China's Tencent Music beats revenue forecasts on rising subscriptions

China's Tencent Music Entertainment Group (NYSE:TME) beat quarterly revenue estimates on Monday, thanks to original content and pandemic-induced curfews that helped the Spotify-like music streaming platform attract more paying users.

The company's US shares rose 3% in extended trading after it said online music paying users rose by a quarter to 82.7 million, driven by a lack of social events due to strict stay-at-home orders in China. Music subscription revenues rose 18%. The company also benefited from a push for original content, including a partnership with Tencent Holdings (OTC:TCEHY) to produce songs from popular gaming titles. However, there were signs that stiff competition and an economic slowdown driven by Beijing's zero COVID policy were straining Tencent Music's business. Revenues fell 20% in the company's biggest revenue source, social entertainment, home to karaoke app WeSing and live concert platform Kuwo Music. Tencent Music said it plans to bolster growth in the unit by adding features such as live audio streaming. The company, which has been in the crosshairs of regulators, was forced to end exclusive contracts with major music labels last year, losing its edge against rivals such as Cloud Music and Douyin, the short video-sharing platform owned by Bytedance. Total revenue in the second quarter ended June 30 was 6.91 billion yuan ($1.02 billion), while analysts expected 6.62 billion yuan, according to Refinitiv IBES data. Excluding items, the company earned 0.63 yuan per American depositary share (ADS), above estimates of 0.56 yuan per ADS.