Tencent Music Entertainment Group (TME) 2022 Q1 法說會逐字稿

Ladies and gentlemen, good evening, and good morning, and thank you for standing by. Welcome to the Tencent Music Entertainment Group First Quarter 2022 Earnings Conference Call. Today, you will hear discussions from the management team of Tencent Music Entertainment Group followed by a question-and-answer session. Please be advised that this conference is being recorded today.

女士們，先生們，晚上好，早安，感謝各位的收看。歡迎參加騰訊音樂娛樂集團2022年第一季業績電話會議。今天，您將聆聽騰訊音樂娛樂集團管理團隊的討論，隨後進行問答環節。請注意，今天的會議將被錄音。

Now I will turn the conference over to your speaker host today, Mr. Tony Yip. Please go ahead, sir.

現在，我將把會議交給今天的演講主持人葉建軍先生。先生，請開始。

Thank you, operator. Hello, everyone, and thank you all for joining us on today's call. TME announced its quarterly financial results today after the market closed, and earnings release is now available on our IR website at ir.tencentmusic.com, as well as via newswire services. Today, you will hear from Mr. Cussion Pang, our Executive Chairman, who will start the call with an overview of our recent updates; next, Mr. Ross Liang, our CEO; and I, Tony Yip, as CSO, will offer additional thoughts on our product strategies, operations and business developments; finally, Ms. Shirley Hu, our CFO, will address our financial results before we open the call for questions.

謝謝接線生。大家好，感謝大家參加今天的電話會議。騰訊音樂娛樂集團 (TME) 今天在收盤後公佈了季度財報，財報現已發佈在我們的投資者關係網站 ir.tencentmusic.com 以及新聞通訊社上。今天，您將首先聽到我們的執行董事長彭迦信先生 (Mr. Cussion Pang) 的發言，他將概述我們最近的發展；接下來，我們的首席執行官梁志強先生和首席戰略官葉建軍先生 (Tony Yip) 將就我們的產品戰略、運營和業務發展發表更多看法；最後，我們的首席財務官在胡績之前 (Ms. Shirley Huley 的財務會議開始介紹我們的首席財務官。

Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Please also note that the company will discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under the IFRS in the company's earnings release and filings with the SEC, where you are reminded that such non-IFRS measures should not be viewed in isolation or as an alternative to the equivalent IFRS measure. The other non-IFRS measures are not uniformly defined by all companies, including those in the same industry.

在繼續討論之前，請參閱我們收益新聞稿中的安全港聲明，該聲明適用於本次電話會議，因為我們將做出前瞻性陳述。另請注意，公司今天將討論非國際財務報告準則 (Non-IFRS) 指標，這些指標將在公司收益報告和提交給美國證券交易委員會 (SEC) 的文件中得到更詳盡的解釋，並與根據國際財務報告準則 (IFRS) 報告的最具可比性的指標進行協調。在此提醒您，此類非國際財務報告準則 (Non-IFRS) 指標不應孤立地看待，也不應將其視為等效國際財務報告準則 (IFRS) 指標的替代指標。其他非國際財務報告準則 (Non-IFRS) 指標並非由所有公司（包括同一產業的公司）統一定義。

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

說完這些，我很高興將電話轉給 TME 執行董事長 Cussion。 Cussion？

Thank you, Tony. Hello, everyone, and thank you for joining our call today. In an era of increasing entertainment choices, (inaudible) and evolving market landscape, a sustained competitive advantage is awarded to those who offer users a differentiated experience. With this in mind, in the first quarter of 2022, we continued to build new professional and personal use cases and interactions around our dual engine content and platform strategy, as well as expand our efforts to augment the scale and fortify the quality and competitiveness of our music catalog.

謝謝，Tony。大家好，感謝您今天參加我們的電話會議。在這個娛樂選擇日益增多、市場格局不斷演變的時代，那些為用戶提供差異化體驗的人才能獲得持續的競爭優勢。秉持著這個理念，我們在2022年第一季繼續圍繞雙引擎內容和平台策略，建構新的專業和個人用例及互動，並加強擴大音樂庫的規模，提升其品質和競爭力。

Meanwhile, we strove to enhance user experience through innovations built on our 4 pillars of music entertainment, namely, listen, watch, sing and play, driving momentum for our long-term success and promoting the healthy development of the music industry.

同時，我們致力於透過圍繞聽、看、唱、玩四大音樂娛樂支柱的創新來提升用戶體驗，為我們的長期成功提供動力，促進音樂產業的健康發展。

First and foremost, we remain committed to energizing original content production, leveraging our technology-driven production capabilities and strength in mobilizing promotional resources. The benefits of our overall content ecosystem are increasingly manifested. With our Xingyao Plan, (foreign language), and Galaxy Plan (foreign language), we empowered original content production, leveraging our technology-driven solution to add value across demo and single discovery throughout the production, distribution and promotion phases of these original works.

首先，我們將持續致力於賦能原創內容生產，充分發揮我們技術驅動的生產能力和調動推廣資源的優勢。我們整體內容生態系的優勢日益顯現。透過星耀計畫（外語）和星河計畫（外語），我們賦能原創內容生產，利用我們技術驅動的解決方案，在原創作品的製作、發行和推廣等各個環節，從試玩到單品發現，提升價值。

Our high hit rate for original content blockbusters is supported by our middleware platform, which integrates first algorithm-driven screening of lyrics, songs and demos; second, AI voice matching capability built upon a stored library of hundreds and thousands of voices; and third, a targeted promotion system based on real-time data analysis to help artists and songs, who wish to invite audience and go viral.

我們的原創內容大片的高命中率得益於我們的中間件平台，該平台集成了：第一，基於演算法的歌詞、歌曲和樣帶篩選；第二，基於存儲的成百上千種聲音庫構建的AI語音匹配能力；第三，基於實時數據分析的定向推廣系統，幫助想要吸引觀眾並火起來的藝術家和歌曲。

Empowered by these advanced technologies, our artists have created quality pieces as well as trendy ones, serving a wide range of users' cases. Notable standouts in the first quarter included Mirage, (foreign language), and Drown, (foreign language), 2 sweeping successes that topped multiple music charts and both achieved peak daily streams in excess of 13 million.

在這些先進技術的賦能下，我們的藝術家創作了既有優質作品，也有潮流單曲，滿足了各類使用者的訴求。第一季的亮點包括《Mirage》（外語）和《Drown》（外語），這兩首單曲橫掃多個音樂排行榜，每日播放量高峰均超過1,300萬次。

Meanwhile, we continue to refine our original content catalog, focusing on key verticals such as gaming, Chinese Ancient Style and pop music. In the first quarter, we collaborated with Tencent Games popular titles, including PUBG Mobile, (foreign language), Honour of Kings, (foreign language), League of Legends, Wild Rift (foreign language) and several more to produce original themed music content. These songs by leading artists such as Hua Chenyu, Chen Linong, Mao Buyi and Huang Z.TAO have made their way to the top of various music charts and have also been embedded with the sales of ads and game [pop-ups] further driving our revenues.

同時，我們持續優化原創內容目錄，並專注於遊戲、古風音樂和流行音樂等關鍵垂直領域。第一季度，我們與騰訊遊戲旗下熱門遊戲合作，包括《絕地求生：刺激戰場》（外語版）、《王者榮耀》（外語版）、《英雄聯盟》、《荒野大鏢客》（外語版）等，打造原創主題音樂內容。這些由華晨宇、陳立農、毛不易和黃子韜等知名藝人創作的歌曲已榮登各大音樂榜單榜首，並融入廣告和遊戲彈跳廣告，進一步提升了我們的收入。

What's more, an inspirational Chinese Ancient Style hit song, [Crying Snow], (foreign language), became the background music of choice for many official media outlets during the Beijing Winter Olympics, generating tremendous social media buzz of over 2 billion views and catapulting it to the top of TME's 12 music charts.

此外，一首充滿中國風的勵志古風歌曲《哭雪》（外語）更成為北京冬奧會期間多家官方媒體的宣傳背景音樂，在社群媒體上引發熱議，播放量突破20億，並榮登TME十二大音樂榜首。

Moreover, our Tencent Musician platform continues to provide systematic support for musicians, enabling us to partner with musicians at any stage and in all aspects of their careers to provide a launchpad for more musicians to showcase their talent, passion and music for the broadest possible audience.

此外，我們的騰訊音樂人平台持續為音樂人提供系統性支持，使我們能夠與音樂人在其職業生涯的各個階段和各個方面進行合作，為更多音樂人提供一個平台，向盡可能廣泛的受眾展示他們的才華、熱情和音樂。

We have been making resolute efforts to optimize and upgrade Tencent Musician's platforms or run services for musicians, so that being active on our platform becomes not only a preference, but also a habit for creators.

我們一直不懈努力優化升級騰訊音樂人平台，為音樂人提供更優質的服務，讓創作者在平台上活躍不僅成為一種偏好，更成為一種習慣。

For factors, in the first quarter, we launched a brand new behind-the-scenes music production service with an initial group of over 50 industry well-known professionals and more than 100,000 creators, who are well versed in music composition, mixing, recording and more joining the roster to provide our musicians with production support.

例如，在第一季度，我們推出了全新的幕後音樂製作服務，首批擁有超過 50 位行業知名專業人士和超過 100,000 名創作者，他們精通音樂創作、混音、錄音等，為我們的音樂人提供製作支援。

Additionally, we have strengthened our platform infrastructure to support musicians with a customized self-service productivity toolkit to analyze data, host concerts and manage their artwork catalog, profile page and photo albums. Taken together, these tools empower musicians to create and promote their work more efficiently and reach a higher audience, ultimately helping to build a constructive and active musicians ecosystem.

此外，我們也強化了平台基礎設施，為音樂人提供客製化的自助生產力工具包，幫助他們分析數據、舉辦音樂會，並管理自己的作品目錄、個人資料頁面和相簿。這些工具將賦能音樂人更有效率地創作和推廣作品，觸達更廣大的受眾，最終協助建構一個建設性、活躍的音樂人生態系統。

Second, the Tencent Musician platform motivates musicians with an array of creative scenarios and rich promotion resources, both on- and off-line, helping them breakthrough to larger audience, aided by our platform's toolkit, (foreign language), climbed to the top at launch of the trending charts with cumulative social media buzz reaching over 200 million views. Our diverse promotions for the singer and the song include top variety shows like the Treasure Vault (foreign language) online joint activities with TMELAND and Weixin video content -- video accounts. Off-line stages, such as our Tencent Musician Entertainment Award, TMEA, and the fourth stage, (foreign language), as well as a handful of offline brand sponsoring events, providing additional opportunities for Liu Shuang to sign and unlock his potential.

其次，騰訊音樂人平台透過豐富的線上線下創意場景和推廣資源，激勵音樂人突破自我，協助其在平台工具的助力下，突破受眾群體。劉爽（外語）在發佈時便榮登熱門榜榜首，社群媒體累積閱讀量超過2億次。我們為歌手和歌曲進行了多元化的推廣活動，包括頂級綜藝節目《寶藏寶庫》（外語）、與TMELAND和微信視訊帳號的線上聯合活動。線下舞台，例如騰訊音樂人娛樂盛典、TMEA和第四期（外語），以及眾多線下品牌贊助活動，為劉爽提供了更多簽約藝人、釋放潛力的機會。

We have established a sustainability and diverse monetization models for musicians, which help them earn a better living while focusing on honing their craft. To this end, we distributed over RMB 200 million from our platform to musicians during the past 12 months, supporting a new generation of indie musicians as they propel the industry forward.

我們為音樂人建立了可持續且多樣化的變現模式，幫助他們在專注於精進技藝的同時獲得更好的收入。為此，我們在過去12個月透過平台向音樂人發放了超過2億元人民幣的收益，支持新一代獨立音樂人推動產業發展。

Enriching our content library and building our presence across a multitude of music verticals to reinforce our source of competencies is another focus, which, in turn, strengthens our platform's reputation as a go-to destination for enthusiasts, and benefits our penetration among high-value heavy users.

豐富我們的內容庫並在眾多音樂垂直領域建立我們的影響力以加強我們的能力來源是另一個重點，這反過來又加強了我們平台作為愛好者首選目的地的聲譽，並有利於我們在高價值重度用戶中的滲透。

Chinese Ancient Style music remains our stronghold. In the first quarter, we presented in China, (foreign language), a variety show that brought together top Chinese musicians and performers from 41 different genres to compose and showcase original music work, thus creatively combined the traditional Chinese cultural elements with trendy styles. The show has received a widespread acclaim and over 300 media accolade for its efforts in actively promoting Chinese cultural heritage.

中國古風音樂依然是我們的強項。第一季度，我們在中國推出了一檔外語綜藝節目，匯集了41個不同流派的中國頂尖音樂家和表演者，創作並展示原創音樂作品，創造性地將中國傳統文化元素與潮流風格巧妙融合。該節目積極弘揚中國文化遺產，獲得了廣泛讚譽，並獲得了超過300家媒體的認可。

In addition, during the first quarter, we began to expand our focus to the electronics, classical and anime genres. For example, we strengthened operations for electronic music by bringing in musicians, labels and institutional partnerships and provide a full range of content, including music, audio, playlist, video and more. By the end of the first quarter, more than half of the world's top 100 DJs has settled on QQ Music, which not only enabled their in-depth communication with Chinese fans, but also promoted the spread of trendy electronic music.

此外，在第一季度，我們開始將重心拓展至電子、古典和動漫音樂領域。例如，我們加強了電子音樂的運營，引入音樂人、廠牌和機構合作夥伴，提供包括音樂、音訊、歌單、視訊等在內的全方位內容。截至第一季末，全球百強DJ中超過一半已入駐QQ音樂，這不僅使他們能夠與中國粉絲進行深入交流，也推動了潮流電子音樂的傳播。

Finally, built upon our commitment to promoting healthy and sustainable industry development, TME seeks to create inclusive professional music charts that accurately reflect and evaluate China's music industry. Our TME Chart, (foreign language), along with its data-based TME Uni Chart, (foreign language), and its expert review-based TME Wave Chart, (foreign language), served as a solid music rating infrastructure.

最後，TME致力於促進產業健康永續發展，致力於打造包容性強的專業音樂榜單，準確反映並評估中國音樂產業的現狀。我們的TME Chart（外語版）、基於數據的TME Uni Chart（外語版）以及基於專家評測的TME Wave Chart（外語版）構成了堅實的音樂評級基礎。

In the first quarter, we released the TME Music Chart Annual Review, which provides a snapshot of the Chinese music landscape in 2021 with ratings and reviews of over 1,800 songs, becoming a bellwether for the latest and hottest in China's music world and attracting a wave of social media buzz, including over 900 million views upon release.

第一季度，我們發布了《TME音樂榜年度回顧》，該榜單透過對超過1800首歌曲的評分和評論，展現了2021年華語音樂的面貌，成為中國音樂界最新、最熱門的風向標，並在社交媒體上引發熱議，發布後閱讀量超過9億次。

Because we are motivated everyday by the differentiated value we can bring to music lovers, music creators and the music industry as a whole, we are committed to earning each of these participants' loyalty and devotion through will empowerment.

因為我們每天都被我們能為音樂愛好者、音樂創作者和整個音樂產業帶來的差異化價值所激勵，所以我們致力於透過意志賦能來贏得每一位參與者的忠誠和奉獻。

With that, I conclude the progress update on our growing content capabilities. Now I would like to turn the call over to Ross, who will share more about our platform strategies. Ross, please go ahead.

至此，我結束了關於我們不斷增長的內容能力的進展更新。現在我想把電話交給羅斯，他將進一步分享我們平台策略。羅斯，請繼續。

Thank you, Cussion. Hello, everyone. Moving on to our platform strategy. In the fourth quarter, we continue to invigorate our ecosystem and innovate around the 4 pillars of our music entertainment experience, listen, watch, sing and play. Beginning with the smallest details, we continuously polish our products to meet the multifaceted needs of diverse cohorts and have strived to create a sense of belonging, making our products an uncompromising must have in our users' daily lives, which we strive to listen our users' core demand, we are providing innovative and professional product features to elevate users' listening experience.

感謝Cussion。大家好。接下來談談我們的平台策略。第四季度，我們將繼續賦能生態系統，並圍繞音樂娛樂體驗的四大支柱——聽、看、唱、玩——進行創新。我們從細節入手，不斷打磨產品，以滿足不同群體的多方面需求，並致力於創造歸屬感，使我們的產品成為用戶日常生活中不可或缺的必需品。我們努力傾聽使用者的核心需求，提供創新且專業的產品功能，以提升使用者的聆聽體驗。

Technology is so deeply embedded in our core corporate character that it has become part of our DNA. QQ Music was the first in China to launch advanced listening functions, including the digital music enhancement engine, which can significantly improve sound quality with 1 simple click, and a replay (inaudible) and a gapless playback, which help equalize music volume and deliver us (inaudible) music listening experience between consecutive song plays, particularly compatible with classical music streaming. These new functions have been well received as millions of users incorporate this feature into their daily practice.

科技深植於我們的核心企業特質，已成為我們DNA的一部分。 QQ音樂在中國率先推出先進的聆聽功能，包括數位音樂增強引擎，只需輕輕一按即可顯著提升音質；以及重播（聽不清楚）和無縫播放功能，可均衡音量，在連續播放之間帶來（聽不清楚）的聆聽體驗，尤其兼容古典音樂串流媒體。這些新功能廣受好評，數百萬用戶已將其融入日常生活。

We have also optimized our smart recommendation filter, and have become more in tune with our users' tastes as demonstrated by QQ Music's recommendation, penetration rate, reaching a new record high by the end of the first quarter, along with recommendation streaming, volume and time spend both recorded stronger double-digit growth year-over-year.

我們也優化了智慧推薦過濾器，更加貼合用戶的口味，QQ音樂的推薦滲透率在第一季末創下新高，推薦播放量和使用時長均同比實現更強勁的兩位數增長。

In addition, our upgrade QQ Music popularity index with real-time updates on the number of listeners online expanded the music coverage and additional song information has considerable strengthened user sense of participation with their input directly influenced a song or artist prominence.

此外，我們升級了QQ音樂人氣指數，即時更新線上聽眾人數，擴大了音樂覆蓋範圍，增加了歌曲訊息，大大增強了用戶的參與感，用戶的參與度直接影響了歌曲或歌手的知名度。

The second pillar of our overall multisensory entertainment experience offering is watch. We are deepening our collaboration with Weixin Video Accounts to create vibrant music scenarios and strengthen music promotion capabilities. In March, Tencent Musician platform have a large-scale, live charity concert during the pandemic, Spring Never Ends, (foreign language). It was an 8-hour uninterrupted mesmerizing performance by 141 groups of well-known artists, such as (inaudible) and a roster of other musicians. Supported by Weixin Video Accounts, promotion capabilities and our ability to mobilize the resources on our platform, the concert attracted millions of viewers, generating over 30% increase in the number of viewers in participating musicians' live streaming rooms on the event day.

我們全方位多感官娛樂體驗的第二個支柱是「觀看」。我們正在深化與微信影片號碼的合作，打造活力四射的音樂場景，並加強音樂推廣能力。 3月，騰訊音樂人平台在疫情期間舉辦了一場大型公益直播音樂會－「春暖花開」（外語）。這場長達8小時的精彩演出由141組知名藝人傾情獻演，其中包括（聽不清楚）等眾多音樂人。在微信影片號碼、推廣能力以及我們平台資源整合能力的支持下，這場音樂會吸引了數百萬觀眾，活動當天參與音樂人直播間的觀眾人數增加了30%以上。

We are proud to share by the end of the first quarter, daily video views of Weixin Video Accounts of musicians on our Tencent Musician platform had exceeded 100 million, representing over 70% increase quarter-over-quarter.

我們很自豪地宣布，截至第一季末，騰訊音樂人平台上音樂人微信影片帳號的每日影片播放量已突破1億，季增超過70%。

Beyond video, our efforts on the visual front also include the use of the graphics and other formats to enrich streaming content (inaudible) music's common display function and the streaming realizations are just a few of the many examples launched in the first quarter.

除了影片之外，我們在視覺方面的努力還包括使用圖形和其他格式來豐富串流內容（聽不清楚）音樂的常見顯示功能和串流媒體實現只是第一季度推出的眾多範例中的幾個。

In terms of sing, we were the first in the industry to offer song tune without requiring earbuds by (inaudible) an easy-to-use function that can substantially improve the song effects of songs recorded without internal devices. Another new feature that has inspired widespread accolade among users is our cloud-based song mixing (foreign language) which helps produce nearly studio quality song mixing in just 2 new minutes after the music work is uploaded to the cloud.

在唱歌方面，我們率先在業界推出無需耳機即可進行歌曲調音的功能（聽不清楚），該功能簡單易用，能夠顯著提升無需內置設備錄製的歌曲的音效。另一個廣受用戶讚譽的新功能是我們的雲端歌曲混音（外語），只需將音樂作品上傳到雲端，即可在短短兩分鐘內完成近乎錄音室品質的歌曲混音。

We have also endeavored to expand music entertainment scenarios, adding more fun play elements to the music entertainment experience. We hosted our first radio earning call on TMELAND, and are planning to organize additional future events, such as facial avatar concerts and customized events on this exciting new virtual music playground in the second quarter.

我們也致力於拓展音樂娛樂場景，為音樂娛樂體驗增添更多趣味元素。我們在TMELAND舉辦了首場電台收益電話會議，並計劃在第二季度在這個令人興奮的全新虛擬音樂樂園舉辦更多活動，例如臉部虛擬演唱會和客製化活動。

In addition, we have (inaudible) dedicated virtual rooms for artists including recently launched rooms for (foreign language), which provides immersive interactive social scenarios, where fans can listen to their idol's digital album anytime, anywhere, while posting songs reviews, talking with other fans and display self-inspirations in virtual avatars.

此外，我們為藝術家提供（聽不清楚）專用虛擬房間，包括最近推出的（外語）房間，提供沉浸式互動社交場景，粉絲可以隨時隨地收聽偶像的數位專輯，同時發布歌曲評論、與其他粉絲交談並在虛擬化身中展示自我靈感。

We are proud to share that through pairing innovations in the 4 pillars of music entertainment, listen, watch, sing and play, QQ Music has achieved solid initial results as demonstrated by its continuous year-over-year MAU growth.

我們很自豪地宣布，QQ音樂透過對聽、看、唱、玩四大音樂娛樂支柱的創新，取得了初步的良好成績，每月活躍用戶數持續同比增長就是明證。

Building on complementary components to our music entertainment ecosystem, we continue to grow our long-form audio business with increasingly differentiated content. We are delighted to see mid- and long-tail podcast focus, flourishing in the TME ecosystem and gaining traction, thanks to our large user base.

基於與音樂娛樂生態系統的互補，我們持續拓展長篇音響業務，提供更具差異化的內容。我們欣喜地看到，由於我們龐大的用戶群，中長尾播客業務在TME生態系統中蓬勃發展，並日益受到關注。

For example, after participating in TME's podcast creation center in 2022, Podcast host, Lao Shi Qi audio work of the Northern Time Raiders, (foreign language), racked up 23 million streams within 1 month upon its release and shot to the top of TME's charts, leading to substantially higher financial gains for Lao Shi Qi and inspiring a growing growth of mid- and long-tail creators to join our podcast ecosystem.

例如，播客主持人、北方時空攻略的老師七的音頻作品（外語）在2022年加入TME播客創作中心後，發布一個月內就突破2300萬播放量，躍居TME排行榜榜首，為老師七帶來了大幅的經濟收益，並帶動了越來越多的中長尾創作者加入我們的播客生態。

Secondly, we enhanced our strong content operation with popular IPs, particularly in TV dramas series through audio books, artist participation in the [Putong] community and the (inaudible) channels. We're successfully promoting both the audio books and the associated IPs with highlights in the first quarter, including (foreign language) and (foreign language).

其次，我們利用熱門IP加強了強大的內容運營，特別是透過有聲書、藝術家參與[Putong]社群以及[聽不清楚]頻道製作電視劇。我們成功地推廣了有聲書和相關IP，第一季的亮點包括[外語]和[外語]。

During the release of these (inaudible) dramas, TME's long-form audio offers of the same title song, their streaming value surged. Going forward, we will leverage our membership to maximize the monetization potential of long-form audio as we also continue to optimize content ROI and the DAU monetization efficiency to improve its profitability.

在這些劇集播出期間，TME 的同名主打歌長音訊的串流價值大幅飆升。未來，我們將利用會員制優勢，最大程度地挖掘長音訊的變現潛力，並持續優化內容投資報酬率 (ROI) 和每日活躍用戶 (DAU) 的變現效率，提升獲利能力。

As we drive our business progress, we remain dedicated to undertaking our social responsibilities to create a better world and promos, creative experience and create a new model of public welfare through music.

在推動業務發展的同時，我們始終致力於承擔社會責任，為創造更美好的世界而努力，透過音樂傳播創意體驗，打造公益新模式。

To celebrate the 15th World Autism Day, we launched an autism charity project, Shape of Music, (foreign language), which presented a series of artworks, such as our first public welfare digital (foreign language) single, The Brightest Star, (foreign language), the music album, Symphony of the Galaxy, (foreign language) and the Shape of Music art exhibition, allow music to not only be heard, but also seen and treasured through the crossover of different content and art forms online and offline. The entire net income from the project was donated to autism institutions to advocate for social connections with these autism groups.

為慶祝第15個世界自閉症日，我們發起了自閉症公益計畫「音樂的形狀」（外語），呈現了首支公益數位單曲《最閃亮的星》（外語）、音樂專輯《銀河交響曲》（外語）以及「音樂的形狀」藝術展等一系列藝術作品，透過線上線下不同內容和藝術形式的跨界，讓音樂被隱藏，不僅被珍藏。計畫淨收入全部捐贈給自閉症機構，用於倡導與自閉症群體的社會聯繫。

With that, I would like to give the floor to Tony to review our business operations. Tony, please go ahead.

接下來，我想請Tony回顧一下我們的業務運作。 Tony，請講。

Thank you, Ross. Hello, everyone. In terms of operating results in the first quarter, our online music MAUs were $604 million, down slightly year-over-year. Despite churn of casual users who opted for other pan-entertainment platforms, we are encouraged by the progress we've made in our original content production capabilities, music catalog and innovative product features, which continue to strengthen the engagement of our core user cohort.

謝謝羅斯。大家好。就第一季的營運表現而言，我們的線上音樂月活躍用戶（MAU）為6.04億美元，較去年同期略有下降。儘管部分一般用戶選擇其他泛娛樂平台，但我們對原創內容製作能力、音樂庫和創新產品功能方面取得的進展感到鼓舞，這些進展持續增強了我們核心用戶群的參與度。

Our IoT service MAU continued to witness a double-digit year-over-year increase in the first quarter, which was primarily attributable to our comprehensive IoT entertainment content, integrating music, singing, live streaming, long-form module and more.

我們的物聯網服務月活躍用戶在第一季繼續實現兩位數的同比增長，這主要歸功於我們全面的物聯網娛樂內容，融合了音樂、唱歌、直播、長篇模組等。

In the first quarter, we work with Little Genius smartwatch, (foreign language), and multiple electric vehicle manufacturers such as Nio, Weili and (foreign language) to provide Karaoke functionalities on IoT devices.

第一季度，我們與小天才智慧手錶、(外語)以及蔚來、偉力、(外語)等多家電動車製造商合作，在物聯網設備上提供卡拉OK功能。

Due to macro headwinds, our online music revenue decreased year-over-year in the first quarter. However, our fundamentals remain healthy, and we successfully sustained our growth momentum in subscriptions. We achieved a net add of 4 million in the first quarter and a paying user penetration rate of 13.2%. At the same time, user retention remained largely stable.

受宏觀經濟逆境影響，我們第一季的線上音樂收入較去年同期有所下降。然而，我們的基本面依然穩健，訂閱用戶數量保持成長動能。第一季度，我們淨增用戶400萬，付費用戶滲透率為13.2%。同時，用戶留存率基本上保持穩定。

For the remainder of 2022, we are committed to delivering a healthy balance between paying user growth and ARPPU, which reflects the quality of growth of our online music business. In the first quarter, as the pandemic weighted on our advertising business, we continue to implement innovative, diverse advertising solutions to unlock more ad revenue potential. To fully leverage our large user base, we are testing a free listening mode where users can listen to songs for 30 minutes for free with every 15 seconds of video rewarded ads that they watch.

在2022年剩餘時間，我們致力於在付費用戶成長和平均每付費用戶收入（ARPPU）之間實現健康的平衡，這反映了我們線上音樂業務的成長品質。第一季度，由於疫情對我們的廣告業務造成壓力，我們持續實施創新、多樣化的廣告解決方案，以釋放更多廣告收入潛力。為了充分利用我們龐大的用戶群，我們正在測試免費試聽模式，用戶每觀看15秒的影片激勵廣告，即可免費試聽30分鐘歌曲。

In addition, our music promotion service (foreign language) and playlist bonus tasks (foreign language), which allow for accurate targeting of the right audience and increase in streaming volume and popularity of selected songs for a fee, have both achieved early success with strong growth in their daily revenue in streams.

此外，我們的音樂推廣服務（外語）和播放清單獎勵任務（外語）可以準確定位目標受眾，並透過收費方式增加所選歌曲的串流媒體量和人氣，這兩項服務均取得了早期成功，每日串流媒體收入強勁增長。

We also forged ahead with new business models to enrich user experience and monetization avenues. In the first quarter, we launched our Super VIP membership, (foreign language), which complements the 2 existing tiers of our subscription plan and incorporates up to more than 50 privileges, including access to more music and audio content, as well as digital albums for a monthly fee of RMB 30.

我們也積極探索新的商業模式，以豐富用戶體驗和獲利管道。第一季度，我們推出了超級VIP會員（外語），該會員服務補充了我們現有的兩個等級的訂閱計劃，並包含多達50多項特權，包括訪問更多音樂和音頻內容以及數位專輯，每月只需支付30元人民幣。

Additionally, in the first quarter, we continue to explore the tie-ins between celebrity artists with our music pets, digital collectibles and (foreign language) To captivate more Gen Z users and cultivate a young and trendy cultural community, we further embraced our deep roots in the college campus scene and spared no effort in bringing more and more promising voices to be heard with our campus musician cultivation plan, Vala Campus, (foreign language).

此外，在第一季度，我們繼續探索明星藝人與我們的音樂寵物、數位收藏品和（外語）之間的結合。為了吸引更多的Z世代用戶，培養年輕時尚的文化社區，我們進一步紮根於大學校園，並不遺餘力地透過我們的校園音樂人培養計劃Vala Campus，讓更多有潛力的聲音被聽到。 （外語）

In the first quarter, we are particularly proud of the positive impact we have had on female campus musicians included in the winner of the first prize scholarship of Vale campus and Chinese folk (inaudible) musician, Georgina Chen (inaudible), who created the Chinese ancient style original work, Mulan, based on the classic heroine. With this song, Georgina bloomed on the CCTV program, Sing My Heart, (foreign language), exemplifying female bravery and spiritual power.

在第一季度，我們尤其為對校園女性音樂家的正面影響感到自豪，其中包括維爾校區一等獎學金得主和中國民謠音樂家喬治娜·陳（聽不清楚）。她根據中國古典女英雄木蘭的原型創作了中國古風原創作品《木蘭》。憑藉這首歌，喬治娜在中央電視台《唱出我心聲》（外語版）節目中大放異彩，展現了女性的勇氣和精神力量。

We were also instrumental in her collaboration with household names and brands, such as the award-winning lyricist, (inaudible), (foreign language), (inaudible), (foreign language), PUBG Mobile, (foreign language) and QQ Speed Mobile, QQ (foreign language), to produce original theme songs, helping her achieve accelerated professional growth and broader recognition.

我們也幫助她與家喻戶曉的人物和品牌合作，例如屢獲殊榮的作詞家（聽不清楚），（外語），（聽不清楚），（外語），PUBG Mobile（外語）和QQ飛車手遊（QQ（外語）），製作原創主題曲，幫助她加速職業發展並獲得更廣泛的認可。

Now let's turn to our social entertainment services. Both MAU and paying users were affected during the quarter by seasonality as well as macro headwinds. Facing the fast challenging landscape, we will continue to improve our competitiveness through ongoing product innovations and new initiatives in social entertainment such as audio live streaming, international expansion and virtual interactive product offerings.

現在讓我們來看看我們的社交娛樂服務。本季度，每月活躍用戶和付費用戶均受到季節性因素以及宏觀經濟逆境的影響。面對快速變化的市場挑戰，我們將繼續透過持續的產品創新和社交娛樂領域的新舉措（例如音訊直播、國際擴張和虛擬互動產品）來提升競爭力。

For WeSing, to achieve our goal of making singing more fun and recording more professional, we provided innovative, easy-to-use features and tools to elevate users' singing and playing experience, as well as energized the relationship among our users. Our investment in these innovative singing and playing tools in the past few quarters started to pay off as the adoption rates of and the user time spent in our singing room both improved year-over-year and quarter-over-quarter.

對於全民K歌而言，為了實現讓歌唱更有趣、錄音更專業的目標，我們提供了創新易用的功能和工具，以提升用戶的歌唱和演奏體驗，並增強用戶之間的聯繫。在過去幾個季度，我們對這些創新歌唱和演奏工具的投入開始獲得回報，歌唱室的採用率和用戶使用時長均實現了同比和環比增長。

Facing competition for our traditional live streaming services, we will strive to generate more differentiated content and user experience. Firstly, we use -- we continue to make progress in vertical content category expansion. Focusing on the (inaudible) economy, Kugou Live launched The Goddess Festival event in March, which successfully attracted female users with premium ARPPU to enjoy our audio live streaming routes.

面對傳統直播服務的競爭，我們將努力創造更多差異化的內容和使用者體驗。首先，我們將繼續在垂直內容類別拓展方面取得進展。酷狗直播專注於（聽不清楚）經濟，於3月份推出了「女神節」活動，成功吸引了擁有優質ARPPU的女性用戶來體驗我們的音訊直播。

Our audio live streaming business achieved a double-digit year-over-year increase in revenues in the first quarter and will become a key component of our overseas development strategy due to higher monetization efficiency in international markets. We also brought in WeSing's target user base by adding live streaming educational content, addressing seniors, online learning and sharing needs such as lessons on square dancing, calligraphy and traditional Chinese offers. Secondly, cross-platform collaboration is another way we can differentiate. For example, our first real-time live singing event, Meet (inaudible), (foreign language), co-hosted by QQ Music Live Streaming and WeSing, brought premium karaoke content to live streaming. QQ Music Live Streaming advanced steadily with the number of hosts increasing rapidly and daily active host reaching a record high of 10,000 during the first quarter.

我們的音訊直播業務第一季營收年實現雙位數成長，由於國際市場變現效率提升，該業務將成為我們海外發展策略的重要組成部分。我們還引入了直播教育內容，滿足老年人、線上學習和分享需求，例如廣場舞課程、書法課程和傳統中國風活動，從而吸引了全民K歌的目標用戶群。其次，跨平台合作是我們實現差異化的另一個方式。例如，我們首個即時直播唱歌活動「Meet（聽不見）」（外語）由QQ音樂直播和全民K歌聯合舉辦，為直播帶來了優質的卡拉OK內容。 QQ音樂直播穩步推進，主播數量快速增長，第一季日活躍主播數創下10,000人的歷史新高。

In conclusion, we kicked off 2022 by facing challenges head on, but we remain confident as we execute our dual engine content and platform strategy. We will persist in making our ecosystem, our content, product differentiated and highly specialized, which in turn will help us capture the hearts and minds of hundreds of millions of music lovers and unlock the massive opportunity in front of us.

總而言之，2022年開始，我們面臨諸多挑戰，但我們對內容與平台雙引擎策略的執行充滿信心。我們將堅持不懈地打造差異化、專業化的生態系統、內容和產品，從而贏得億萬音樂愛好者的青睞，釋放我們面前的巨大機會。

With that, I would like to turn the call over to Shirley, our CFO, for a closer review of our financials.

說到這裡，我想把電話轉給我們的財務長雪莉 (Shirley)，讓她更仔細地審查我們的財務狀況。

Thank you, Tony. Hello, everyone. Actually, I'll discuss our results from a financial perspective. Our total revenue for Q1 2022 were RMB 6.6 billion, down by 15% year-over-year and by 20.7% sequentially. In the first quarter of 2022, our IFRS net profit was RMB 649 million, and the non-IFRS net profit was RMB 939 million, which represented a sequential increase of 8% as a result of our focus on operating statements.

謝謝Tony。大家好。實際上，我將從財務角度來討論我們的業績。 2022年第一季，我們的總營收為人民幣66億元，年減15%，季減20.7%。 2022年第一季度，我們的IFRS淨利潤為人民幣6.49億元，非IFRS淨利潤為人民幣9.39億元，由於我們專注於營運報表，環比增長8%。

In the first quarter of 2022, music subscription revenues continued healthy growth with revenues of RMB 1.99 billion and a year-over-year growth of 18% as we benefited from expanding sales channels and paying user (inaudible) using high quality content and the services we provide.

2022年第一季度，音樂訂閱收入持續健康成長，營收達到人民幣19.9億元，年增18%，這得益於我們不斷擴大的銷售管道以及付費用戶使用我們提供的高品質內容和服務。

Online music paying users grew to 80.2 million, up 32% year-over-year, represented 4 million net add sequentially. Most of the app was RMB 8.3 this quarter compared to RMB 9.3 in the same period last year as we offer more effective promotions to attract the users.

線上音樂付費用戶成長至8,020萬，年增32%，季增400萬。本季度，該應用程式的平均單價為8.3元人民幣，而去年同期為9.3元人民幣，這得益於我們推出更有效的促銷活動來吸引用戶。

Taking out the impact from fewer calendar days in Q1, ARPPU maintained stable sequentially, as we book on the quality growth of our overall subscription revenue. Revenues from advertising dropped on year-over-year, and sequentially, as our advertising being continued to be negatively impacted by the investor adjustment and seasonality. Our advertising revenues were also impacted by outbreak of COVID-19 and the lockdown in some major cities. We are proactively expanding the added inventory, optimizing the display and rolling out innovative advertising formats to manage these challenges.

剔除第一季日曆天數減少的影響，ARPPU環比保持穩定，這得益於我們整體訂閱收入的高品質成長。廣告收入年比和季比均有所下降，因為我們的廣告業務持續受到投資者調整和季節性因素的負面影響。新冠疫情爆發以及一些主要城市的封鎖也對我們的廣告收入產生了影響。我們正在積極擴大新增廣告位，優化展示方式，並推出創新的廣告形式來應對這些挑戰。

While we expect ad growth will continue to be impacted in the short term due to headwinds from regulation (inaudible) and the regional COVID-19 outbreak, we remain confident about the long-term growth potential and expect advertising revenue to start recovering in the second half of 2022.

雖然我們預計，由於監管（聽不清楚）和區域性 COVID-19 疫情爆發帶來的不利影響，短期內廣告成長將繼續受到影響，但我們對長期成長潛力仍然充滿信心，並預計廣告收入將在 2022 年下半年開始復甦。

Sublicensing revenues also dropped on a year-over-year basis and sequentially due to restructuring of agreements with certain music labels. Social entertainment services and other revenues were RMB 4 billion, down by 21% year-over-year as we face an evolving macro environment and intense competition from other entertainment platforms. To adapt to the changing environment and to stabilize revenue scale, we have demonstrated our content offerings by enriched our interactive product offerings and enriching cross-platform collaboration, and we are also expanding our international footprint, as discussed earlier.

由於與部分唱片公司協議重組，再授權收入年比及季比均下降。社交娛樂服務及其他收入為人民幣40億元，年減21%，這主要源自於我們面臨不斷變化的宏觀環境以及其他娛樂平台的激烈競爭。為了適應不斷變化的環境並穩定收入規模，我們透過豐富互動產品和加強跨平台合作來展現我們的內容產品，同時，正如前文所述，我們也正在拓展國際業務。

Gross margin in Q1 was 28%, down by 3.5% year-over-year due to the following factors. First, given the continuous growth in music subscription revenue, our revenue mix shifted with revenues from online music, which generally have a lower gross margin, accounting for a higher percentage of revenue. Second, revenues from audio live streaming, whose gross margin was relatively lower, also grew faster and accounted for a higher percentage of revenue. In addition, the decrease of advertising and sublicensing revenues also impacted the margin. Meanwhile, our tight control on content costs with increased ROI requirements, as well as lower revenue sharing ratio for social entertainment business had a favorable impact on gross margin on a sequential basis.

第一季毛利率為28%，年減3.5個百分點，主要原因如下：首先，隨著音樂訂閱收入的持續增長，收入結構發生變化，原本毛利率較低的在線音樂收入佔比有所提升；其次，原本毛利率較低的音頻直播收入增長較快，佔比有所提升；此外，廣告和授權收入的減少也對毛利率產生了影響。同時，我們嚴格控制內容成本，提高投資回報率要求，並下調了社交娛樂業務的收入分成比例，這些因素對毛利率環比產生了積極影響。

Now moving on to operating expenses. Total operating expenses for Q1 2022 were RMB 1.3 billion or 20% as a percentage of total revenue, which was relatively stable comparing with last year. Take out the impact from acquisition of Lazy Audio, operating expenses as a percentage of revenues would have been slightly lower year-over-year. Selling and marketing expenses were RMB 330 million, down by 51% year-over-year.

現在來看看營運費用。 2022年第一季總營運費用為人民幣13億元，佔總營收的20%，與去年相比相對穩定。若剔除收購Lazy Audio的影響，營運費用佔營收的比重較去年同期略有下降。銷售及市場推廣費用為人民幣3.3億元，較去年同期下降51%。

During the quarter, we took measures to improve (inaudible) closely monitoring the (inaudible) of each promotion channel, largely with large external promotion channels and language our internal (inaudible) to attract users and promote our brand.

在本季度，我們採取措施改善（聽不清楚）密切監控每個推廣管道的（聽不清楚），主要是利用大型外部推廣管道和語言我們的內部（聽不清楚）來吸引用戶並推廣我們的品牌。

General and administrative expenses were RMB 1 billion, up by 15% year-over-year, excluding the impact of approximately RMB $44 million from the acquisition of Lazy Audio, G&A would have increased by 10% year-over-year. The increase was driven by a higher number of employees in R&D as we invested into target investments, technology innovation and a more diversified product offerings.

一般及行政開支為人民幣10億元，較去年成長15%。若剔除收購Lazy Audio約人民幣4,400萬元的影響，一般及行政開支較去年同期成長10%。一般及行政開支的成長主要源自於我們增加對目標投資、技術創新和更多元化產品組合的投入，從而增加了研發人員的數量。

Meanwhile, we have been closely monitoring employee-related expenses and taking actions to improve headcount facing, which starts the balance through this quarter and resulted in a decrease in GI expenses on a sequential basis.

同時，我們一直密切監控與員工相關的費用，並採取措施改善員工人數，這將在本季度開始平衡，並導致 GI 費用環比下降。

Our effective tax rate for Q1 2022 was 12.2% compared to 11.5% in the same period of 2021. The increase in effective tax rate was mainly due to some of our entities are entitled to different tax benefits in 2021 and 2022. Our net profit was RMB 649 million and net profit attributable to equity holders of the company for Q1 2022 was RMB 609 million.

2022年第一季我們的有效稅率為12.2%，而2021年同期為11.5%。有效稅率的增加主要是由於我們的部分實體在2021年和2022年享有不同的稅收優惠。 2022年第一季我們的淨利為人民幣6.49億元，歸屬於公司股東的淨利為人民幣6.09億元。

Non-IFRS net profit was RMB 939 million, and non-IFRS net profit attributable to equity holders of the company was RMB 899 million. Non-IFRS net profit margin was 14.1%. As of March 31, 2022, our combined balances of cash, cash equivalents, term deposits and short-term investments were RMB 25.9 billion, representing an increase of RMB 1.2 billion from December 31, 2021.

Non-IFRS淨利為人民幣9.39億元，Non-IFRS歸屬於母公司股東的淨利為人民幣8.99億元。 Non-IFRS淨利率為14.1%。截至2022年3月31日，本公司現金、現金等價物、定期存款及短期投資合計餘額為人民幣259億元，較2021年12月31日增加12億元。

Looking forward, we will continue to focus on our community and invest in (inaudible) in new products and services, including platform audio and international (inaudible), with a focus on investment returns and future growth potential. Meanwhile, we will continue to effectively control tight country-related costs and selling and marketing expenses to improve the overall operational efficiencies.

展望未來，我們將繼續專注於社區，並投資（聽不清楚）新產品和服務，包括平台音訊和國際（聽不清楚），重點關注投資回報和未來成長潛力。同時，我們將繼續有效控制與特定國家相關的成本以及銷售和行銷費用，以提高整體營運效率。

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

我們的準備演講到此結束。接線員，我們現在可以開始提問了。

(Operator Instructions) Our first question will come from Alicia Yap with Citigroup.

（操作員指示）我們的第一個問題來自花旗集團的 Alicia Yap。

I have a question related to how the lockdowns and the COVID has impacted us. So if management can share or elaborate the overall Tencent Music, how it has been, for example, the prolonged lockdown in Shanghai's impact, any positive impact on the time spend, on the online music stuff or even the social entertainment active user? Specifically, can you also -- have you seen any spike in the user demand or time spend for your long-form audios or the podcast? And then any negative impact from the spending willingness and also the spending behavior.

我有一個問題，關於封鎖和新冠疫情對我們的影響。管理階層能否分享或詳細說明一下騰訊音樂的整體情況？例如，上海長期封鎖的影響，對用戶使用時間長度、線上音樂內容，甚至社交娛樂活躍用戶，有什麼正面影響嗎？具體來說，您是否看到用戶對長音訊或播客的需求或使用時間有所激增？以及消費意願和消費行為是否帶來了負面影響。

Sure. In terms of traffic on the music side, as a result of various investments in the innovative features that we have been making over the past several quarters, particularly in QQ Music, we actually did not see any meaningful negative impact from the lockdown. So as we reported during the early remarks, we actually saw a year-over-year increase in the MAU with QQ Music. And then with regards to the social entertainment side, specifically with regards to leasing and the online singing components of that product feature, we actually saw a slight increase in the online singing activities as a result of people spending more time with karaoke during their quarantines.

當然。就音樂流量而言，由於我們過去幾季對各種創新功能（尤其是QQ音樂）進行了投資，我們實際上並沒有看到疫情封鎖帶來任何顯著的負面影響。正如我們在先前的演講中提到的，QQ音樂的月活躍用戶實際上同比增長了。至於社交娛樂方面，特別是租賃和該產品功能的線上唱歌部分，由於人們在隔離期間花了更多時間唱卡拉OK，我們實際上看到線上唱歌活動略有增加。

However, with respect to revenues, there was a meaningful impact on the advertising revenue as a result of a large number of our advertising customers being in lockdown situations in major cities. And also, it had an impact on our live streaming revenues because both the hosts are also affected in terms of the activities and affected the users' willingness to spend on live streaming.

然而，就收入而言，由於我們大量廣告客戶在主要城市處於封鎖狀態，廣告收入受到了顯著影響。此外，這也影響了我們的直播收入，因為主播的活動也受到影響，並影響了用戶的直播消費意願。

Our next question will come from Alex Poon with Morgan Stanley.

我們的下一個問題來自摩根士丹利的 Alex Poon。

My question is related to our music ARPPU trend. Since beginning of this year, we have started scaling back some of the promotions to balance between the growth of net adds and ARPPU growth, and we are also launching new membership programs which has very high ARPPU. So how should we think about the ARPPU trend from second quarter, third quarter, fourth quarter onwards?

我的問題與我們的音樂 ARPPU 趨勢有關。自今年年初以來，我們開始縮減一些促銷活動，以平衡淨增用戶數和 ARPPU 的成長，同時我們也推出了一些新的會員計劃，這些計劃的 ARPPU 非常高。那麼，我們該如何看待第二季、第三季和第四季以後的 ARPPU 趨勢呢？

Yes. Thank you. Well, I think let me kind of spend a minute to talk about the overall subscription revenue growth because that plays hand in hand with the ARPPU trends. In terms of subscription, our overall goal for subscription revenue year-over-year growth for this year is to achieve close to 20% for the full year. And there are 2 ways to achieve this objective. The previous approach was to focus on subscriber net adds of 3.5 million to 4 million per quarter, which translates to approximately 20% subscriber growth counting from the end of last year. And then ARPPU, that is on a slight downward trend.

是的，謝謝。我想花點時間談談整體訂閱收入的成長，因為這與 ARPPU 趨勢密切相關。就訂閱收入而言，我們今年訂閱營收年增的總體目標是全年接近 20%。實現這一目標有兩種方法。先前的方法是專注於每季淨增加 350 萬到 400 萬用戶，這意味著從去年年底開始，用戶成長率約為 20%。而 ARPPU 則略有下降。

The new approach that we'll be implementing going forward is to have a better balance between subscriber growth and ARPPU. And we'll work on improving the ARPPU through less promotions and other measures such as super VIP that we mentioned. And as a result, we expect the ARPPU to increase going forward with Q1 as a base.

我們未來將實施的新策略是更好地平衡用戶成長和平均每付費用戶收入 (ARPPU)。我們將透過減少促銷活動以及其他措施（例如我們之前提到的超級VIP）來提升ARPPU。因此，我們預期ARPPU將以第一季為基準持續成長。

For subscriber numbers, because of the better ARPPU growth, we can have lower quarterly net adds less than the 3.5 million to 4 million range that we previously talked about. But overall, still achieved a close to 20% growth in subscription revenue with a more healthy mix of ARPPU improvement and subscriber growth.

就使用者數量而言，由於ARPPU成長較好，我們的季度淨增用戶數可能會低於我們先前提到的350萬到400萬的範圍。但整體而言，訂閱收入仍實現了近20%的成長，ARPPU的提升和用戶成長的組合更加健康。

Our next question will come from Xueqing Zhang with CICC.

我們的下一個問題來自中金公司的張學慶。

And my question is related to Tencent ecosystem, especially cooperation with WeChat. Since there is (inaudible), we see a series of new functions have launched on WeChat. Could management share with us the key directions of cooperation and what functions are particularly helpful? And wondering how does it help with the operational data.

我的問題是關於騰訊生態系統，特別是與微信的合作。由於（聽不清楚），我們看到微信上推出了一系列新功能。管理階層能否與我們分享合作的重點方向以及哪些功能特別有用？我想知道這對營運數據有何幫助？

(foreign language)

（外語）

[Interpreted] So I'll just spend a quick minute to do a short-term translation in the interest of time. We continue to deepen our cooperation with WeChat with the overall objective of letting music to become an important part of the social use cases. And as Ross mentioned, there are a number of areas of our corporation. It includes things like in the Weixin profile, you can change the profile based on the music that you've been listening on. In the Weixin audio call ring tone, you can now customize using music from QQ Music. During Weixin chat, you can directly share music from QQ Music.

[口譯] 鑑於時間關係，我先快速翻譯一下。我們將繼續深化與微信的合作，整體目標是讓音樂成為社交用例的重要組成部分。正如Ross所提到的，我們公司在多個領域開展合作。例如，在微信個人資料中，你可以根據你正在聽的音樂更改個人資料。在微信音訊通話鈴聲中，你現在可以自訂使用QQ音樂中的音樂。在微信聊天過程中，你可以直接分享QQ音樂中的音樂。

And then also with regards to video account, which we've mentioned in the prepared remarks, we continue to see very rapid growth in the operating metrics such as daily video views. And with respect to live concert, that's also a key area that we are looking to expand our cooperation in. We have done a number of very successful live concert events such as ones with Leslie Chong, Mayday, et cetera. And increasingly, these events would have a monetization element such as ad sponsorships and others. So overall, we provide a very healthy music content vertical to help enrich the video account content ecosystem for Weixin. In return, Weixin provide us with very complementary promotional capability, and we also help them with artist partnership to strengthen that partnership.

關於視訊帳號，正如我們在準備好的演講中所提到的，我們的營運指標（例如每日影片觀看量）持續快速成長。至於現場演唱會，這也是我們希望擴大合作的關鍵領域。我們已經舉辦過許多非常成功的現場演唱會，例如與張國榮、五月天等的合作。而且，這些活動越來越融入了廣告贊助等獲利元素。總而言之，我們提供了一個非常健康的音樂內容垂直領域，有助於豐富微信視訊帳號的內容生態系統。作為回報，微信為我們提供了非常互補的推廣能力，我們也幫助他們與藝人合作，以加強這種合作關係。

Okay. Besides the content distribution and promotional capabilities that we mentioned that we work together with Weixin, I think there's one more important point is we are working with them really closely on the program development side. So such as online concerts, we are not just distributing it, but we are also working on the detailed production to ensure a high quality of online music concerts will be delivered to our users. So this is the top priority of the TME team and also the Weixin Video Account team as well. We have been in the Tencent corporate umbrella for a long time, and we work together peer-to-peer, side-by-side. So I think that we are really working together to create synergies. And we are looking forward to have a lot more, very high-quality content will be provided through this platform.

好的。除了我們之前提到的與微信在內容分發和推廣方面的合作之外，我認為還有一點很重要，那就是我們在程式開發方面與他們合作非常緊密。例如線上演唱會，我們不僅負責內容分發，還在細節製作上投入精力，確保為用戶提供高品質的線上演唱會。這是騰訊音樂娛樂團隊和微信視頻號碼團隊的首要任務。我們長期隸屬於騰訊集團，並肩合作，點對點。所以我認為我們正在攜手創造協同效應。我們期待透過這個平台提供更多高品質的內容。

Besides video, the top tier are these concerts. We are also working on the long tiers and also some of the really high potential musicians content as well. So a lot more wonderful content can be expected in the future, and we have a lot more to come.

除了影片之外，頂級內容是這些音樂會。我們也在製作長篇內容，以及一些極具潛力的音樂家的內容。因此，未來可以期待更多精彩內容，我們將有更多精彩內容等著您。

Our next question will come from Eddie Leung with Bank of America Merrill Lynch.

我們的下一個問題來自美銀美林的 Eddie Leung。

Could you talk a little bit about the outlook for your live streaming business for the rest of the year, especially given recent regulations in host taxation problem, as well as protection of minors?

您能否談談今年剩餘時間直播業務的前景，特別是考慮到最近在主播稅收問題以及未成年人保護方面的規定？

In terms of the outlook for the full year, in the last earnings call, we said that for the full year 2022, we were expecting total revenue year-over-year to decline, to be around mid-single digit. And obviously, that was prior to a number of recent regulatory announcements, such as ones you mentioned, as well as from the very recent impact from the pandemic measures. And without those impacts, obviously, the previous guidance would have continued to apply.

關於全年前景，在上次財報電話會議上，我們曾表示，預計2022年全年總收入將年減，約為個位數中段。顯然，這是在一系列近期監管公告（例如您提到的那些）發布之前，以及近期疫情防控措施的影響下做出的。如果沒有這些影響，先前的預期顯然會繼續適用。

However, following these recent pandemic measures, as well as latest regulation, specifically the live streaming one that you talked about, which comes into effect in June, we're likely to see live streaming revenue be impacted for the rest of the year because the new regulation and the new restrictions around tip ranking as well as around PK, i.e., competition between -- performance during live streaming sessions, don't come into effect until next month. We're not yet in position to quantify that impact for you at this point. We -- because the details will depend on the actual detailed execution and the implementation of those restrictions. And we'll be working very closely with the regulator to figure out exactly how best to be fully compliant.

然而，考慮到最近的疫情防控措施以及最新監管規定，特別是您提到的將於6月生效的直播相關規定，我們可能會看到今年剩餘時間的直播收入受到影響，因為新規以及圍繞打賞排名和PK（即直播期間的表演競爭）的新限制要到下個月才生效。目前我們還無法量化這些影響。具體細節將取決於這些限制措施的實際執行情況。我們將與監管機構密切合作，以找到最佳的完全合規方法。

And then to offset some of these challenging pressures, obviously, we will continue to invest in building new opportunities to mitigate. And these opportunities in social entertainment line mainly around audio live streaming where some of the restrictions recently announced are less prevalent in audio live streaming. And then secondly, with international expansion within our social entertainment business that we see opportunities in Southeast Asia, Japan as well as the Middle East. And then lastly, in the longer run, as we continue to build out our metaverse experience through our first pioneering virtual music playground, TMELAND, we'll continue to host more and more exciting and interactive virtual events to pioneer a new form of social entertainment.

為了抵​​消這些挑戰性的壓力，我們顯然將繼續投資，創造新的機會。這些社交娛樂領域的機會主要集中在音訊直播領域，而最近宣布的一些限制在音訊直播領域並不那麼普遍。其次，隨著我們社交娛樂業務的國際擴張，我們在東南亞、日本以及中東地區看到了機會。最後，從長遠來看，隨著我們透過首個開創性的虛擬音樂遊樂場TMELAND繼續建構我們的元宇宙體驗，我們將繼續舉辦越來越多令人興奮、互動性強的虛擬活動，以開創一種新的社交娛樂形式。

Our next question will come from Wei Xiong with UBS.

我們的下一個問題來自瑞銀的魏雄。

My question is on margins. Management mentioned about a few factors that affected our gross margin just now. So just wondering how should we think about the gross margin trending in the next few quarters? And also together with our focus on efficiency improving this year, any areas we see still have potential for further cost savings? And how will that impact the net margin for this year?

我的問題是關於利潤率的。管理階層剛才提到了一些影響我們毛利率的因素。請問我們該如何看待未來幾季的毛利率趨勢？此外，考慮到我們今年專注於提高效率，我們認為哪些領域仍有進一步節省成本的潛力？這將如何影響今年的淨利率？

Okay. Gross margin is 28% in Q1, down by 0.8% sequentially. The main reason is advertising revenue dropped quickly and has higher contribution gross margin. During Q1, there are some positive factors on gross margin. (inaudible) revenue sharing ratio of social and Tencent business have been controlled and decreased sequentially. Second, adapted to new macro environment, we increased the ROC requirement of content across. We restructured the agreement with some music labels and stayed positive trend back, that has a positive impact on our gross margin. And looking forward to 2022, we expect our gross margin will be increased in the next quarter if our social entertainment revenue can be stable.

好的。第一季毛利率為28%，季減0.8%。主要原因是廣告收入下降較快，但貢獻的毛利率較高。第一季度，毛利率有一些正面因素。 （聽不清楚）社交和騰訊業務的收入分成比例有所控制，較上季下降。其次，為了適應新的宏觀環境，我們提高了內容的ROC要求。我們與一些唱片公司重組了協議，並保持了積極的成長趨勢，這對我們的毛利率產生了積極的影響。展望2022年，如果我們的社交娛樂收入能夠維持穩定，我們預計下一季的毛利率將會上升。

We will focus on increasing business with all business units and cost items. And for the operating margin cost and expense control to improve operation, this business is one of our top projects this year. We have taken tight control on selling and marketing expenses in Q1, resulting in 51% decrease on a year-over-year basis. We will further monitor our eye of each promotion channel and manage the internal and external resources more effectively to improve the business of selling and market expenses.

我們將專注於提升所有業務部門和成本項目的業務。為了改善運營，提高營業利潤率、降低成本和控制費用，這是我們今年的重點項目之一。我們在第一季嚴格控制銷售和市場費用，使其年減了51%。我們將進一步關注每個推廣管道，並更有效地管理內部和外部資源，以改善銷售和市場費用。

And for high account management, we will continue to invest in new products and new buildings, such as long-form audio, international business and the musician program. We will now pay more attention to improve the profitability of business and products such as optimizing organizational alignment and improving the headcount efficiency. And looking forward to 2022, we expect our adjusted net profit can be increased sequentially, but adjusted net margin can meet or above (inaudible) of 2021, and our music business can breakeven on operational level. That's all.

對於高客戶管理，我們將繼續投資新產品和新項目，例如長篇音訊、國際業務和音樂家項目。我們現在將更加重視提高業務和產品的獲利能力，例如優化組織架構和提高員工效率。展望2022年，我們預計調整後淨利潤將環比增長，但調整後淨利潤率將達到或超過2021年的水平（聽不清楚），並且我們的音樂業務將在營運層面實現盈虧平衡。僅此而已。

Our next question will come from Ronald Keung with Goldman Sachs.

我們的下一個問題來自高盛的 Ronald Keung。

I want to ask on the pricing side on subscription. Given that the ARPPU has fallen over the past -- sequentially over the past few quarters. So with the COVID impact, with the macro impact, yet we do think the competition has been quite rational. So I want to hear about the pricing trend outlook? When will we see a stabilization in ARPPU for subscription? And also any iterations on -- iteration on long-term paying subs targets?

我想問一下訂閱定價方面的問題。鑑於過去幾季ARPPU（平均每付費用戶營收）季減，加上新冠疫情和宏觀經濟的影響，我們認為競爭仍然相當理性。我想了解定價趨勢的前景？訂閱的ARPPU何時才能穩定？關於長期付費用戶目標，你們有什麼新的調整嗎？

Yes. I think as I previously mentioned, the new approach that we'll be taking with our subscription revenue is to have a better balance between subscriber growth and ARPPU growth. And even though our recorded ARPPU for Q1 saw a slight sequential decline, that was mainly a result of the lower number of days in Q1. If we adjust for that, the ARPPU for Q1 versus Q4 is actually fairly stable.

是的。正如我之前提到的，我們將採取新的訂閱收入策略，以便在用戶成長和 ARPPU 成長之間取得更好的平衡。儘管我們第一季的 ARPPU 環比略有下降，但這主要是因為第一季的天數較少。如果我們對此進行調整，那麼第一季與第四季度相比，ARPPU 實際上相當穩定。

And on the -- in using Q1 as a base, we are actively working on improving the ARPPU through, obviously, less price promotion, as well as through other measures such as bundling super VIPs and other measures as well. And so we'll be expecting the ARPPU to increase as a trend with Q1 as a base.

以第一季的數據為基礎，我們正在積極提升ARPPU，當然，我們會減少價格促銷，也會採取其他措施，例如捆綁超級VIP等等。因此，我們預期ARPPU將以第一季的數據為基準呈現成長趨勢。

And we talked about the subscriber as well because of our goal to achieve overall close to 20% of subscription revenue for the full year, and with the rising ARPPU, we can have a slightly lower quarterly net adds less than the 3.5 million to 4 million range that we previously talked about. But still, we should be able to achieve close to 20% target of subscription revenue growth for the full year.

我們也談到了用戶數量，因為我們的目標是實現全年訂閱收入成長接近20%。隨著ARPPU的上升，季度淨增用戶數可能會略低於我們先前提到的350萬到400萬的範圍。但即便如此，我們仍應該能夠實現全年訂閱營收成長接近20%的目標。

Yes. I think we are encouraged by the strong growth of our online music subscription business and especially under the macro headwinds. And also, we are achieving a pretty good -- the subscription rate is over 30% right now. I think that we will continue to pull in more high-quality content into the subscription plan, which help us because we really learned that a lot of users really express the value of music content so that they are willing to pay for it.

是的。我認為，線上音樂訂閱業務的強勁成長令我們感到鼓舞，尤其是在宏觀經濟逆風的背景下。此外，我們的訂閱率目前已超過30%，取得了相當不錯的成績。我認為我們會繼續在訂閱方案中引入更多優質內容，這對我們很有幫助，因為我們確實了解到，許多用戶確實認可音樂內容的價值，因此他們願意為此付費。

In terms of the ARPPU, we can also drive it by, for example, launching out some of the new VIP plans with new privileges to our users, which has a higher price tag than the regular one that we have. We can also have many different ways to drive the monetization. For example, we can also work with different business partners to work on the new channels for production -- for promotion as well. So that, I think, that overall, the online music subscription business for TME is we are still developing in a really healthy manner.

就ARPPU（平均每付費用戶收入）而言，我們也可以透過一些方式來提高它，例如推出一些新的VIP套餐，為用戶提供新的特權，這些套餐的價格比我們現有的常規套餐更高。我們還可以透過多種方式來推動獲利。例如，我們也可以與不同的商業夥伴合作，開發新的製作管道和推廣管道。因此，我認為，總體而言，TME的線上音樂訂閱業務仍在以非常健康的方式發展。

Our next question will come from Thomas Chong with Jefferies.

我們的下一個問題來自 Jefferies 的 Thomas Chong。

Given the amount of cash that we have at the end of Q1, and when we look into our strategies going forward, how should we think about the priority in terms of cash usage? Are we going to do some more M&A in international market share buyback or considering dividends? And may I also ask about the progress on the Hong Kong listing by way of introduction?

考慮到我們第一季末的現金規模，當我們考慮未來策略時，我們應該如何考慮現金使用的優先順序？我們是否會進行更多併購，回購國際市場份額，還是考慮分紅？另外，請問一下香港上市的進展如何？

Yes. In terms of our cash utilization, obviously, I think we would be very disciplined and prudent with our cash management. We have announced that we'll continue, and we intend to fully complete our share repurchase program by the end of this year. As of the latest date just shortly before the earnings release, we have already spent over 670 million on share buyback since March last year. And as a percentage of our current market cap, that's a very sizable amount. And at this stage, we have no intention to declare a dividend.

是的。就現金使用而言，我認為我們會非常自律和審慎地進行現金管理。我們已經宣布將繼續執行股票回購計劃，並計劃在今年年底前全面完成。截至財報發布前不久的最新數據，自去年3月以來，我們已經花費了超過6.7億美元用於股票回購。以我們目前市值的百分比來看，這是一個非常可觀的金額。目前，我們還沒有宣布派息的打算。

With respect to M&A, we will continue to be prudent and assess strategic opportunities, both overseas, as well as domestically in areas that are complementary to our core music, as well as social entertainment businesses.

在併購方面，我們將繼續保持謹慎，評估海外和國內與我們的核心音樂以及社交娛樂業務互補的領域的戰略機會。

And in terms of the Hong Kong listing, last quarter, we talked about that we have already started in pursuing the Hong Kong secondary listing. We are currently in an active execution phase, and we will strive to move things forward in an expedited manner and obtain the necessary regulatory approvals in due course. And to the extent there are major developments, we will be making the appropriate announcement at that time.

關於香港上市，上個季度我們曾表示，我們已經開始著手尋求香港第二上市。目前，我們正處於積極的執行階段，並將努力加快推進，並適時獲得必要的監管批准。如有重大進展，我們將及時發佈公告。

Our next question will come from Charlene Liu with HSBC.

我們的下一個問題來自匯豐銀行的 Charlene Liu。

I wanted to ask about new ads monetization model. I think in the last quarter, you mentioned a freemium mode, which allows users to unlock user, to unlock music subscription services by watching ads. Can you share with us the progress on this in terms of user penetration and feedback from ads clients more generally? And do you have any long-term target in revenue from this mode?

我想問一下新的廣告獲利模式。我記得在上個季度，您提到了免費增值模式，用戶可以透過觀看廣告來解鎖音樂訂閱服務。您能否從用戶滲透率和廣告客戶回饋等方面，與我們分享此模式的進展？您對這項模式的長期收入目標是什麼？

Yes. Sure. Advertising overall saw some impact as a result of obviously recent regulation around the splash screen ads, as well as the pandemic measures, specifically a large number of our large advertisers are actually based in major cities. And as a result, obviously, I think the advertising revenue has been affected, and we've seen a decline on a year-over-year basis in the first quarter.

是的，當然。由於近期針對閃屏廣告的監管以及疫情防控措施，廣告業務總體受到了一定影響，尤其是我們的許多大型廣告客戶實際上都位於大城市。因此，我認為廣告收入顯然受到了影響，第一季的廣告收入比去年同期有所下降。

However, if we look at the sort of subcategories within our advertising revenues, we are seeing positive momentum in selected new ad formats. An example of that is the video incentive ad that you mentioned and that we talked about previously. We continue to increase the penetration rate of new ad products, the video incentive ad specifically, which is gaining very positive momentum. And the revenue of this new format is growing sequentially despite the difficult overall ad environment.

然而，如果我們檢視一下我們廣告收入中的子類別，我們會發現一些新的廣告形式正呈現正向的成長動能。例如，您提到的以及我們之前討論過的影片激勵廣告。我們持續提升新廣告產品的滲透率，特別是影片激勵廣告，其發展動能非常正面。儘管整體廣告環境艱難，但這種新形式的收入仍在持續成長。

It's now a sort of low single-digit percent of our advertising revenue at the moment, but we would expect it to grow and to become a much more meaningful portion over time. In the long run, despite the short-term challenges, we do expect a lot of potential in the advertising business, and we expect a recovery into the second half.

目前，它在我們的廣告收入中所佔比例仍處於個位數左右的低位，但我們預計它會隨著時間的推移而增長，並成為一個更有意義的組成部分。從長遠來看，儘管短期面臨挑戰，但我們預計廣告業務仍具有巨大的潛力，並預計下半年將出現復甦。

We do see certain sectors that are stronger than others. For example, the FMCG kind of traditional consumer staple products continue to perform well, as well as online games as people spend more time on online games during quarantine. And conversely, areas such as cosmetics, so electronics and e-commerce, in general, saw a bit of a weakness in the advertising verticals.

我們確實看到某些行業比其他行業表現更好。例如，快速消費品（傳統消費必需品）繼續表現良好，而網路遊戲也是如此，因為人們在隔離期間花更多時間玩網路遊戲。相反，化妝品、電子產品和電子商務等領域在廣告垂直領域整體上表現略顯疲軟。

We are now approaching the end of the conference call. I will now turn the call over to your speaker host today, Mr. Tony Yip, for closing remarks.

電話會議即將結束。現在，我將把電話會議交給今天的主持人葉建忠先生，請他致閉幕詞。

Yes. Thank you, everyone, for joining us today. If you have further questions, please feel free to contact our Investor Relations team. And this concludes the call today. We look forward to speaking with you again next quarter. Thank you, and bye for now.

是的。感謝各位今天的參與。如果您還有其他問題，請隨時聯絡我們的投資者關係團隊。今天的電話會議到此結束。我們期待下個季度再次與您溝通。謝謝，再見。

Thank you. Bye.

謝謝。再見。

Thank you. Bye.

謝謝。再見。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您可以斷開連線了。

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

[本記錄中標記為 [已翻譯] 的部分由現場翻譯人員朗讀。 ]