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A Look at Tencent’s Robust Revenue Growth

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Sales estimated to rise by 36.9% in 2019

Tencent Music Entertainment (TME) managed to grow its revenue by 72.0% YoY (year-over-year) to $2.76 billion in 2018. A company’s revenue growth and earnings growth are key drivers of its stock price. Investors are always eager to know whether a company can grow its revenue and bottom line on a consistent basis.

Wall Street analysts expect TME’s revenue to grow by 36.9% YoY to $3.76 billion in 2019 and by 35.3% YoY to $5.09 billion in 2020. In comparison, its EPS are expected to grow 7.9% YoY to $0.41 in 2019 and 36.6% to $0.56 in 2020.

Business segments

TME’s primary business segments are its Online Music Services and Social Media Entertainment segments. At the end of the first quarter, TME’s Online Music Services revenue accounted for 28.0% of its total sales, while Social Media Entertainment accounted for 72.0% of its sales.

Online Music Services revenue rose 28.0%, while Social Media Entertainment sales rose 44.3% in the first quarter. Subscriber growth is a key revenue driver for TME, and the company stated that paying customers rose in the double-digits by percentage across its segments in the first quarter.

At the end of the first quarter, TME’s Online Music Services segment had 28.4 million paying users, while its Social Media Entertainment segment had 10.8 million paying users. The Social Media segment generates higher sales due to higher monthly spending per user. The monthly average revenue per user in the Online Music segment is $1.21, while the amount is $18.5 in the Social Media segment.

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