Aug 11, 2026 earnings call — Focus on premium IP and Ximalaya integration
Total revenues were RMB 8.9 billion, up 6% year-on-year.
Revenue $1.3B (est $1.3B) · EPS $0.25 (est $0.24)
Key quotes
"We are strengthening our content ecosystem by deepening strategic partnerships, developing more proprietary IP and extending premium content across a wider range of experiences."
"We are excited to welcome Ximalaya to the TME family. Music and audio naturally complement each other. They broaden our content offering and create more listing occasions throughout the day."
"This quarter, digital albums and tailored SVIP package continue to drive stronger member adoption and user engagement."
Analyst Q&A 5
IP revenue growth and Ximalaya impact
Q: Analyst asked how IP-related business will drive revenue for the rest of the year and the momentum outlook. They also asked how Ximalaya joining TME will affect financials and impact TME in H2.
A: Management said their long-term platform build created a complete music ecosystem that leverages diversified IPs and helped Q2 growth. They acknowledged some competitive headwinds but cited steady performance in concerts and diversified monetization. They said Ximalaya joining makes a one-stop music plus audio platform, amplifies user base and time spent, and sets a base for medium-to-long-term growth.
"So this is a complete music ecosystem, and that also can fully leverage the diversified IPs, which you can see also that we have a lot of contribution from marketing and consumption-related services." — Liang Zhu (CEO)
Subscription trends, SVIP growth, competition
Q (Lincoln Kong · Goldman Sachs): Analyst asked about subscription prospects into H2 excluding Ximalaya, the growth trend for SVIP and ARPU contribution, and the latest competition status.
A: Management said high-value users (SVIP) were not materially affected and they aim to stabilize and grow the SVIP base by adding benefits like merchandise, concerts and long-form audio from Ximalaya. They plan deeper cooperation with WeSing Video to tap light users while keeping focus on their core music business, and they believe they can remain in a good position versus competitors.
"I believe we can stay in a very good position against the competition." — Liang Zhu (CEO)
AI music agent: engagement and monetization
Q (Alex Yao): Analyst asked what challenges the Weixin Shai AI agents produced for discovery, listening, retention or conversion and what the monetization path is — engagement/cost efficiency or direct revenue.
A: Management said AI features are still early but increased retention and engagement, especially for high-value users. They said they will use AI agents to boost user engagement, sharing and listening, which should help drive subscription growth, and that AI can also improve efficiency and create commercial opportunities including AI-generated music.
"and we will use that to increase engagement and activity of our users, so they will use it more often to share and lessen to sons, especially for those paid users that will further drive the growth of subscription." — Liang Zhu (CEO)
Why TME is strong in music and audio
Q (Alicis a Yap · Citi): Analyst asked what TME's competitive advantage and moat are for music, long-form audio IP and the overall IP strategy.
A: Management said they cannot discuss exclusivity but highlighted Ximalaya's large legacy user base and strong kids/story share, plus internet literature that can be turned into audiobooks. They pointed to deep collaborations with Tencent Video and partners for artist nurturing and IP events, and said their integrated one-stop platform helps nurture high-quality content and support SVIP growth.
"So with our integrated or one-stop platform, we will further nurture more high-quality." — Liang Zhu (CEO)
Margins drivers and share buybacks
Q (Yifan Ye): Analyst asked why sales and marketing costs rose in Q2, the gross/net margin outlook for Q3–Q4 with full Ximalaya consolidation, and thoughts on shareholder return given large cash deposits.
A: Management said GP margin slightly declined because offline businesses, artist brokerage and concerts grew faster and took a larger revenue share; they called Q2 a seasonal rise in offline performance and noted Ximalaya amortization has some positive impact. They said Q2 sales expenses were controlled by shifting channel strategy toward higher ROI and deeper Tencent collaboration; overall sales and operating expenses will rise a little, net margin will drop slightly, and they are still under a 1 billion shareholder return program, having completed USD 400 million buyback in Q2 and preparing another round.
"About sales expenses, I would say in Q2, we have controlled the sales expenses because in general, we have changed our channel expenses strategy, which means that we will seek more products with higher ROI." — Min Hu (CFO)