Operator: We announced our quarterly financial results for Tencent Music before the U.S. market opened. The earnings release is now available on our website and via investor services. During today’s call, you will hear from Mr. Cussion Pang, our Executive Chairman, and Mr. Ross Yang, our CEO, who will share an overview of the company’s strategies and business updates. Then Mr. Shen will ask both to discuss our financial results before we open the floor for questions. Before we continue, I refer you to the safe harbor statement in our earnings release, which applies to this call as well as the following statements. Please note that we discuss non-IFRS measures today, which are not thoroughly explained and reconciled to the most comparable measures reported under IFRS in our earnings release and filings with the SEC. All participants are mute 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 am pleased to turn the call over to Cussion, Executive Chairman of Tencent Music. Cussion, please.

Cussion Pang, Executive Chairman, Tencent Music Entertainment: Thank you, Madison. Hello, everyone, and thank you for joining our call today. In the second quarter, we delivered resilient performance while navigating a complex and evolving market. Our second growth engine continued to strengthen. Revenue from marketing and consumption service achieved another quarter of solid growth as we further expanded the value of music IP through live concerts, merchandise, and other IP-driven experiences. The addition of Ximalaya marks another important step in our content and platform strategy. By bringing music and audio together, we are enriching our content offering, reaching users across more listening occasions, and giving them more ways to discover, enjoy, and engage with great content. Our strategy is clear. We are strengthening our content ecosystem by deepening strategic partnerships, developing more proprietary IP, and extending premium content across a wider range of use experiences.

First, premium content remains at the heart of this strategy, and the recent momentum we are seeing with classic catalogs is a perfect example. Hits variety shows and concert tools have amplified the reach of this work, making loyal fans more engaged while drawing in new generation of listeners. This has led to continuous growth in their streaming share. Second, we continue to expand our partnerships beyond traditional content licensing. Recently, we deepened our partnerships with Three Music Group. In addition to securing digital-first releases for its top artists, we expanded our collaboration into new areas, including content co-creation, physical offerings, and offline experiences. At the same time, we partnered with Huace Film & TV, Wuyifilm Entertainment, and Zhejiang Satellite TV to bring original soundtracks and popular music variety shows to our platform, creating a more immersive connection between music and visual entertainment.

These deeper partnerships allow us to work more closely with creators and rights holders across the whole music value chain, enabling us to create more value from premium IP. Third, another key focus is developing more high-quality proprietary content, which is becoming an increasingly important differentiator for TME and giving users more reasons to engage with our platform. Examples include Chosen’s Blaze into Bloom, 热烈盛开, the theme song for the 2026 Jiangsu Football City League, Liu Yuning’s Borrow a Little Light from Ordinary Days, 平凡的日子借一点光, Kugou Music’s new brand anthem, and the theme song and insert song for the hit animated theme, All Wishes Come True!, 八仙, all of which recorded strong streaming performance since their release. Fourth, Ximalaya further strengthens our content advantage with its premium audiobooks and podcasts.

By adding popular categories like online novels, history, kids content, and education, we can reach users across many other more listening occasions, ultimately enhancing user time spent and engagement within our ecosystem. What really stands out is Ximalaya’s ability to create its own hits. Its original productions have consistently driven strong engagement and paid conversion. In fact, nine of its top 10 new online novel titles this year were produced in-house, underscoring both the strength and scalability of its original content capabilities. Just as importantly, owning these hits also means better economics. With the strength of our content and platform ecosystem, deep user insights, expansive services, and a strong commitment to upholding copyright protection, a growing number of artists are turning to us as we expand talent development and artist management. This is a natural extension of our ecosystem that creates value for artists we are uniquely positioned to deliver.

This is exciting as it empowers us to be more entrepreneurial and innovative in bringing more premium content and IP-driven immersive music experiences to music lovers. First, take rapper Zhou Yan, for instance. As his strategic partner, we have supported him across content promotion, IP development, and concert planning, helping him expand into new markets and formats and grow from arena shows to stadium concerts. Following the success of his Evolution Tour in Asia, we launched the Wu Ji, the first Chinese language rap stadium tour in China. More than 30,000 fans attended his opening show in Xi’an. Tia Ray is another good example. Her Once Upon a Moon tour wrapped up with two consecutive sold-out arena shows in Hangzhou and is now reaching international markets, showcasing her rising profile and growing fan base. We are also helping artists expand into new opportunities.

For renowned actor and singer Steven Zhang, we produced his debut arena tour, New Journey, and his opening show in Shenzhen sold out quickly during pre-sales. Second, recently, we invested in The Black Label to deepen our collaboration on a broader range of IP-related initiatives, including artist promotion and merchandise development, helping leading artists to build deeper connections with their audience in China. This strategic partnership reflects our commitment to exploring cross-border opportunities and deepening the fan-based economy. By integrating content creation, music streaming, artist development, live experiences, merchandise, and fans engagement, we are able to create more value from premium IP, truly bringing the IP to life. We are already seeing encouraging results. IP-related consumption services, particularly live events and artist merchandise, continue to deliver strong double-digit year-over-year growth during the quarter. First, in live entertainment, we hosted three fan meetings in Macau for SM Entertainment’s trainee group, SMTR25.

The event attracted tens of thousands of fans and generated strong merchandise sales. TIMA, our proprietary flagship concert IP for International Music Awards, is becoming a larger and more influential brand in just its second year. Building on last year’s success, we scaled up the venue to Kai Tak Sports Stadium in Hong Kong, including audience capacity by more than 3-folds, capturing music lovers’ growing enthusiasm. Second, artist merchandise also continued to gain momentum. By bringing together our capabilities in IP development, product design, merchandising, and distribution, we are creating more meaningful connections between artists and their fans. During the quarter, we produced Chosen’s physical albums in both CD and vinyl formats, complemented by a range of collectibles merchandise that generated strong fan demand. Physical album releases from Kwan Cai Xukun, Chen Chusheng, and Puyi Yexing also delivered impressive results.

Protecting copyright is fundamental to preserving the long-term value of premium IP. During the quarter, we continued to strengthen our copyright protection efforts through proactive screening and takedown, legal action, and closer collaboration across the industry. As AI continues to evolve, we are stepping up our engagement with regulators, music labels, artists, and other industry partners to strengthen copyright protection in the new era. By working together across the industry, we believe we can foster a healthier environment for creators, reinforce the long-term value of premium IP, and support the sustainable development of the music industry. We remain committed to providing a safe and enjoyable music experience for users of all ages. During the second quarter, with comprehensive upgrades to Youth Mode across our core products, we created a dedicated library of age-appropriate music, helping younger users discover and enjoy music in a safer and more trusted environment.

To conclude, while challenges remain, we believe we are still in the early innings of unlocking the full potential of premium IP. We are excited about the opportunities ahead and remain confident in our ability to deliver sustainable long-term growth. With that, I will turn the call over to Ross.

Ross Yang, CEO, Tencent Music Entertainment: Thank you, Kashan. Hello, everyone. While the competitive landscape continues to evolve, our commitment has not changed, delivering the best music and audio experiences for all users. Every user listens differently. That’s why we continue to innovate our products, broaden our user reach, and enrich our membership offering. In the second quarter, our focus on user experience translated into stronger engagement, with average daily time spend continuing to improve, supporting standing growth in membership revenue. Product innovation remains at the heart of everything we do to serve our users. This quarter, we created a more seamless discovery-to-playback journey through improvements in content discovery and audio quality. Enhanced content discovery features such as swipe tabs and video feeds help users explore more relevant content in a more engaging way. Newly introduced 3D NICA Sunday in audio also allowed free premium users to experience premium sound quality from their very first listen.

Thought of application of AI also made music discovery more intuitive and personalized. We upgraded our AI agents across QQ Music and Kugou, enabling them to better understand nuanced user intents. Acting as personal DJs, these AI agents can now instantly create personalized playlists tailored to users’ listening needs in the moment. Together, these improvements helped users discover more content, boosted their time spent on our platform, and increased the share of recommendation-driven streams. While delivering great services is the foundation, reaching more users is equally important. That’s why we are continuing to deepen our integration with the Tencent ecosystem to expand our presence across more user touch points. First, we deepened our cooperation with Weixin video accounts by bringing leading labels, top artists, and independent musicians into its ecosystem. We are creating a more seamless journey from music discovery to full track listing on TME.

Collaborations with Weixin Pay also helped our lightweight products such as Bodian Music and the Kugou Concept attract users looking for simple music experience and deepen their engagement. Furthermore, we recently integrated with Weixin’s AI agent, Xiaowei. We are pleased that by tapping into Weixin’s massive user base, more users can now discover songs, generate playlists, stream music with easy commands, and instantly share favorite tracks with friends. Together, these initiatives are expanding our user reach, improving conversion and engagement, as well as enhancing content distribution across the Tencent ecosystem. Second, we are also extending our user reach beyond mobile and PC into cross-device listening scenarios. During the quarter, we broadened our smart vehicle coverage through deeper collaborations with leading automakers, including Changan, Li Auto, and XPeng, and introduced the LLM pod search to deliver a smarter in-car experience.

We are also among the first music platform to integrate with HarmonyOS, expanding our reach within its fast-growing ecosystem. Such a move has strengthened our presence among HarmonyOS users and positioned us to capture new opportunities for further monetization. We are excited to welcome Ximalaya to the TME family. Music and audio naturally complement each other. They broaden our content offering and create more listening occasions throughout the day. This helps us strengthen our position as a comprehensive music and audio platform. We are still in the early stages of unlocking the full potential of this combination, and we are seeing significant opportunities ahead. By bringing together our complementary strengths, we can deliver compelling content to a much broader audience. We are starting to enrich our SVIP offering with premium audio content to create richer listening experiences.

Over time, we also see opportunities to strengthen our advertising business and improve efficiency, leveraging our shared technology and infrastructure. We believe these efforts will create lasting value for our users, creators, partners, and shareholders. Finally, we are further elevating the SVIP value proposition by transforming it into multi-dimensional experience centered on IP engagement. Premium music remains at its core, now complemented by premium audio and a growing portfolio of IP-driven member benefits. This quarter, digital albums and the tailored SVIP package continue to drive stronger member adoption and user engagement. Packages for Ren Jun, Huang Renjun, Li Zhang Yixing, aespa, and the rest featured popular member benefits such as photo cards and NFC cards. We also expanded our Starlight Card lineup by adding artists from The Black Label, including Taeyang, Somi, Miroh, and the ALLDAY PROJECT.

Meanwhile, collaborations with popular gaming IPs such as Wuthering Waves, Ming Chao, and Light and Night, Guang Yu Ye Zhi Dian, brought new themed decorations to SVIP users, generating stronger user engagement and conversion. Together, these offerings contribute to highest growth in our SVIP user base, ARPPU, time spend, retention, as well as consumption of other premium ancillary experiences. They reinforce our value proposition of one membership, richer experiences. To conclude, our journey reflects how we have evolved from a gateway for content into a strategic platform that actively shapes the music and audio entertainment landscape. Our focus remains steadfast: creating deeper and more meaningful connections between creators, content, and audiences. We are uniquely positioned and are confident that we can translate these deep connections into long-term structural value across music and audio.

With that, I would like to turn the call over to Shirley, our CFO, for a deep dive into our financials.

Shirley Shen, CFO, Tencent Music Entertainment: Thank you, Ross, and greetings, everyone. Let me now turn to our financial results and an evolving competitive industry landscape. We delivered steady financial results in the second quarter of 2026 with 6% year-on-year revenue growth. Total revenues were RMB 8.9 billion, up by 6% year-on-year, primarily driven by strong growth in revenues from music-related services. The consolidation of Ximalaya contributed approximately RMB 0.4 billion to our overall revenues in the second quarter of 2026. Revenues from music-related services grew 11% year-on-year, driven by solid growth in revenues from membership services and offline performance-related services. Revenues from membership services were RMB 4.8 billion, up by 8% year-on-year. In the second quarter of 2026, our VIP membership program continues to expand. Our diversified VIP privileges, such as artist membership, sales, photo cards, and the Starlight Pass, continued to drive VIP user adoption and revenue growth.

This quarter, we collaborated with our VIP ambassadors to offer special packages and improve our VIP offering. The consolidation of Ximalaya also contributed to revenue growth in membership services. Within marketing and consumption services, offline performance-related service delivered robust results as we successfully staged several concerts for our strategically collaborated artists, including Silence Wang and Sam Fish. Sales of digital albums also achieved solid performance, primarily driven by the launch of Jeff Chang’s album, "Children of the Sun." We continue to prioritize our IP-related offerings and build deeper collaborations with strategic artists across music promotion, offline performances, artist merchandise, and digital albums. In a challenging macro environment and a competitive market, our advertising business, especially the ad-supported model, are experiencing some headwinds, but continue to take actions to improve ad exposure, enhance entry rate, and eCPM, and offer more engaging interactive products for users.

We are also deepening collaboration with the Tencent ecosystem to reach more users. The consolidation of Ximalaya contributed to revenue growth in advertising positively, and we see growth potential in this area through leveraging our expanded contents and shared resources and technologies. Our gross margin in Q2 2026 was 44.2%, compared with 44.4% in the same period of last year. Revenue mix impacts our gross margin. Offline performance-related services continue to grow. We are happy to see continued cost efficiency improvement for offline performances-related services. The consolidation of Ximalaya, after considering the amortization of intangible assets recorded on the purchase accounting, had an favorable impact on our gross margin this quarter. We are confident that our gross margin will remain competitive in the industry over time.

Moving on to operating expenses, they amounted to only RMB 1.3 billion, representing 14.5% of our total revenues in 2026, compared with 13.7% in the same period of last year. This quarter, we adjust our channel spending strategies by reducing channel spending and deepening collaborations with the Tencent ecosystem. For example, we strengthened our cooperation with WeChat video account for content distribution and user conversion, and collaborated with WeChat Xiaowei to drive traffic to our lightweight APIs. The consolidation of Ximalaya, including the amortization of intangible assets recorded on the purchase accounting, drive the increase in operating expenses. Going forward, we expect to dynamically adjust our channel spending strategies for all our business according to evolving market conditions with our requirements. Our net profit attributable to equity holders was RMB 2.5 billion, compared with RMB 2.4 billion in the same period of 2025.

Diluted earnings per ADS this quarter were RMB 1.57. For Q2 2026, our adjusted EBITDA was RMB 3.3 billion, up by 5% year-on-year. Non-GAAP net profit attributable to equity holders of the company was RMB 2.7 billion, up by 4% year-on-year. As of June 30, 2026, our combined balance of cash equivalents, term deposits, and short-term investments was RMB 44.2 billion as compared to RMB 41 billion as of March 31, 2026. This combined balance was affected by changes in exchange rate of RMB to USD at different balance sheet dates. In addition to our strong operating cash flow, we maintain diversified finance options to meet our strategic expenditure requirements. Under the share repurchase program announced in March 2025, we have repurchased 43.5 million ADSs from the open market for total cash consideration of USD 400 million in the second quarter of 2026.

As part of our long-term commitment to shareholder returns, we remain on track to complete the 2025 stock repurchase program on file. Looking ahead, we will continue to focus on the development of SVIP membership, creating more innovative products, and providing more diversified benefits and privileges to our users. We also keep investing in quality content and IP development to build a comprehensive content ecosystem. Additionally, we will continue to deepen collaboration with Tencent ecosystem. The combination of Ximalaya brings exciting opportunities for us as our company enters a new and broader platform. All these factors pave the way for long-term health growth of our business. This concludes our prepared remarks. We are now ready to open the call for questions.

Operator: Thank you, Shirley. If you are joining by phone, please press 5 to ask a question and then 6 to unmute yourself. If you are accessing the call from the Tencent Meeting or GoToMeeting application, please click the Raise Hand button at the bottom left. For the benefit of all participants on today’s call, please limit yourself to one question. If you have more than one, please re-enter. If you are asking questions in Chinese, please ask them to repeat in English. The first question comes from Alex Li from Bank of America. Alex Li, your line is open now.

Alex Li, Analyst, Bank of America: Hi, thanks for this opportunity for asking questions. Congrats on very strong results. My question is, there are two questions. The first question is on IP-related business. IP has been a key driver for our revenue in the first half of 2026. I was wondering how will the IP-related business drive the revenue growth for the rest of this year? How is the momentum and outlook looks like there? The second question is really on Ximalaya consolidation. Now that Ximalaya is already part of the TME group, how should we think about the financial outlook after Ximalaya’s consolidations and its impact to the TME financials in the second half of this year? Thank you.

Cussion Pang, Executive Chairman, Tencent Music Entertainment: I have two questions. The first is about the IP business. As we can see, IP was the driving force behind the growth of our entire business in the first half of this year. I would like to understand what the trend of the IP business will be in the second half of this year. Could you give us an outlook for the future? The second question is about Ximalaya. We also know that Ximalaya has now been fully integrated into the Tencent Music Group. Could you tell us about Ximalaya’s future financial outlook after the integration, including its overall impact on Tencent Music as a whole?

Translator/Interpreter, English Translator: Thank you, Alex, for your questions. The first question is about our IP development. Currently, based on our overall performance in the second quarter, we have achieved very stable growth. This growth is supported by our forward-looking strategies developed over many years. We have built a differentiated platform with both content and offline/online services and products, as well as virtual and non-virtual offerings. This forms a complete music ecosystem that can fully leverage our diversified IPs. You can also see that we have a lot of contribution from marketing and consumption-related services. All of this has contributed a lot to this quarter’s result.

Cussion Pang, Executive Chairman, Tencent Music Entertainment: Although the competitive environment this year has put certain pressure on our overall subscriber subscriptions and advertising business，但像我刚才讲到的，像演唱会等等的IP相关的消费类型的服务，基于我们当前的一个优势，我们觉得还是可以持续地给我们业务带来一个比较稳定的增长。这个最主要的是有以下几个不同的层面的。第一个，我们在IP里面相关的生态的供给，我们当前除了内部自主的研发以外，我们也会跟不同的外部的合作方有深度的合作，让我们在整体的IP的打造里面，可以产生更多的高品质的IP。第二个维度，我们也看到整体，因为我们是通过内容的深度的合作，再到内容的宣发以及衍生产品等等的全过程的一个掌握，这个也是TME的相关的优势。那最后一个层面，就是我们有多元化的一个变现的场景，所以我们可以通过平台的能力，我们IP的价值不仅仅限于演唱会、周边产品等等，这个也帮助我们有更多的一些相关的特权跟返补到我们SVIP的会员的包月的业务里面。所以这些多场景的价值，也成为我们一个非常坚实的护城河。

Translator/Interpreter, English Translator: For this year competition, we do see some patterns from the competitive area, be it in the membership and ads business. Our IP related services, including concerts and performance, are experiencing steady growth, mainly because of the following reasons. Number one is our IP supply. Apart from our in-house research and development, we are also carrying out a lot of deep collaboration with external suppliers, which help us build high-quality IPs across the board. Second, you can also see that in terms of content collaboration, apart from that on the promotion, distribution, and derivative products, we are also in a very good position. Number three is the diversified monetization. Through our platform, it will not only provide performance, concerts or merchandise, and through our member benefits, it could also contribute more to the increase of our SVIP numbers.

All of these have helped us build a very solid competitive mode.

Cussion Pang, Executive Chairman, Tencent Music Entertainment: 关于你第二个问题提到的喜马拉雅，我们也非常的欣喜。随着喜马拉雅加入到TME的大家庭之后，我们可以让整个TME的集团实现360°展式的音乐加音频的服务平台的战略升级。所以这个也扩大了我们的用户群体，丰富我们用户的画像，也进一步地提升用户的时长，还有忠诚度。所以整合了喜马拉雅，加上我们刚才在平台内容里面那个独特的优势，我们对于整个集团中长远的发展，我们觉得是能释放一个更好的动力，为我们未来的增长打了一个更好的基础。

Translator/Interpreter, English Translator: About your second question on Ximalaya. We are very pleased to have Ximalaya to be part of TME family. With Ximalaya on board, we have already built a one-stop music plus audio platform, which help us amplify the user base and also enrich the user profile, and also increase time spent on our platform. Overall, in the medium to long run, we can see that Ximalaya’s joining to TME family will also unlock more potential of future growth. This also set a solid base for future growth.

Operator: Thank you. The next question comes from Lincoln Kong from Goldman Sachs. Lincoln, please.

Lincoln Kong, Analyst, Goldman Sachs: Thank you management for taking my question. My question is about the subscription business. Basically, in the first half or in second quarter, if we excluding Ximalaya, we do see some moderation in subscription revenue growth. How should we think about the prospects into the second half of the year? What sort of the growth trend for SVIP or the overall ARPU to contribute to the overall growth? Could management also elaborate a bit more on the latest status in terms of the competition, especially against Xiami? Thank you.

Translator/Interpreter, English Translator: 我的问题是关于我们的订阅业务的。其实看整个上半年，尤其是第二季度的话，如果去掉喜马拉雅这一部分的话，我们可以看到这个订阅业务实际上收入是在放缓的。所以管理层能不能够给我们展望一下，就今年下半年的整个的一个前景，包括SVIP还有ARPU的整个的一个趋势。然后另外的话，也能不能够给我们讲一下现在整个音乐行业竞争的现状，以及和企鹅之间的竞争。

Cussion Pang, Executive Chairman, Tencent Music Entertainment: 我们确实可以看到，在第二季度的时候，我们在这种竞争的持续的影响下，我们的音乐相关的会员收入的增速是有所放缓。

Translator/Interpreter, English Translator: Well, with the competition in hand, we can see that the growth in music-related business is slowing down.

Cussion Pang, Executive Chairman, Tencent Music Entertainment: 但这个其实主要还是确实是一个流量上面的一些影响。那我们就像我刚才提到的，我们最重要的一部分，主要还是我们跟微信视频号的合作。

Translator/Interpreter, English Translator: Well, it is mainly some impact on traffic. But as we said, the most important thing is our collaboration with WeChat video app.

Ross Yang, CEO, Tencent Music Entertainment: 所以说我们其实已经很欣喜，可以看到TME目前已经开始整体地去负责微信视频号中音乐这个垂直类目的运营。同时我们也能够可以看到，从视频号到我们的

整个app从QQ到QQ音乐这边的链路基本上已经打通。

Translator/Interpreter, English Translator: We are also very pleased to see that TME is already taking charge of the music business operation under WeChat and Weixin video account. The connection between Weixin video account and QQ app has already been very smooth.

Ross Yang, CEO, Tencent Music Entertainment: 从实际的收入表现来看，我们应该说最重要的高价用户和SVIP高价值用户这部分并没有受到太多的影响，主要还是确实受到轻度用户的一个冲击。

Translator/Interpreter, English Translator: If you look at revenue-wise, our high-value users or SVIP has not been heavily affected. What has been most heavily affected is for those casual or light users.

Ross Yang, CEO, Tencent Music Entertainment: 所以从订阅用户的运营上来看，我们一定还是在稳固我们目前的SVIP的基本盘，同时把更多的权益放到我们的SVIP的权益包里面，去提升它的规模跟ARPPU。

Translator/Interpreter, English Translator: If you look at our subscribers, we try to stabilize our SVIP base and try to put more benefits into the SVIP package to increase its total number of base.

Ross Yang, CEO, Tencent Music Entertainment: 所以这里面就包含了刚才Cussion提到的我们的周边衍生品，然后演唱会，以及我们在喜马拉雅收购进来以后，我们能够提供更有价值的长音频的内容。

Translator/Interpreter, English Translator: This includes, like Cussion said, merchandise, performance concerts, and with Ximalaya, we can also provide more high-value long-form audios.

Ross Yang, CEO, Tencent Music Entertainment: 所以相比于其他的竞品，我们的核心的音乐业务实际上是能够保持很强的差异化和健康的增长。

Translator/Interpreter, English Translator: Compared with our peers, our core music business is still having a solid and healthy growth.

Ross Yang, CEO, Tencent Music Entertainment: 而对于在轻量用户这部分，我们还是重点会去发掘我们现在新的小的轻量级app的一个增长，这里面主要是播演音乐跟酷狗概念版，以及我们在这个季度所推出的酷狗免费版。

Translator/Interpreter, English Translator: To acquire more light users, we also happen to potential from those light small apps, especially like audio music, Kugou Concept, and the Kugou free version, which we released at this quarter.

Ross Yang, CEO, Tencent Music Entertainment: 所以基本来看，我们相信在我们目前这样的跟视频号的紧密合作，以及我们自己去稳守、稳固我们的大盘，然后去深入挖掘我们的高价值用户，我们相信我们自己这边能够更积极地去面对这样的竞争环境。

Translator/Interpreter, English Translator: We believe through our collaboration, a deeper collaboration with the Weixin video account by stabilizing our main business and tapping more potential from high-value users. I believe we can stay in a very good position against the competition.

Ross Yang, CEO, Tencent Music Entertainment: 从竞争这个角度来说，首先对于TME来说，其实这么多年来一直面对着竞争的环境的存在，所以我们其实最重要的一点还是做好我们自己。

Translator/Interpreter, English Translator: In terms of competition, TME has never been absent from competition over years. The most important thing for us is to do our own job well.

Ross Yang, CEO, Tencent Music Entertainment: 所以相比于其他的竞品来说，就像刚才我们也提到，通过喜马拉雅的加入，我们已经完成了我们从音乐业务向音乐加音频整个综合性的服务平台的转型。

Translator/Interpreter, English Translator: Compared with our peers, with the consolidation of Ximalaya, we have already finished our transition from a music platform to a music plus audio comprehensive service platform.

Ross Yang, CEO, Tencent Music Entertainment: 所以未来在TME的平台上，我们相比竞争对手，我们就能够提供比其他更丰富的内容，更多元化的渠道，以及我们在线上线下更加丰富的权益。

Translator/Interpreter, English Translator: Compared with our peers in the future on TME platform, we can provide more enriching content, more channels, and more benefits that cover both online and offline.

Ross Yang, CEO, Tencent Music Entertainment: 所以无论对方怎么演变，我们仍然还是会坚定地沿着我们自己这条路。我们相信在这条路径之下，我们的整体的一个业务还是应该是能够保持比较稳定的一个增长，稳健的发展。

Translator/Interpreter, English Translator: No matter what happens in competition, we will stay firm on our own track of development. We also believe that our business will continue to have a stable and steady development.

Operator: Thank you. The next question comes from Alex Yao from JPMorgan. Alex, please.

Alex Yao, Analyst, JPMorgan: Thank you management for taking my question. Especially thank you for playing such a soothing music ahead of the conference call. I really enjoy listening to "Borrow a Little Light from Ordinary Days", and also all the best to the business transition. My question is about the integration and synergy with the Weixin Xiaowei, the Weixin agent services. You guys highlighted the Weixin Xiaowei integration and the upgraded AI agents acting as personal DJs in QQ Music and Kugou. What measurable changes have these products produced in discovery, listening time, retention or conversion? What is the intended monetization path? Does management primarily view AI as an engagement and a cost efficiency tool, or can AI become a direct revenue contributor? Thank you.

Translator/Interpreter, English Translator: 谢谢管理层，非常感谢管理层在这个会议之前播放的几首非常好听的音乐。

我的问题是关于微信小薇和AI Agent的一些事情，包括我们最近也是这个AI Agent有一个升级，可以在QQ音乐和酷狗音乐当做个人DJ。那我想问问，这些包括微信小薇和AI Agent，它有没有实质性地比如说增加了留存，增加了转化，或者增加了用户的时长？那么关于它具体的变现的路径，管理层是怎么想的？那关于这个AI的技术，那么咱们是把它当做一个降本或者是提升成本管理的一个工具，还是说它能够成为一个真正的收入的一个贡献来源？

Ross Yang, CEO, Tencent Music Entertainment: 对，我们实际上在，应该说首先小微目前还是在测试中，所以我们目前在跟小微的这样的一个，其实我们是作为一个其中的一个很重要的scale来存在的。

Translator/Interpreter, English Translator: First of all, WeCom is still under testing. We take it as very important scale.

Ross Yang, CEO, Tencent Music Entertainment: 所以从他们早期的测试里面，我们可以也比较欣喜地看到，对于从用户去建立自己的歌单，然后去分享自己的歌曲，已经成为在微信这个助手里面比较常用的一个应用。

Translator/Interpreter, English Translator: Well, though it’s still at an early testing stage, we’re very happy to see that users are already using it to set their own song list, share songs, and they’re using it very frequently.

Ross Yang, CEO, Tencent Music Entertainment: 对我们自己现在目前在我们自己的APP中所升级的，就我们自己的一个基于大模型的，尤其是跟混元密切合作，就基于混元的这样的一个音乐AI Agent，我们其实发现确实对我们里面的高价值的用户，高活跃人群的留存提升是非常明显。

Translator/Interpreter, English Translator: With our app internal upgrading, especially with the integration of Hunyuan and plus our music AI Agent, we can tell that it does increase the retention, especially for the high value users.

Ross Yang, CEO, Tencent Music Entertainment: 而且我们在最近，大家可以去体验一下，我们在最近的我们的Mac版本里面，我们发布两个重要功能，一个是刷歌，一个是AI的DJ。那在Mac上的一个AI陪伴电台，能够充分地在Mac这个办公场景下去体现用户的一个参与度。

Translator/Interpreter, English Translator: Recently, you can also try some new features on Mac version, especially two new features. One is you can swipe to listen to music. Second is the AI DJ. Basically, you can use it as like a companion DJ station.

Ross Yang, CEO, Tencent Music Entertainment: 同时我们也发现，其实通过我们最近在算法上通过GPT模式所提升的我们的算法，已经能够很好地去推进我们推荐的参与度。我们最近的一个算法也被顶级的这样一个会议所采纳了。

Translator/Interpreter, English Translator: With our latest algorithm, the GPT model, we can see that it also increased the engagement recommendation and our recommendation has also been adopted by one of the top tier conferences.

Ross Yang, CEO, Tencent Music Entertainment: 那基于助手，刚才说基于助手这边的其实商业模式是相对比较清晰，它主要还是去提升用户的活跃度，然后同时在分享跟听歌的时候，还是根据我们本身的内容策略，就是基于我们目前的付费墙这个模式，去提升我们这种订阅用户的增长。

Translator/Interpreter, English Translator: About the monetization of AI Agent, I think the business model is very clear, and we will use that to increase the engagement and activity of our users. So they will use it more often to share and listen to songs, especially for those paid users that will further drive the growth of subscription.

Ross Yang, CEO, Tencent Music Entertainment: 那对于整体的AI技术这部分，其实我们在前面几个季度也都谈到了。当然就是说本身跟其他的公司来说，本身的去提效跟降本是AI工具本身一个比较标准的用法。

Translator/Interpreter, English Translator: About AI technology in general, we talked about this topic in a previous quarter’s call as well. Well, AI itself compared with others in nature, is also a tool to improve efficiency and cut costs.

Ross Yang, CEO, Tencent Music Entertainment: 但是我们特别要提，我们特殊的地方主要还是在于对于C端消费端用户的AI去使用大模型去产生音乐这部分的业务。那么经过这两年的发展，我们这部分业务，比如在酷狗的AIK和在QQ音乐里面的AI作歌都取得了非常好的商业化的进展。所以我们其实核心目的我们还是确实像刚才，我们仍然是希望通过AI技术的采用，能够帮助我们更好地去找到其中的这种商业化的机会，去提升我们本身的收入。

Translator/Interpreter, English Translator: However, what is special about us is on the consumer side, we can use AI, especially large language models, to generate music. Over the past couple of years, we’ve already used that in our app like Kugou AIK and QQ use, also using AI to generate songs. All of these have also generated very good commercial returns. We hope that we can use AI technologies to tap more commercial opportunities and increase our revenue.

Operator: Thank you. The next question comes from Citigroup. Alicia. Alicia, please.

Alicia, Analyst, Citigroup: Hello. Can you hear me?

Operator: Yes, we can.

Alicia, Analyst, Citigroup: 感谢管理层，晚上好，谢谢接受我的提问。我想问一个关于我们TME在音乐和长音频IP这方面的竞争优势和护城河是什么？然后整体就是我们的overall IP的战略，能够跟我们梳理一下吗？我自己翻译一下，就wonder management can share your insight, what is the competitive advantage and competitive mode of TME on the music and also the long form audio IP and also the overall IP strategy, thank you.

Ross Yang, CEO, Tencent Music Entertainment: 对，首先我们要注意，我们其实在这部分我们不能完全去谈互通和合作，当然主要是以独家这部分，肯定是不能以这个。因为我们根据市场监管总局的规定，我们自己现在已经基本上还是保持一个非独这样的一个版权的形态。

Translator/Interpreter, English Translator: Well, first of all, about exclusive content, we are not in a specific position to talk about competitive mode, because according to SAMR’s rules, we cannot use those exclusively on content.

Ross Yang, CEO, Tencent Music Entertainment: 但是相比于其他家，其实我们的竞争优势非常明显。首先就是喜马拉雅本身仍然聚集了大量的一二线的白领跟女性用户。

Translator/Interpreter, English Translator: However, compared with our peers, our competitive advantage is quite clear. First of all, Ximalaya still has a lot of user legacy that covers white collar and female users in tier 1 and tier 2 cities.

Ross Yang, CEO, Tencent Music Entertainment: 所以基本上你们可以注意到，在我们整个的儿童业务，就在喜马拉雅本身的儿童业务，仍然在市场上占据了非常重要的一个地位，而且它其中的很多的故事IP都跟我们形成了很好的合作。

Translator/Interpreter, English Translator: As you probably can see, our kids business on Ximalaya is still taking considerable market share and especially the story part has also complement with our own business.

Ross Yang, CEO, Tencent Music Entertainment: 然后第二部分其实就是悦文本身，其实在整个的网络文学部分，因为小说仍然是就像Spotify的audiobook一样，网络小说肯定是我们最重要的一部分。那在这部分上我们主要还是继续跟我们的悦文集团，跟悦文达成一个很好的深度的战略合作，其中的它的全部作品都第一时间内都可以在我们本身的平台上完成有声化以及分发。

Translator/Interpreter, English Translator: Another part is the internet literature, especially the novels, like audio books. We will continue to deepen our collaboration with China Literature, Yuewen, and all the new works will turn into audiobooks and will be efficiently distributed on our platform.

Ross Yang, CEO, Tencent Music Entertainment: 而且最近我们在跟悦文正在做的漫剧的合作，我们也相信对于在漫剧和有声之间能够更好地去使这样的有声文学，这样文学的IP能得到最大化的一个发展。

Translator/Interpreter, English Translator: Recently, we’re also partnered with China Literature, Yuewen, on comic plays. We also believe that comic plays and audios can also complement with each other.

Ross Yang, CEO, Tencent Music Entertainment: 那第三块其实就是我们跟本身腾讯视频的一个深度的合作。那我们相信本身在于长视频平台，比如说最近的《百花杀》这样的头部的影视剧，包括《人间》这类的，只要在腾讯视频上相对比较爆火的S剧。那同样的，在我们喜马拉雅也发现了它有非常大的有声书的消费的增长。

Translator/Interpreter, English Translator: In addition, we also have a deep collaboration with Tencent Video for some long-form videos like Bai Hua Sha or Renjian, those hit shows. Once we found those hit shows on Tencent Video, especially those S plays, we also spot there is a great consumption scenarios on Ximalaya.

Ross Yang, CEO, Tencent Music Entertainment: 所以我们最近也正在推进跟腾讯视频在产品上的合作，也就刚才说的本身在所有的热剧的排播的所有的有声剧都可以在我们这边上线，同时从腾讯视频完成导流。那么从我们这边的喜马拉雅里面所有的有价值的有声内容，也会同时授权给腾讯视频，以完成让他们在那边的用户也能得到一个在听书上的需求的满足。

Translator/Interpreter, English Translator: With the Tencent Video, for those hit shows, we can turn those into audiobooks very quickly and turn it online. We can also have some traffic diverted from Tencent Video. For the audio resources on Ximalaya platform, we will also license it to Tencent Video, so that Tencent Video users can also listen to this audio content.

Ross Yang, CEO, Tencent Music Entertainment: 所以从一句话来解决，其实我们现在长音频的业务仍然也是以IP为centric的这样的一个业务，那么我们可以本身聚焦在本身最经典的儿童的故事，然后以悦文为核心的网络文学，以及跟腾讯视频所结合的S级的影视剧，也仍然能在中间去创造更好的这样一个商业化的机会。

Translator/Interpreter, English Translator: In a nutshell, long-form audio is still IP-centric business, and we will keep a focus on classic kids stories, the internet literature from China Literature Yuewen, and the S level shows from Tencent Video. We believe all of this will have very good commercial outlook.

Ross Yang, CEO, Tencent Music Entertainment: 关于音乐内容生产的部分呢，其实TME也一起来做了多年的前瞻性的部署。

Translator/Interpreter, English Translator: About music creation, TME has also deployed many forward-looking strategies.

Ross Yang, CEO, Tencent Music Entertainment: 我们除了跟国际以及国内的很多的厂牌做一个不同的、共同的音乐的创作，以及我们也成立了不同的joint venture的分公司，加上我们公司内部的自研的工作室，我们已经大力地投入在音乐内容的创作上。

Translator/Interpreter, English Translator: Apart from our collaboration with domestic and international labels, we co-produce a lot of artworks. We also set up some joint ventures, and we also spent lots of efforts in in-house studio in music creation.

Ross Yang, CEO, Tencent Music Entertainment: 另一个很关键的就是我们必须要跟腾讯的大的生态有更多的紧密的合作。当前包括腾讯游戏、腾讯视频里面很多不同的主题曲，OST，我们在过去都出了打造了很多不同的非常亮眼的一些的头部的歌曲。

Translator/Interpreter, English Translator: In addition, we will also continue to forge a closer collaboration within the Tencent ecosystem with gaming, with Tencent Video, and over the years we have generated many hit songs。除了歌的制作以外，我们在过去几年也开始实现了我们自己的艺人经纪管理。我们有很多的在行业里面的著名的歌手也加入到我们的阵营里面。但同时间，我们也跟很多的海外的公司，比如说SM Entertainment，韩国的，我们也开始来培养新一代的一些新的艺人歌手，这个也是我们在打造歌手的层面，我们也投入更多的精力跟资源。Apart from our music creation, we’re also entering deeper into artist or singer generation or nurturing and artist management.

For example, we partner with SM Entertainment from Korea, so that it could help us better nurture more talented artists.

最后我们可以把这些非常好的歌以及歌手再通过不同的场景，比如说帮他们主办他们的个人的演唱会，也有TME自己的内部IP的盛典等等，我们也可以把演出的不同的内容来打造起来。最后就是希望我们以一体化的整体来打造更长久的IP，而且这些是高品质的，而且在过去的几年里面，我们在这方面的业务的增长已经证明了这里面的空间还是有非常大的一个发展的空间。With song creation and singer nurturing, we can also help a lot of singers to make their own concerts and we can also organize a lot of the IP based events, and all of this will further contribute to the business growth.

With our integrated or one-stop platform, we will further nurture more high-quality IP. If you look at our business performance over the past several years, such rapid growth is already a proven record of the huge potential of this business. [Foreign language] Ultimately, with more benefits, it will further contribute to the growth of our subscription or SVIP growth.

Operator: Thank you. The next question comes from Maggie from CICC. Maggie.

Maggie, Analyst, CICC: Thanks management for taking my question. My first question is related to margin. In the second quarter, sales and marketing increase appeared to be quite modest year-over-year, even taking into consideration of Ximalaya, which was believed to entail higher sales and marketing cost ratio. Could management help us better understand the driver behind that? What is the overall gross margin and net margin outlook in the third quarter and fourth quarter upon a full quarter consolidation of Ximalaya? My second question is related to shareholder return. Our total cash, short-term, long-term deposit reached CNY 44 billion by the end of second quarter, and it is almost 40% of our current market cap. Could management share with us your latest thought on enhancing shareholder return going forward? Thank you.

Translator/Interpreter, English Translator: 谢谢管理层给我提供的机会。第一个问题是关于整个利润率的情况，包括第二季度我们可以看到销售的支出其实同比增长还蛮多的，即使考虑到喜马拉雅合并的这个事情。能不能管理层分析一下背后的这个主要的驱动力到底是什么？然后给我们展望一下今年下半年包括整个毛利和净利的一个具体的情况。第二个问题是关于股东回报的。我们可以看到在截止到二季度末的话，我们账上现金已经达到了440亿人民币，这基本上占到了我们大约40%的市值。所以想问一下管理层对于现在这个股东回报有哪些计划？

Shirley Shen, CFO, Tencent Music Entertainment: 对，我们的毛利率同比稍有降低的主要原因，其实主要是因为线下活动的收入增长较快，那么占总收入的比例较大。另外一方面，其实线下活动中的经纪类业务增长也比较快，那么占比也逐步提高。同时演唱会和实体粉丝类业务积累的运营经验，也提升了运营效率，那对整体的毛利率还是有一个正向影响的。所以综合下来，同比的毛利率下降是比较少的。

Translator/Interpreter, English Translator: Well, first question about the slight decline of our GP margin is mainly due to the following reasons. Number one is our offline business is growing very rapidly, which means that it takes a bigger share of our total revenue. Plus our offline artist brokerage business is also growing very rapidly and also taking a bigger share of our overall revenue. Plus concert and live performance, which also contribute positively to our GP margin. These are why our GP margin is just declining slightly.

Shirley Shen, CFO, Tencent Music Entertainment: 反比来看，毛利率下降的比较多，其实纯粹是因为线下活动的收入的季节性的波动，那么Q2的占比是显著高于Q1的，那么对毛利率产生了一定负向影响。

Translator/Interpreter, English Translator: Well, if you look at a quarter-over-quarter, the slight decline of GP margin is mostly the seasonal changes of the offline performance business, because the offline performance business in Q2 is greatly higher than Q1.

Shirley Shen, CFO, Tencent Music Entertainment: 考虑喜马拉雅的并入，在考虑了我们的会计政策下的无形资产的摊销后，对整体的毛利率是正向的影响。

Translator/Interpreter, English Translator: Considering the amortization of intangible assets of Ximalaya, it has some positive impact over our GP margin.

Shirley Shen, CFO, Tencent Music Entertainment: 长期来看，合并了喜马拉雅后，我们持续会进行音频和音乐的内容整合，丰富整个内容生态。整合好差异化的用户结构，提升VIP的留存和付费转化。相信对整体的毛利率有一定的提升空间。

Translator/Interpreter, English Translator: In the long run, with the consolidation of Ximalaya, we will continue to build our music plus audio platform, to have a more enriching ecosystem, and to provide a more differentiated user experience. With that, we believe we can increase the retention conversion rate.

Shirley Shen, CFO, Tencent Music Entertainment: 根据目前对于下半年的收入预期的情况来看，我们预计整体的毛利率比去年同期稍微下降。

Translator/Interpreter, English Translator: Our projection into the second half of our revenue expectation, we project that our GP margin will be decreasing slightly year-over-year.

Shirley Shen, CFO, Tencent Music Entertainment: 关于销售费用的问题，我可能要说一下。其实Q2来讲，我们相对而言，其实是控制了销售费用的投入。整体来讲，就是调整了整个渠道费用的策略，对渠道费用有更高的ROI要求，减少了渠道费用。同时加强了与腾讯整个生态的合作，包括视频号、微信支付和游戏等。与视频号的合作也逐步取得一些成效，引流效果有一定的提升。

Translator/Interpreter, English Translator: About sales expenses, I would say in Q2 we have controlled the sales expenses because in general, we have changed our channel expenses strategy, which means that we will seek more projects with higher ROI. In addition, we are also strengthening our collaboration within the Tencent ecosystem, including Tencent Video, WeChat Pay, and Tencent Games. As you can see in our collaboration with Tencent Video, has already helped us increase the traffic and conversion.

Shirley Shen, CFO, Tencent Music Entertainment: 在合并喜马拉雅以后，其实6月份喜马拉雅几乎是停投的。那我们将集团中台的能力逐步适配到喜马拉雅，形成更优的投放模型。从7月起，会在集团相同的ROI要求的前提下逐步恢复投放。

Translator/Interpreter, English Translator: Well, with the consolidation of Ximalaya, basically the input in June has already extended, but with the technology and platform convergence, we have resumed the expanding for Ximalaya, but with the same ROI standard since July.

Shirley Shen, CFO, Tencent Music Entertainment: 对。我们不会进行大水漫灌式的烧钱去做营销。我们将持续地投入优质内容，精细化的推广策略，聚焦核心价值用户和生态优势，稳固付费用户的基本盘。预计全年的销售费用和G&A都会有合理的增加，主要是含了喜马拉雅的一些支出。运营费率相比2025年有小幅的提升，加上贷款利息支出增加，净利润会小幅承压。预计全年经调整的EBITDA会有小幅提升。

Translator/Interpreter, English Translator: We would not just spend broadly in marketing, and we will fine-tune our strategy in marketing and to do more targeted marketing and stay focused on our ecosystem and to try to tap more value from our users. So for the whole year, our sales expenses will go up a little bit and our operating expenses will slightly go up. But considering the loans, our net margin for the whole year will go down slightly and EBITDA will edge up a little bit.

Cussion Pang, Executive Chairman, Tencent Music Entertainment: 关于股东回报上，我们当前有一个10亿美元的股票回购计划，而且在第二个季度，我们已经总计完成了金额达到4亿美元的股票回购。

Translator/Interpreter, English Translator: About shareholder return. Currently, we are still under that $1 billion shareholder return program. In Q2 alone, we already completed $400 million USD share buyback.

Cussion Pang, Executive Chairman, Tencent Music Entertainment: 管理层当前对整个公司的长期价值是非常有信心的，所以我们也会在当前除了完成我们剩余的股票回购计划之后，我们也会积极地去准备新一轮的回购计划。我们的目标就是以不同的模式可以提高股东的回报作为我们的目的。

Translator/Interpreter, English Translator: The management is very confident in the long-term future of the company. So apart from finishing the rest of the previous share buyback program, we are also preparing for another round of share buyback. We will try to use different approach to increase shareholder return.

Operator: Thank you. In the interest of time, I would like to wrap up today’s call. Thank you again for joining us today. If you have any further questions, please feel free to put them in our team and we can close today’s call. We look forward to speaking to you next quarter. Thank you and bye.

Translator/Interpreter, English Translator: Thank you.

Cussion Pang, Executive Chairman, Tencent Music Entertainment: Thank you.

Operator: Thank you.