Tencent Music Entertainment Group ADR Class A Aktie

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The earnings release is available on our website. During today's call, you'll hear from Mr. Cussion Pang, our Executive Chairman; and Mr. Ross Liang, our CEO. He will share an overview of the company's strategies and business updates. will discuss our financial results before we open the quest.

Before we continue, I refer you to the safe harbor statement in our earnings release, which applies to this call to include forward-looking statements. Please note that we 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. please be advised that today's call is being recorded.

With that, I'm pleased to turn the call over to Cussion, Executive Chairman of Tencent. Cussion,please.

Thank you, Millicent. Hello, everyone, and thank you for joining our call today. In the second quarter, we delivered resilient performance while navigating a complex and evolving market. Our second growth engine continued to strengthen. Revenue from marketing and consumption service achieved another quarter of solid growth as we further expanded the value of music IP through live concerts, merchandise and other IP-driven experiences. The addition of Simaaya marks another important step in our content and platform strategy.

By bringing music and audio together, we are enriching our content offering, reaching users across more listening occasions and giving them more ways to discover, enjoy and engage with great content. Our strategy is clear. We are strengthening our content ecosystem by deepening strategic partnerships, developing more proprietary IP and extending premium content across a wider range of experiences. First, premium content remains at the heart of this strategy and the recent momentum we are seeing with classic catalogs is a perfect example. Fixed variety shows and concert tools have amplified the reach of this work, making loyal fans more engaged while drawing a new generation of listeners. This has led to continuous growth in their streaming share. Second, we continue to expand our partnerships beyond traditional content licensing.

Recently, we deepened our partnerships with Free Music Group.In addition to securing digital-first releases for its top artists, we expanded our collaboration into new areas, including content co-creation, physical offerings and offline experiences. At the same time, we partnered with Hua Fe and TV, Linfair Entertainment and Zhejiang Satellite TV to bring original soundtracks and popular music variety shows to our platform, creating a more immersive connection between music and digital entertainment. These deeper partnerships allow us to work more closely with creators and rights holders across the whole music value chain, enabling us to create more value from premium IP.

Third, another key focus is developing more high-quality proprietary content, which is becoming an increasingly important differentiator for TME and giving users more reasons to engage with our platform. Examples include Joseen'sz into Broom, Shanghai, the F song for the 2026 Jiangsu Football City League, L, Bors Little Light from Ordinary days Hugo Music's new brand, Anthem and the S song and insert song for the hit animated theme, all wishes come true, ASEAN, all of which recorded strong streaming performance since the release.

Fourth, Ximalaya further strengthens our content advantage with its premium audio books and podcasts. By adding popular categories like online notebooks, history, kids content and education, we can reach users across many other more listening occasions, ultimately enhancing user time spent and engagement within our ecosystem. What really stands out is Ximalaya's ability to create its own kids. Its original productions have consistently driven strong engagement and pay conversion. In fact, 9 of its top 10 new online local titles this year were produced in-house, underscoring both the strength and scalability of its original content capabilities.

Just as importantly, owning this hit also means better economics. With the strength of our content and platform ecosystem, deep user insights, expansive services and a strong commitment to upholding copyright protection, a growing number of artists are turning to us as we expand talent development and artist management. This is a natural extension of our ecosystem that creates value for artists we are uniquely positioned to deliver. This is exciting as it empowers us to be more entrepreneurial and innovative in bringing more premium content and IP-driven immersive music experiences to music lovers. First, T wrapper Guy, for instance. As a strategic partner, we have supported him across content promotion, IP development and concert planning, helping him expand into new markets and formats and go from arena shows to stadium concerts. Following the success of his evolution tool in Asia, we launched W, the first Chinese language web stadium tool in China. More than 30,000 fans attended this opening show in Xian. -- is another good example. [indiscernible] once upon a moon tool wrapped up with 2 consecutive sold-out arena shows in Hangzhou and is now reaching international markets, showcasing her rising profile and growing fan base.

We are also helping artists expand into new opportunities. For renowned art and Sing [indiscernible], we produced his debut Arena tool, Liu Jenny, and his opening show in Shenzhen sold out quickly during his sales. Second, recently, we invested in the Black Label to deepen our collaboration on a broader range of IP-related initiatives, including artist promotion and merchandise development, helping leading artists to build deeper connections with their audience in China. This strategic partnership reflects our commitment to exploring cross-border opportunities and deepening the fan-based economy. By integrating content creation, music streaming, artist development, live experiences, merchandise and fans engagement, we are able to create more value from premium IP truly bringing the IP to life. We are already seeing encouraging results. IP-related consumption services, particularly live events and artist merchandise, continue to deliver strong double-digit year-over-year growth during the quarter.

First, in live entertainment, we host 3 fan meetings in Macau for SM Entertainment's Trainee Group, SMTR25. The event attracted tens of thousands of fans and generated strong merchandise sales. TIMA, our proprietary flagship concert IP for International Music Awards, is becoming a larger and more influential brand in just a second year. Building on last year's success, we scaled up the venue to Kaidakports Stadium in Hong Kong, including audience capacity by more than threefold, capturing music lovers growing enthusiasm. Second, artist merchandise also continued to gain momentum. By bringing together our capabilities in IP development, product design, merchandising and distribution, we are creating more meaningful connections between artists and their fans. During the quarter, we produced [indiscernible] physical albums in both CV and renal formats, complemented by a range of collectibles merchandise that generated strong fan demand. Physical album releases from, and also delivered impressive results. Protecting copyright is fundamental to preserving the long-term value of premium IP. During the quarter, we continued to strengthen our copyright protection efforts through proactive screening and takedown, legal action and closer collaboration across the industry.

As AI continues to evolve, we are stepping up our engagement with regulators, music labels, artists and other industry partners to strengthen copyright protection in the new era. By working together across the industry, we believe we can foster a healthier environment for creators, reinforce the long-term value of premium IP and support the sustainable development of the music industry. We remain committed to providing a safe and enjoyable music experience for users of all ages.

During the second quarter, with comprehensive upgrades to use across our core products, we created a dedicated library of age-appropriate music, helping younger users discover and enjoy music in a safer and more trusted environment. To conclude, while challenges remain, we believe we are still in the early innings of unlocking the full potential of premium IP. We are excited about the opportunities ahead and remain confident in our ability to deliver sustainable long-term growth.

With that, I will turn the call over to Ross.

Thank you, Cussion. Hello, everyone. While the competitive landscape continues to evolve, our commitment has not changed, delivering the best music and audio experiences for our users. Every user listen differently. That's why we continue to innovate our products, broaden our user reach and enrich our membership offering. In the second quarter, our focus on user experience translated into stronger engagement with average daily time spent continue to improve, supporting standing growth in membership revenue. Product innovation remains at the heart of everything we do to serve our users.

This quarter, we created a more seamless discovery to playback journey through improvements in content discovery and audio quality. Enhanced content discovery features such as swap types and video feeds help users explore more relevant content in a more engaging way. Newly introduced 3D Nikon S in audio also allowed premium users to experience premium sound quality from their very first listen. Thoughtful application of AI also made music discovery more intuitive and personalized. We upgraded our AI agents across QQ Music and Kugou, enabling them to better understanding Nuanced user intent, Aingize personal digs. The AI agents can now instantly create personalized playlists tailored to users' listening needs in the moment. Together, these improvements help users discover more content, boost their time spent on our platform and increase the share of recommendation-driven streams. We are delivering great services is a foundation. Reaching more users is equally important. That's why we are continuing to deepen our integration with the Tencent ecosystem to expand our presence across more user touch points.

First, we deepened our cooperation with Weixin Video Accounts by bringing leading labels, top artists and independent musician into its ecosystem. We are creating a more seamless journey from music discovery to full track listing on TME. Collaborations with Weixin Pay also helped our lightweight products such as body Music and Kugou concept, attract users looking for a simple music experience and deepen their engagement. Furthermore, we recently integrated with Weixin's AI agent, Xiaomi. We are pleased that by tapping into Weixin's massive user base, more users can now discover songs, generate playlists, stream music with easy comments and instantly share favorite tracks with friends. Together, these initiatives are expanding our user reach, improving commission and engagement as well as enhancing content distribution across the Tencent ecosystem.

Second, we are also extending our user reach beyond mobile and PC into cross-device listing scenarios. During the quarter, we broadened our smart vehicle coverage through deeper collaborations with leading automakers, including Changan, Li Auto and Xiaopeng and introduced LM-powered search to deliver a smarter in-car experience. We are also among the first music platform to integrate with Harmony OS, expanding our reach within its fast-growing ecosystem. Such a move has strengthened our presence among Harmony OS users and positioned us to capture new opportunities for further monetization. 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 helps to strengthen our position as a comprehensive music and audio platform.

We are still in the early stages of unlocking the full potential of this combination, and we are seeing significant opportunities ahead. By bringing together our complementary strengths, we can deliver compelling content to a much broader audience. We are starting to enrich our SVIP offering with premium audio content to create richer listening experiences. Over time, we also see opportunities to strengthen our advertising business and improve efficiency, leveraging our shared technology and infrastructure. We believe these efforts will create lasting value for our users, creators, partners and shareholders. Finally, we are further elevating the SVIP value position by transforming it into multidimensional experience centered on IP engagement.

Premium music remains at its core, now complemented by premium audio and a growing portfolio of IP-driven member benefits. This quarter, digital albums and tailored SVIP package continue to drive stronger member adoption and user engagement. Packages for, Lian and Rise featured popular member benefits such as photo cards and NFC cards. We also expanded our Star Life card lineup by adding artists from the Black label, including Tang, Somi, Mo and A Day project. Meanwhile, collaborations with popular gaming IPs such as Visingaves Mina and Light and Night brought new themed decorations to SVIP users, generating strong user engagement and conversion. Together, these offerings contribute to health growth in our SVIP user base, ARPPU, time spent, retention as well as consumption of other premium ancillary experiences. They reinforce our value position of one membership richer experiences.

To conclude, our journey reflects how we have evolved from a gateway for content into a strategic platform that actively shaped the music and audio entertainment landscape. Our focus remains steadfast, creating deeper and more meaningful connections between creators, content and audiences. We are uniquely positioned and confident that we can translate these deep connections into long-term sustainable value across music and audio.

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 and an evolving competitive industry landscape. We delivered steady financial results in the second quarter of 2026 with 6% year-on-year revenue growth. Total revenues were RMB 8.9 billion, up by 6% year-on-year, primarily driven by strong growth in revenues from music-related services. The consolidation of TME contributed approximately RMB 0.4 billion to our overall revenues in the second quarter of 2026. Revenues from music-related services grew 11% year-on-year, driven by solid growth in revenues from membership services and off-line performance-related services.

Revenues from membership services were RMB 4.8 billion, up by 8% year-on-year. In the second quarter of 2026, our SVIP membership program continues to expand. Our diversified SVIP privileges such as artist membership sales, Pass and Star Life Pass continued to drive SVIP user adoption and revenue growth. This quarter, we collaborated with our SVIP ambassadors to offer spatial packages and improve our SVIP adoption. The consolidation of Ximalaya also contributed to revenue growth in membership services. Within marketing and consumption services, offline performance-related service delivered robust results as we successfully staged several concepts for our strategically collaborated artists, including Science and [indiscernible].

Sales of digital albums also achieved solid performance, primarily driven by the launch of album Ching of the Sound. We continue to prioritize our IP-related offerings and build deeper collaborations with strategic artists across music promotions, offline performances, artist merchandise and digital albums. In a challenging macro environment and the competitive market, our advertising business, especially the ad-supported model experienced some headwinds. We continue to take actions to improve ad exposure, enhance entry reach and experience and offer more engaging interactive products for users.

We are also deepening collaboration with the Tencent ecosystem to reach more users. The consolidation of Ximalaya contributed to revenue growth in advertising positively, and we see growth potential in this area through leveraging our expanded content and shared resources and technologies. Our gross margin in Q2 2026 was 44.2% compared with 44.4% in the same period of last year. Revenue mix impacts our gross margin. Offline performance-related services continue to grow. We are happy to see continued cost efficiency improvement for offline performance-related services. The consolidation of Ximalaya after considering the amortization of intangible assets recorded under purchase accounting had a favorable impact on overall gross margin this quarter. We are confident that our gross margin will remain competitive in the industry over time.

Moving on to operating expenses. They amounted to RMB 1.3 billion, representing 14.5% of our total revenue in 2026 compared with 13.7% in the same period of last year. This quarter, we adjusted our channel spending strategies by reducing channel spending and deeping collaborations with the Tencent ecosystem. For example, we strengthened our cooperation with Weixin Video Account for content distribution and user composition and collaborated with Weixin Xia to drive traffic to our lightweight IP.

The consolidation of including the amortization of intangible assets recorded under purchase accounting drive the increase in operating expenses. Going forward, we expect to dynamically adjust our channel spending strategy for all our business according to market conditions and our requirements. Our net profit attributable to equity holders was RMB 2.5 billion compared with RMB 2.4 billion in the same period of 2025. Diluted earnings per ADS were RMB 1.7 2026, our adjusted EBITDA was RMB 3.3 billion, up by 5% year-on-year. IFRS net profit attributable to equity holders of the company was RMB 2.7 billion, up by 4% year-on-year. As of June 30, 2026, our combined balance of cash, cash equivalents, term deposits and short-term investments was RMB 44.2 billion as compared to RMB 41 billion as of March 31, 2026. This combined balance was affected by changes in exchange rate of RMB to USD at different balance sheet dates.

In addition to our strong operating cash flow, we maintained diversified finance options to meet our strict expenditure requirements. Under the share repurchase program announced in March 2025, we have repurchased 43.5 million from the open market for a total cash consideration of USD 400 million in the second quarter of 2026. As part of our long-term commitment to shareholder returns, we remain on track to complete the 2025 stock repurchase program on time. Looking ahead, we continue to focus on the development of SVIP membership, creating more innovative products and providing more diversified benefits and privileges to our users. We also keep investing in quality content and IP development to build a comprehensive content ecosystem. Additionally, we continue to deepen collaboration with Tencent ecosystem. The combination of brings exciting opportunities for us as our company and audio platform. All these factors pave the way for long-term health growth of our business.

This concludes our prepared remarks. We are now ready to open the call for questions.

[Operator Instructions] And the first question comes from [indiscernible]

So my question is -- there are two questions. So the first question is on IP-related business. So IP has been a key driver for our revenue in the first half of 2026. And I was wondering how will the IP-related business drive the revenue growth for the rest of this year? And how is the momentum outlook looks like there.

And the second question is really on Ximalaya consolidation. So now that Ximalaya is already part of the TME Group, how should we think about the financial outlook after Ximalaya consolidations and its impact to the TME financials in the second half of this year?

[Interpreted]

Well, about your first question is about IP-related business. As you can see that we have achieved a solid growth in our Q2 results, that is mainly due to our many years of deployment of our forward-looking strategies. We have already built a differentiated platform that fibers content bus platform that combines both of online services and products, also combines virtual and non virtual products. 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. And all of this have calculated a lot to this quarter's results.

For this year, competition, we do see some typewinds from the competitive area, be it membership and as business. But our IP-related services to employing like concerts and performance are experienced in steady drop, mainly because of the following reasons. Number one is our IDP supply. Apart from our in-house research and development, we're also carrying out a lot of the deep collaboration with external suppliers and which help us build the high-quality IPs across the board. Second, you can also see that in terms of content collaboration, Apart from that, the promotion, distribution and merchandise is derivative products will also in a very good position.

Number 3 is the diversified monetization for our platform. It would not only provide performance concerts are merchandised and through our member benefits, it could also contribute more to the increase of our SVIP numbers. And all of this have helped us build a very solid competitive moat.

About your second question on Ximalaya, we are very pleased to have Ximalaya to be part of TME family. And with Ximalaya on board, we have already build a one-stop music plus audio platform, which help us amplify the user base and also enrich the user profile and also time spent on our platform. So overall, in the medium to long run, we can see that Ximalaya is joining to TME family will also unlock more potential of future growth, and this has also set a solid base for future growth.

And the next question comes from Lincoln Kong from Goldman Sachs.

My question is about the Subscription business. So basically, in the first half or second quarter, if we're excluding Ximalaya, we do see some moderation in revenue growth. So how should we think about the prospects into the second half of the year? What's sort of the growth trend for SVIP or the overall ARPU to contribute to the overall growth? And can management also elaborate a bit more on the latest status in terms of the competition, especially against [indiscernible]

[Interpreted]

Well, with the competition in hand, we can see that the growth in music business is long neck. Well, it's mainly some impact on traffic. But as we said, the most important thing is our collaboration with WeSing Video app. We're also very pleased to see that TME is already taking charge of the music business operation under WeSing Video Account. And the connection between WeSing Video Accounts and people app has already been very [indiscernible].

Well, if you look at revenue-wise, our high-value users or SVIP has not been by affected. What has been most -- have affected is for those casual on light metrics? So if you look at our subscribers, we got to stabilize our SVIP base and try to put more benefits into the SVIP package to increase its total number of things.

Well, this includes like Cussion said, merchandise performance concerts and with Ximalaya, we can also provide more high-value long-form audios.

Compared with our peers, our core music business is still having a solid housing growth. Well, to acquire more light users, we also having the potential from those light and small apps, especially [indiscernible] music, Kuwo concept and the Kuwo free version, which we released visit this quarter. We believe through our collaboration -- a deeper collaboration with WeSing Video Account by stabilizing our main business and tapping more potential from high-value service. I believe we can stay in a very good position against the competition.

In terms of competition, TME has never been upset from competition over the years. So the most important thing for us is to do our own job well. Well, compared with our peers with the consolidation of Ximalaya, we already finished our position from a music platform to a music plus audio comprehensive service platform. Third with our peers in the future on TME platform, we can provide more enriching content, more channels and also more benefits that cover both online and off-line. No matter what happens then competition will stay firm on our own track of development. We also believe that our business will continue to have stable and steady development.

And the next comes from Alex C. Yao.

My question is about the integration and synergy with Weixin Shaw, the Weixin agent services. You guys highlighted the Weixin Shai integration and upgraded AI agents acting as a personal DJs in QQ Music and Kugou. What manageable challenges have these products produced in discovery listening time retention or conversion? And what is the intended monetization path? Does management primarily view AI as an engagement and cost efficiency to -- or can AI become a direct revenue convertor?

[Interpreted] Well, though is still at an early testing stage, we're very happy to see that users are using it to send their own song list, share songs, and they're using it very [indiscernible] Well, with our app internal operating, especially with the integration of HYI 3and plus our music AI agent, and we can tell that it does increase the retention especially for the high-value business. Well, recently, also tried to new features on a micro version especially 2 new features. One is you can swipe to listen to music. And secondly is the AI DJ basically can use it as like a companion DJ station.

And with our latest algorithm, the GPD model, and we just see that it also increased the engagement of recommendation and our recognition has also been adopted by one of the top-tier conferences. What about the monetization of AI agent, I think the business model is very clear. 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.

About AI technology in general, we talked about this topic in the previous quarter's call as well. Well, AI itself compared with others in nature is also to improve efficiency and cut costs. However, what is special about us is on the consumer side can use AI, especially large [indiscernible] models to generate music. And over the past couple of years, we've already used that in our app like Google AIK and the QQ using AI to generate songs. And all of these have also generated very good commercial returns. We hope that we can use AI technologies to tap more commercial opportunities and increase our revenue.

And the next question comes from Citigroup, Alicia Yap.

[Interpreted] I wonder if management can share your insight. What is the competitive advantage and competitive moat of TME on the music and also the long-form audio IP and also the overall IP strategy.

[Interpreted] Well, first of all, about the [indiscernible], we are not in a position to talk about [indiscernible] because according to SAMR use, we cannot use those exclusively on content. However, compared with our peers, our competitive advantage is there. First of all, Ximalaya has a lot of user legacy that covers what [indiscernible] and email users in Tier 1 and Tier 2 states. As you probably can see, our kids business on Ximalaya is still taking considerable market share and especially the story part has also complement with our own business.

Another part is the Internet literature, especially the normal select volume books. We'll continue to deepen our collaboration with kind of literature given. And all the new works will turn into audio books and will be efficiently distributed on our platform. And we also believe that comply and audios can also complement with it. In addition, we also have a deep collaboration with Tencent Video for some long-form videos like [indiscernible] so once we found those patrols, Tencent video, especially those that as plays, we also spot there is a great consumption scenarios on Ximalaya. So with the Tencent video for those hit shows, we can turn those -- we have generated many hit songs.

From music creation, we're also entering into deeper into hardest or generation or nurturing and artist management, for example, we partnered with SM entertainment from Korea, so that you could help us better nurture more talented artists. So with song creation and [indiscernible], we can also help a lot of singers to make their own concerts, and we can also organize a lot of the IP-based events.

And all of this will contribute to the business growth. So with our integrated or one-stop platform, we will further nurture more high-quality. And if you look at our business performance over the past several years, such rapid growth is only proven record of a huge potential of this business. Ultimately, it was more benefits. It will further contribute to the growth of our subscription for SVIP growth.

The next question comes from Maggie.

My first question is related to margin. In the second quarter, sales marketing increase appeared to be quite more this year-over-year even taking into consideration of Ximalaya, which was delayed to entail higher sales and marketing cost ratio. So could management help us understand the driver behind that. And what's the overall gross margin and net margin outlook in the third quarter and fourth quarter on a full quarter consolidation of Ximalaya?

And my second question is related to shareholder return. So our total cash, short-term long-term deposit reached RMB 44 billion at end by the end of second quarter, and it's almost 40% of our current market cap. Could management share with us your related thoughts on enhancing shareholder return going forward.

[Interpreted]

Well, first question about the slight decline of our PP margin is mainly due to the following reasons. Number one is our off-line business is growing very rapidly, which means that it takes a bigger share of our total revenue. And plus our off-line artists brokerage business is also growing directly and also taking a bigger share of our overall revenue and plus concert and live performance, which also contributed positively to our GP margin. And these are why our GP margin is just declining slightly.

[Interpreted] Well, it looks like quarter-over-quarter, the slight decline of JPMorgan is mostly the seasonal changes of the Offline Performance business because the Offline Performance business in Q2 is greatly higher in Q1. Considering the amortization of the tangible assets of Ximalaya, it has some positive impact over our GP market.

In the long run, with the consolidation of Ximalaya, we will continue to build our Music plus audio platform, and to have a more enriching ecosystem to provide a more differentiated user experience. And with that, we believe we can increase the retention conversion rate. Our projection into the second half of our revenue expectation, we project that our GP margin will be decreasing slightly year-over-year.

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. And in addition, we're also strengthening our collaboration within the Tencent ecosystem, by Tencent Video, Tencent Pay, Tencent Gaming. And as you can see in our collaboration with Tencent Video has already helped us to increase the traffic and conversion.

The consolidation of Ximalaya, basically the input in June has already suspended, but with the technology and platform convergence, and we have resumed the expanding for Ximalaya, but with the same ROI standard since July.

We will not just spend broadly in marketing, and we'll fine-tune our strategy in marketing and to do more targeted and stay focused on our ecosystem and to value -- to try to tap more value from our users. So for the whole year, our sales expenses will go up a little bit and operating expenses will slightly go up. But considering the loans, our net margin for the whole year will go down slightly and EBITDA will go up -- will edge up a little bit. About shareholder return, currently, we're still under that 1 billion shareholder return program. In Q2 alone, we already completed USD 400 million share buyback.

The management is very confident in the long-term future of the company. So apart from finishing the rest of the previous share buyback program, we're also preparing for another round of share buyback. We will try to use different approach to increase shareholders.

In the interest of time, I would like to wrap up today's call. Thank you again for joining us today. If you have any further questions, please feel free to IR team. This concludes today's call. We look forward to speaking with you next quarter. Thank you, and bye.

Thank you. Bye.

Good evening, good morning, and welcome to Tencent News Entertainment Group's First Quarter 2026 Earnings Conference Call. I'm Millicent, Head of IR. We announced our quarterly financial results earlier today before the U.S. market opened. The earnings release is now available on our IR website and via Newswire services.

During today's call, you'll hear from Mr. Cussion Pang, our Executive Chairman; and Mr. Ross Len, our CEO, who will share an overview of our company strategies and business updates. Then Ms. Shirley Wu, 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 make forward-looking statements. Please note that we discuss non-IFRS measures today, which all more thoroughly explain and reconciled to the most comparable measures reported under IFRS in our earnings release and filings with the SEC. All participants are moved at this time. After management's remarks, there will be a Q&A session, and please realize that today's call is be recorded.

With that, I will now turn the floor 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 off-line 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 outdating arrivements 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 profile elevation 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 champagne 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 now convenient 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 piece off 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 licenses and proprietary content offers valuable emotional responses resonated that uses quite fit. Let me share 2 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 label, including JV music, Ninfa recost and Monkey Baby Music Limited.

Securing continued access to iconic catalogs from artists such as [ Jo Joan, Karen Moran way Haining ] and Angolan hub, further reinforcing our leadership in premium copyrights. We also deepened our strategic partnership with TF Entertainment. Providing users with a 30-day head start benefit for upcoming releases and exporting 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 China Simson to Star fixes, choosing Sinderen for the scientist project Helmer, performed by Jose. The song branded strong traction point release quickly tapping 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 reinforce 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. It is choose to reship every stage of the creative process.

For instance, our one-stop AI music production tool business stimulates the full cycle song writing process of professional musicians from direct compositions and arrangement to local performance and mixing. This empowers creators to produce high-quality work 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, revitalized classic IPs and endure them to younger generations. Some AI covers of classic hits are often among the most popular tracks by reimaginating iconic songs with innovative styles and voco. These will be interpretations sparked renewed interest. Driving listeners back to the original versions and amplifying the visibility and commercial value of legacy IPs. [indiscernible] think Pan-IP related use 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 influence while deepening water shape, 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 J. Chao on his digital album children of the sun. Where we launched the packaged offerings combining the album, SVIP memberships and physical collectibles, supported by a nationwide offline campaign across 45 cities.

The release achieved a strong buy retraction, top major charts, surpassed RMB 100 million in sales and drove meaningful SVIP conversions. We also deepened the partnership with leading office, including [ Kwen, Taiwan and Rowan One, ] whose recent releases delivered a strong fan engagement and commercial performances.

Second, we also continue to strengthen cross-culture reach to defend offline partnership with leading domestic and international labels and artists. This quarter, we delivered multiple flagship concepts, which drawing over 10,000 attendees, maintaining a strong execution standard in live performances.

Notably, Baby Monster's concert in Taiwan, China and NCT rich concepts in Hong Kong, China, attracted both core fans and border audience expanding their reach.

Third, we are cultivating our primary across to amplify the global footprint of Chinese music. This is exemplified by [indiscernible] debit world tour across Asia and North America and Gains first large-scale show in Singapore. -- domestically, concerts by real Panaya, TL Janae, Angela Changsha, Jinggang and Shanghai, further define fan engagement.

Before concluding, I would like to share our ESG progress. In April, we published over our 2025 ESG report. Over the past years, we stepped up and created empowerment product inclusively and really change 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 and the challenges, we are elevating the strategic priority and investment in copyright governance, taking a more resolute 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 our increasing competitive landscape, we are building a more resonate platform cloud by our content and the platform dual engine, driving user directionation, engagement and lifetime value. As we strengthen our competitive edge and further defection ate 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 2 areas: User growth and monetization efficiency and improvement resulting from better services. On the user front, maintain health to our final 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 streamlined user conversion, by inviting a past leasing video accounts, we first rated a seamless transition from short video music discovery to full triple back on our platform. This also elevates mutation exposure helping them convert casual short video wheelers into alloy fund based on our platform.

Second, for [ Hugo, ] welcome Pat pressure is a bit more acute, may allow the virus to interest through more premium and ad memberships.

Third, we leverage AI to drive engagement with improved recommendation system, efficient discovery enabled by AI agents and either platelet creation, growth in music assets posted engagement. We also saw potential growth in both AI-driven messaging and playback DAU.

At the same time, personalized features such as [indiscernible] player innovations and interactive tools led to a deeper sense of belonging on our platform.

To how we are unlocking greater IP value and increasing user lifetime value, we continue to execute exiting care plans. As I mentioned earlier, we launched a new initiative to transition to a membership-based concept with enriched content and rest offerings. Although still in its early stage, we see strong long-term potential in IP-driven offerings through enhanced benefits and integrated rights.

First, S&IP membership continue to stay stronger adoption and rotation, thanks to our refined operations and innovative benefits. For example, we are past [indiscernible] an as our first growth platform, IP family brand ambassador. This static partnership significantly enhances the purse value and the public awareness of our premium offerings.

In addition, to further direction at our SIP premium offerings, we continue to expand the fund-based benefit and audio privileges. On the content front, we introduced the China Limited addition digital airborne combined with physical collectible for leading K-pop artists such as Black pin, [indiscernible] and iron. On the platform and the product front, we launched the TME Connect, enabling high fidelity audio transmission across multiple devices.

[ Coke ] Music launched live house on effects and Qi further deepen the collaboration with Sobi to become the first music platform in China to support Toby SAI audio format. We also extended this immersive experience to CUBE House and off-line audio experience space for artists like Talios Sales, Wangsu long and black ink.

Second, we pioneered more IP-centric memberships to capture diverse user demands. A key milestone this quarter was a launch of our on-ground cloud romance universe with Silence on Monsoon, offering priority ticket excise uniter content and artist-centric ports that resonates well with funds.

At the same time, we continue to expand Artists reach on [indiscernible] welcome [indiscernible] first Sony Milicartists and enhanced product features such as incadea functionality with further strengthened user engagement and retention.

Last but not least, we are unlocking incremental growth by skilling IP-driven offline offerings. Particularly with artist merchandise. For instance, we sold as a sole distributor for transform project to they build physical and other sold-out merchandise, such as [indiscernible] New Year gift box and Huya supports plus collectibles.

Beyond merchandise, we brought the idle city of sans China. They build exhibition to life in collaboration with cube during a multidimensional immersive experience for fans. To conclude, while challenges remain, we are confident in our past work, we will continue shipping our competitive edge to strengthen our reverent platform, 1 and attract users difference engagement and unlocks new monetization opportunities.

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

Thank you, Ross and greetings, everyone. Let me now turn to our financial results and the challenging environment, we have delivered financial results in the first quarter 2 with 7% year-on-year revenue growth. Revenues from mutilated services grew 12% year-on-year, driven by solid growth in revenues from membership services and off-line performance related to services, supplemented by growth in revenues from advertising services.

Revenues from membership services were RMB 4.6 million, up by 7% year-on-year. In the first quarter of 2026, this quarter, we started to presenting membership service revenues to be better reflected the nature of our mentorship business. Revenues from membership services primarily consist of membership fees paid for membership benefits and privates we see new related services.

Over time, some IP-related benefits such as participate merchandise and out plan performances have emerged as a key driver adoption. Additionally, our newly launched and class membership product rates bank assurance and is a great example for innovation, integrated product was counted in the platform strategy. These collaborations we have built with the strategical artists across music promotion of line performances, artists aerated merchant banks and Bank Club membership provides more immersive experience for base and help enrich privileges of our membership programs, building win-win relationships for everyone.

Additionally, we delivered a solid year-on-year growth in advertising revenues, driven by growth of ad-supported model and a sponsorship advertising. Our increased number of paying users and the then applicational users created more challenges for our advertising business in the increasingly competition market. We have taken actions and improved ad exposure, lower entry barriers and of the more engaging in active ad costs for users.

As our engaged growth engine, top line performances related services have achieved strong results in Q1. We have positioned our strategic artics such as well plan, [indiscernible] the guy on high-profile stages across the mast and overseas markets effectively is pending the global influence and further unlocking the long-term commercial value.

Also, [indiscernible] hosted flagship cancers with leading KPO groups, including Brabant and NCP reach. Revenues from social and channel services and others were RMB 1.4 billion, down by 11% year-on-year. Our gross margin in Q1 2026 was 4.9%, 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-efficient 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 back to ad quarter-over-quarter due to seasonality.

Moving on to operating expenses. They amounted to RMB 1.2 billion, representing 50.3% of our total revenues in Q1 2026, compared with 15.5% in the same period of last year. Savings 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 charge, we increased the channel spending this quarter.

Operationally, we have improved the relevance of target audience while keeping high ROI network in the industry. Going forward, we expect to dynamically adjust our channel spending strategies according to evolving market conditions with our requirements. Meanwhile, we expect to increase content promotion and continue to provide high-quality content to our users, which comparably helps users on our platform.

General and administrative expenses were RMB 140 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 in the disposal associated 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-ops 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 investment was RMB 41 billion, as compared to RMB 38 million as of December 31, 2025. This combined balance was backed by changes in the exchange rate of RMB to USD at different balance sheet base. In March 2026, we declared a cash dividend of USD 12 coordinary share or USD 0.24 for ABS for the year ended December 31, 2025, and the cash payment to the direct dividend of USD $317 million was made in April 2026.

In addition, as part of our long-term commitment to shareholder returns, we plan to complete the 2-year stock repurchase program that we announced in March 2025 on time.

Finally, I'll conclude with some remarks on the outlook. Looking ahead, where 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 sales of our business and industry. And so comprehended collaborations with our strategic partners, we will continue to bring new benefits and privileges to our users and create more innovative products. All these factors enable us to build a richer and more dynamic milk and entailment ecosystem.

This concludes our prepared remarks. We are now ready to open the call for questions.

[Operator Instructions]. The first question comes from the line from Lincoln Kong from Golman Sachs.

[Foreign Language].

[Interpreted]. Just now, first of all, congrats on the good performance -- and just now you said you're going to take a holistic approach also use of whole ecosystem to improve our business. question, first of all, is about the revenue guidance for the remainder of 2026. Give us an outlook on the member and not number ship business and what are key drivers for future growth and especially as we know that the competition remains intense, and especially for the membership businesses.

And speaking of the ecosystem, we have noticed that the sense has been approved by the regulator and it can give us an update on how we can improve our performance in the whole ecosystem.

[Interpreted].

First of all, I'd say a few words about the guidance for the remainder, despite the challenge of environment to achieve the steady performance in Q1, this is attributed to our economy platform to an strategy, which has helped us build an irreplaceable one-stop music and attend system.

This quarter, our non-membership growth was robust and our performance-related businesses once again achieved attributed year-on-year growth.

However, competitive pressure remains significant. This quarterly price competition within the industry, coupled with the ramp 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 3 key areas.

First of all, strength and enforcement to prevent AI from becoming execute for infringement. In response to industry chaos, we have established a dedicated rice production mechanism to resolutely safe at the legal interest of our platform, core owners and creators. We welcome innovation that we'll do everything in our hour to suppress some washing and other infringing behaviors.

Second, expanding top of [indiscernible] through deeper integration with the trance ecosystem. April this year, we entered into a deep partnership with WeChat channels. operating short-form video with music consumption which at China users can now jump directly to Q2 music with 1 thing to click when they discover music, they like. This creates a seamless -- a seamless connection from discovery to listening, collection and high-quality consumption while providing user creators with greater promotion and exposure opportunities.

Third, leveraging our flourishing ecosystem to solidify the one-stop music consumption mindset. It is of accumulation has provided us not only with the massive library of premium content, but also with the creators behind hits and the loyal fan base that follow them. To fully unlock the long-term value of this ecosystem, we were broadening our competitive advantage through 2 dimensions: IP expansion and value deepening.

Well, first, expanding the IP matrix, while continuously expanding our metrics of partner artists, we're also building our in-house artist system, currently, our ecosystem features numerous talented artists.

The second is extending the value chain, established in an in-house artist 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 [indiscernible] as an example, our collaboration has evolved from early digital reuse rights to organizing concert tours and selling fiscal merchandise. This quarter, we also launched our first fan-based membership service, being a dedicated artist-centric fan experience that includes priority entry and unique fan benefits.

Looking at a year as a whole, we expect some short-term volatility in growth rate for membership and advertising business due to competition, but we will try to be proactive in state guarding 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.

We just received a notice of the approval from SAMR. And along with the Tencent Group, TME and Tencent Group will strictly requirements of trader commitments to ensure the transaction, transaction will be proceeded accordingly and label.

And then this question comes from Alicia Yap from Citi.

[Interpreted].

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. And also what are their retention rate and 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?

And then with the pending approval of the [ HMA ] transaction, any preliminary planned on the long-form audio subscription plan in the future?

[Interpreted]. First of all, the positioning of TME this year is to make a one-stop music service platform. Well music and [ QQ Music ] has been developing for over 2 decades. And over the years, we have been expanding our business based on navi. So for 3 years, we have evolved from doing traditional streaming business to a broader category of business.

As to your question about user retention for different tiers of users, we have not disclosed this number. But in general, it is various. The design of a multi-tier member system is to meet demands of different kind of users.

For light users, or not those very active users who are using like free and ad-supported approach to improve intention and tap their commercial value. Basic music service is mainly for the users who have a relatively high map for music and also for those sticky users.

For those deeper value users like our products like FinCloud bubbles are for those users who have a more diversified demand. I believe in the future, the IP-based music subscription, not just music subscription but also the auto subscription business, including like book listening or kids audios, this IP-based content will create bigger commercial opportunities and also improve our retention.

All in all, in the future, we will continue to build an IT-based one-stop music service platform. And with all of this, we can continue to improve user retention and tap more business opportunities. And this is very core that provides the most value compared with our competitors.

And the next question comes from [indiscernible].

[Interpreted].

My question is about member services. We noticed that this quarter, if you look at where year-on-year growth, that's very good. But if you look at quarter-over-quarter, it's going down slightly. I was just wondering what is the reason behind? Because as far as I can tell, this business doesn't seem to have a very strong seasonality.

And probably, I guess, is because Q1 is a relatively low season. But apart from the seasonalities, is there any other possible reasons like competition, some turns of users or some higher-value users are changing their packages from like high packages to some cheaper packages? And could you also give us some like guidance of the future quarter-over-quarter growth for fixed business.

[Interpreted].

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 turn of users. As you can tell that our SVIP member is still growing steadily. So our medium- to high-value users are still there.

Well, as you mentioned, this Q-o-Q slight decline is mainly because of the completion on the streaming, music streaming business and especially for those free and ad-supported members.

We observed some phenomenon in the market that deviate from the business essence, some other competitors are using AI to quickly fill their music vibrates and trying to use the aggressive strategy to divert traffic and users into their platform, and they're also fighting for those light users.

Well, we noticed that this is a very important moment for the industry because such behavior is an exhaustion of the economic value of this industry and also they are consuming their own business value. In this environment, as we started in the beginning, we will stay focused on building a one-stop comprehensive music service platform.

We provide monthly subscription music services on 2 music platforms, [indiscernible] music. The users on Google platform is more price sensitive and promotion sensitive and well in face of multiple choices and these kind of users are easily flown away.

Well, this will have some impact on the new membership growth on CUBE platform. Well, in this context, we have to use a free and ad-supported mode to reduce a barrier to entry. Google concept version is also posting a very robust growth in the first of this year because we're adopting a more flexible pricing and the content to retain these live users.

QQ Music is relatively more comprehensive platform. So the overall operational data on Q2 music platform is steady and healthy. The overall value of users on this platform is even increasing. The recent release of the collaboration between WeChat channels and QQ Music will further consolidate our competitive batch.

Lastly, our off-line performance or experience or multidevice user experience and scale remain to be our competitive edge, which provides a solid base for us to further tap commercial opportunities.

And the next question coming from Mizuho, Wei Fang.

[Interpreted].

Well, thank you very much. We noticed that the GP margin this year actually is growing a little bit for the quarter. I'm just wondering, in this case, we do change your overall -- if the whole year guidance around GPM. Because I remember last quarter's call said that the overall year's GP market will stay flat or even decreasing slightly.

And we also noticed that the sales -- selling expenses actually increased a bit. Is that because of the like the deeper collaboration with Tencent ecosystem. I'm just wondering this cost ratio, is it one-off or?

[Interpreted].

Well, if you look at Y-o-Y in Q1, we've had a very good GP margin, mainly because of the following risks. Number 1 is in Q1, we see a continuous growth of membership and ads business, which contributes positively to our market.

Well, despite the fact that the IP-related business is growing very rapidly in terms of the overall contribution to revenue and especially if we look kind of our brokering business is growing exponentially and its proportion of overall contribution to the revenue is also going up. And we also call our off-line performance and event business.

Through that, we have accumulated lots of experience and improved the operational efficiency, so overall, the IP-related business impact on the GP margin is close to 0. The rigid cost control also generated very good results on [indiscernible].

Well, if you look at quarter-over-quarter, the rise of GP margin is mainly because of the seasonality of IT-related business because if you look at Q1, the contribution from this business is far lower than Q4 last year. Because it generates some positive impact over the GP margin and offset the impact of the seasonality reasons of membership and advertising business.

Well, as to the -- our expectation over future revenue growth, we expect to have a cheap margin on par with last in Q2. In the long run, we expect some slowdown of the growth rate from membership and advertising business. but we will adopt a very rigid cost control measures by reducing our resource allocation to low value, less effective content and plus the reduction of cafes from Apple Store. And all of this will provide enough room for the resiliency of our profits.

To adopt project basis, our product basis measures to control costs and also, we'll use our content platform content platform strategy, online plus offline and also improving increasing the percentage of contribution of our own proprietary IP business. And with all of these measures, we can maintain a steady profit.

In the long run, we are very confident to stay at the front line of our margin in the industry. Well, as to the question about the selling expenses in Q1, it went up by 36% year-on-year. That's mainly because of the intensifying competition in the industry. And in face of such intensifying competition, we have to strategically increasing our expenses in user acquisition for our music platforms.

We're using different channels like by backbans to acquire higher-value users and we're also using the light card artists to acquire more high-quality high-value users.

In the meantime, we're also promoting our proprietary content, increased music exposure and also increase the core competitiveness of our own content. With all of these measures, we try to increase the stickiness of our users. With the Tencent ecosystem this year, we will allocate some strategic resources with which have channels, and we will help which channels we establish is on music system.

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. We expect that in the future with the virtualization of the WeChat channels music platform plus our own content contribution, and we will achieve a win results on 2 platforms.

For the whole year, the selling expense will have a reasonable rate, which will be in line with our previous year guidance. And we'll -- in the following, of course, we will not be growing as fast as 36%.

Okay. Thank you, Shirley, and thank you, everyone, for the interest of Toll. I will wrap up today's call. If you have any further questions, please feel free to contact the IR team. And this concludes today's call, and thank you again, look forward to speaking next quarter.

Thank you.

Bye-bye.

Good evening, good morning, and welcome to Tencent Fourth Quarter and Full Year 2025 earnings conference call. I'm to Millicent T. We announced our financial results as today before the U.S. market opened. The earnings release is now visible in our newswire services.

During today's call, you'll 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, [indiscernible] the safe harbor sorting out earnings release, which applies to this call, as we make forward-looking statements. Please note that we discuss non-IFRS measures today, which are going reconcile to the most comparable measures reported under IFRS as release and filings with the SEC. [Operator Instructions] Today's call is being recorded. With that, I will now turn the call over to Cussion, Executive Chairman of Tencent.

Thank you, Millicent. Hello, everyone, and thank you for joining our call today. In 2025, we remained disciplined in executing our dual engine content and platform strategy. delivering accelerated revenue growth and sustained margin expansion. Our differentiated all-in-one music service platform has built a solid subscription growth and strong momentum across our nonsubscription offerings. This enabled us to unlock value from music IP, create new opportunities for artists and address a larger market.

As the competitive landscape continues to evolve, our proven ability to deliver integrated expensive and multi-phased services give us a distinct competitive advantage. With disciplined investment and continued innovation focused on long-term value creation, we are confident in leading the industry advancement. Our competitive edge first and foremost stems from our industry-leading music copyright portfolio, building on our high-quality IP access, we have expanded a comprehensive suite of music services to create holistic value from music creators and contribute to the long-term growth of music industry.

Leveraging our deep insights into the industry, we have amplified our content strength and address the evolving listening preferences of our users. First, our timers and classic music catalog fostered deep emotional connections and serve as a cornerstone of our subscription business. This is why music can be so long lasting and enduring in terms of monetization. Pushing forward from a position of strength, the reason to renew the contract with Warner Music Group and Bing Music, exploring new avenues for physical albums, merchandise and live performances.

We also deepened the alliance with Media Asian music, introducing Dolby Atmos to over 300 iconic tracks by legendary artists, including Isetan and Nissin, Neinor and Andy Lau, Linda. For the first time, elevating the value of our classics with a more immensive listening experience. Second, we continue to deepen differentiation through our proprietary content. The streaming share of our self-produced content keeps growing as listeners seek unique high-quality shoes and musical experience.

For example, our mid-autumn filmed heat year-after-year, Simen performed by Xiaodan, chartered in 17 countries and regions and generated over 100 million social media views in a single day. Furthermore, our capability to crops OSTs continues to strengthen. In the fourth quarter, we produced a bespoke 4-track OSD suite for Tencent Video's heat drama, Chino, Jane, which topped multiple music charts doing the drama's broadcast. In addition, several of our coproducersnds were featured on the 2026 CMG Spring Festival Gala, which then quickly went viral with multiple tracks surprising 10 million streams in just a few days.

Third, we continue to gain share among younger users, thanks to our coverage of shares that recently well with this user cohort. K-Pop, for instance, is capturing and increasing shares of streams our recently renewed partnership with Pea Nation Corporation secured a 30-day head-start benefit to new releases on top Korean artists and groups such as SiC, us, Baby Don't Cry and TMX. Keeping users at the forefront of global trends, our thriving Tencent Musician platform and established an avenue for Indie and up and coming artists is also vital to meeting the growing advantage of young audiences for diverse music styles.

This quarter, we partnered with the Indie fine, Music grew with over 1 million followers their tracks, including the viral briefing decision, Husi Jadin, space and fusastic community interaction among young users, esthetication efforts and our distinctive competitive edge within the content and platform ecosystem have enabled us to accelerate the comprehensive expansion of our music services. We believe this is quite unique to TME, enabling us to continue leading music consumption along the entire music industry chain.

Beyond music subscription, we see tremendous potential in other music-related value-added services. We aim to grow and expand our total addressable market sustainably, by our deeply rooted and strong conviction in serving, protecting and unlocking the full value of music IPs. Building on our momentum, we continue to push boundaries by hosting more high-quality live experiences that empower artists in expanding their audience reach.

First, let me begin by highlighting that in 2025, we showcased our production capabilities with multiple flagship events, including dragons, Changi Long, World tour. The 20 concert tool across big cities in Asia Pacific attracted over 260,000 fans. This highly sought after tool featured 2 landmark shows at the Tipton in the fourth quarter. doing over 75,000 fans. The large-scale events that we have hosted for him. This unprecedented proves our ability to execute compacts high-profile tools and laid a solid foundation for future collaborations with top-tier international artists.

Secondly, through continuous investment across the music value chain, we have built a diverse and robust lineup of strategic arts. We collaborate with them across music promotion, live performances, artist management and merchandise. And these investments have begun to bear fruit, contributing to strong growth in our non-subscription revenue in 2025, our strategic artist portfolio include [Foreign Language].

Through these efforts, we offer a richer array of music consumption and well-run entertainment experiences, while transforming music and artists into influential IPs, further extending their value and impact. Third, Beyond Life concepts, we continue to introduce innovative merchandise formats to spark new waves of fan-based consumption. A prime example was the key album for Assurant's latest release, Play marking our first partnership with a top-tier Western artist using this hybrid physical digital format. We also enhanced story usual in physical alone, space honey with a suite of collectible elements, pushing friends and engaging engagement. In addition, we made a breakthrough in expanding artist merchandise with new tool time collectibles, which are highly valued by fans as tangible extensions of the live concert experience and emotional connections with their free artists.

Our exclusive addition [Foreign Language], 2 special commemorative gift box and the special release of Luhan, Season 4 Asia tour commemorative album integrated with SVIP privileges, both achieved strong sales across the board. I'm pleased to say that we more than doubled revenues of IP-related merchandise and fan-based consumption as we exceeded 2025.

As advertising and other IP-related offerings scale, and as the often multi-tiered membership for online music subscription, the business impact of each pay membership varies. Given the significant evolution of our business model in recent years, our focus has moved beyond the number of paid subscribers and ARPPU. The operating metrics for our online music services adopted at our listing Instead, we are increasingly focused on revenue and profit as our primary performance indicators. Reflecting this shift, starting from the next quarter, we will discontinue to disclose the certain operating metrics on a quarterly basis.

Going forward, we will report annually the number of total paying users across our music services as of year-end. Last but not least, we have social responsibilities and back in our core strategy. We continue to improve accessibility and inclusive design, making our products more user-friendly. For example, QQ Music introduced a hearing protection mode for children, leveraging AI and user insights to reduce shop and sensitive signs or safer and more comfortable listening experience. Meanwhile, WeSing upgraded its large to better serve more users with adoption exceeding 50%.

To wrap up, our thriving dual-engine ecosystem, anchoring by content advantage, comprehensive service offerings and innovative excellence enable us to effectively serve a diverse range of user creators and fans while unlocking the IP value and enhancing monetization efficiencies. Looking ahead, we will continue to reinforce our core strength and broaden our niche to capture the significant growth opportunities before us.

Now I would like to hand the call over to Ross for a deeper dive into our overall platform development. Ross, please go ahead. Thank you.

Thank you, Cussion. Hello, everyone. In area of rapid technological advancement and emerging consumption expectations, apart from what Cussion just discussed. We stayed able acting proactively across the board to serve our users better under keeps the flavor of our content platform ruling. With our deeper commitment to use value we have built a competency multipronged membership system designed to drive effective subscriber conversion, stronger engagement and a deeper share of wallet. We continue to lead me consumption trends through ongoing technological and product innovation, inspiring users to explore a broader range of music generals and discovered artists, driven by differentiated extensive content privileges as well as immersive experiences may end in 2025 with our 20 million users with ARPPU trending upward.

Our new AD supported subscription plan is also gaining initial traction. Over time, it will allow us to broaden use class and attract new audiences to our platform. We continue to innovate product metrics to deliver highly differentiated offerings that make music consumption steamless and accessible anytime unveil. First, we further deepen and integrate our presence across marketing devices. May mobile IRFs remain our core access point. We have also penetrated further into PC, in car smart speaker and available ecosystems.

This makes music consumption an integrate part of user daily, whether they are commuting and at home or at work. Second, our multiplatform portfolio enable us to cater to a wide run of user hybris and peripheral resets. Music and mill of competency premium services to highly engaged users with a strong willingness to pay, light versions such as Fort music and Cugnet casual listeners effectively.

Third, we are integrating social features to amplify user switch and both user acquisition, conversion and engagement. In call 4, QQ Music introduced WeWork more than 170 artists from type and other levels to broaden artist fund interaction channels. Further upgrade is functionality based on intelligent song recognition feature that automatically detects song titles, screen shots or link shared by artists and enables 1 type playback.

Together with the launch of live streaming for domestic artists, these enhancements down this time spent and rotation. It's also worthwhile to mention that this year's new music report campaign, I did underwriting letters and AI-generated voice messengers from artists further strengthening users' engagement and encouraging widespread sharing as our expanding user cases result in broadened audience reach. We remain focused on harnessing AI to import music creation and elevate user experiences. From music creation and production to distribution and consumption, we are making music consumption, more fun and personalized.

First, our AI tools are in reaching content supply. Today, over 10 million users and more than 150,000 professional creators use our one-stop AI music production platform. Features such as track refinement and AI-generated vocal demos accelerate music creation. In addition, auto-capture Toro highlights and generated video clicks based on liri,delivering more gauging audio video experiences through quick laser mode.

Second, we are deepening core operation across the broader Tencent ecosystem to enhance content distribution and construction. We enhanced our development multimodal large model driven or recommendation driven stream share to a record high. We also deepen collaboration with main video accounts by co-creating trends trending music task and IBM music links in the comment section for the joint promotion of trade forms.

Meanwhile, Yamba has also been embedded into QQ Music. This has not only boosted user engagement, but also provide deep insights into our user preferences and needs, thereby improving distribution efficiency. Third, we have integrated AI across the end-to-end music consumption journey, pulled by Jamba, QQ Music's AI agent has involved into a system allowing users to handle complex multistate task using natural language command.

For example, Beyond music discovery, the AI agent provides direct access to digital albums and merchandise purchase, creating a seamless inter action experience that have driven conversion. Last but not least, we continue to scale and differentiate our SIP membership, caring new audience segments and leveraging our uniquely comprehensive ecosystem to deepen music consumption and unlock substantial monetization of business particularly through our growing fund-based economy.

As we constantly deepen collaboration with music labels, artists and introduce new high-value benefits, our SIP users surpassed 20 million milestone, confirming the success of our strategy. We will further enrich membership benefits fulfill the diverse needs of a broadened user base during both SIP sign-ups and rotation. For example, the appointment of [Foreign Language] as QQ Music SIP brand ambassadors underlining as package for the annual gala of Mandi Journey to and the QQ Music Top Music Night 2026, also result in effective SIP adoption.

We also grew our Starlight card roster to include Korean artists like IV and Mixin reaching the cap and attracting from participation. At the same time, future-related perks continue to drive IP acquisition and rotation. Highlights include QQ Music co-brand BTI and proprietary NASS. Cubo Music's scenario specific BTI strong effects and festival and the core branding scheme with the non artists like Santong, Taishin Silanna and Jason.

All of this added to a more immersive leasing experience and a deeper engagement. To summarize, our commitment to product excellence, innovation and value creation has proper resident growth in a dynamic and competitive market environment. Looking a high, we remain dedicated to this long-term user-centric approach, setting at the forefront to capture new growth in the sustainable music ecosystem.

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 to all. Let me now turn to our financial results. We closed the 2025 with outstanding financial performance in both top line and bottom line. We achieved a robust growth in net subscription of the waiting of line performance and a related merchandise sales and successfully implemented our focus approach for promotional expenses. I'll first talk about Q4 2025 performance.

In Q4 2025, our total revenues grew 15% year-on-year to RMB 8.6 billion, driven by strong growth in online services. [indiscernible] subscription revenues from new service other new subscription were RMB 2.5 billion, up by 41% year-on-year. For music subscription revenues, as Ross discussed earlier, we have built a multi-prolonged membership system that includes a supported membership, standard membership and SYP to serve users needs and preferences.

This system has been well received and a successful need to increase user retention and growth in subscriber revenues. We continuously enrich privileges and benefits and provide mid-time net opportunities for our SYP members in Q4, we appointed Bill as Cubo Music's first a brand ambassador, together with and sales. In addition, we offer the priority ticketing for the new Metabit, Gala and transit for our SYP members.

Advertising revenue continued its strong growth strategically, both year-on-year and sequentially, primarily driven by the following. First, our AD supported model continued its robust growth as a result of increased number of advertisers, higher entries and a higher CPM. Double festival also contributed to the sequential revenue growth. Second, sponsorship advertising achieved strong growth. Off-line performance and music festivals have broadened our user and effectively attract more brands, thereby driving growth in sponsorship advertising revenues.

Over the past few quarters, our off-line performances and unreclated merchandise sales have made a significant progress and give that increases results. In Q4, we hosted 2-brand shows in Taipei for Dragon and provided arts-related merchant buyer sales during the show, which were exceptionally well received. We also collaborated with Simon Zhuang to deliver a series of successful concerts, providing fans with distinctive experience. Meanwhile, we have established cooperation with strategic across promotion of brand performances and artist related merchandise to provide a more minimal appearance for fans and build emerge privileges of SYP membership.

Revenues from social entrainment service and others were RMB 1.5 billion down by 5% year-on-year. Our gross margin in Q4 2025 was 44.7%, up by 1.1 percentage points year-on-year, which was mainly attributable to strong growth in newer subscription and advertising revenues, alongside a lower revenue sharing ratio in social and services. As we continue to invest in new business, setpoint performance and one related sales, revenue mix between music subscriptions under this new business may cause fluctuations in overall gross margin.

Moving on to operating expenses. They amounted to RMB 1.2 billion representing 14.4% of our total revenues in Q4 2025 compared with 15.7% in the same period of last year. Market faces were RMB 266 million, up by 7% year-on-year, primarily due to higher channel spending and content promotion expenses. We will keep monitoring market conditions and increase content promotion and the channel spending as needed with RI focused financial system.

General and administration expenses were RMB 981 million, up by 6% year-on-year, primarily due to growth in employment-related bases. Our effective tax rate for Q4 2025 was 70.5%. For Q4 2025, our net profit increased by 10% to RMB 2.3 billion and net profit attributable to equity holders of the company increased by 13% to RMB 2.2 billion. Non-agri net profit increased by 8% to RMB 2.6 billion and the non-agri metro with attributable to active holders of the company increased by 9% to RMB 2.5 billion.

Our diluted earnings per ADS this quarter was RMB 1.41 up by 12% year-on-year, and non-average diluted earnings per ADS was RMB 1.6, up by 9% year-on-year.

As of December 31, 2025, our combined balance of cash, cash equivalents, term deposits and short-term investment was RMB 38 billion, as compared to RMB 36.1 billion as of September 30, 2025. This combined balance was evacuated by changes in the exchange rate of RMB Paint finance sales. That group discuss our performance for the full year of 2025. Total revenues were RMB 32.9 billion, up by 16% year-over-year. Revenues from online service for RMB 26.7 billion, up by 23% year-over-year. The increase was driven by strong growth in new subscription revenues supplemented by growth in revenues from offline performances, advertising service and artist management merchandise.

Our music subscription revenues were RMB 17.7 billion, up by 16% year-over-year, primarily driven by continuous expansion of membership properties, such as early access to legal performance, market related merchandise and a wide range of printing offerings.

Revenues from social and channel service climbed by 7% year-over-year. Gross margin in 2025 was 44.2%, up by 1.9 percentage points year-over-year due to the reasons discussed early. Total operating expenses for 2025 were RMB 4.9 billion up 54% year-over-year. primarily due to growth in an employee-related expenses and higher focused promotion expenses and China spending. In 2025, Tencent net profit increased by 60% to RMB 11.4 billion and the profit attributable to equity holders of the company increased about 66% to RMB 11.1 billion.

We have recognized again of RMB 2.4 billion being the disposal of an associate in the first quarter of 2025. Non net profit increased by 22% to RMB 9.9 billion, and the non-IFRS net profit full for equity products of the company increased by 25% to RMB 9.6 billion. In March 2026, we declared a cash dividend of U.S. dollar per ordinary share or USD 0.24 per ADS for the year ended December 30, 2025. The cash of approximately USD 368 million is expected to be paid in the second quarter of 2026.

Finally, I'll continue with some remarks on the rules. Looking ahead, we will continue our strategy to invest in content and technology. We will keep focusing on IP development and sales use content were advancing innovative integrated products with content and the platform to build a greater and more dynamic news and entertainment ecosystem. We remain confident in the health sort of our business and are committed to even returns for our shareholders. This concludes our prepared remarks. Operator, we are ready to open the call for question.

[Operator Instructions] And the first question comes from the line of Alicia from Citigroup.

[Foreign Language] In light of the AI wave and also the growing industry competition, what is the company's strategic growth outlook for 2020? And how does the company plans to capture the opportunities and also address the challenges that arise?

Thank you, Alicia, for your questions. And I will try to answer it from both of the TME's internal and external perspective. Internally, first of all, I think that TME has delivered a very solid results, including both top line and bottom line in 2025, with a healthy growth of subscription and impressive momentum across our nonsubscription offerings. In particular, our nonmusic subscription business continued to grow and scale, further endorsing our content platform in.

And for the music subscription side, as we mentioned, we have built a 3T membership system to drive effective member conversions strong engagement and a deeper water share. Our SVIP continue to scale and surpassing 20 million SVIP subscribers in just 2 years. So we piloted our advertising membership in late 2025 as well and which allowing us to compete, broaden and attract new audience setting the stage for long-term growth.

On the subscription side, I think that we have further expanded deepening the collaborations with artists and labels and penetrated further into the off-line experiences such as the live concerts and merchandise. We believe it is just the beginning. The initiatives are important to enrich the SVIP benefits and allowing us to unlock new growth possibilities and further strengthening our competitive advantage as well. From the external perspective, I think that the competition is not new to us, but our historical performance has proven that we have always remained agile to compete effectively.

We remain focused on long-term value creation, and we believe that our unique content and platform strategy will continue to deliver the high-quality growth in a healthy way. Whether it's home or what we firmly believe that content will lasting value is IP-driven and robust IPs will always enjoy the long legacy and their value will be further enhanced it through bought-in distribution, cross-media collaborations and diverse monetization opportunities and the rapid revenue growth of our expansive nonmusic subscription services.

Over the past 2 years, illustrated our strength and capability in this regard. So in 2026, our subscription revenue will experience some short-term pressure due to the intensive competition. But we believe that our 3 tier membership and vibrant non-subscription services will allow us to grow historically holistically and also sustainably.

And the last point that I would like to address in the 2026 outlook is about AI. We continue to embrace AI to improve our user experience on our platform and also using AI technology as a tool to improve the efficiencies in content creation and promotion. With our proficiencies on IP creation and management, we believe that with the help of AI, it will further strengthen our competitive advantage and create business value in the long run.

And the next question comes from [indiscernible].

[Foreign Language] So my question is about AI. So actually, I want to management thoughts around the AI impacting to the overall use of the value chain. How would Tencent AI integrate many into our products and our ecosystem and the management thinking around impact to music label, streaming platforms and user behavior ?

[interpreted] Under the current circumstances, especially in the recent 3 months, we're aware of the fact that the AI is profoundly changing not only music industry, but also the overall industry in terms of cent creation distribution. We've already seen some of the icons in the rest of 3 months created by AI. It brings huge challenge to stringent platforms because for us, we're still trying to promote the songs of especially the original songs.

We'll continue to embrace the technologies. Just now I mentioned music creation, we will continue to provide the most effective, most convened creation tools for creators so as to create a very low threshold for creators. Music comment remains the most important thing because nowadays apart from the human created content for music will continue to give more distribution resources to that. Apart from that, we'll also give some traffic to the AI generating content. We've noticed that there are a lot of low cost having some comment with some risks of copyright infringement. And even some of the content is ready infringing original copyright and we're paying lots of efforts in educating these markets so as to serve a positive driver to this market.

Yes, I mean it in a leading position in the music industry. We're also on the 31st company to fully integrate AI into the music industry. We've already provided a one-stop AI music production to over 100 million of average users and over 150,000 professional creators already using our. We're also 1 of the very first platforms here at home to achieve very good commercial value on AI-generated content. We believe with the further improvement of AI generated, we can continue to tap more potential for customer to tap more commercial value.

More importantly, we're also operating our AI agent similar to [indiscernible]. We hope that with this AI agent, it could help our users to fulfill their target on our platform. Tencent indeed faced a lot of challenging stuff, it is a big challenge, but we believe it remains to be a huge opportunity for us. We're embracing AI, and we believe AI will serve as a targeted brand to get. Some additional comments apart from what just Ross discussed. So at TME, we're trying to make user creation more comment and us to provide a better user experience. At present, we can see that AI too indeed is making music creation and production note but on the copyright, it's not just about size. And IP also matters a lot. So in the future, it will also give more input into IP.

The addition of our off-line music experience also matters like live concert, fan-based economy, merchandise and these things can be partly replaced by AI technologies. We will keep investment or giving more effort into optimizing our IP. And in the meantime, we will also leverage AI to improve the efficiency of music production.

And the next question comes from Thomas Chong from Jefferies.

We talked about during our prepared remarks, the investment in content, IP development, innovative products but if we look at it from a financial perspective, how should we think about the trend in terms of our GP margin, the trend for our OpEx and the earnings growth for this year?

[interpreted] In general, our 2026 GP will stay flat with 2025. We'll be a little bit lower than 2025. Number one, with continuous growth of our subscription business and advertising business, and we'll continue to optimize our costs and which will reduce the ROC. So with the sustained growth of sub and advertisement business, it will our profit. In addition, the recent adjustment of our fee also serves as a positive driver to a market.

In addition, number three, we will continue to strengthen our product cooperation with the high-quality IP and also have more self-produce content so as to create a better competitive -- competitiveness. Number four, we will continue to deepen and expand citations with the top-tier labels and artists and so as to create more revenue on live concerts. This will enrich and expand our ways of monetization. Well, at the beginning of the development of this business, it may have some minor negative impact on our GP margin.

Well, with the changes of the revenue mix, there might be some seasonal fluctuations of our GP. In the long run, with more services needing to diversify demand from users, we will also generate a higher ARPU of each user. Input into IP and copyright will also help improve our content cost. The debundling with the important industrial players will also provide diversified services to us and will also help improve our efficiency of each business. We believe in the long run, we will keep growing our top line and due to margin, and we believe our GP margin will stay at a sound and steady level.

About our operating profit, we have to make that in the face of current fierce competitive landscape and plus the changes brought by AI as we just discussed. And we will continue to give more import into content and with our strategic operating and we will keep improving our one-stop music services to our users. We enhanced our users' awareness so as to maximize the value of music. We will not just spend on marketing by a very large margin, whereby -- a very large volume.

We will still be focused on our core value, which is our users and our ecosystem, and we will keep investing in self-produced content and to improve our channel cost. And based on the calculation, and we will continue to test more value on our paid users so as to achieve a steady and sustained growth. Into 2026, our total net profit will be improved and the margin will be similar to 2025, might be a bit lower than 2025.

And the next question comes from Alex Yao from JPMorgan.

I have 2 questions. Number 1 is regarding the impact from AI generated music content, particularly on the demand side. Are we seeing AI content generated additional and incremental demand for music consumption or this is more of a zero-sum game in terms of total consumer time spend on music content? And second question is regarding the royalty pool. If medium to longer term, the AI will be price the music content generation, will that gradually eat into the royalty pool from a monetization perspective? And if that's the case, should we consider changes to our business model to fit the new supply side of the change?

[interpreted] These are very good interesting questions. Number one, I think that in nature, AI is already changing the nature of the music industry. In the past, we saw a lot of fix offs from the Internet, but you never know who is the singer. In the very recent 3 months, very interestingly enough is we do see some hit songs on many music rankings. Well, we have to know the short-form video side, I've already given give a big boost to these AI generated music But most of the songs are not original songs. So if you look at business sector, the AI generated content are very original.

So as you can see on that, most of the songs are to resung. So basically, the quality itself is really changed. So what is changing is the sound quality. In the long run, they're really sing by AI will experience a rapid development. But in terms of the question you just asked about the consumption of the original songs, we are not aware of big changes. As to the UGC or well, you may see a similar time to the UGC tax and videos, which is to say that maybe in the future, many people can make music like there -- they can take pictures and videos.

Well, if you look at Facebook, TikTok DoYin on well, it's maybe well distributed among the social media, just between the familiar users. But if you look at the Copilot or the revenue sharing as it comes from PGC or ODC. So it's the same for the music industry. So my thing is that UGC will be well distributed among the familiar users. But in terms of royalty and revenue sharing, we do not see material changes. We are spending a lot of efforts trying to make a platform to allow our users to create or produce music and result that ended future on TME platform, we can also make a social platform about music.

I want to have some other comments. First of all, this question really deserves more thought, and I think this is also a critical question. And just a follow-up by what Ross said, AI ready music or content, if see some by human sound, while the revenue sharing mechanism will remain the same with traditional model. If this is what wholly AI made, while you have a different royalty sharing model. But on those UGC platform, maybe they have to adopt like incentive model or something else, but it doesn't generate any material change or impact on the current business.

Okay. We will have time for 1 more question. It goes to Mackie from SLS Magnitude.

[interpreted] Since this is the last one, I'll get a housekeeping one. Wondering if there's any update you can share with us regarding the proposed Ximalaya acquisition deal. And partly relating to that word management latest thought on the share repurchase program, we noticed that there's still a large quota left?

[interpreted] Well, we're still communicating with the regulator on the deal. If there is any update will disclose at that point.

[interpreted] We have always valued our shareholder return. This year, as you can see, our dividend payout is far higher than last year, which shows. Currently, about the share buyback will speak to the previous plan, and we will respond to market needs while meeting the revenue requirements.

Thank you. Thank you, everyone, for joining us today. If you have any further questions, please feel free to contact the IR team and this concludes today's call. And again, thank you, and look forward to speaking to you next quarter.

Thank you.

[Portions of this transcript that are marked [interpreted] were spoken by an interpreter present on the live call.]

Good evening and good morning, and welcome to Tencent Music Entertainment Group's Third Quarter 2025 Earnings Conference Call. I'm Millicent T., Head of IR. We announced our quarterly financial results earlier today before the U.S. market open. The earnings release is now available on our IR website and via Newswire services.

During today's call, you'll hear from Mr. Cussion Pang, our Executive Chairman; and Mr. Ross Liang, our CEO, who will share an overview of our company's 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 this call as we 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 and our earnings release and filings with the SEC. [Operator Instructions] And please be advised that today's call is being recorded.

With that, I'm very pleased to 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. In the third quarter, we delivered another set of strong financial results, underpinned by the well-rounded performance of our online music business. Our ongoing innovations across content, services and live experience continue to fuel steady growth in our subscription business, while pushing momentum in non-subscription revenue, particularly in concerts and artist merchandise. Backed by our strong financial position and operational excellence, we are posted to further broaden our music service, unlock new growth opportunities and create greater value for artists, partners and users across the entire music industry.

Now let me share some highlights from this quarter. First, we further enriched our content coverage to include more offerings in different music genres and languages. For example, in Pop music, we renewed the contract with dramas, a leading Korean naval and partnerships with GE Studio, [indiscernible] strengthening our collection of top hits. To better serve users' passions for game-related music, we partnered with Tencent Games to coproduce Atlas of Tomorrow, [indiscernible] the 10th anniversary file song performed by [indiscernible] for Honor of Kings performed as the final at the Honor of Kings' 10th anniversary co-creation night, the song quickly garnered over 600 million social media mentions within 2 weeks of its release, engaged 280 cultural and tourism authorities nationwide, standing out as one of the year's most impactful game soundtracks.

We also collaborated with Bristed Entertainment for the first time and introduced 50 original soundtracks from iconic game titles, including World of Worldcraft, Moss and Hip Stone. To further enrich anime and K-pop music categories, we established strategic partnerships with renowned Japanese ACG label, King Records and Korean Label Serial, offering popular anime songs and OSTs from his dramas such as Boys Ofroers, Second, during the quarter, we successfully staged several large-scale international concerts and events, extending our reach beyond borders to tap into the international market opportunities. A prime example is the concert tour that we hosted for leading Korean artist, G Dragon. G Dragon 2025 World Tour, Übermensch, building on our success in the second quarter. This time, we put on 14 additional show shows for him across 6 cities, including Sydney, Melbourne and Curumpa, drawing over 150,000 attendees.

The popularity of the tool lead to acceleration of live concert revenue growth, demonstrating our strength in delivering world-class entertainment experiences. Our annual flagship TMEA concert was another success and highlight for the quarter. The event featured 35 different artists and groups and drew more than 10,000 attendees, underscoring its strategic importance as a well-anticipated premier gathering within the music industry. Building on the momentum from EMEA, this year, we broke new ground and introduced another flagship concert IP, TME Live International Music Awards, TMA, to celebrate the achievements of international artists and showcase their talents. The inaugural [indiscernible] global renowned artists and groups from China and a number of Asian countries, including famous [indiscernible] SMTR25, the 2-day events immersed over 20,000 attendees in a vibrant atmosphere.

We also organized and delivered several major concert tools for well-known artists like [indiscernible] The success of these shows illustrates TME's strength and impact in bing artist fan bases, especially through interactions with younger audience. For instance, in Guy's most recent shows in Chongqing, through integrated online and offline promotional resources, we helped him attract more than 40,000 attendees, up from 10,000 in a single event in the third quarter. This marked a successful upgrade in concert scale, moving from arena level to stadium level. Together, these remarkable events have laid a solid foundation for TME to continue to grow at scale as we further build out our performance pipeline, we are confident that there will be more exciting opportunities home and abroad to deliver large-scale and immersive live music experiences for users.

Third, we continue to break new ground with artist partnerships, providing them with holistic support and leveraging our increasing promotional capability to enrich artist-centric offerings. For instance, during the quarter, we partnered with Tencent's hit title, Crossfire to produce new song COPD by seamlessly integrating this song into the game ecosystem and allowing users to earn in-game items through listening task. We amplified its impact. The track sold to #2 on the QQ Music new song chart within 2 days of its release. As another example, in this quarter, we premiered Lejiang's new digital album [indiscernible] together with collectible cart packages. This innovative approach not only boosted participations, but also lead the album to rank among the top of the 2025 bestseller charts. The production and release of Baidu's first physical album, My Odyssey, featuring 2 distinct version designs marked another success.

The album earned strong acclaim from fans and achieved outstanding sales performance. All of the above examples illustrate the power and flywheel of our content and platform dual engine, supported by our massive user base, fueled by expanding content ecosystem and constant innovation, we have reinforced the virtuous cycle, allowing us to design diverse services to address users' needs with user interactions deepening and community engagement strengthening, it boost the reach of quality content on our platform and attracts more attention from artists and labels, both home and abroad, fueling the sustainable growth of our ecosystem.

Last but not least, on ESG, for 7 consecutive years, we have proudly won the Music [indiscernible] welfare program, partnering with singers and teachers to support music education in rural areas. This year, we invited WeSing users to redeem their points accumulated through incentive ads to directly support the program, sparkling greater users' interest. Over 380,000 participants took apart. Looking ahead, we will continue to leverage our dual engine strategy, explore new opportunities and expand our reach. building a seamless ribvant all-in-one music service platform for music lovers.

Now I would like to hand it over to Ross for a deeper dive into our overall platform development. Ross, please go ahead. Thank you.

Thank you, Cussion. Hello, everyone. Our music ecosystem continued to strive in the third quarter, benefiting from our profound user insights and operational excellence. As we focus on enhancing the value proposition for user, this quarter, we achieved a steady growth in IIP penetration and ARPPU. We are also building a diversified product portfolio catering to different user cohorts to effectively expand our platform's reach to a broader audience. To this end, our commitment to harnessing AI to elevate users' experiences continue to import us to remain at the forefront of delighting music users.

First, on system integration, we were among the first to support Apple's liquid glass mode in iOS 26 and introduced liquid glasses themes and players on Android for optimized visual effects and better interactions. We also fully adapted our app for Harmony OS with core music features now largely aligned with what we offer on Android. Second, we upgraded player interactive features and AI-powered functionalities. For example, we embedded more enlighting designs and tokens on the playback page, creating delightful thread across new touch points, which also proved effective in new sound promotions. We also pioneered multimode sound transition feature, Automix, offering seamless remix and a more immersive streaming experience.

To effectively deepen engagement, we expanded our [indiscernible] card feature, newly covering over 200 leading artists. The card collecting process is full of threats and fun, driving sharing among users and increased user activeness. Our upgraded AI assistant allows users to generate a personalized playlist with just one type or easily create their own original music. This has significantly lowered the barrier to creative expression and helped increase content consumption through recommendation. We are here to serve and delight. As a result, users can unlock additional tools to and perks from our multipoint membership offerings, whether a freemium user, a deeper value add member or a standard subscriber.

We provide different services to cater to the distinct needs of users. In fact, recently, we started to see an increasing values of freemium users upgrading to ad members, which also led to increased time spent. For those looking to experience the Ilt-made service, our SIP offers an unparalleled range of freemium features, which have been crucial in driving SIP adoption rate and average spend. Its penetration and ARPPU expanded both year-over-year and quarter-over-quarter as we introduced new privileges and innovative services that strengthened its value proposition and inspire the music appreciation in new ways.

A new highlights to share. First, premium sound qualities remain a key draw for ICVYP as we accelerated its results. QQ Music newly introduced DTS forming external speakers became the top convention driver among audio qualities. Viper [indiscernible] with its improved sound quality, sound and reduced data usage also proved to be highly effective in retaining IIP loyalty. Second, our insight into content and user propelled us to provide creative offerings, which in turn helped boost IYP uptake. For example, the digital album, an integral part of our content ecosystem remains effective at SVIP commission. Members highly appreciate their privilege access to digital albums alongside limited edition, collectible NFC cards. Notable collaborations this quarter include [indiscernible] self-titled Japanese EP, which significantly boosted SYP commissions.

Another example is Starlight cars. In the third quarter, we rolled out new Starlight cars featuring popular artists such as [indiscernible] which instantly became a big draw. We have also expanded artist partnerships to include more international musicians, including JYP, Japan's Joy and Western artist, replicating our success domestically. We recently expanded our Starlight card offerings to the Hong Kong and Thailand market through our music platform [indiscernible]. Third, we rolled out several targeted initiatives to reinforce the artist fan connection and strengthen user loyalty through bubble. We expanded our artist rotors by onboarding over a dozen musicians from domestic labels such as [indiscernible] giving more fans the chance to interact directly with their favorite artists online.

This in turn attracted a broader user base. We leveraged AI to further localize the bubble features and functionalities, leading to improved user retention. The new and upgraded features include in-app translation and speak to text capabilities empowered by large AI models as well as desktop short cars for quickly and spontaneous access. We also launched limited edition budgets to celebrate key artist moments such as new sound release, birthdays and debut anniversaries. This complement by [indiscernible] perks helped strengthen emotion ties between artists and fans, resulting in improved retention and engagement.

In summary, we are pleased with the progress we have made in enhancing the value of an increasingly diverse user base. Moving forward, we remain committed to further enhancing our core strength and platform efficiency. We are well positioned to continue to shape the industry from music creation to enjoyment.

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 Q3 2025, our total revenues grew 21% year-on-year to RMB 8.5 billion, marking the highest revenue growth since Q1 2021. This was resulted from continued growth momentum in music subscriptions, together with robust growth in offline performances, advertising services and artist-related merchandise sales. Online music revenues grew 27% year-on-year to RMB 7 billion. Music subscription revenues grew 70% year-on-year to RMB 4.5 billion in Q3 2025 driven by continued growth in monthly ARPU and subscriber base.

Monthly ARPU reached RMB 11.9 this quarter compared to RMB 10.8 in the same period of last year, primarily driven by expansion in SVIP membership program. This quarter, we continue to broaden and strengthen the SVIP benefits. For example, QQ Music newly introduced the DTS booming external speaker and we expanded Starlight cards with more popular artists, both are features to drive SVIP adoption. Additionally, our multiprolonged membership offerings across ADS membership, standard memberships and SVIP membership also contributed to improved user engagement and conversation.

All of these efforts have laid down the foundation for the healthy growth of our subscription business. Advertising revenue continued its strong growth trajectory on a year-on-year basis, primarily driven by more diversified product portfolio and innovative formats such as ad-supported model. Offline performances and artist-related merchandise sales delivered triple-digit year-on-year revenue growth this quarter in Q3. We successfully hold multiple concerts, both domestically and internationally. In overseas market, we hosted 14 shows for G Dragon across 6 cities, achieving robust ticket sales. In domestic market, we successfully hosted concerts for high-profile artists such as and.

In addition, we provided concert-related merchandise sales during the concert, which opened more artist connection opportunities and in turn, contributed to the revenue growth in artist-related merchandise sales. Social entertainment service and other revenues were RMB 1.5 billion, down by 3% year-on-year. Our gross margin in Q3 2025 was 43.5%, up 0.9 percentage points year-on-year. The increase was mainly attributable to strong growth in music subscription and advertising revenues alongside a lower revenue sharing ratio in social entertainment services. At the same time, new growth areas such as off-line performances and artist-related merchandise sales have lower gross margin. The revenue mix shift may cause gross margin fluctuations in different periods. Diversification in revenues offers the possibility for further growth in our revenue and gross profit and help us cultivate a more comprehensive one-stop music services ecosystem.

Moving on to operating expenses. They amounted to RMB 1.3 billion, representing 15.5% of our total revenues in Q3 2025 compared with 70.4% in the same period of last year. Selling and marketing expenses were RMB 216 million, up by 18% year-on-year, primarily due to higher content promotion expenses and channel spending. We keep monitoring market conditions and increase spending as needed with financial discipline. General and administrative expenses were RMB 1.05 billion, up by 5% year-on-year, primarily due to growth in employee-related expenses. Our effective tax rate for Q3 2025 was 70.7% and remained relatively stable compared with ET in the same period of 2024. We accrued withholding income tax of RMB 118 million this quarter. For Q3, our net profit increased by 29% to RMB 2.2 billion and net profit attributable to equity holders of the company increased by 36% to RMB 2.2 billion.

Non-IFRS net profit increased by 28% to RMB 2.5 billion and non-IFRS net profit attributable to equity holders of the company increased by 33% to RMB 2.4 billion. Our diluted earnings per ADS this quarter was RMB 1.38, up by 37% year-on-year. non-IFRS diluted earnings per ADS was RMB 1.44, up by 33% year-on-year. As of September 30, 2025, our combined balances of cash, cash equivalents, term deposits and short-term investments were RMB 36.1 billion as compared to RMB 34.9 billion as of June 30, 2025. This combined balance was impacted by the repayment of USD 300 million for the senior unsecured notes due in Q3 2025 and it was also affected by changes in the exchange rate of RMB to USD at different balance sheet dates.

Looking forward, we will put more efforts in IP cultivation and self-product content while keeping product innovation to foster a vibrant and comprehensive music ecosystem. With solid growth in our core business and increased product diversification such as off-line performance and artist-related merchandise, we are well positioned and are confident in the high-quality growth of our business.

This concludes our prepared remarks. Operator, we are ready to open the call for questions.

And the first question comes from the line from Morgan Stanley, Liu Yang.

I would like to ask about the fourth quarter this year and the 2026 outlook for the business.

[Interpreted] Thank you so much for your questions. And with our holistic high-quality growth strategy, we delivered another quarter of strong results on both of the top and the bottom line. We continue to lead the industry in music consumption and creation, and we are confident to deliver good results. On the music subscription side, our multipronged membership offerings lead to better caters to users' diverse needs. Number of paying users and ARPPU grew steadily, while user retention and time spent remained healthy. SVIP penetration and ARPPU increased year-over-year and quarter-over-quarter.

In addition, I would like to point out that the newly launched ad memberships also gained momentum, which will help us to unlock greater value from the freemium users as well. On the non-subscription side, our one-stop music entertainment service platform will continue to drive users demand and business growth. First, on the advertising side, our diversified and innovative ad formats continue to create value for advertisers and users. So it will continue to drive steady business growth in quarter 4. Second, on the fast-growing live concerts business, we have already achieved significant breakthroughs home and aboard, which will contribute to a triple-digit year-to-year revenue growth.

Last, on the fan-based economy, we have explored a variety of new product combinations and service formats, which will effectively helping artists and music labels to further unlock commercial value. So in short, for the year 2025, we remain hopeful to deliver strong performance of our online music services to further driving good revenue and profit growth of the company. Looking ahead to 2026, we are committed to implement our platform and content ecosystem dual engine strategy. With the strong foundation that we have built together with the new initiatives, we expect sustained healthy growth in our music subscription business, although at a slightly slower rate given its high base. Non-subscription businesses contribution to the group performance will continue to increase and is expected to grow faster than the subscription business.

And then the next question comes from Goldman Sachs, Lincoln.

A very solid quarter in the third quarter. So I just want to quickly touch on the industry landscape here, especially for the music streaming business. I think recently, there is a bit of a market concern over some music competition in terms of the faster MAU ramp-up or potential high budgets for purchase of music content. So I just want to wonder management thoughts, do you see anything changed in terms of the competition landscape at all? And also our strategy to further enhance our leadership in terms of the content differentiation, our user mindset and overall service offering to consumers.

[Interpreted] well, thank you very much. Thanks for your question. Regarding the competition, I think we still have the same competitors in the music industry and including Soda Music as well as NetEase music and also soda music and the [indiscernible] For sure, we also noticed the growth from Soda music. Well, for DME, we always believe the competition is normal, and this is also what we see from the past to now and [indiscernible] also marks the 20th anniversary of [indiscernible] music. And along the way for our development, we have already encountered many competitions.

Regarding the competition, I'd like to touch upon platform and content, the 2 perspective. Regarding the platform, I called music application is still a traditional business. And the business is based on the streaming business, where traditionally, we do have the recommendation, where our asset management maintains that same and most important and critical user experience for us regarding the streaming business.

I think our competitive edge still rests with our music library, along with the user asset management that has been accumulated for so many years. But at the same time, you can also say that [indiscernible] still lead the industry regarding the sound quality and sound effect where we also continue to provide the sound quality, the [indiscernible] sound quality to the market.

We also continue to engage with the high son-quality equipment for music fixtures, including the HiFi and continue to engage the ERPs and allow to speak high-quality sound effects, fixtures and equipment to further extend our content coverage. Where you can see, besides those basic products within TMB, we have already further extended our business to provide a more enriched and diversified music experience to our users.

Especially from our recent performance on the Starlight card, along with our user badge as well as bubble, we do have the e-apply and defense infection, which will yield very positive results. which are not exist for any other competing products. Where at the same time, regarding the social entertainment business and our leasing product still show great potential and advantage regarding commercialization and other floor events, which also yield very positive results. This can also help to consolidate our transitional business advantage.

Well, I think a majority of people just pay attention to the changes on our mobile applications, where for any music product, you have to still keep an eye on the user rate as well as content coverage on multiterminal and multi-devices. You can say that at our PC end, and we still have a huge subscriber base. And also for the in-car service, we have a very high penetration ratio especially recently, we're actually leading the music publications by working with ammonia OS. You can see based upon our product innovation, optimize user experience and continued innovation and we'll still be able to pioneer and lead the market development.

Regarding the patent or the copyright for TME, we always provide the most complete and high-quality application content in the whole industry. Besides releasing different general of the sense, the most important thing we did for the past few years is continue to engage and cocreate many different musical content with music creators in our industry. Besides working for different genres of [indiscernible], and recently, we also started to follow and work with Tencent Games and Tencent Video to create their top-notch IP for the co-creation of the [indiscernible].

So you can see that our cooperation with Tencent Games and Tencent Video, and actually delighted the user and also be quite popular from [indiscernible] user, where more importantly, we continue to afford the comprehensive partnership with our partners, not only for the traditional [indiscernible], but also for the co-creation of the content, including the [indiscernible] concert as well as the fan-based economy, and we also made local extensions of collaboration with the partners. What we do is to provide the most comprehensive and high-quality content to our users.

So you can say that now we do have the well-established platform with very robust content creation. We are adopting the One Body with 2 wing strategies. That is indeed our largest competitive edge and the differentiation compared with other competitors, and we're also going to continue to integrate the platform and content for further development. That is also good for our IP protection and also continue to drive the subscription business development, which will be ultimately positive for our future business growth. So indeed, the industry is facing [indiscernible] competition, but we're still very confident for our future development. .

And the next question comes from Alicia Yap from Citigroup.

Congrats on the solid results. I have a question regarding the music concert. So can management share with us what would be your 2026 pipeline for the music concert. So how should we be thinking about modeling the revenue growth from music concert merchandising and also the digital album sales because -- so what are the challenges and opportunities on pursuing music concerts business and also to ensure the sustainable steady long-term growth?

[Interpreted] And you see that for the [indiscernible] performance for concept, this is actually a commitment for TME to go for, and we also have a long-term investment for that, especially for the past few years, I will just share with you what we did from a few perspectives. First of all, regarding the [indiscernible] and we still organize the top artist for the most popular audience in our industry, where at the same time, we also invite the top artists to come and to stage the flight cancer, where internally, we also have our own proprietary IT, including TMEA as well as TMEA. So for TME, we did a comprehensive resources investment and substantial resources allocation to make sure we continue to advance the early performance. Actually the aside performance not only help us to build our experience but also continue to further debate with our partners. For example, in the prepared remarks, I have already mentioned what we do for Dragon, the [indiscernible] artist.

We have [indiscernible] he's on Asia Pacific region tour. And the [indiscernible] can actually help us to further accumulate experience, but at the same time, it also hit a great success in Asia Pacific region. And such experience from the tour invents can also be replicated and introduced into other large-scale flight concert and performance. So we are very happy and satisfied with what we have been achieved, can say that besides organizing more top artist for tours and performance and we're also going to leverage our own proprietary IP, including TMEA and TME to continue to improve our performance in organizing the outline performance and concert.

This also showcases our unique advantage because TME will be able to integrate our online and offline music resources and continue to further deepen our collaboration with the musical ecosystem. In that way, we can also make sure that our audience will enjoy a high-quality music experience and that can also become our competition advantage and differentiation. So by organizing such top parties performance, we also hope that we will provide more performance privilege as well as privilege to the fan-based economy to our user. This can also help to promote the SVIP subscription business development, where at the same time, we will be able to provide our users a more comprehensive and immersive experience by staying [indiscernible]

Regarding the fan-based economy, and we also continue to further improve our service to the fan groups and community by providing the primary privilege to them, which has proven to be very popular among our effects. For example, I have already shared with you the [indiscernible] Asia Pacific tour. The merchandise sales from that to proved to be quite successful. This is also what we continue to do by providing the primary privilege to our users.

And the next question comes from Jefferies and Thomas Chong.

My question is about our subscription services. Given that we have been strengthening our ARPU growth while we are maintaining our steady net adds. I just want to get some color with regard to how we should think about our 2026 growth driver for the subscription services. How should we think about the growth momentum for APP and net adds. I'm just wondering if we are seeing the competitive dynamic environment in terms of the competition. Would there be any changes in terms of the growth driver we launched more lower-priced packages to drive the subscriber growth and the ARPU may not be as fast as what we previously expected. And on the other hand, when we look into our SVIP subscribers and the penetration, can management talk about the goal in 2026?

[Interpreted] Thank you very much. Thanks, Thomas. Regarding our overall target for 2026, I think we're still going to register a very steady growth for the subscriber base. And it may -- regarding the growth driver, it may come in from the following aspects. First of all, still leveraging the high-quality content for business groups. We're still going to provide the high-quality content by working with our IP partners to continue to provide the high quality and unique content to our users.

Well, the second growth driver may come from the content privilege because starting from 2026, we're going to export the new boundaries besides the traditional music content, we're also going to pursue the boundary for the Starlight card, the earthlike onset as well as the merchandise because my colleagues colleague used to mention regarding the content, we not only do the music content, but also continue to develop all the peripherals for merchandise to continue to pursue a sustainable business growth. Another key growth driver for the subscription business will be raised with the functional privileges, including the sound quality, sound effect, the ringtong editing as well as the AI-empowered sound writing. This can actually be the differentiated function we offer to the market.

So generally speaking, we're still going to continue to consolidate and innovate on both content and functionalities. In that way, we will be able to further grow the size of our subscription business and also achieving ARPPU growth. You can say that regarding the second part of your question, the low-priced package, and this is not something new to us, and we have already seen such thing performing years. And especially, we have already been prepared for that especially, you can see the freemium model, and that is a model we have started from 3 years ago. You can see that from the fundamental business logic and regarding how we consider the growth of the user, we, first of all, have the free-to-use service user and then they go for a [indiscernible] and then we do have the regular user, and then they will be upgraded to SVIP.

If a multi-prolonged membership in order to help to further grow our user size. You can say that, especially for ad supported, even if it is also being provided by other competing products in the market. But if you take a look at the commercial data, especially the monetization efficacy of a single DU actually makes the TME Trunk competitors. So in other words, we already have a very good experience in balancing between commercialization efficiency and user retention. We're responding to the final part of your question that is regarding to SVIP, and I think I have already said that in the prepared remarks, SVIP continues to be a critical part of our business.

And for the penetration ratio and ARPPU for SVIP, they're still growing or even commented a good growth as what we expected. Well, regarding the year of 2026, I think the key driver for SVIP. Besides providing the subscription and high-quality content, we're also going to have [indiscernible] comprehensive partnership with our IP partners to continue to drive SVIP risks.

And the next question coming from [indiscernible]

This is regarding the gross profit and gross margin. So in light of the potential revenue mix change, thanks to very robust growth in off-line performance as well as artist-related merchandise. How should we think about the profitability of these initiatives and their impact to our overall trend in gross profit as more as margins?

[Interpreted] Thank you very much. Thanks [indiscernible]. From what we see now regarding our online music business, and we still maintain a continued growth for subscription business and advertisement business. But from the content cost structure and efficiency side, we continue to do the optimization. And I should believe our subscription and advertisement business growth will continue to benefit the GP margin. But for sure, as you may notice, advertisement business, we're in [indiscernible] and first seasonalities were indeed [indiscernible] the fluctuations to the GP margin.

You can say that we continue to drive the development of applied performance as well as to grow the merchandise for audit, and we will need to make further investment on the audit-related than in the initial stage of the business development, it will indeed have some negative impact on the GP margin. Well, as you can see that for those businesses, it can actually help to take care of the users' diversified musical needs and the consumption values from a single user will surely be more [indiscernible]. While at the same time, we also provide comprehensive music service, along with the copyright and the Artist IP in order to further improve the efficiency of the cost. [indiscernible] for the long run, we hope our investment will help to drive the effective growth in both revenue and gross profit as a whole. .

At least from what we see now in Q4 of this year, there will still be continued growth for the monthly revenues both the advertisement business and the subscription business where we are approaching to the end of this year, the contribution from the sales of the light events as well as the artist related merchandise will contribute that to the overall revenue. So in that reason, the Q4 GP margin would be elevated compared with Q3. We look into the year of 2026. And as we continue to build our confidence over the subscription business and advertisement business, along with investments in [indiscernible] , along with artist, the merchandise, our revenue or the revenue may differ or fluctuate due to the [indiscernible]. But over speaking, we're still very confident for our 2026 revenue growth and Q3 margin growth.

So thank you, everyone, for joining us today. If you have any further questions, please feel free to contact our team. And this concludes today's call. Thank you very much again, and look forward to seeing you on next quarter. Goodbye.

Thank you. Goodbye.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]