China’s online music entertainment platform Tencent Music Entertainment Group (TME) said late on Monday that it was planning an overseas expansion of its social entertainment services, the dominant revenue earner, after reporting sales that lagged guidance in the second quarter despite a 31% surge from a year ago.
Revenue at the provider of music streaming, online karaoke, and live streaming services rose to 5.90 billion renminbi ($859 million) during the six months that ended June 30, from 4.50 billion renminbi a year earlier, but still missed the 5.94 billion renminbi average analyst forecast compiled by Capital IQ.
Group turnover increased as online music paying users reached a record 31.0 million, an increase of 33.0% year-over-year, with 2.6 million net addition which represented the largest net addition since the first quarter of 2018, according to an earnings statement. Revenues from social entertainment services climbed by 35.3% to 4.34 billion renminbi, primarily driven by growth in both online karaoke and live streaming services.
Adjusted earnings per American Depositary Shares (ADSs) stood at 0.67 renminbi ($0.10) for the June quarter, comfortably above the 0.59 renminbi market forecast, even as the cost of revenue advanced by 46.1% due to higher content expenses and revenue-sharing fees.
“We are forging Internet of Things (IoT) partnerships with leading manufacturers of cars, smart speakers, and smart-watches, which will provide further channels for user acquisition,” Tony Yip, chief strategy officer said in the statement. “As part of our internationalization strategy, we are also looking to expand our social entertainment services outside of China, as we take initial steps to explore overseas opportunities for WeSing in South East Asia.”