(Reuters) -Tencent Music Entertainment exceeded analysts’ expectations for first-quarter revenue on Tuesday, driven by growth in subscribers for its online music services.
The U.S.-listed shares of the company were up 2% in premarket trading.
Tencent Music’s premium Super VIP (SVIP) membership, which combines long-form audio content, online karaoke services and high-quality sound, has gained significant traction among users.
The company is taking the right steps by providing affordable entertainment options to users amid a slowing economy, analysts said last month.
Revenue from music subscriptions grew 16.6% to 4.22 billion yuan ($586.1 million), while paying users increased by 8.3% to 122.9 million.
However, the social entertainment division remains a drag on the overall growth due to the removal of certain live-streaming features to adhere to Beijing’s anti-gambling regulations.
For the first quarter, revenue from the social entertainment services business, which includes karaoke app WeSing and live concert platform Kuwo Music, fell 11.9% to 1.55 billion yuan.
The company posted an 8.7% increase in revenue to 7.36 billion yuan for the quarter ended March, beating analysts’ estimates of 7.27 billion yuan, according to data compiled by LSEG.
The music firm is also in advanced talks to acquire China’s largest online audio platform, Ximalaya, which would broaden its portfolio.
($1 = 7.2001 Chinese yuan renminbi)
(Reporting by Kritika Lamba in Bengaluru and Yelin Mo in Beijing; Editing by Sonia Cheema and Vijay Kishore)
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