Good evening, good morning, and welcome to Tencent Music Entertainment Group's First Quarter 2025 Earnings Conference Call. I am Millicent T., 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. Kar Shun 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, I refer you to the safe harbor statement in our earnings release, which applies to this call, as we'll 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 in our earnings release and filings with the SEC. All participants are muted at this time. After management's remarks, there will be a Q&A session. I'm pleased to inform you that today's call is being recorded. With that, I'm very pleased to turn the call over to Kar Shun, Executive Chairman of TME. Kar Shun?

Thank you, Millicent. Welcome. Hello, everyone, and thank you for joining our call today. We kick off 2025 with a strong first quarter performance, demonstrating robust topline growth and stronger profitability. This underscores the successful execution of our high-quality growth strategy. With the sound foundations we have built, a thriving music ecosystem, and a healthy financial position, we are well-equipped to navigate global uncertainties with confidence. As music becomes more accessible and personalized, we see user preferences becoming increasingly diverse. Our platform is uniquely positioned to inspire deeper and broader music consumption through enriching our ecosystem and expanding our suite of services. Let me share some of the key highlights. First, we strengthened our partnerships with record labels to further enrich our classic music library. Notably, we renewed multiyear contracts with Sony Music Entertainment, bringing 360 Reality Audio sound privileges to SVIP members. We also expanded collaborations with Emperor Entertainment Group and Rock Records, enhancing the listening experience with immersive Dolby Atmos sound. Also, we partnered with Dream Music Group to further broaden our selection of popular rap music, which has growing engagement and positive feedback from our users. Meanwhile, our self- and co-produced proprietary content is gaining increasing traction among music fans, offering a differentiated user experience that sets us apart from other music platforms. Some highlights include our partnership with CCTV News to produce the song for Zhou Shen, which ranked #1 on the Kugou Mainland Chart and #4 on the QQ Music Mainland Chart. We also produced 'One Thought to Eternity,' the theme song for the popular Tencent game 'CrossFire,' which quickly topped multiple charts and resonated with both music lovers and gamers. Through our insights on content and user-evolving preferences, we deepened and regulated content consumption across different genres. While Chinese songs remained the mainstream choice, we are seeing increasing popularity of Korean, English, and Japanese tracks. In this regard, we renewed the contracts with top South Korean labels, Starship Entertainment and YG Entertainment, maintaining our leadership in Korean content while also launching merchandise collaborations such as collectible star casts. Our extended partnership with Japan's top ACG label added thousands of tracks, including popular anime theme songs, further expanding genre coverage for fans. We fulfilled the users' demand for collectibles, providing them new ways to express their passion and appreciation of artists. Recent highlights included the 10-day head-start presale of 'Beyond Utopia' by Teens in Times, which rose to #1 on the 2025 physical album bestseller chart and #2 on the all-time chart during this period. Another example is the physical album for Silence Wang, which quickly became a favorite among his dedicated fans. We also collaborated with K-pop icon G-Dragon to sell official light sticks and other products in Mainland China. For fans who purchased his digital albums, we offered the privilege to buy China Limited special edition merchandise, which achieved impressive sales performance. We offered the user a more engaging and interactive music experience, both online and offline. In the first quarter, we staged nearly 40 well-known artists and groups at our annual 'MUSIC FOR PASSION' event in Chengdu, attracting tens of thousands of passionate fans. We debuted aespa's first-ever exhibition and BABYMONSTER's pop-up store in Mainland China, offering fans limited collectibles, interactive displays, and behind-the-scenes content to deepen fan connections with the artists. Online, we invited artists to engage directly with fans in the comment sections, sparking waves of enthusiasm among their fan communities. Before I conclude, I also want to briefly touch on our ESG progress. In April, we released our 2024 ESG report to offer stakeholders enhanced transparency and insights into our operations. The report details our practices and achievements in key areas, including intellectual property protection, user privacy and data security, product inclusion and accessibility, and the fostering of diverse music communities. As we continue to unlock the potential of music and technology, we remain committed to advancing sustainable growth and creating social value. In summary, our solid start to the year is a testament to the strength of our comprehensive content ecosystem and our operational excellence. These core capabilities, together with our strategic focus, ensure that we will remain well-positioned for sustainable growth in 2025 and into the future. Now I would like to turn the call over to Ross for more details on our overall platform development. Ross, please go ahead. Thank you.

Thank you, Kar Shun. Hello, everyone. Our consistent focus on high-quality content and innovative product offerings has enabled us to build a dynamic music ecosystem that meets a wide range of user preferences. As a result, we have seen enhancements in user engagement illustrated by year-over-year growth in both paying user base and ARPPU in the first quarter. This positive trend was further supported by continued strength in SVIP adoption, reflecting the increase in recognition and engagement of our valued members. There are some highlights to share. First, our premium sound quality and audio effect offerings remain our key attraction for SVIP members, penetrating about 15% of our SVIP user base. To illustrate, Kugou Music introduced the industry-first Viper External Amplification Enhancement Sound Effect, which intelligently optimizes sound depth and clarity when using external speakers. We also launched dedicated audio effects for AirPods, enabling users to enjoy the advanced audio performance of the new models without upgrading devices. Second, a range of unique perks has proven effective in driving SVIP conversions, including unique album discounts, special badges, early access to merchandise and live events. For example, at our annual 'MUSIC FOR PASSION' event, SVIP members enjoyed special privileges such as priority ticket purchases. Moreover, those who bought tickets through this channel were also provided with exclusive services such as reception and transportation. We also hosted our first large-scale conference hall in Mainland China, offering SVIPs early ticket access and fan meeting opportunities. Additionally, we enhanced our system, enabling SVIPs to unlock expanding rewards, deepening their sense of identity and community. Third, long-form audio content, particularly top IPs, contributed to boosting SVIP retention. In the first quarter, we created the audio drama 'The Grave Robbers' Chronicles' in development with the original author, Nanpai Sanshu, featuring top voice actors and producers. Benefiting from interactive activities such as live streaming with the author and voice commentary by the leading voice actor, it quickly gained popularity, surpassing tens of millions of streams in just 14 days. On technology, we continue to use AI to elevate user engagement. One example was introducing an interactive commentary feature, increasing fun and emotion. Users can also personalize music effects by switching between different vocals and instruments with one single click. On the non-subscription side, advertising remains our key growth driver and continues to deliver solid year-over-year growth across the board, thanks to diversifying ad formats. Our innovative ad-supported model grew from strength to strength in the past quarter. We have also introduced a variety of interactive tasks for both paid and unpaid users, which saw an upward trend in engagement and adoption. These positive trends provide us with further confidence to continue to grow our advertising business as a whole, unlocking more potential in the future. Looking ahead, we remain committed to enhancing our competitiveness and pioneering new ways to inspire deeper and broader music engagement. 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 everyone. Let me now turn to our financial results. In Q1 of 2025, our effective monetization of online music services and operational efficiency management continued to drive robust financial results with strong performance in our music subscription and advertising business. Revenues continued growth momentum and reached RMB 7.4 billion with a 9% year-over-year growth. Online music revenues increased by 16% year-over-year to RMB 5.8 billion, primarily driven by strong growth in our music subscription revenues and advertising revenues, supplemented by growth in revenues from artist-released merchandise and offline performances. Music subscription revenues in Q1 of 2025 reached RMB 4.2 billion, representing a 17% increase year-over-year and a 5% rise sequentially, driven by continued expansion of the SVIP membership program and reduced promotional activity. Monthly ARPPU increased to RMB 11.4 this quarter compared with RMB 10.6 in Q1 2024. To meet the evolving needs of our users, we continue to enhance rights and privileges of our SVIP members such as premium audio content, enhanced sound quality and effects, and early access to artist-related merchandise and live events. Our advertising revenues also achieved strong year-over-year growth, primarily due to the growth in ad-supported model revenues with more interactive features and enriched benefits boosting engagement in the ad-supported model, enhancing the eCPM and attracting more advertisers. The success of our flagship 'MUSIC FOR PASSION' event was a great example of this through offline event sponsorships with recent advertiser partnerships while driving ecosystem monetization. In Q1, we started shipping the physical album of Zhou Shen released in Q4 2024 and recorded the related revenues, resulting in a year-over-year revenue increase from artist-related merchandise sales. We have made good progress on artist-related merchandise sales and offline performance. In Q1, we strengthened partnerships within the music industry and successfully hosted concerts featuring renowned artists leading to revenue growth this quarter. Social entertainment services and other revenues declined 12% year-over-year to RMB 1.6 billion. Starting this quarter, we ceased disclosing operating metrics for the social entertainment business quarterly. We have shifted our strategic focus to our core music business, which has accounted for an increasingly dominant portion of our revenue; operating metrics for the social entertainment business are no longer considered the key drivers to our growth and prospects. Our gross margin improved to 44.1% and increased by 3.2 percentage points year-over-year, driven by the strong growth of our subscription revenue and advertising revenues contributing to the growth of gross margin. Revenues from leasing membership and advertising in social entertainment services have also positively impacted our gross margin. We maintain strict financial discipline and ROI-focused promotional spending management while directing investments towards long-term growth areas. Operating expenses as a percentage of revenue decreased to 15.5% in Q1 2025 compared with 16.8% in the same period of the last year. Our effective tax rate for Q1 2025 was 9.2% compared to 19.9% in the same period of 2024. The lower ETR was primarily due to the impact from gains on deemed disposal. We accrued withholding tax of RMB 118 million in Q1 of 2025. Net profit was RMB 4.4 billion, and the net profit attributable to equity holders of the company was RMB 4.3 billion. This quarter, we received a 2% equity interest in UMG through a distribution-in-kind from associates, which was designated as a financial asset at fair value through other comprehensive income and recognized a gain of RMB 2.37 billion in the disposal of the associate. Non-IFRS net profit increased by 23% to RMB 2.2 billion, and non-IFRS net profit attributable to equity holders of the company increased by 25% to RMB 2.1 billion. Our diluted earnings per ADS this quarter was RMB 2.77, and non-IFRS diluted earnings per ADS was RMB 1.37, up by 26% year-over-year. These results underscore our efforts in monetization, enhanced operating efficiency, and the benefit from our share repurchase program. As of March 31, 2025, our combined balance of cash, cash equivalents, and short-term deposits was RMB 37.7 billion, compared with RMB 37.6 billion as of December 31, 2024. This combined balance was also affected by changes in the exchange rate of RMB to USD at different balance sheet dates. In March 2025, we cleared a cash dividend of USD 0.09 per ordinary share or USD 0.18 per ADS for the year ended December 31, 2024, and the cash payment for the dividend of USD 275 million was made in April 2025. Looking ahead, we will prioritize high-quality growth in our music business by expanding SVIP memberships, growing our advertising business, and diversifying our offerings across the music value chain. We will continue to invest in original content production, high-quality content and innovative technologies globally to further improve user engagement, experience, and strengthen our ecosystem. We remain confident in the healthy growth prospects of the music industry, and we are committed to delivering high-quality investment returns for our shareholders. This concludes our prepared remarks. Operator, we are ready to open the call for questions.

And the first question comes from Wendy at Goldman Sachs.

Congrats on the very solid first-quarter performance. So can management share a bit more comment around the outlook of our topline profit growth for the next quarter as well as for the full year 2025?

Thank you, Wendy, again, for your questions. We achieved a strong result in Q1, which gives us the confidence in the 2025 outlook. With our risk service offerings and the competitive product experience, as well as our long-term commitment to participating in the value chain of the music industry, we expect full-year year-over-year growth rate to accelerate from last year, and we will continue to expand our margin as well. While the music subscriptions business remains our cornerstone with healthy growth, we continue to lead the way to encourage more music consumption, which allows users to engage with a wide range of music entertainment services. Our SVIP subscription program continues to inject new energy, and its unique offerings such as artist merchandise, long-form audio content, and concerts will further enhance our user engagement and ARPPU expansion. So all these achievements reinforce our confidence in the long-term potential of the music industry and our commitment to ongoing investment. In conclusion, for the year 2025, for our subscription businesses, we will continue to deliver high-quality growth driven by subscriber gains and ARPPU expansion. For the long subscription businesses, improved advertising performance and product innovation will continue to drive steady advertising revenue growth, while deeper partnerships with music labels and artists will boost revenue for merchandise and concerts.

And the next question comes from the line from Citigroup, Alicia.

Congrats on the solid results. Question is on how do management think about the growth opportunity of podcasts in China? Can you also share a little bit detail on your long-form audio user metrics and revenue contribution?

Thank you very much. At least in the domestic China market, when talking about podcasts, it could be interpreted narrowly or broadly. When interpreted from the network sense, it is similar to normal podcasts and can be conducted through single-person live streaming or multi-people dialogue. It is a way to voice one's opinion. For podcasts in the rest of the world, especially in the U.S., it has been developing very fast, but still in China, its coverage is limited but has maintained some growth. We continue to keep an eye on the podcast business, and we prioritize the long-form audio business. For long-form audio, we believe we can continue to grow the user base complementarily with our existing subscribers. Regarding long-form audio, we have registered nice performance, becoming a key driver to advance our SVIP business. Our musical content and long-form audio will complement each other while enhancing the quantity and quality of our content library.

The next question comes from the line from Macquarie, Ellie.

I just have a question on SVIP progress. Can management share some operating metrics or key KPIs for SVIP? What's the retention that we are seeing for users that have been converted to the premium tier? And going forward, what would be the ultimate theme for ARPPU expansion?

Thank you very much. The management team is quite satisfied with SVIP business progress now. We are pleased to see that more labels, more artists, and even live streaming platforms, including those from overseas markets, have started to embrace the trend of SVIP. SVIP, as a high-end membership package, not only provides users with diverse music and entertainment experiences, but it also allows artists to access their fans through multiple channels, increasing opportunities for commercial value monetization. Currently, our SVIP penetration ratio and ARPPU demonstrate very strong growth momentum. We will continue to improve our membership system while launching more attractive privileges and tailor-made services for our users. Our effective operational strategy ensures that SVIP paying users and ARPPU will continue to grow, demonstrating great resilience and faster growth than expected. Looking into 2025, we maintain a positive attitude toward future growth for the SVIP business, increasing investment for high-value membership services and forging in-depth cooperation with labels and artists.

The next question comes from Morgan Stanley, Liu, Yang.

I would like to ask about the ARPPU growth. The 7.5% year-on-year growth looks pretty good. Could management comment on the contribution from Super VIP and the less promotion activities to the overall ARPPU year-on-year growth?

Thank you very much. It’s not appropriate for us to provide breakdowns, but I can tell you that Q1 of every year will be a season with festivals and holidays. We indeed continue to optimize our operations in Q1, and we downsized the discount we provided to the market, which helped to improve ARPPU. We still expect the indigenous growth of the SVIP business to play a bigger driving role for our overall ARPPU while continuing to guarantee the user experience and healthy subscriber growth.

The next question comes from Alex Yao from JPMorgan.

Congrats on a solid quarter. My question is on the nonpaying subscribers. As we shift towards this high-quality growth strategy, are we increasingly deemphasizing the price-sensitive consumers who often come just for deep discounts? Once we cut the discounts, these price-sensitive users tend to drop out of the membership user base. What is the monetization strategy on these nonpaying users? Any updates on monetization of these nonpaying members on advertising? And beyond advertising, do we have any thoughts on monetizing these nonpaying members?

Thank you very much. This question is indeed complex because we do have measures to address nonpaying users. Our operational focus remains on converting nonpaying users into subscribers, which demonstrates the great value of the company and is a priority. We leverage incentive-based advertising, including great music models and online earning measures to retain nonpaying users while generating advertising revenue from them. We also look for other revenue sources related to the digital economy, such as digital albums, merchandise, and single downloads. Generally speaking, we aim to convert nonpaying users while generating good business opportunities from them.

The next question comes from UBS, Wei Xiong.

Congrats on the solid results. My question is about margins. Our gross margin continued to expand sequentially this quarter, and management shared different drivers behind that. Which of these drivers have higher potential to further drive up the upside of gross margin going forward? Do we have a medium-term target for that? Additionally, considering our efforts in cost discipline, could you discuss plans for OpEx this year and how we should think about the net margin trend as well?

Thank you very much. We have already mentioned a few drivers for the improving gross margin. The most important driver is the growth of revenue. The growth from subscribers and advertising, especially in SVIP, is expected to be key in future business improvement. Cost initiatives will enable us to manage costs, ensuring that cost growth is always lower than revenue growth. We are deeply rooted in the music industry with significant investments that have generated good yields, helping us to control costs and establish strong partnerships with copyright owners, which will improve efficiency. Looking forward into 2025 and beyond, we believe the factors mentioned will continue to play significant roles in supporting our gross margin growth. Regarding operating expenses, they will mostly be allocated towards user acquisition and content promotions. We will see a slight increase in sales expenses, but overall growth should be lower than total revenue growth. Management expenses will maintain flat growth, allowing for improved net profit and margin rates.

The next question comes from Barclays, Roger.

Congrats on a very solid quarter. My question is on international opportunities, especially in Southeast Asia. We have a very small footprint there, with the music app JOOX, and we are going to host G-Dragon in Southeast Asia this year. Can management talk about your thoughts on the opportunities in the region? Will this be an area of investment you will look at for possibly next year?

Thank you very much. The international market is always an important part of our overall strategy. Our group has a strong strategy that includes both content and platform development, and we will adopt the same for our international business. We have performed well in Southeast Asia but aim to engage further in content creation and offline performance opportunities in overseas markets. We plan to invest in building our content ecosystem, helping to deliver high-quality content to our overseas platform, and engaging in music content and artist management.

And the next question comes from Mizuho, Fang, Wei.

Congrats on the solid quarter. I got one on advertising. If I look at the non-music segment, there was a timing impact from offline events last quarter, and now this quarter, we see good acceleration. Given the macro conditions have changed a lot, could management share insights on the outlook for your advertising and the pipeline for offline events business for the rest of the year? I'd also appreciate comments on initiatives for expanding into newer advertising verticals and optimizing your ad bidding system.

Thank you very much. Let me first discuss advertising, especially online. Our advertising revenue registered strong year-over-year growth, mainly attributed to innovative incentive-based advertising. Over the past two to three years, we have successfully launched free music business models that have achieved excellent results. Starting this year, we launched an online earnings business model to access a larger user base. We maintain a positive outlook for advertising revenue growth in both Q1 and the full year based on our operational success. Regarding offline events, we observe strong growth momentum for performances. Our priority is to improve the quality of our performance business, including supporting strategic artists like G-Dragon and enhancing our indigenous IP events, such as QQ MUSIC FOR PASSION, to create comprehensive musical experiences for users.

I’ll answer your question regarding offline performances, especially concerts. The offline performance sector continues to thrive, and we aim to improve the quality of our performance business. We hope to provide support to artists like G-Dragon and enhance indigenous events, thereby improving the musical experience for our users. Ultimately, we hope to realize our overarching strategy by providing greater value to the market and society.

Thank you, Kar Shun, and thank you, everyone, for joining us today. In the interest of time, this concludes today's call. If you have any further questions, please feel free to contact the IR team. Thanks again, and we look forward to speaking to you next quarter.

Thank you. Bye.