By Josh Ye and Samrhitha A
(Reuters) -China’s Tencent Music Entertainment Group said on Tuesday second-quarter revenue rose 5.5% year-on-year, driven by a rise in user subscriptions, but warned that future revenue will shrink as tighter live-streaming controls come into effect.
Total revenue of the Spotify-like music streaming company controlled by Chinese tech giant Tencent Holdings Ltd stood at 7.29 billion yuan ($1.00 billion) in the quarter to June 30, in line with Wall Street estimates, according to Refinitiv data.
The number of paying users of its online music streaming service rose more than 20% to 100 million, a milestone for the company.
However the group said in a call with analysts that it has implemented risk control measures across its live-streaming services which will result in a “low to mid-single-digit per cent decrease” for its total revenue this year from last year.
Tencent Music’s shares gained about 1% in New York when the market opened on Tuesday.
Tony Yip, the company’s chief strategy officer, said Tencent Music is making adjustments to its live-streaming business in order to “better control potential risks the platform may face in the future”, without elaborating on the type of risks.
He added that the company is “adjusting certain live streaming functions and adopting more stringent compliant procedures”, describing them as necessary for its platform’s “healthy development in the long run”.
He said total revenues for the company will experience “a low to mid-teens percent decrease” in the coming quarter from the same period last year.
But the company said profit will continue to grow this year. In the second quarter, net profit attributable to equity holders rose to 1.30 billion yuan from 856 million yuan a year earlier.
($1 = 7.2850 Chinese yuan renminbi)
(Reporting by Josh Ye in Hong Kong and Samrhitha Arunasalam in Bengaluru; Editing by Maju Samuel, Tomasz Janowski and Jan Harvey)
