spending management while directing investments toward long-term growth areas. Operating expenses as a percentage of revenue decreased of 15.5% in Q1 2025 compared with 16.8% in the same period of last year.

Our effective tax rate for Q1 2025 was 9.2% compared to 19.9% in the same period of 2024. The lower ETR was primarily due to the impact from game the disposal.

We accrued withholding tax of RMB 118 million in Q1 of 2025. In Q1 2025, our net profit was RMB 4.4 billion, and the net profit attributable to equity holders of the company was RMB 4.3 billion. This quarter, we have received a 2% equity interest in distribution income from associates, which was designated as financial effect as at value through other comprehensive income and have recognized a gain of RMB 2.37 billion in the disposal of the associate.

[indiscernible] network increased by 23% to RMB 2.2 billion and net profit attributable to equity holders of the company increased by 25% to RMB 2.1 billion, respectively. Our diluted earnings support ADS this quarter was RMB 2.77 and non-IFRS diluted earnings per ADS was RMB 1.37, up by [ 26 ] year-over-year. These results underscore our effect to monetization, enhanced operating efficiency and the benefit from our share repurchase program.

As of March 31, '25, our combined balance of cash, cash equivalents and short-term deposits were RMB 37.7 billion as compared with RMB 37.6 billion as of December 31, 2024. This combined balance was also in exchange rate of RMB to SVIP different balance sheet dates.

In March 2025, we cleared a cash dividend of [ USD 0.09 ] for [ USD 0.5 ] per year for the year ended December 31, 2024, and the cash payment for the dividend of USD 275 million was made in April 2025.

Looking ahead, we will prioritize high-quality growth in our music business by expanding SVIP memberships, growing our advertising business and diversifying our offerings across music value chain. We will continue to invest in original content production, high-quality content and innovative technologies globally to further improve user engagement, user experience and strengthen our system. We remain confident in the health growth prospect of the music industry, and we are a parter and are committed to given high-quality investment returns for our shareholders.

This concludes our prepared remarks. Operator, we are ready to open the call for questions.

[Operator]

[Operator Instructions] And the first question comes from the line of Goldman Sachs, Wendy.

[Zhi Yi Chen, analyst]

Congrats at a very solid first quarter performance. So can management share a bit more comment around the outlook of our top line profit growth for the next quarter as well as for the full year 2025?

[Kar Shun Pang, executive]

Thank you Wendy for your questions. And actually, we did a good job and achieved a strong result in Q1, which gave us confidence in the 2025 outlook. With our risk service offerings and also the comparing product experience as well as our long-term commitment in participating in the value chain of the music industry, we expect full year year-over-year growth rate to accelerate from last year, and we will continue to expand our margin as well.

While the music subscriptions business remain our cornerstone with healthy growth, we continue to lead the way to encourage more music consumptions which has allowed the users to engage with a wide range of music entertainment services.

Our SVIP subscription program continues to inject new energy and its unique offerings such as the artist merchandise, non-fund audio content and concert, et cetera, will further enhance our user engagement and ARPPU expansion. So all these achievements reinforce our confidence in the long-term potential of the music industry and also our commitment to ongoing investment.

So in the conclusion, I think for the year 2025 for our subscription businesses, we will continue to deliver high-quality growth driven by both of the subscriber gains and the ARPPU expansion.

And for the loan subscription business, improved advertising performance and product innovation will continue to drive the steady advertising revenue growth, while deeper partnerships with music labels and artists will boost the revenue for merchandise and concerts, et cetera. Thank you.

[Operator]

And the next question comes from the line from Citigroup, Alex Liu.

[Zhangxiang Liu, analyst]

Congrats on the solid results. Question is on how do management think about the growth opportunity of podcasts in China? Can you also share a little bit detail the current -- your long-form audio user metrics and also revenue contribution?

[Unknown Executive]

[Foreign Language] Thank you very much. Thanks for the question. At least in domestic China market, when talking about pod cast, it could be interpreted in narrow sense and the broader sense.

When interpreting the podcast from the network sense, actually, it's just like the normal podcast we mentioned. It still be conducted in single person live streaming or multi-people down lock. It is a way to voice so it has everything to do with the KOLs.

So we say that for forecast in the rest of the world, especially in U.S., it was developing very fast, but still in China, its coverage quite limited, but still maintain some growth. So we continue to keep an eye on podcast business. And for sure, regarding each commercial value, there will be some challenge.

Actually, for our company, we're going to emphasize we prioritize the long form for audio business, just like what has been done by Scotty, we really would like to continue to advance the long-form audio business.

Actually, regarding the long-form value, and we believe we continue to grow the user base. At the same time, it can also play a complementary role with our existing subscriber rates. And more importantly, regarding the long-form audio business, we are more focused on listening to the books, online literature and children related content.

So with our concerted efforts regarding the long-form audio user, no matter for the user base or the subscriber base, we indeed registered a very nice performance, and it has also become a key driver to advance our SVIP business.

So in one word, we do believe our medical content and long-form audio going to play a complementary role to each other. It's also going to help further enhance the quantity and quality of our entire TME content library by providing our user a much better experience, even including the basic user.

[Operator]

The next question comes to the line from Macquarie, Ellie.

[Ellie Jiang, analyst]

I just have a question on SVIP progress. Can management share some kind of operating metrics or key KPIs for SVIP? What's the retention that we are seeing for the users that's been converted to the premium tier? And going forward, what would be kind of the ultimate kind of seal for the ARPU expansion?

[Unknown Executive]

Thank you very much. Thanks for your question. Actually, for the management team, we are quite satisfied with SVIP business progress now. At the same time, we are pleased to see, at least from the content perspective, more labels and more artists and even the live streaming platform, including those ones from overseas market started to embrace the trend of SVIP.

SVIP as a high-end membership package, not only provide user with diversified music and entertainment experience, it also allowed artists to have access to their fans in multichannels. It also increased opportunity for commercial value monetization.

So at nowadays, you can see for SVIP penetration ratio and ARPPU, all demonstrate very strong growth momentum. We will continue to improve and polish our membership system, where at the same time, we are also going to launch more attractive privilege and channel mix studios to our user. As always, our very effective operational strategy, we believe our SVIP paying users and ARPPU will continue to grow. At least for this quarter, our paying users and ARPPU all demonstrate very good sequential growth.

Actually, rolling out SVIP business is strategically aligned with our overall strategy. When we launched SVIP, A key reason is because we really want to leverage SVIP to continue to improve the ARPPU of our overall business. So from this perspective, SVIP started to play a driver role in demonstrating great resilience and the growth is even faster than what we expected.

So look into 2025, and we believe for SVIP business, we still maintain a positive attitude for its future growth, where at the same time, we were also going to increase investment for the high-value membership service, continue to forge in-depth cooperation with labels and artists and continue to improve our product appealing and the customer satisfaction.

[Operator]

The next question comes from Morgan Stanley, Yang Liu.

[Yang Liu, analyst]

I would like to ask about the ARPPU growth the 7.5% year-on-year growth looks pretty good. Could management comment on the contribution from Super VIP and also the contribution from the less promotion activities to the overall ARPU year-on-year growth.

[Unknown Executive]

Thank you very much. Thanks for the question. Actually, we -- it's not appropriate for us to provide you the breakdowns, but let me just tell you, we are very clear, Q1 of every year will be a season with festivals and holidays, and we indeed continue to optimize our operations in Q1. Where at the same time, we also downsized the discount we provided to the market. And from the actual result, it indeed helped to further improve ARPPU.

So from the actual results, you can see, as I have already mentioned, we are still expecting the indigenous growth of SVIP business that can play an even bigger driver role to our overall ARPPU, where for the marketing strategy itself, and we have already started to further reduce and continue to improve the ARPPU for our basic members.

So in one word, we are still going to keep an eye on the feedback from the user and the dynamics of the market. because ultimately, what we hope to achieve is to continue to grow the ARPPU while at the same time, guarantee the user experience and the subscriber size healthy growth.

[Operator]

The next question comes from Alex C. Yao from JPMorgan.

[Alex Yao, analyst]

And congrats on a solid quarter. So my question is on the nonpaying subscribers. So basically, as we shift towards this high-quality growth strategy will be I think at least increasingly deemphasizing the price-sensitive consumers who often come just for deep discount. And once we cut the discount, these price-sensitive users tend to be just turned out of the membership user base. So the question is that now we probably need to deemphasize more of those presentative consumers. What is the monetization strategy on these nonpaying users? In the past couple of years, we talked about advertising. So any updates on monetization of these nonpaying members on advertising? And then other than advertising, do we have any other strategy or thoughts to monetize these nonpaying members?

[Unknown Executive]

Thank you very much. Thanks for your question. This question is indeed very complex because we do have some measures to those so-called free users or the nonpaying users.

So from our operational perspective, our operational focus still hope to convert those nonpaying users into the subscribers. This might demonstrate the great value of the company, and it is also the priority of the company because indeed, by so doing, we will be able to build long user group and continue to grow our revenue in a sustainable way.

So for those nonpaying users, still what we're doing now is to leverage incentive-based advertisement. First of all, we may have some great music model, but at the same time, we also have the online learning measures. By the 2 measures, we will be able to make sure, we still retain the nonpaying user but be able to have a good advertising revenue from them.

Where at the same time, we also see other sources of the revenue related to the economy, for example, like digital album or defense merchandise for the single download and purchase. These are also ways to help us to monetize over these nonpaid users.

So general speaking, for those nonpaying users, we do leverage the outright performance, for example, like concept like merchandise, like the play of defense economy, including the advertisement to continue to generate good business opportunities from those nonpaying users.

[Operator]

The next question comes from UBS, Wei Xiong.

[Wei Xiong, analyst]

Congrats on the solid results. My question is about margins. So our gross margin continued to expand sequentially this quarter, and management shared different drivers behind that in the prepared remarks. So just wondering, out of these drivers, which ones do we see have higher potential for future to further drive up the upside of gross margin going forward? And do we have a medium-term target for that? And also related to that, considering our efforts in cost discipline, could you please also talk about the plans for OpEx this year? And how should we think about the net margin trend as well?

[Unknown Executive]

Thank you very much. Thanks for your question. Just now in the prepared remarks, we have already mentioned a few drivers for the ever-improving GP margin. And I think the most important driver is still the growth of the revenue. Where at the same time, we also see the revenue growth from the subscribers and advertising and especially in the growth of the subscribers, the SVIP growth would likely to be a key driver for our future business improvement.

Where at the same time, another very important factor we have to consider is a cost initiative. We continue to welcome to the cost, and the cost management methodology is also the key. We continue to adopt ROC in managing our content cost. At the same time, we make sure the cost growth is always lower than the revenue growth.

Another factor I have to mention is that we were deeply rooted in the music industry with huge investments we made. So at the same time, we forged a very strong win-win partnership with the IP holder for the copyright owner. So this investment has already generated a very good yield, not only helping us to well control the cost, we will be able to forge a debond with labels and artists and therefore, it can help us to leverage multiple ways of monetization, which will also help to further improve our cost efficiency.

So look into 2025 for the whole year or even the year beyond 2025, I believe the fact has been mentioned in our prepared remarks will continue to play their due roles. In other ways, we believe our GP margin will still have room to further grow.

Well, for your second question regarding the operating expenses, for the year of 2025 to our clearance sales expense, majority of them will still be made for the acquisition of the new users and promotion of the content.

So before, there will be a slight increase in our sales expenses, but its overall growth should be lower than the growth of our entire revenue.

Well, for the management expense, it we're going to maintain a flat growth. So compared with last year, our net profit and net profit rate will have room for further improvement.

[Operator]

The next question comes from Barclays, Roger.

[Unknown Analyst]

Congrats on a very solid quarter. So my question is on international opportunities, especially in Southeast Asia. We have a very small footprint there, the music app and also we're going to host Grains, Southeast Asia toward this year. So can management talk about your thoughts on the opportunities in the region? And would that be an area of investment you take a look at this for maybe next year?

[Unknown Executive]

Thank you very much. Thanks for your question. International market is always a very important part of our overall strategy.

At now, our group does have a very strong overall strategy, and the strategy includes the content as well as the platform development. We are going to adopt the same strategy for our international business.

Where from the platform perspective, we will continue to advance the construction of our platform and especially till now, we did a good performance in Southeast Asia market. But besides the product and service improvement, we are also going to build the content ecosystem and continue to engage in the content creation in the overseas market, along with the offline performance opportunities being captured.

So on one side, we continue to invest in our content ecosystem, and which will help to deliver high-quality content to our overseas platform where at the same time, we also hope that we can engage in the music content and artist management.

And for the past few years, we continue to improve our operational capacity of the platform and also make huge investment on content. We will continue to engage the international market and make continued investment. Thank you.

[Operator]

And the next question comes from Misuho, Fang Wei.

[Wei Fang, analyst]

Congrats on a good point. I got one on advertising. So if I look at the non-submusic segment, right, I recall last quarter, there was some timing impact from off-line events, and now this quarter, we see a good acceleration, right? Of course, the macro condition has changed a lot. I was wondering if management can share any thoughts on the outlook for your advertising and also the pipeline for offline advanced business for the rest of the year? It would be great if you could also comment on some of your initiatives in terms of expanding to, for example, newer advertising verticals and also optimizing your ad bidding system?

[Unknown Executive]

thank you very much. Thanks for your question. And let me first talk about advertisement, especially online advertising. As I have already mentioned, we do have a wide range of the advertising format. For example, we do have the scratch screen advertisement as well as incentive-based advertisement.

In the past 1 to 2 years, our advertising revenue does register a very strong Y-o-Y growth, it's mainly attributed to our innovative incentive-based advertising business.

Well, for the past 2 to 3 years, we continue to roll out free to listen to the music business, which registered a very nice achievement. Starting from this year, we also started to launch the online earning business model. and the online earning business model can help us to access to the larger user base with very strong motivation from the business. So we filled out the online earnings model actually be able to continue to advance which will help us to make sure advertising revenue continued to go beyond our expectation.

Regarding the advertising system, we're still adopting the advertising system from the Tencent Group. No matter from its bidding capacity or from the advertiser expansion or the AI enabling, we do see the Tencent advertising system is making the industrial leading performance, and this can also help us to further grow our advertising-related revenue.

So actually, we also observed the microeconomic feature is looking right. So for the online advertising business, no matter in Q1 of this year for the full year, at least from the operational perspective, we still maintain a very positive attitude on the advertising revenue for the whole year.

[Unknown Executive]

I'll answer your second part of the question regarding the outline performance, especially the concert. For past 2 to 3 years, we do see the offline performance continue to thrive.

With a very strong growth momentum for the platform performance, I think the priority for TME Group is continued to improve the quality of our performance business.

For the past 2 to 3 years, we are also very pleased to see many of our partners, including the strategic audits [indiscernible] ways as well as labels and poles. They supported us a lot. We also would like to say thank you to all of them.

So at this moment, I think we have a few things that we need to do right and good. And the first one is the tour of our artists especially, you mentioned in your question, the Dragon as well as some of the audits we have strategic partnership wins. We hope that we will be able to provide them good support, where at the same time, offering the audience or defense a good opportunity to appreciate high quality of line performance.

Well, at the same time, for our indigenous IP event, for example, like QQ MUSIC FOR PASSION, we do hope that we will be able to improve its performance for this year. We hope by organizing or help to sponsor those offline performance. We will be able to provide a comprehensive musical experience to all of our users where at the same time, to play the of the VIP privilege. In that way, we will be able to help grow the SVIP subscriber base.

So ultimately, we hope that the TME overarching strategy with one body two to to be fully demonstrated. In that way, we will create a greater value to the market and the society as a whole.

[Operator]

Thank you, Kar Shun, and thank you, everyone, for joining us today in the interest. This concludes today's call. And if you have any further questions, please feel free to contact the IR team. Thanks again, and look forward to speaking to you next quarter. Okay. Bye.

[Unknown Executive]

Thank you, Bye.