Tencent Music Entertainment Group

Total revenue in Q2 2026 was RMB 8.9 billion, up 6% year over year. Music-related services revenue grew 11% year over year; membership services revenue was RMB 4.8 billion, up 8% year over year. Gross margin was 44.2% versus 44.4% a year ago. Operating expenses were RMB 1.3 billion, or 14.5% of revenue, versus 13.7% last year. Net profit attributable to equity holders was RMB 2.5 billion versus RMB 2.4 billion in the same period of 2025; IFRS net profit attributable to equity holders was RMB 2.7 billion, up 4% year over year. Adjusted EBITDA was RMB 3.3 billion, up 5% year over year. Diluted earnings per ADS was stated as RMB 1.7 in the prepared remarks. Cash, cash equivalents, term deposits, and short-term investments totaled RMB 44.2 billion as of June 30, 2026, versus RMB 41 billion on March 31, 2026. Management said Ximalaya contributed approximately RMB 0.4 billion to revenue in Q2 2026. No formal next-quarter or full-year quantitative guidance was given, but management said gross margin is expected to decrease slightly year over year in the second half, while sales expenses and operating expenses should rise slightly for the full year and net margin should decline slightly; EBITDA should edge up a little.

The CEO/lead executive framed the quarter as resilient execution in a complex market and emphasized that the company’s strategy is centered on premium content, deeper partnerships, proprietary IP, and extending content into live events, merchandise, and audio. He highlighted Ximalaya as an important step in building a broader music-and-audio ecosystem and said the company is still in the early innings of unlocking premium IP’s full potential. Tone-wise, he was optimistic but careful, repeatedly noting that challenges remain while expressing confidence in long-term sustainable growth.

The CFO said Q2 2026 revenue was RMB 8.9 billion, up 6% year over year, with music-related services up 11% and membership services up 8% to RMB 4.8 billion. Gross margin was 44.2%, compared with 44.4% last year, and operating expenses were RMB 1.3 billion, or 14.5% of revenue, versus 13.7% a year ago. She said the quarter benefited from Ximalaya’s consolidation, while advertising faced headwinds in a difficult macro and competitive environment. On capital allocation, she noted RMB 44.2 billion of combined cash and investments at quarter-end and said the company repurchased 43.5 million shares for USD 400 million in Q2 under the existing buyback program.

Analysts focused on three main issues: how IP-related revenue can keep growing in the second half, what Ximalaya means for the financial outlook, and whether slower subscription growth and competitive pressure are affecting momentum. Management said IP monetization has a solid base from concerts, performances, merchandise, and SVIP benefits, and that Ximalaya broadens the platform into music plus audio, improving user reach and long-term growth potential. On AI, management said the current focus is engagement, retention, and subscription uplift rather than direct monetization alone, though they also said AI-generated music has already produced commercial returns. On shareholder return, management said it remains committed to the buyback program and is preparing for another round.