Good evening, good morning, and welcome to Tencent Music Entertainment Group's first quarter 2026 earnings conference call. I'm Millicent Tu, Head of IR.

We announced our quarterly financial results earlier today before the US market opened. The earnings release is now available on our IR website and via newswire services.

During today's call, you will hear from Mr. Cussion 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, 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 today's call as we may make forward-looking statements.

Please note that we will 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. Please be advised that today's call is being recorded.

With that, I will now turn the call over to Cussion, Executive Chairman of TME. Cussion, please.

Thank you, Millicent. Hello, everyone, and thank you for joining our call today.

Despite an increasingly competitive landscape in the music streaming industry, we delivered a steady performance overall this quarter. Our growth is increasingly driven by diversified monetization across the music value chain, with the offline concert-related business achieving another quarter of triple-digit year-over-year growth.

We will continue to accelerate the development of our multidimensional commercialization model, which is deeply rooted in our commitment to cultivating a vibrant and legitimate music ecosystem. While AI is rapidly expanding the supply of content, it is also introducing significant market noise and new industry challenges.

The proliferation of unauthorized AI-generated content not only creates headwinds for our music subscription growth, but also undermines creators' rights and dilutes the long-term value of the music ecosystem as a whole. In response, we are working closely with creators, rights holders, and regulators to lead and champion robust copyright protection efforts.

While the nature of these challenges is unique to the AI era, we have successfully navigated major copyright and IP transitions before and have consistently been at the forefront of those efforts. We remain confident in our ability to adapt, lead by example, and help shape the future framework for intellectual property protection in the age of AI.

This commitment has further sharpened our focus on what truly drives long-term value and sustainable growth. Today, we are more convinced than ever that original human creativity and premium music IPs are the ultimate differentiators.

That's why we are evolving beyond traditional streaming services into an integrated music ecosystem that further unlocks the value of every piece of IP. This holistic approach is designed to deepen engagement and expand user wallet share.

Against this backdrop, we have further optimized our catalog, ensuring that our licensed and proprietary content offers valuable emotional resonance that users crave. Let me share two examples.

First, we further enhanced our classic music catalog, capitalizing on the enduring demand and extended life cycles of timeless hits. We recently renewed contracts with labels including JVR Music, Linfair Records, and Rockmobile Baby Music Limited, securing continued access to iconic catalogs from artists such as Jay Chou (周杰伦), Karen Mok (莫文蔚), Harlem Yu (庾澄庆), and Angela Zhang (张韶涵), further reinforcing our leadership in premium content copyrights.

We also deepened our strategic partnership with TF Entertainment, providing users with a 30-day head-start benefit for upcoming releases and exploring collaboration across physical products, live performances, and other IP-related opportunities. Second, the streaming share of our in-house new releases has seen a steady rise, reflecting our ongoing efforts to enhance production capabilities.

A notable example is our collaboration with Sony Pictures on the Chinese theme song "The Star Fixers" (修星星的人) for the sci-fi blockbuster Project Hail Mary, performed by Josen. The song gained strong traction upon release, quickly topping multiple charts across our platforms.

Across our business, AI has become a key enabler, accelerating time to market, improving production efficiencies, and enhancing user experience. Importantly, it complements, not replaces, human creativity and further reinforces the scarcity and value of premium IPs.

Let me walk you through how we are actively embracing AI to further enhance our content ecosystem and, in turn, unlock additional value from legacy IPs. First, we provide creators with tools to reshape every stage of the creative process.

For instance, our one-stop AI music production tool, Venus, stimulates the full-cycle songwriting process of professional musicians, from lyrics, compositions, and arrangement to vocal performance and mixing. This empowers creators to produce high-quality works more efficiently and at lower cost.

Second, as we bring more legitimate AI-generated music onto our platform, we are pleased to see that high-quality AI works can, in turn, revitalize classic IPs and endear them to younger generations. Some AI covers of classic hits are often among the most popular tracks.

By reimagining iconic songs with innovative styles and vocals, these reinterpretations spark renewed interest, driving listeners back to the original versions and amplifying the visibility and commercial value of legacy IPs. As more premium IPs thrive on our platform, they serve as a powerful engine for our broader commercialization efforts.

By building holistic pan-IP-related music experiences, we continue to lead industry consumption and grow at scale. Whether through immersive live performances or innovative fan-based economy, we are elevating music's influence while deepening wallet share.

Specifically, first, our highly loyal user ecosystem continues to attract leading artists and IPs seeking deeper collaboration. By strengthening strategic partnerships, we extend IP value chains through integrated virtual and physical offerings.

A key example is our collaboration with Jay Chou on his digital album, Children of the Sun, where we launched a packaged offering combining the album, SVIP memberships, and physical collectibles. Supported by a nationwide offline campaign across 45 cities, the release achieved strong viral traction, topped major charts, surpassed RMB 1,000 million in sales, and drove meaningful SVIP conversions.

We also deepened partnerships with leading artists including Kun (蔡徐坤) and Roy Wang (王源), whose recent releases delivered strong fan engagement and commercial performances. Second, we also continued to strengthen cross-cultural reach through deepened offline partnerships with leading domestic and international labels and artists.

This quarter, we delivered multiple flagship concerts, drawing over 10,000 attendees, maintaining a strong execution standard in live performances. Notably, BABYMONSTER's concert in Taiwan, China and NCT WISH concerts in Hong Kong, China attracted both core fans and broader audience, expanding their reach.

Third, we are cultivating our premier artist rosters to amplify the global footprint of Chinese music. This is exemplified by Silence Wang's (汪苏泷) debut world tour across Asia and North America and GAI's (周延) first large-scale show in Singapore.

Domestically, concerts by Will Pan (潘玮柏), TIA RAY (袁娅维), Angela Zhang (张韶涵), Jane Zhang (张靓颖), and Zhang Yuan further deepened fan engagement. Before concluding, I would like to share our ESG progress.

In April, we published our 2025 ESG report. Over the past years, we stepped up in creator empowerment, product inclusivity, and value-chain sustainability.

These efforts reinforce the long-term value and resilience of our ecosystem, as reflected in the ESG rating upgrades and external recognition. In closing, we are encouraged by the progress we have made.

Amid the challenges, we are elevating the strategic priority and investment in copyright governance, taking a more resolute stance to safeguard the long-term health of the music industry. We remain committed to advancing the broader creative economy, unlocking new opportunities, and driving enduring long-term value.

Now, I would like to hand the call over to Ross for an update on our overall platform development. Ross, please go ahead.

Thank you.

Thank you, Cussion. Hello, everyone.

In an increasingly competitive landscape, we are building a more resilient platform powered by our content and platform dual-engine, driving user differentiation, engagement, and lifetime value. As we strengthen our competitive edge and further differentiate our offerings, we are transitioning to a membership-based model that goes beyond content subscriptions to deliver more immersive music experiences.

I will share more details shortly. For today's call, I would like to primarily focus on two areas: user growth and monetization efficiency improvements resulting from better services.

On the user front, maintaining a healthy top-of-funnel remains our foundation. Let me share some updates.

First, we are excited to further deepen our integration with the WeChat ecosystem to broaden reach and streamline user conversion. By embedding a pathway within Weixin Video Accounts, we facilitated a seamless transition from short-video music discovery to full-track playback on our platform.

This also elevates musicians' exposure, helping them convert casual short-video viewers into a loyal fanbase on our platform. Second, for Kugou, where competitive pressure is a bit more acute, we lowered barriers to entry through more freemium and ad memberships.

Third, we leveraged AI to drive engagement with improved recommendation systems, efficient discovery enabled by AI agents, and easier playlist creation. Growth in music assets boosted engagement.

We also saw exponential growth in both AI-driven listening and playback DAU. At the same time, personalized features, such as theme avatars, player innovations, and interactive tools, led to a deeper sense of belonging on our platform.

Turning to how we are unlocking greater IP value and increasing user lifetime value, we continued to execute exciting tiered plans. As I mentioned earlier, we launched a new initiative to transition to a membership-based concept with enriched content and rights offerings.

Although still in its early stage, we see strong long-term potential in IP-driven offerings through enhanced benefits and integrated rights. First, SVIP membership continues to see stronger adoption and retention thanks to our refined operations and innovative benefits.

For example, we appointed JC-T (檀健次) as our first cross-platform SVIP family brand ambassador. This strategic partnership significantly enhances the perceived value and public awareness of our premium offerings.

In addition, to further differentiate our SVIP premium offerings, we continue to expand fan-based benefits and audio privileges. On the content front, we introduced China-limited edition digital albums combined with physical collectibles for leading K-pop artists such as BLACKPINK, aespa, and IVE.

On the platform and product front, we launched TME Connect, enabling high-fidelity audio transmission across multiple devices. Kugou Music launched the LiveHouse sound effects, and QQ Music further deepened collaboration with Dolby to become the first music platform in China to support Dolby AC-4 audio format.

We also extended this immersive experience to Dolby House, an offline audio experience space, for artists like Charlie Puth, Silence Wang (汪苏泷), and BLACKPINK. Second, we pioneered more IP-centric memberships to capture diverse user demands.

A key milestone this quarter was the launch of our inaugural fan club, Romance Universe, with Silence Wang (汪苏泷), offering priority ticket access, unique content, and artist-centric perks that resonate well with fans. At the same time, we continue to expand artists' reach on Bubble, welcomed Shuxin Yu (虞书欣) as Bubble's first Sony Music artist, and enhanced product features such as in-chat search functionality, which further strengthened user engagement and retention.

Last but not least, we are unlocking incremental growth by scaling IP-driven offline offerings, particularly with artist merchandise. For instance, we served as the sole distributor for TOP's (登陆少年组合) debut physical album and other sought-after merchandise, such as Yuqi's (宋雨琦) [Skiki?]

New Year gift box and Hu Xia's Super Plus collectibles. Beyond merchandise, we brought the (G)I-DLE City of Scent China debut exhibition to life in collaboration with Cube, delivering a multidimensional immersive experience for fans.

To conclude, while challenges remain, we are confident in our path forward. We will continue sharpening our competitive edge to strengthen our vibrant platform, one that attracts users, deepens engagement, and unlocks new monetization opportunities.

With that, I would like to turn the call over to Shirley, our CFO, for a deep dive into our financials.

Thank you, Ross, and greetings, everyone. Let me now turn to our financial results.

In the challenging environment, we have delivered steady financial results in the first quarter of 2026, with 7% year-on-year revenue growth. Revenues from music-related services grew 12% year-on-year, driven by solid growth in revenues from membership services and offline performances-related services, supplemented by growth in revenues from advertising services.

Revenues from membership services were RMB 4.6 billion, up by 7% year-on-year. In the first quarter of 2026, this quarter, we started presenting membership services revenues to better reflect the nature of our membership business.

Revenues from membership services primarily consist of membership fees paid for membership benefits and privileges within music-related services. Over time, some IP-related benefits, such as artist merchandise and offline performances, have emerged as key drivers of SVIP adoption.

Additionally, our newly launched fan club memberships further enrich fan experience and is a great example for integrated product with content and platform strategy. These collaborations we have built with strategic artists across music promotion, offline performances, artist-related merchandise, and fan club membership provide more immersive experience for fans and help enrich privileges of our membership programs, building win-win relationships for everyone.

Additionally, we delivered solid year-on-year growth in advertising revenues, driven by growth of ad-supported model and sponsorship advertising. Our increased number of paying users and the churn of casual users created more challenges for our advertising business in the increasingly competitive market.

We have taken actions to improve the ads exposure, lower the entry barriers, and offer more engaging interactive ads tasks for users. As our growth engine, offline performances-related services have achieved strong results in Q1.

We have positioned our strategic artists, such as Will Pan, Silence Wang, and GAI, on high-profile stages across domestic and overseas markets, effectively expanding their global influence and further unlocking their long-term commercial value. Also, we have hosted the flagship concerts with leading K-pop groups, including BABYMONSTER and NCT WISH.

Revenues from social entertainment services and others were RMB 1.4 billion, down by 11% year-on-year. Our gross margin in Q1 2026 was 44.9%, up by 0.8 percentage points year-on-year.

The year-on-year increase was primarily due to increase in revenues from membership services and advertising services, along with decreased channel fees. Additionally, we are happy to see cost efficiency improvement for IP-related services.

In the long run, we are confident that our gross margin will remain competitive in the industry, although it may fluctuate quarter-over-quarter due to seasonality. Moving on to operating expenses, they amounted to RMB 1.2 billion, representing 15.3% of our total revenues in Q1 2026, compared with 15.5% in the same period of last year.

Selling and marketing expenses were RMB 271 million, up by 36% year-on-year. In response to the competition and to mitigate the impact of user churn, we increased channel spending this quarter.

Operationally, we have improved the relevance of target audience while keeping high ROI level in the industry. Going forward, we expect to dynamically adjust our channel spending strategies according to evolving market conditions with ROI requirements.

Meanwhile, we expect to increase content promotion and continue to provide high-quality content to our users, which concurrently helps grow users on our platform. General and administrative expenses were RMB 940 million and remained relatively stable compared with the same period of 2025.

Our net profit attributable to equity holders was RMB 2.1 billion, compared with RMB 4.3 billion in the same period of 2025, as we have recognized a gain of RMB 2.4 billion on deemed disposal of an associate in the first quarter of 2025. Our diluted earnings per ADS this quarter were RMB 1.34.

This quarter, we started disclosing non-IFRS metrics, adjusted EBITDA, to better reflect our core business operation results. For Q1 2026, our adjusted EBITDA was RMB 2.8 billion, up by 10% year-on-year.

Non-IFRS net profit attributable to equity holders of the company was RMB 2.3 billion, up by 7% year-on-year. As of March 31, 2026, our combined balance of cash, cash equivalents, term deposits, and short-term investments was RMB 41 billion, as compared to RMB 38 billion as of December 31, 2025.

This combined balance was impacted by changes in exchange rate of RMB to USD at different balance sheet dates. In March 2026, we declared a cash dividend of US$0.12 per ordinary share, or US$0.24 per ADS, for the year ended December 31, 2025.

The cash payment for the dividend of US$317 million was made in April 2026. In addition, as part of our long-term commitment to shareholder returns, we plan to complete the two-year stock repurchase program that we announced in March 2025 on time.

Finally, I will conclude with some remarks on the outlook. Looking ahead, while challenges exist, our long-term strategy and commitment to investment in content and technology remain unchanged.

We continue to focus on IP development for the long-run health of our business and industry. Through comprehensive collaborations with our strategic partners, we will continue to bring new benefits and privileges to our users and create more innovative products.

All these practices enable us to build a richer and more dynamic music and entertainment ecosystem. This concludes our prepared remarks.

We are now ready to open the call for questions.

Thank you, Shirley. If you are dialing in by phone, please press 5 to ask a question and then 6 to unmute yourself.

If you are accessing the call from the Tencent Meeting or VooV Meeting application, please click the "Raise Hand" button at the bottom left. For the benefit of today's call, please limit yourself to one question, and then if you have more, you can go back to the queue.

The first question comes on the line from Lincoln Kong from Goldman Sachs. Lincoln, your line is open.

好，谢谢管理层接受我的提问。那我也是看到我们一季度也取得了一个很稳健的一个成绩。那刚才

Cussion 其实也有说到，就是我们现在是有采取一个 holistic approach of the ecosystem。那我想问的话，就是我们这个音乐相关的这些收入在 2026 年，比如说余下的这段时间的一个展望，尤其包括就是会员和非会员收入的一个主要的一些增长的 driver，以及大家可能也比较关心就是会员业务目前的这个竞争的一些态势的一些变化。然后这个讲到这个 ecosystem 相关，就今天刚才也看到就是喜马拉雅的这个收购的一个批准，不知道就这个东西 Cussion 现在可不可以有些分享，它对我们这个 TME

的整体的这个生态的一个帮助和结合应该是怎么样的？谢谢。Thank you very much for giving me this opportunity to ask first question. Just now, first of all, congrats on the good performance in Q1.

Just now, you said you're going to take a holistic approach, also make full use of whole ecosystem to improve our business. My question, first of all, is about the revenue guidance for remainder of 2026.

Can you give us an outlook on the member and non-membership business and what are key drivers for future growth? Especially, as we know that the competition remains intense, especially for membership businesses.

Speaking of the ecosystem, we have noticed that the Ximalaya still has been approved by the regulator, and can you give us some update on how it can improve our performance in the whole ecosystem?

OK，谢谢 Lincoln 的提问。我先按照我们未来的 guidance 先做一些陈述。其实在坦白讲，在当前的比较充满挑战的环境底下，TME

在第一季度，我们依然是实现了非常稳健的一个业绩的一个增长的。主要是我们坚持了平台与内容生态双引擎的一个策略，帮助我们构建了一个不可替代的一站式的音乐的娱乐生态。本季度我们看到音乐非会员的业务的增长是比较强劲的，演出相关的业务再次实现了三位数的同比的增长。Thank you, Lincoln, for a question. First, I want to say a few words about the guidance for the remainder of 2026.

Despite a challenging environment, we achieved a steady performance in Q1. This is attributed to our content plus platform dual-engine strategy, which has helped us build an irreplaceable one-stop music entertainment system.

This quarter, non-membership growth was robust, and our performance-related businesses, once again, achieved a triple-digit year-on-year growth. 我们当前面对的竞争的压力是比较大的，那一方面是来源于竞争平台在用户流量以及无序的价格的竞争，叠加了

AI

带来的盗版问题、内容的问题。所以我们后续的音乐流媒体相关的业务收入的增长会带来一定的不确定性。那我们后续呢会在运营重点上围绕以下的三方面。However, competitive pressure remains significant. Disorderly price competition within the industry, coupled with the rampant issue of pirated content driven by AI, has introduced uncertainties regarding future revenue growth of traditional streaming services.

Moving forward, our operational focus will center on three key areas. 第一点呢，我们是加大我们的维权的力度。我们拥抱

AI 当作为提升内容生产效率的工具，但我们不会让 AI

成为侵权的借口。针对行业当前的乱象呢，我们已经建立了一个专向的维权的机制，坚决地维护平台、版权方以及创作者的合法的权益。那我们也欢迎技术的创新，但尽一切的能力来打压洗歌、盗歌、蹭热度等等的侵权行为。First of all, strengthening enforcement to prevent AI from becoming an excuse for infringement. In response to industry chaos, we have established a dedicated rights protection mechanism to resolutely safeguard the legal interests of our platform, copyright owners, and creators.

We welcome tech innovation, but we'll do everything in our power to suppress song washing and other infringing behaviors. 第二个方向呢，我们在用户的流量方面，我们已经在加大还有加深跟腾讯体系的合作。今年的

4 月份开始呢，我们已经开始加大了跟微信视频号的深度战略合作，打通了短视频与音乐的消费场景。视频号用户听到好歌曲以后呢，他可以一键跳转到 QQ 音乐直接收听，帮助用户实现从发现音乐，到正版的收听、收藏以及高品质的消费的无缝连接。音乐的创作者呢，也可以获得更多的宣传还有曝光的机会。Second,

expanding top-of-funnel traffic through deeper integration with the Tencent ecosystem. April this year, we entered into a deep strategic partnership with WeChat Channels.

By bridging short-form video with music consumption, WeChat Channels users can now jump directly to QQ Music with one single click when they discover music they like. This creates a seamless connection from discovery to legitimate listening, collection, and high-quality consumption, while providing music creators with greater promotion and exposure opportunities.

第三方面呢，我们会继续利用好我们在平台上的繁荣的

IP 生态，深化用户一站式的音乐消费的心智。多年来的积累让我们不仅拥有了海量的优质的内容储备，更拥有了很多生产好歌的创作者，以及追随这些艺人的用户群。为了充分的去释放这个生态的长期的价值呢，我们正通过 IP

的规模的扩张以及价值的深挖两个维度来拓宽我们的竞争的优势。Third, leveraging our flourishing IP ecosystem to solidify the one-stop music consumption mindset. Years of accumulation have provided us not only with a massive library of premium content, but also with the creators behind the hits and the loyal fanbase that follow them.

To fully unlock the long-term value of this ecosystem, we're broadening our competitive advantage through two dimensions: IP expansion and value deepening. 首先我们在扩大

IP 的矩阵里面，我们会不断的扩大合作艺人的 IP 的矩阵的同时，我们也会发力的去构建我们既有艺人的体系。目前我们的生态呢已经聚集了非常多的头部的以及非常出色的音乐人，在我们的中国里面有非常优秀的艺人已经在我们的矩阵里面。第二个价值呢，就是我们的价值延伸，我们既有的艺人的一个建立之后，我们也让我们更灵活地去打通音乐创作到商业授权、品牌合作的全产业链的链条，显著的提升我们 IP 的变现的效率。与我们战略合作的艺人像汪苏泷的合作作为例子，合作内容已经从早期的围绕歌曲本身的内容首发权益，拓展到现在的帮他举办个人的演唱会、实体周边的销售，以及本季度我们也携手打造了首个 Fan Club

的会员的服务，围绕以艺人为核心的构建专属的粉丝的体验，包括我们优先入场，还有独特的粉丝福利等等。First, expanding the IP matrix. While continuously expanding our matrix of partner artists, we're also building our in-house artist system.

Currently, our ecosystem features numerous talented artists. Second is the expanding value chains.

Establishing an in-house artists system allows us to flexibly integrate the entire industrial chain, from music creation to commercial licensing and brand collaborations, significantly improving IP monetization efficiency. Taking our strategic partnership with Silence Wang as an example, our collaboration has evolved from early digital release rights to organizing concert tours and selling physical merchandise.

This quarter, we also co-launched our first fan-based membership service, building a dedicated artist-centric fan experience that includes priority entry and unique fan benefits. 所以最后呢，我们对于未来的业务的展望，我们是理解到会受到竞争的影响。我们也预期会员以及广告的业务的增速短期内会有一些的波动。但当我们集中精力做好我们的内容的维权，加大用户的引流还有维护，在围绕

AI

的综合的打造还有变现呢，我们对长期的业绩的表现还是比较乐观的，而且能够保持一个稳健的长期的增长。Looking at a year as a whole, we expect some short-term volatility in the growth rate of our membership and advertising business due to competition, but we will try to be proactive in safeguarding our copyright, try to divert more traffic from the ecosystem. In the long run, we remain optimistic about our comprehensive IP-based monetization, and which we expect to maintain steady growth.

对，因为今天刚刚我们获得了一个批准，所以我们也是跟腾讯集团一起，我们也将严格的去遵守国家市场监督总局在公告里面所有的各项要求，我们认真的会去履行各项承诺，确保交易能够依法合规地推进。We just received the notice of the approval from the SAMR, and along with the Tencent Group, TME and Tencent Group will follow strictly the requirements of SAMR and all the commitments to ensure the transaction will be proceeded accordingly and legally.

Thank you. The next question comes from Alicia Yap from Citigroup.

Alicia, please. Alicia, your line is open.

Are you with us?

Oh, hello. Yeah.

Can you hear me now?

Yes, we can.

Okay. 感谢管理层接受我的提问，也恭喜这个稳定强劲的业绩。那个我的问题是关于这个包月这块，想请管理层能否给我们就是划分一下这个就是不同的这个等级，比如说尤其是广告订阅用户的这个增长，还有这个用户的留存大概是怎么样的一个情况？然后另外呢就是这个我们这种新增的 Fan Club 和 Bubble 的这种新型的这个订阅服务，他们的贡献或者是以后的增长潜力大概是怎么样？然后未来会不会这些对于整个 ARPU 的这个增长是一个重要的驱动力？然后我知道这个喜马拉雅交易可能刚刚批准啊，就是不知道管理层有没有一个初步的，就说后面的一些长音频订阅的一些初步的计划跟我们分享？我自已翻译一下。So thanks management for taking my questions.

My question is related to subscription. Can management share some details about the subscription tiering split?

What is the growth status for the advertising subscription user? Also, what are their retention rate?

The contribution and the growth potential from those newer subscription, like the Fan Club and Bubble, will this become a meaningful driver for the blended ARPU growth in the future? Then with the pending approval of the Ximalaya transaction, any preliminary plan on the long-form audio subscription plan in the future?

Thank you.

对，所以我们现在来看，首先我们要清楚，我们目前的整个定位，我们定位目前的集团我们是要作为作为一个一站式的综合的音乐服务平台。First of all, the positioning of TME business is to make a one-stop music service platform. 因为从酷狗音乐和

QQ 音乐这边我们其实已经发展了 20

多年，这么多年来我们其实持续是以音乐为核心去拓展我们的业务版图。Kugou Music and QQ Music has been developing for over two decades, and over the years, we have been expanding our business based on music. 所以在这么多年来，其实我们已经比较好的从传统的音乐订阅业务已经延伸到了更广泛和丰富的服务的品类。For years, we have evolved from doing traditional streaming business to a broader category of business.

所以针对你刚才那个问题来说，因为这几级会员的留存，我们目前并没有公布，但是我们可以说因为这个几级会员的提供使得整体的会员的留存是一个相对比较稳定的。As to your question about user retention for different tiers of users, we have not disclosed this number, but in general, it's very stable. 实际上多级会员体系的设计是仍然还是针对我们不同的用户对音乐这样一个需求来定义的。The design of a multi-tier member system is to meet the demands of different kind of users.

所以我们比如说我们对于轻度的用户，或者说在本身的中低度活跃这个群体里面，我们使用免费模式以及广告会员来去提升他们的留存以及去考虑其中的一些商业的价值。For light users or not those very active users, we're using free and ad-supported approach to improve retention and tap their commercial value. 那基础的音乐服务始终还是位于对于相对比较高的用户的认同，而且比较有粘性的这些用户去提供的一个会员的服务。Basic music service is mainly for the users who have a relatively high demand for music and also for those sticky users.

那对于更深度的，所以我们在目前刚才提到我们去建立了无论是非基于粉丝的

Fan Club，包括 Bubble

的这些基于粉丝效应的这些服务，那么都是针对于有更多元化的用户需求来对应的。For those deeper value users, like our products like Fan Club, Bubbles are for those users who have a more diversified demand. 所以我们相信呢，其实现在未来针对于

IP 的为核心的这样一个音乐订阅服务，那包括不仅音乐，包括音频，就是我们现在看到的就是比如我们对于听书和儿童这类相对来说这种音频跟音乐更深的基于 IP

的高价值的这种服务，我们能够发掘更大的商业机会和提升我们的用户的留存。I believe in the future, the IP-based music subscription, not just a music subscription, but also audio subscription business, including like book listening or kids' audios, this IP-based content will create a bigger commercial opportunities and also improve our retention. 所以总的来看，其实从现在后面开始，我们仍然围绕着

IP

为核心去建立这样的一站式的综合的服务平台，那同时在上面去更好地提升用户的留存，那么在其中自然而然的这些商业机会就能够被我们去发掘到。All in all, in the future, we will continue to build IP-based one-stop music service platform, and with all of this, we can continue to improve user retention and tap more business opportunities.

这也是我们现在其实跟竞争对手来相比来看，我们应该是最具价值的一部分。And

this is the very part that provides the most value compared with our competitors.

Thank you. The next question comes from Morgan Stanley, Leo Yang.

Yang, your line is open. 感谢提问的机会。那我的问题是也是关于这个会员服务的这个情况。那这个季度会员服务年对年还是有不错的增长，但是环比

Q-on-Q 的话还是有一点点下跌。我想多理解一下这个后面的原因，因为我的理解是这个业务按理说的季节性不太强，但也有可能 1Q 可能是演唱会的淡季，不知道会不会有一些这个环比上的影响。那这个下滑环比下滑的背后除了季节性以外，我不知道是不是有一些比如竞争带来的问题，更多的是有一定的客户流失，还是腾讯音乐这边自己的防御，比如说有一些用户可能从中高端的套餐降级到了低端的套餐？那这种情况多不多？然后如何判断接下来的这个环比的走势，就是 membership

收入的环比走势？谢谢。Thank you very much. My question is about member services.

We noticed that this quarter, if you look at YoY growth, that's fairly good. If you look at quarter-over-quarter, it's going down slightly.

I'm just wondering what is the reason behind, because as far as I can tell, this business doesn't seem to have a very strong seasonalities. Probably, I guess it's because Q1 is a relatively low season.

Apart from the seasonalities, is there any other possible reasons like competition, some churns of users, or some higher-value users are changing their packages from high packages to some cheaper packages? Could you also give us some guidance of the future quarter-over-quarter growth for this business?

对，我们其实可以看到主要还是从首先我先回答刚才那个问题，并不是因为我们自己的

SVIP 的降低或者其他流失所导致的。所以我刚才提到说我们其实 SVIP

本身仍然能够保持比较好的一个增长，所以这是首先，所以这块就我们中高活跃的群体其实是没有受到多少影响。Well, first, I want to respond to your question by saying it's not because some SVIP members have chosen some lower or cheaper packages or because of the churning of users. As you can tell, that our SVIP membership is still growing steadily.

Our medium to high-value users are still there. 所以你确实看到环比的这个变化呢，主要竞争确实是来自于音乐流媒体这个板块，当然尤其是对于免费和价格敏感的用户。Well, as you mentioned, this Q-o-Q slight decline is mainly because of the competition on the music streaming business, and especially for those free and ad-supported members.

对，市场上也出现了一些偏离商业本质的现象，对部分这种行业的从业者也通过

AI

去生成一些盗版的内容去快速填充曲库，并以激进的这样一个导流的方式去争夺轻度和价格敏感型的用户的注意力。We've observed some phenomenon in the market that deviate from the business essence. Some other competitors are using AI to quickly fill their music libraries and try to use aggressive strategy to divert traffic and users into their platform and they're also fighting for those light users.

所以在我们看来，现在确实是一个比较重要的时刻，因为这时候其实是这样的行为实际上对产业这种健康生态的一种消耗，更是对我们自身长期商业价值的一个透支。Well, we noticed that this is a very important moment for the industry, because such behaviors is an exhaustion of the economic value of this industry, and also they are consuming their own business value. 所以面对这样的环境，刚才也就是像我刚才所说的，我们仍然就要去专注于去是一个综合性的一个音乐服务平台。Amid this environment, as we said in the beginning, we will stay focused on building a one-stop, comprehensive music service platform.

当然就是这个来看，正因为我们在两个比较大的一个音乐平台去提供了我们的音乐的包月收入，一个是酷狗，一个是

QQ

音乐。We provide monthly subscription music services on two music platforms, Kugou and QQ Music. 所以像刚才我讲完提到的，其实实际上来说，酷狗的平台的用户对于价格和对于促销的活动是更为敏感的，那在多平台这样选择的面前，轻度用户的流失性确实在相比之前是有所增加的。Users on Kugou platform is more price-sensitive and promotion-sensitive, and while in face of multiple choices, and these kind of users are easily flowing away.

所以我们这样的情况就是在实际上在这样的话其实是会影响到对于酷狗音乐平台的会员的开通量。Well, this will have some impact on the new membership growth on Kugou platform. 那在这样的情况下，我们就要通过免费模式和广告会员来去降低我们的用户的使用门槛。In this context, we have to use the free and ad-supported mode to reduce a barrier to entry.

另外我们酷狗的概念版在应该说在上半年也取得了一个比较好的增长，能够用更加灵活的变定价和内容组合去满足用户的轻度化的需求。Kugou concept version is also posting a very robust growth in the first half of this year, because we're adopting a more flexible pricing and content to retain these light users. 而因为

QQ

音乐相对来说比较综合。QQ Music is relatively more comprehensive platform.

所以整体的我们的运营数据还是比较健康，并且保持稳定的。So

the overall operational data on QQ Music platform is steady and healthy. 然后用户本身在全平台的这个价值上是甚至上稳中有升的。The overall value of users on this platform is even increasing.

另外就刚才我们所说，在我们刚刚发布的视频号和

QQ 音乐的合作，我们相信也会进一步的去巩固我们在在这个 app

上的竞争优势。The recent release of the collaboration between WeChat Channels and QQ Music will further consolidate our competitive advantage. 最后，我们也相信其实实际上我们在无论是在线下的体验以及我们多设备上的用户的规模仍然还是也是我们一个比较好的一个竞争的一个优势，使得我们自己在未来去实现我们更好的商业化的机会提供一个更加非常好的一个基础。Lastly, our offline performance or experience, or multi-device user experience and scale remain to be our competitive edge, which provide a solid base for us to further tap commercial opportunities.

Thank you. The next question coming from Mizuho, Fangwei.

Wei, your line is open. 好，谢谢接受我的提问。我有个问题想请教一下

Shirley 总，因为我们看到这个季度的那个 gross margin 其实是比上个季度环比有一些提升，那我不知道这样会不会改变管理层对上个季度对于今年全年的这个

gross margin 这样的一個预测？因为当时你们说是一个平稳或者是有一点点下降。然后我想在另外请教一下，就是 sales marketing 这个季度确实有增长，那你们有提到这个是因为你们跟这个腾讯内部做更深度的整合，我想问一下这一块的这个 cost ratio 会是一个 one time 吗，还是或者说在未来的几个季度里面会维持一个相对来说比较高的这样一个数字？谢谢。Thank you very much. We noticed that the GP margin this year actually is grew a little bit quarter-over-quarter.

I'm just wondering in this case, will you change your overall the whole year's guidance on GPM? Because I remember last quarter's call is that the overall year's GP margin will stay flat or even decreasing slightly.

We also noticed that the selling expenses actually increased a bit. Is that because of the deeper collaboration with Tencent ecosystem?

I'm just wondering if this cost ratio is it one-off or 同比来看呢，我们的这个

Q1

确实是取得了不错的这个毛利率，那么主要的原因因为以下几个因素。Well, if you look at YoY in Q1, we've had a very good GP margin, mainly because of the following reasons. 第一呢就是

Q1

的会员及广告收入持续增长，这个对我们的毛利率还是一个持续正向的。Number one is in Q1, we see a continuous growth of membership and ads business, which contribute positively to our GP margin. 第二点呢，就是尽管我们的

IP 相关业务收入占总收入的比例是相对增长的，那由于 IP 相关业务中的经纪类业务增长是比较快的，占比也逐步升高，那同时演唱会及活动类的业务积累了运营经验，也提升了运营效率，那么总体而言，我们觉得 IP

类的这个相关业务在本季度呢对毛利率的影响基本是没有的。Well, despite the fact that the IP-related businesses are growing very rapidly in terms of the overall contribution to the revenue, and especially if you look at our brokering business is growing exponentially and its proportion for overall contribution to the revenue is also going up. We can also tell that our offline performance and event business, through that, we have accumulated lots of experience and improved the operational efficiency.

Overall, the IP-related business's impact on the GP margin is is close to zero. 所以第三点就是说我们也同时对各项成本呢进行了积极的管控，也提升了

ROC，也取得了不错的成效。The

rigid cost control also generated very good results on ROC. 那环比来看呢，毛利率的提升呢，主要是因为 IP

类的相关业务的收入的季节性波动。Q1 的这个占比显著是收入的占比是显著低于去年 Q4

的。Well, if you look at quarter-over-quarter, the rise of GP margin is mainly because of the seasonality of IP-related business, because if you look at Q1, the contribution from this business is far lower than Q4 last year.

这个对毛利率呢产生了一个正向的影响，那么抵消了会员与广告收入季节性的一个负面的影响。Because

it generates some positive impact over GP margin and also offset the impact of the seasonality reasons of membership and advertising business. 那么根据这个预期，我们对未来的这个收入增长的节奏的一个预期呢，我们预计这个

Q2

的这个毛利率与去年基本同期是持平的。Well, as to the our expectation over future revenue growth, we expect to have a GP margin on par with the last year in Q2.

那么长期来看呢，我们预计我们现有的会员和广告收入的增速会稍微放缓，相对来放放缓，但是我们会通过对各项相关成本的严格管理，在内容上减少对低价值、非优质内容的无效的投入，那么结合苹果渠道费率下降的这个情况，我们认为我们的这一块的业务会保持一个盈利的韧性。In the long run, we expect some slowdown of the growth rate from membership and advertising business, but we will adopt very rigid cost control measures by reducing our resource allocation to low-value, less-effective content, and plus the reduction of channel fees from Apple Store, and all of this will provide enough room for the resiliency for our profits. 那另一方面呢，我们 IP 相关的新业务的高速增长，那么对毛利率确实是会带来一些结构性的压力，那么特别是季度和季度之间，那我们会持续的优化运营，按项目精细化管控投入产出，利用平台和内容的结合、线上和线下的结合，那么扩充自有 IP

规模等方式，不断去扩大盈利空间。Well, as our IP-related business is growing robustly, which will have some structural pressure on our overall GP margin. We will keep optimizing our cost and adopt project-basis project-basis measures to control cost, and also we'll use our content platform content plus platform strategy, online plus offline, and also improving increasing the percentage of contribution of our own proprietary IP business, and with all of this measures, we can we can maintain a steady profit.

长期来看呢，我们对我们的毛利率保持行业的优秀水平是有信心的。In the long run, we are very confident to stay at the front line of our GP margin in the industry. 还有销售费用。对。那么讲到销售费用呢，确实在一季度是增长了

36%，那么这个是我们面对这个日益激烈的这个市场竞争，我们战略性的加大了音乐平台的這個获客的投入，那么我们聚焦广点通、字节等渠道的优质点位的流量，精准定向高价值的用户，并结合星光卡等一分的内容进行推广，那么渠道投放用户质量和效率都有明显的提升。Well,

as to the question about the selling expenses, in Q1 went up by 36% year-on-year, that's mainly because of the intensifying competition in the industry. In face of such intensifying competition, we have strategically increasing our expenses in user acquisition for our music platforms.

We're using different channels like ByteDance to acquire higher-value users and also using the light card of the artists to acquire more high-quality, high-value users. 同时呢我们也增加了自有内容的推广的投入，那么进一步提升歌曲的曝光的热度，强化平台内容的核心竞争力，来使得这个我们的提升平台用户的粘性。In the meantime, we're also promoting our proprietary content to increase the music exposure and also increase the core competitiveness of our own content.

With all of this measures, we try to increase the stickiness of our users. 那么另外呢我们依托这个腾讯系，我们今年也会将资源重点投向微信视频号的生态战略合作，那么帮助视频号建设音乐生态。With the Tencent ecosystem, this year, we will allocate some strategic resources with WeChat Channels, and we will help WeChat Channels establish its own music system.

那如为视频号引入音乐人、头部歌手和工作室，并且和腾讯视频的头部的音综去合作宣发，来提升视频号给

TME 引流的效率。And

we will work with the top-tier musicians, singers, and studios, and we will do some joint promotions and even releases with them so as to create and improve the overall efficiency of our collaboration.

那预计假以时日呢，随着视频号生态音乐生态的完善，借助微信生态的流量红利，TME

能有效提升获客的效率。We expect that in the future, with the mature materialization of the WeChat Channels music platform, plus our own content contribution, and we will achieve a win-win results on two platforms. 那么预计全年的销售费用会有合理的增加，跟我们之前引导的全年的增长比例基本一致，那不会像

Q1 这样就是说达到 36%

这么高的一个比例吧。对。For the whole year, the selling expense will will have a reasonable rise and which will be in line with our previous full-year guidance. We'll in the following quarters, it will not be growing as fast as 36%.

Okay. Thank you, Shirley.

Thank you, everyone. In the interest of time, I will wrap up today's call.

If you have any further questions, please feel free to contact the IR team. This concludes today's call, and thank you again.

Look forward to speaking next quarter.

Thank you. Thank you.

Bye-bye.