Cloud Music, China’s second-largest operator of music streaming providers, has reported at 26.6% YoY bounce in income from on-line music providers in calendar Q2.
The corporate, previously referred to as NetEase Cloud Music, reported RMB 2.6 billion (USD $359.0 million on the common trade charge for Q2) from on-line music providers, up from RMB 2.0 billion in the identical quarter a yr earlier.
Of that, RMB 2.1 billion ($289.9 million) got here from gross sales of music subscriptions, up 25.5% YoY, which the corporate stated was “pushed by a rise within the variety of subscribers.”
In a break with earlier follow, Cloud Music’s mid-year earnings report didn’t get away the variety of paying subscribers or month-to-month energetic customers (MAUs).
“Our whole consumer base remained largely steady, with a DAU/MAU ratio (day by day energetic consumer/month-to-month energetic consumer ratio) constantly staying above 30%,” the corporate stated in its report back to traders.
“We continued to propel high quality growth throughout our music-centric ecosystem, strengthening our music-centric monetization, leading to improved profitability.”
In its most up-to-date full-year report, NetEase reported 44.12 million paying subscribers on the finish of 2023, a 15.3% YoY enhance.
That places it behind its main rival, Tencent Music Leisure, which reported 106.7 million paying subscribers on the finish of 2023, and 117 million paying subscribers in Q2 2024.
Going ahead, “we purpose to proceed driving strong income development by leveraging enhanced content material and capabilities, broadening membership privileges and increasing consumption eventualities for our on-line music subscribers,” Cloud Music Investor Relations Director Angela Xu stated on the corporate’s earnings name Thursday (August 22).
“We’ve got made on-line music membership advantages extra accessible by providing particular promotions for pupil subscribers and commencement particular actions. We’re assured that by growing the variety of customers having fun with premium privileges on our platform, particularly youthful era customers, we are able to entice extra high-quality energetic and paying customers, driving long-term development in scale and business growth.”
“We purpose to proceed driving strong income development by leveraging enhanced content material and capabilities, broadening membership privileges and increasing consumption eventualities for our on-line music subscribers.”
Angela Xu, NetEase Cloud Music
Total, income at Cloud Music got here in at RMB 4.1 billion ($566.1 million), a 4.1% YoY enhance. That quantity was held again by a lower in its social leisure providers division, which noticed income fall 21% YoY, to RMB 1.5 billion.
Like its bigger rival, Tencent, Cloud Music has been grappling with a decline in social leisure revenue following a crackdown by the Chinese language authorities on on-line playing final yr.
Nonetheless, Cloud Music’s backside line confirmed important development, with gross revenue coming in at RMB 1.426 billion ($196.9 million), a 47.7% YoY bounce from RMB 965.1 million in the identical interval a yr earlier, “primarily attributable to elevated revenues from gross sales of membership subscriptions and continued enchancment in value management measures,” the corporate stated.
Adjusted internet revenue was RMB 880.7 million ($121.6 million), up 165.4% YoY from RMB 331.9 million within the first half of 2023.
The corporate’s gross margin improved to 35.0% within the half, from 24.7% a yr earlier.
Cloud Music stated the development in profitability was “primarily pushed by the advantages of economies of scale.”
The corporate cited “elevated enterprise scale, robust monetization of our core on-line music enterprise that led to ongoing enchancment of working leverage, in addition to a one-off adjustment of sure copyright prices that boosted the gross revenue margin by roughly 2.6 proportion factors for the primary half of 2024.”
Cloud Music additionally up to date the numbers on its impartial artist program, which now counts 732,000 registered artists, up from 684,000 on the finish of 2023. The corporate says the artists on its platform have contributed 3.6 million music tracks to its library.
Cloud Music highlighted expanded offers with music rights holders as one of many drivers of its development, noting that in H1 it signed new partnerships with Ok-pop company JYP Leisure and with Kakao Corp., controlling shareholder of Ok-pop label SM Leisure.
The corporate additionally renewed copyright offers with Korean labels YG and CUBE, amongst others, and added J-pop music from Japanese labels comparable to Vap Japan and B-Zone, recognized for anime soundtracks, on prime of signing new partnerships with Chinese language labels KC DIGITAL and Guoran Leisure.
It additionally boasted of expanded collaborations with music trade companions, together with an “modern, unique” tab web page for Taylor Swift’s not too long ago launched album The Tortured Poets Division.
“The album achieved over 100 million streams on our platform in simply 19 days after its launch,” Cloud Music stated.
“Along with driving steady development in our membership subscription mannequin, we stay dedicated to exploring extra monetization initiatives,” Xu instructed traders on the earnings name.Music Enterprise Worldwide
