Tencent Music Entertainment (TME) shares were indicated lower in pre-market trading Tuesday after the China-focused music streaming platform posted weaker-than-expected second quarter revenues and slowing user spending.
Tencent said diluted earnings for the three months ending in June, the company's fiscal second quarter and its second as a public company, came in at just under 10 cents per share when converted into U.S. dollars, just ahead of the Street consensus of 8 cents per share. Group revenues, however, were pegged at a converted $835.95 million, just shy of the $842.6 million estimate from analysts covering the company.
Quarterly paying users on the group's social entertainment platform, which includes Karakoe-like services such as WeSing and Kuwo Live, rose 17% to 9.5 million, while online music customers edged only 1.2% higher to 652 million as the monthly average revenue per user rose 16.5% to $18.45 each, the slowest since the group went public late last year.
"We continued to expand our music content leadership by partnering with more music labels, as well as adding more content including music-centric variety shows, short-form videos and long-form audio such as audio books and podcasts," said CEO Cussion Pang. "We strengthened our alliances to produce and distribute more high-quality original soundtracks, including our partnerships within the Tencentecosystem to develop original music content for games, films and TV shows."
"In social entertainment, we not only effectively broadened our user base through mini-program and a lite version app, but also improved user engagement by adding new product features, especially social features with high user participation," he added.
Tencent Entertainment's U.S.-listed shares were marked 3.11% lower in pre-market trading Tuesday to indicate an opening bell price of $14.00 each, a move that would take the stock back to its December 2018 IPO level and value the group at around $23.85 billion.