Tencent Music Entertainment Group (NYSE: $TME) is a company that develops music streaming services with a focus on the Chinese market. Its apps include KuGo, QQ Music, Kuwo Music, and WeSing. On Wednesday, November 12, 2025, Tencent Music released its Q3 fiscal 2025 earnings report. Let us take a deep dive into the report.
Tencent Music Q3 Results
For the third quarter, Tencent Music reported total revenue of RMB8.46 billion (US$1.19 billion), representing a 20.6% year-over-year increase and above estimates of RMB8.23 billion.
It reported adjusted earnings per ADS of RMB1.54 ($0.22), above analyst estimates of RMB1.52, and an increase from the RMB1.16 reported last year. The company reported a net profit of RMB2.15 billion ($302 million), a 36% YoY increase.
Revenue growth was driven by strong growth in online music services revenue to RMB6.97 billion (US$979 million), which was a 27.2% YoY increase. It reported revenue of RMB4.50 billion (US$632 million) from music subscriptions, a 17.2% YoY increase. The company reported a Monthly ARPPU of RMB11.9, up from RMB10.8 in the same period last year.
It ended the quarter with RMB36.08 billion ($5.07 billion) in total cash, cash equivalents, term deposits, and short-term investments.
Commenting on the results, Tencent Music Executive Chairman Cussion Pang stated, “In the third quarter, we delivered another set of solid results, underpinned by the well-rounded performance of our online music business.”
It reported an improvement in the gross margin to 43.5% from 42.6% last year, driven by growing revenue from music subscription and ad services, and a lower revenue sharing ratio for social entertainment services.
Market Performance
Despite the market-beating results, TME shares sank 8.02% to $19.08 as of 2:54 PM in New York. Over the past 6 months, TME shares are up 35.58%, while over the past month, the stock is down 14.89%. Year to date, TME shares are up 68.34%, while over the past 12 months, the stock is up 65.28%.
Analysts remain optimistic about the future of NYSE: TME shares, giving them a strong buy rating. They forecast an average price of $28.42, which is a 49.66% upside based on the most recent price. The analysts give a narrow range of price targets, with a high of $30 and a low of $25.
Is TenCent Music (TME) A Buy
Following the post-earnings decline of Tencent Music, some investors may worry about its future as a viable buy. However, analysts from Citi state that the decline is unwarranted. They attribute the decline to concern around rising competition from Soda Music, whose parent company is ByteDance, the parent company of TikTok.
The Citi analyst states the recent selloff could present a unique buy opportunity. Their analysis is based on the solid Q3 results and the solid commentary on Q4. Adding $TME to your portfolio now could potentially benefit your portfolio in the medium term.
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