Image Source : China Visual

BEIJING, November 16 (TMTPOST) —Tencent Music Entertainment Group (Tencent Music) reported overall revenue of 7.37 billion yuan ($1.04 billion), down 5.6 percent year on year, and net profit attributable to shareholders of the company was 1.06 billion yuan ($149.54 million), up 43.37 percent year on year, according to the third-quarter results disclosed by Tencent Music on Tuesday evening.

The company's customer acquisition expenses were almost halved, creating the highest growth of profit in a single quarter during this year. The company's same-caliber profit in the first quarter dropped by 34.23% year on year and in the second quater by 7.88% year on year.

Tencent Music's stock surged more than 15% at the opening of U.S. stocks on Tuesday, local time.

The company continues to lose traffic. By the end of the third quarter, there were 587 million monthly active mobile users on online music platforms, down 7.7% year on year. There were 155 million monthly active mobile users on social entertainment platforms, up 24.4% year on year. However, the company said in its earnings report that QQ Music's daily active users are still growing.

Tencent Music's music applications have been competing fiercely with short video platforms and other entertainment platforms. Users' attention is being attracted by its rivals. Another reason is that the company is "reducing costs and increasing efficiency," with sales and marketing expenses dropping 58.3 percent in the third quarter from 578 million yuan ($81.55 million) to 245 million yuan ($34.56 million) compared with the samer period of last year. The reduction in customer acquisition costs has also resulted in a smaller subscriber base than before.

The company also controlled content costs, negotiated with music copyright holders to change the licensing model from minimum guarantee to revenue sharing model, and reduced revenue sharing fees for the live streaming business. As a result, Tencent Music's gross margin increased three percentage points to 32.6% in the third quarter.