Good evening, good morning, and welcome to Tencent Music Entertainment Group's Second 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 opened. The earnings release is now available on our IR website and via Newswire services. During today's call, you will 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 address our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statements in our earnings release, which applies to this call as will 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. And please be advised 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, please.

Thank you, Millicent. Hello, everyone, and thank you for joining our call today. We delivered high-quality growth in the second quarter, with solid year-over-year increases in both revenue and profitability. On one hand, our platform remains a core growth driver and continues to gain traction. On the other hand, we are also seeing impressive results from our expanding suite of music-related services. Key initiatives like advertising, concerts, and artist collaborations have all achieved rapid growth in the second quarter, and that strong momentum is carrying into the third quarter. By constantly enhancing our content ecosystem, expanding our offerings, and fostering new ways for artists to engage, we are shaping a rise in one music service platform. Now let me share some of the key highlights on the content business. First, we began cooperating with well-known Korean labels, the Black Label and H Music for the first time, further strengthening and differentiating our K-pop offerings. We also expanded our visions with renowned Chinese artist, Wanghong, offering both his classics and latest work on our platform. Second, we continue to foster co-creation and our original content production to further enrich and diversify our content offerings. A prime example is our recent collaboration with SM Entertainment on NCP's special EP, Lucid, Tan. Our integrated promotions across music festivals, debut concerts, and variety shows attracted a large audience. 10,000 music lovers participated in a single loan at the music festival, and variety show clips generated over 1 million likes, highlighting the power of the end-to-end industry collaboration across borders. We also work closely with artists to develop our regional pieces like the theme song for the Charts and garnered extensive praise from national media. Additionally, our strategic partnership with satellite TV has further supplemented our music copyright portfolio with products such as the treasury voice and opened new opportunities for collaboration in content creation, artist promotion, and more. We have also shown strong capabilities in staging and coming together with users through other music-related service offerings. These efforts have further energized our ecosystem, boosted user loyalty, and cultivated content creation, altogether reinforcing our platform's unique position in the evolving music industry. A few examples: First, we successfully hosted leading Korean artist, G-Dragon's first major tour since 2017 in Macau, which attracted over 36,000 attendees to immerse in the celebratory atmosphere, and the event merchandise was quickly sold out. This marked our first large-scale snow concept production, significantly pushing our industry reputation. Following a strong kickoff, we are scheduled to expand the tour into other regions this year. Additionally, we organized a stadium concert for another artist, helping them to reach a broader, younger audience. Due to high demand, we quickly responded and worked to schedule additional shows to accommodate fan interest. Second, we have become an important partner staging and creating live performances for emerging artists. In the first half of the year, we leveraged our proprietary IPs, City Life and Thought Life, to host over 300 offline shows for nearly 100,000 musicians. Our cross-platform promotion boosted a number of works into trending, connecting them with a broader audience of music lovers. For instance, after we promoted an artist’s first viral race for the win video on social media, it quickly went viral, sparking a wave of user-generated content and achieving 20 million streams on our platform. Third, we created more opportunities for music lovers to meet and interact with artists both online and offline. For example, buyers of merchandise could win opportunities to attend offline signing events, such privileges not only enhance fan engagement but also help drive album performance. In late June, we partnered with DRU, a global fan communication platform company, to launch the interactive community bubble on QQ Music. The bubble enables users to engage directly with hundreds of K-pop artists from labels such as SM and JYP Entertainment, providing artists an avenue to share members-only content. To cater to a wider audience, we also plan to invite some popular Chinese artists to the community, allowing them to foster a deeper and more personal connection with their fans. Finally, reflecting our commitment to serving the music industry and supporting its healthy growth, we hosted the Further Wave Music Awards, which honored the most outstanding Chinese music works of 2024. 15 top-tier music creators presented the awards. The chart professionalism earned industry-wide acclaim with a market of 200 million social media viewers. This quarter, we also cooperated with professional institutions, music labels, and artists leveraging AI technology to unlock the social value and hearing power of music. For example, we launched a project featuring natural soundscapes to enhance sleep quality. In summary, our dedication to diversifying music services and delivering well-rounded music entertainment has set the stage for long-term sustainable growth. With a strong foundation in place, we will continue to enhance our content and platform ecosystem, offer richer experiences, and unlock greater opportunities for both music lovers and stakeholders across the music value chain. 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. In the second quarter, our platform demonstrated robust growth driven by continuous product improvement and operational excellence. Online music recorded strong performance supported by an expansion in both our subscriber base and ARPPU. This positive trajectory was underpinned by our innovations across product stations, artist merchandise, and artist-fan interactions, which have further strengthened our appeal among SVIP members. Overall, user engagement reached a record high and SVIP subscribers exceeded 15 million, a new milestone that reflects the deep trust and loyalty within our user community. To enhance the SVIP experience, we introduced a range of new and upgraded features during this quarter. Here are some key highlights: First, high-quality sound quality remains the most popular SVIP membership benefit, effectively fulfilling robust demand for more immersive listening experiences. In the second quarter, we launched enhanced music quality and one-click audio enhancements, allowing users to easily transform their smartphones into portable speakers. We also upgraded voice extraction technologies with the industry-first AI chorus function, allowing you to plug in and experience a live concert sing-along anytime. Second, to further drive SVIP adoption, artist-centric privileges have become increasingly effective. Such initiatives are bolstered by our deeper collaborations with labels and artists that unlock a wide range of compelling features for users. Digital albums are a great example. Recently, we launched new digital singles and albums while integrating privileges significantly boosted engagement. Another example is priority access to concert tickets for in-demand events, enabling users to secure tickets for G-Dragon and Blackpink concert first through our platform. This garnered significant interest among music fans. We also collaborated with both domestic and international artists to release unique merchandise, responding effectively to user demand for collectibles. Third, we elevated user engagement by introducing new ways for artists to connect. For example, beyond launching the Bubble platform in May, we partnered with TI Entertainment to transform projects into concerts. This event gathered over 33 million viewers, with SVIP members enjoying dedicated camera angles, bringing fans even closer to the artists. We also upgraded our virtual fan community, making meet-ups more personalized. During our last one, we hosted fun activities and live voice coaching, attracting over 100,000 users. Next, as our in-car music service recognition among SVIP members grew, we broadened our alliance with prominent automakers. For instance, this quarter, we formed a comprehensive partnership with GE and collaborated with Xiaomi on its first smart model. This integrated service enhances users' music listening experiences. Along with the success of our SVIP offerings, the power of our platform and innovative performance has led to accelerated advertising growth, both quarter-over-quarter and year-on-year. In particular, we optimized interactive formats, significantly increasing user engagement and receiving positive feedback from advertisers. Lastly, our ad-based membership is seeing positive momentum, giving us more room to provide tailored solutions to advertisers and users with various needs. Looking ahead, we see great potential in the music entertainment space and are committed to investing in new initiatives that create lasting value and impact on music creation and consumption. Along this journey, we will continue to innovate and enhance user experiences to deliver more premium and immersive experiences to all of our users. 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 Q2 2025. Our total revenue hit a record high of RMB 8.4 billion, up by 18% year-over-year, successfully overcoming challenges from adjustments in social service demand. This was driven by continued strong growth in new subscriptions and advertising services as well as robust growth from artist-related merchandise sales and offline performances. Online music revenues grew 26% year-on-year to RMB 6.9 billion. Net revenue grew 17% year-on-year to RMB 4.4 billion in Q2 2025, driven by continued expansion in subscriber base and monthly ARPPU. Monthly ARPU reached RMB 11.0 this year compared to RMB 10.7 in the same period of last year, primarily driven by expansion in subscribers and ARPPU. To enhance the SVIP member experience, we continue to broaden and strengthen SVIP benefits, including improved sound quality. Advertising revenue continues its strong growth trajectory both year-on-year and quarter-on-quarter, primarily driven by innovative ad formats, such as our ad-supported model, which keeps gaining traction and significantly contributed to our advertising revenue growth. Further, sponsorship advertising also saw growth this quarter, benefitting from an increased number of offline promotions and performances. Additionally, off-line merchandise and performance-related services delivered robust results this quarter, contributing to our revenue growth in music services. While we continue our strategic initiatives in the offline performance market. This quarter marked the first major tool since 2017, and we successfully hosted a concert with more locations planned for Q3. We also hosted other high-profile concerts during this quarter. Social entertainment services and other revenues were RMB 1.6 billion, down by 9% year-on-year. This decrease was mainly due to adjustments to certain live streaming interactive functions. Our gross margin rose by 2.4 percentage points year-on-year to 44.4%, primarily driven by strong growth in new subscriptions and advertising revenue. Additionally, we improved our cost base thanks to our established relationships with labels and audiences. Moving on to operating expenses, sales and marketing as a percentage of revenues was 2.6%, down from 2.9% in the same period last year. General and administrative expenses as a percentage of revenues were 11.1%, down from 13.1% in the same period of last year, underscoring our strong operating efficiency. Our effective tax rate for Q2 2025 was 17.3%, compared to 19.4% in the same period of 2024. We accrued withholding income tax of RMB 118 million in the second quarter of 2025. In Q2 2025, our net profit increased by 38% to RMB 2.5 billion, and the profit attributable to holders of the company increased by 43% to RMB 2.4 billion. Non-IFRS net profit attributable to the company reached a historical high of RMB 2.6 billion this quarter. Our diluted earnings per ADS this quarter was 1.5, up by 45% year-over-year, and the non-IFRS diluted earnings per ADS was 1.66, up by 39% year-on-year. These results underscore our effective monetization, enhanced operation, and benefits from our share repurchase. Our combined balance of cash, cash equivalents, deposits, and short-term investments were RMB 34.9 billion compared to RMB 37.7 billion as of March 31, 2025. This balance was also affected by changes in exchange rates. Going forward, we will focus on expanding our SVIP membership, introducing more enhanced interactive privileges such as high-quality content and early access to artist merchandise and concerts. We will continue to invest in product and innovative technologies globally. We remain optimistic about the growth potential in the music entertainment industry and are confident about the high-quality growth of our business. This concludes our prepared remarks. Operator, we are ready to open the call for questions.

The question comes from the line from Lincoln from Goldman Sachs. Lincoln, can you hear us?

Congratulations on the record quarter. My question is about our strong momentum in the first half. How should we approach the second half concerning our revenue and profit expectations?

We are really encouraged by this quarter's solid and well-rounded performance, with both our top line and bottom line coming in strong. Our music subscription business remains robust, and we will continue to focus on high-quality growth. Our subscriber base has already reached over 104 million, and while the pace for net adds may fluctuate from quarter to quarter, we are confident in maintaining a healthy and dynamic growth trajectory. We are seeing a steady upward trend in ARPPU as we enhance our offerings and value proposition, which we believe will further strengthen over time. In addition to our subscription business performance, we are excited about our traction in non-subscription services. Advertising continues to be an important growth driver, and our innovative efforts into different user cohorts have been welcomed by advertisers. Additionally, as we continue to innovate and collaborate with more artists and labels, new revenue streams from concerts and artist merchandise are becoming more scalable. Revenue has significantly increased year-over-year, validating our strategy to build a comprehensive music entertainment platform. While concerts may experience short-term fluctuations due to scheduling and logistics, we remain optimistic and focused on driving sustainable long-term growth. Given our solid performance year-to-date, we now expect revenue to exceed our expectations. With an emphasis on operational efficiencies, we see potential for further improvement in the bottom line as well.

Congrats on the solid results. I have a question on the Bubble. Can management share with us the traction of your recently launched Bubble? What is the user feedback and engagement for this new product, and can Bubble become a meaningful product in the future with potential revenue contributions?

The company is pleased to have collaborated with DRU this quarter to launch a product called Bubble. The launch was driven by user feedback requesting improved communication with artists. As we strive to enhance user experience, our partnership with DRU for this service aligns with that goal. Once the Bubble community is established, we will focus on optimizing the experience, particularly in translation and language support for South Korean and Chinese users. Initial feedback indicates that this feature is being well-received. In addition to targeting the South Korean audience, we aim to introduce Chinese artists to the community for an enhanced user experience. We anticipate that Bubble will become a significant growth driver. Current user demographics show that many paying users are younger, indicating strong activity and engagement that could lead to future growth and monetization. Bubble has established itself as a successful social product in international markets, and we believe it will support our efforts to strengthen QQ Music and broaden our social features.

Congratulations on a very strong set of numbers. My question is about our recent deal with Himalaya. Can management comment on the synergies with Himalaya regarding cost optimization and enhancements to our product offerings and whether there will be benefits to our SVIP offerings as well?

Regarding our deal with Himalaya, we are currently awaiting approval from regulatory authorities, so it's difficult to comment on specifics. However, we value the importance of long-form audio as a complementary content form to our existing business. We see positive progress in our subscriber base and commercialization. If the deal proceeds smoothly, we expect the opportunities for subscription revenue and advertising revenue to grow, and we will update the market as progress is made.

Congratulations on the very strong results. I have a question about other music revenue. Does management believe that in the long run, this part of the business will account for a larger share of total revenue? What will be the impact on the gross margin, considering that advertisement is a high-margin business, but how about offline performance concerts?

Thank you very much. The company is pursuing a strategy of integrating content and platforms. Both concert experiences and fan economies are important directions for our growth. While there will be fluctuations due to scheduling and merchandise issues, we see continued growth in fan economy revenue, which we anticipate will contribute to total revenue over time. However, both concerts and fan economy activities tend to have lower gross margins. While this could impact our overall gross margin, we are continually ramping up our online music revenue and advertising business, which contributes positively to our margin profile. We remain confident in our operational trends going forward.

Congrats on the solid quarter. I'd like to follow up on the fan economy development as you expand from online music distribution into broader fan economy initiatives, including related merchandise, offline performance, connectivity between artists and fans. What do you see as the biggest opportunity and biggest challenge in the near future?

The biggest opportunity lies in our commitment to building a comprehensive service platform that includes content, merchandise, and privileges. We believe the fan economy is integrated into our broader system, which allows us to leverage it effectively. A key challenge is ensuring that the size and development of our platform promote integrated growth for both content and privilege. Additionally, another opportunity is staging concerts for G-Dragon in overseas markets to expand our audience reach there.

Congrats on the strong results. We are very encouraged to see all of these exciting developments and initiatives. So my question is really about our long-term positioning. Could management share how we foresee our longer-term revenue mix and how this could evolve, especially as we diversify our music offerings?

Regarding the overall positioning of the company, we will continue to leverage our strategy of platform development and content ecosystem. We foresee that the online music business will remain a key source of revenue and profit in the near future. Advertising revenue is another area that could potentially grow even faster than online music revenue over the longer term. While social entertainment revenue has stabilized, we expect to see new growth drivers from content, performances, and merchandise, which will positively contribute to our overall revenue growth.

Congrats on the solid quarter. Earlier management mentioned strong advertising revenue growth partly attributed to the newly launched ad-based membership. Can management share more about revenue contributions from this new membership and how we plan to scale it without affecting standard subscriptions?

The rapid growth in our advertising business is mainly fueled by online advertising rather than the growth from ad-based memberships.

For the advertising business, incentive-based advertising will remain key in the coming years. We recently piloted an ad-based membership, which we view as an important strategic direction. This three-tier membership system will help expand subscriber size while providing tailored solutions to different user groups. We will share progress on this in the future.

I have some questions, then we'll take the last two. So Roger, on Parkway, your line is open.

Congrats on a very solid quarter. My question is on operating expenses. Over the last couple of quarters, our bottom line continued to outpace our top line growth, thanks to successful cost reductions in terms of sales and marketing expenses and G&A expenses. Should we expect this trend to continue for the rest of '25 and '26, given the growth opportunities management has discussed?

Thank you for your question. Our marketing expenses, particularly sales expenses, are aimed at promoting music content and increasing channel traffic. We will modify our spending in response to market competition while still investing in music promotion. We anticipate that operating expenses will increase compared to 2024, but we will make sure that the growth in expenses is slower than the growth in revenue to maintain healthy profit margins.

Congrats on the very impressive set of results. I’d like to ask about the online music subscription business. Can you share more on super VIP penetration, ARPU trends, and retention rates this quarter? Notably, how should we view the sustainability of this growth, and what will management's top priorities be to drive sustainable revenue growth?

There seems to be a misunderstanding. The key growth driver of the SVIP ratio is not related to timing or specific events but is instead based on continuous growth from releases.

We now have 50 million SVIP members and 124 million subscribers. You can calculate the SVIP penetration ratio. We see ARPPU and retention rates increasing, which aligns with our expectations. The main growth drivers continue to be premier sound quality, long-form audio content, and the shift of regular members into SVIP status. Our growth is fundamentally supported by our solid business strategy. In terms of sustainability, we plan events in advance to maintain strong audience engagement in merchandise sales, contributing to steady growth.

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

Thank you so much. Bye-bye.