Tencent Music Entertainment Group (TME) Q4 2025 Earnings Report, Transcript and Summary

Good evening, good morning, and welcome to Tencent Music Entertainment Group's Fourth Quarter and Full Year 2025 earnings conference call. I'm Millicent T., Head of IR. We announced our financial results earlier today before the U.S. market opened. The earnings release is now available on our website and via Newswire services. During today's call, you'll hear from Mr. Cussion Pang, our Executive Chairman; and Mr. Ross Liang, our CEO, who will share an overview of our company strategies and business updates. Then Ms. Shirley Hu, our CFO, will discuss our financial results before we open the call for questions. Before we continue, I refer you to the safe harbor statement in our earnings release, which applies to this call, as we make forward-looking statements. Please note that we discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under IFRS and our earnings release and filings with the SEC. [Operator Instructions] And please be advised that today's call is being recorded. With that, I will now turn the call over to Cussion, Executive Chairman of TME.

Thank you, Millicent. Hello, everyone, and thank you for joining our call today. In 2025, we remained disciplined in executing our dual engine content and platform strategy, delivering accelerated revenue growth and sustained margin expansion. Our differentiated all-in-one music service platform has built a solid subscription growth and strong momentum across our non-subscription offerings. This enabled us to unlock greater value from music IPs, create new opportunities for artists and address a larger market. As the competitive landscape continues to evolve, our proven ability to deliver integrated expensive and multi-phased services give us a distinct competitive advantage. With disciplined investment and continued innovation focused on long-term value creation, we are confident in leading the industry advancement. Our competitive edge first and foremost stems from our industry-leading music copyright portfolio. Building on our high-quality IP access, we have expanded a comprehensive suite of music services to create holistic value from music creators and contribute to the long-term growth of music industry. Leveraging our deep insights into the industry, we have amplified our content strength and addressed the evolving listening preferences of our users. First, our timeless and classic music catalog fostered deep emotional connections and serve as a cornerstone of our subscription business. This is why music can be so long-lasting and enduring in terms of monetization. Pushing forward from a position of strength, we recently renewed a contract with Warner Music Group and Bin Music, exploring new avenues for physical albums, merchandise and live performances. We also deepened alliance with Media Asian music, introducing Dolby Atmos to over 300 iconic tracks by legendary artists, including Eason Chan [Foreign Language], Leslie Cheung [Foreign Language], and Andy Lau [Foreign Language]. For the first time, elevating the value of our classics with a more immensive listening experience. Second, we continue to deepen differentiation through our proprietary content. The streaming share of our self-produced content keeps growing as listeners seek unique high-quality genres and musical experience. For example, our Mid-Autumn-themed Year after Year [Foreign Language] performed by Xiao Zhan, chartered in 17 countries and regions and generated over 100 million social media views in a single day. Furthermore, our capability to crops hit OSTs continues to strengthen. In the fourth quarter, we produced a bespoke 14-track OST suite for Tencent Video's hit drama, Shine on Me [Foreign Language], which topped multiple music charts doing the drama's broadcast. In addition, several of our coproducer songs were featured on the 2026 CMG Spring Festival Gala, which then quickly went viral with multiple tracks surpassing 10 million streams in just a few days. Third, we continue to gain share among younger users. Thanks to our coverage of genres that resonate well with these user cohorts. K-Pop, for instance, is capturing and increasing shares of streams our recently renewed partnership with P Nation Corporation secured a 30-day head-start benefit to new releases on top Korean artists and groups such as PSY, CRUSH, HWASA, Baby DONT Cry and TMX. Keeping users at the forefront of global trends, our thriving Tencent Musician platform and established an avenue for indie and up and coming artists is also vital to meeting the growing advantage of young audiences for diverse music styles. This quarter, we partnered with the indie band Fine, a music group with over 1 million followers their tracks, including the viral hit Breathing Decision [Foreign Language] community interaction among young users. Years of dedication efforts and our distinctive competitive edge within the content and platform ecosystem have enabled us to accelerate the comprehensive expansion of our music services. We believe this is quite unique to TME, enabling us to continue leading music consumption along the entire music industry chain. Beyond music subscription, we see tremendous potential in other music-related value-added services. We aim to grow and expand our total addressable market sustainably, guided by our deeply rooted and strong conviction in serving, protecting and unlocking the full value of music IPs. Building on our momentum, we continue to push boundaries by hosting more high-quality live experiences that empower artists in expanding their audience reach. First, let me begin by highlighting that in 2025, we showcased our production capabilities with multiple flagship events, including G-DRAGON's World Tour. The 20 concert tour across 8 cities in Asia Pacific attracting over 260,000 fans. This highly sought after tour featured 2 landmark shows at the Taipei Dome in the fourth quarter drawing over 75,000 fans. The large-scale events that we have hosted for him. This unprecedented success proves our ability to execute complex, high-profile tools and laid a solid foundation for future collaborations with top-tier international artists. Secondly, through continuous investment across the music value chain, we have built a diverse and robust lineup of strategic artists. We collaborate with them across music promotion, live performances, artist management and merchandise. And these investments have begun to bear fruit, contributing to strong growth in our non-subscription revenue in 2025, our strategic artist portfolio include [Foreign Language]. Through these efforts, we offer fans a richer array of music consumption and well-run entertainment experiences, while transforming music and artists into influential IPs, further extending their value and impact. Third, beyond live concerts, we continue to introduce innovative merchandise formats to spark new waves of fan-based consumption. A prime example was the KIT album for Ed Sheeran's latest release Play marking our first partnership with a top-tier Western artist using this hybrid physical digital format. We also enhanced Esther Yu's [Foreign Language] physical album, Spicy Honey with a suite of collectible elements, pushing fans and engaging engagement. In addition, we made a breakthrough in expanding artist merchandise with new tool themed at collectibles, which are highly valued by fans as tangible extensions of the live concert experience and emotional connections with their favorite artists. Our exclusive addition [Foreign Language], 2 special commemorative gift box and the special release of LUHAN's SEASON4 ASIA TOUR commemorative album integrated with SVIP privileges, both achieved strong sales across the board. I'm pleased to say that we more than doubled revenues of IP-related merchandise and fan-based consumption as we exceeded 2025. As advertising and other IP-related offerings scale and as the often multi-tiered membership for online music subscription, the business impact of each pay membership varies. Given the significant evolution of our business model in recent years, our focus has moved beyond the number of paid subscribers and ARPPU. The operating metrics for our online music services adopted at our listing. Instead, we are increasingly focused on revenue and profit as our primary performance indicators. Reflecting this shift, starting from the next quarter, we will discontinue to disclose the certain operating metrics on a quarterly basis. Going forward, we will report annually the number of total paying users across our music services as of year-end. Last but not least, we have social responsibilities embedded in our core strategy. We continue to improve accessibility and inclusive design, making our products more user-friendly. For example, QQ Music introduced a hearing protection mode for children, leveraging AI and user insights to reduce shop and sensitive sounds for safer and more comfortable listening experience. Meanwhile, WeSing upgraded its large front mode to better serve more users with adoption exceeding 50%. To wrap up, our thriving dual-engine ecosystem, anchoring by content advantage, comprehensive service offerings and innovative excellence enable us to effectively serve a diverse range of user creators and fans while unlocking the IP value and enhancing monetization efficiencies. Looking ahead, we will continue to reinforce our core strength and broaden our reach to capture the significant growth opportunities before us. Now I would like to hand the call over to Ross for a deeper dive into our overall platform development. Ross, please go ahead. Thank you.

Thank you, Cussion. Hello, everyone. In area of rapid technological advancement and emerging consumption expectations, apart from what Cussion just discussed we stayed able acting proactively across the board to serve our users better under keeps the flywheel of our content platform growing. With our deeper commitment to user value we have built a comprehensive multipronged membership system designed to drive effective subscriber conversion, stronger engagement and a deeper share of wallet. We continue to lead music consumption trends through ongoing technological and product innovation, inspiring users to explore a broader range of music genres and discovery artists, driven by differentiated extensive content privileges as well as immersive experiences. We ended 2025 with over 20 million SVIP users with ARPPU trending slightly upward. Our new AD-supported subscription plan is also gaining initial traction. Over time, it will allow us to broaden user class and attract new audiences to our platform. We continue to innovate product metrics to deliver highly differentiated offerings that make music consumption seamless and accessible anytime any well. First, we further deepen and integrate our presence across marketing devices. While mobile apps remain our core access point, we have also penetrated further into PC, in car, smart speaker and available ecosystems. This makes music consumption an integral part of user's daily lives whether they are commuting and at home or at work. Second, our multi-platform portfolio enable us to cater to a wider range of user hybrids and preferences. While Kugou Music and QQ Music offer comprehensive premium services to highly engaged users with a strong willingness to pay, light versions such as Bodian Music and Kugou Concept to our casual listeners effectively. Third, we are integrating social features to amplify users' reach and boost user acquisition, conversion and engagement. In quarter 4, QQ Music introduced Weverse DM onboarding 170 artists from HYBE and other labels to broaden artist-fan interaction channels. Bubble upgrade is functionality based on intelligent song recognition feature that automatically detects song titles, screen shots or links shared by artists and enables 1 type playback. Together with the launch of live streaming for domestic artists, these enhancements drove higher use time spent and retention. It's also worthwhile to mention that this year's new music report campaign added handwriting letters and AI-generated voice messengers from artists further strengthening users' engagement and encouraging widespread sharing as our expanding user cases result in broadened audience reach. We remain focused on harnessing AI to import music creation and elevate user experiences. From music creation and production to distribution and consumption, we are making music consumption more fun and personalized. First, our AI tools are interested in reaching content supply. Today, over 10 million users and more than 150,000 professional creators use our one-stop AI music production platform. Features such as track refinement and AI-generated vocal demos accelerate music creation. In addition, AI auto-capture chorus highlights and generated video clicks based on lyrics, delivering more engaging audio video experiences through quick listen mode. Second, we are deepening core operation across the broader Tencent ecosystem to enhance content distribution and consumption. We enhanced our self-developed multimodal large model driven our recommendation driven stream share to a record high. We also deepen collaboration with Weixin Video accounts by co-creating trends -- trending music task and adding BJI music links in the comment section for the joint promotion of hit songs. Meanwhile, Yuanbao has also been embedded into QQ Music. This has not only boosted user engagement, but also provided deep insights into our user preferences and needs, thereby improving distribution efficiency. Third, we have integrated AI across the end-to-end music consumption journey, powered by Yuanbao, QQ Music's AI agent has involved into a system, allowing users to handle complex multi-step task using natural language comments. For example, beyond music discovery, the AI agent provides direct access to digital albums and merchandise purchase, creating a intent to action experience that have driven conversion. Last but not least, we continue to scale and differentiate our SVIP membership, capturing new audience segments and leveraging our uniquely comprehensive ecosystem to deepen music consumption and unlock substantial monetization opportunities, particularly through our growing fan-based economy. As we constantly deepen collaboration with music labels, artists and introduce new high-value benefits, our SVIP users surpassed 20 million milestone, confirming the success of our strategy. Our further enriched membership benefits fulfill the diverse needs of a broadened user base during both SVIP sign-ups and retention. For example, the appointment of Ryan Ding, Ding Yuxi, Ju Jingyi, Karry Wang, Wang Junkai as QQ Music SVIP brand ambassadors. And Liu Yuning as Kugou's Music first ever brand ambassador, paired with limited edition physical and virtual gifts for SVIP subscription. The brand organized SVIP ticket package for the Annual Gala of Melody Journey 2 and the QQ Music Top Music Night 2026, also result in effective SVIP adoption. We also grew our Starlight Card roster to include Korean artists like Ivy and NMIXX, enriching the card pool and attracting fan participation. At the same time, future-related perks continue to drive SVIP acquisition and retention. Highlights include QQ Music co-branded TTIX and the proprietary NAC sound format. Kugou music's scenario specific DTS song effects and festival and the co-branding skins with renowned artists like Chen Yixun, Silence Wang Sulong, and Zhou Shen. All of this added to a more immersive listening experience and a deeper fan engagement. To summarize, our commitment to product excellence, innovation and value creation has propelled resilient growth in a dynamic and competitive market environment. Looking a high, we remain dedicated to this long-term user-centric approach, sitting at the forefront to capture new growth in the sustainable music ecosystem. With that, I would like to turn the call over to Shirley, our CFO, for a deep dive into our financials.

Thank you, Ross and greetings to all. Let me now turn to our financial results. We closed the 2025 with outstanding financial performance in both top line and bottom line. We achieved a robust growth in music advertising top line performance and art-related merchandise sales and successfully implemented our ROI focused approach for promotional expenses. I'll first talk about Q4 2025 performance. In Q4 2025, our total revenues grew 15% year-on-year to RMB 8.6 billion, driven by strong growth in online music services. Music subscription revenues continued growth momentum up by 13% year-on-year and reached RMB 4.6 billion in Q4 2025. Revenues from music service other than music subscription were RMB 2.5 billion, up by 41% year-on-year. For music subscription revenues, as Ross discussed earlier, we have built a multi-prolonged membership system that includes a supported membership, standard membership and SVIP to serve users with different needs and preferences. This system has been well received and a successfully need to increase user retention and growth in music subscription revenues. We continuously enrich privileges and benefits and provide limited time opportunities for our SVIP members. In Q4, we appointed Liu Yuning as Kugou first ever brand ambassador, together with and limited edition physical and virtual gift sales. In addition, we offer the priority ticketing for the new Melody Journey 2 Gala entrance tickets for our SVIP members. Advertising revenue continued its strong growth strategically, both year-on-year and sequentially, primarily driven by the following. First, our AD supported model continued its robust growth as a result of increased number of advertisers, higher entrance fees and higher ECPM. Double 11 Shopping festival also contributed to the sequential revenue growth. Second, sponsorship advertising achieved strong growth. Off-line performance and music festivals have broadened our user scenario and effectively attracted more brands, thereby driving growth in sponsorship advertising revenues. Over the past few quarters, our off-line performances and artist-related merchandise sales have made a significant progress and delivered impressive results. In Q4, we hosted 2-brand shows in Taipei for G-Dragon and provided artist-related merchandise sales during the show, which were exceptionally well received. We also collaborated with Silence Wang to deliver a series of successful concerts, providing fans with distinctive experience. Meanwhile, we have established cooperation with strategic artists across music promotion of brand performances and artist-related merchandise to provide a more immerse experience for fans and help enrich privileges of SVIP membership. Revenues from social entertainment service and others were RMB 1.5 billion down by 5% year-on-year. Our gross margin in Q4 2025 was 44.7%, up by 1.1 percentage points year-on-year, which was mainly attributable to strong growth in music subscription and advertising revenues, alongside a lower revenue sharing ratio in social entertainment services. As we continue to invest in new business such as off-line performance and artist-related merchandise sales, revenue mix between music subscriptions under this new business may cause fluctuations in overall gross margin. Moving on to operating expenses. They amounted to RMB 1.2 billion representing 14.4% of our total revenues in Q4 2025 compared with 15.7% in the same period of last year. Selling and marketing expenses were RMB 266 million, up by 7% year-on-year, primarily due to higher channel spending and content promotion expenses. We will keep monitoring market conditions and increase content promotion and the channel spending as needed with ROI focused financial discipline. General and administration expenses were RMB 981 million, up by 6% year-on-year, primarily due to growth in employment-related expenses. Our effective tax rate for Q4 2025 was 70.5%. For Q4 2025, our net profit increased by 10% to RMB 2.3 billion and net profit attributable to equity holders of the company increased by 13% to RMB 2.2 billion. Non-IFRS net profit increased by 8% to RMB 2.6 billion and the non-IFRS net profit attributable to equity holders of the company increased by 9% to RMB 2.5 billion. Our diluted earnings per ADS this quarter was RMB 1.41, up by 12% year-on-year, and non-IFRS diluted earnings per ADS was RMB 1.6, up by 9% year-on-year. As of December 31, 2025, our combined balance of cash, cash equivalents, term deposits and short-term investment was RMB 38 billion, as compared to RMB 36.1 billion as of September 30, 2025. This combined balance was affected by changes in the exchange rate of RMB to USD at different balance sheet dates. Next, I would discuss our performance for the full year of 2025. Total revenues were RMB 32.9 billion, up by 16% year-over-year. Revenues from online music service for RMB 26.7 billion, up by 23% year-over-year. The increase was driven by strong growth in music subscription revenues supplemented by growth in revenues from off-line performances, advertising services and artist-related merchandise. Our music subscription revenues were RMB 17.7 billion, up by 16% year-over-year, primarily driven by continuous expansion of membership priorities, such as early access to live performances, artist-related merchandise and a wider range of premium offerings. Revenues from social entertainment service climbed by 7% year-over-year. Gross margin in 2025 was 44.2%, up by 1.9 percentage points year-over-year due to the reasons discussed early. Total operating expenses for 2025 were RMB 4.9 billion up by 4% year-over-year primarily due to growth in employee-related expenses and higher content promotion expenses and channel spending. In 2025, Tencent net profit increased by 60% to RMB 11.4 billion and the net profit attributable to equity holders of the company increased about 66% to RMB 11.1 billion. We have recognized a gain of RMB 2.4 billion being the disposal of an associate in the first quarter of 2025. Non-IFRS net profit increased by 22% to RMB 9.9 billion, and the non-IFRS net profit attributable to equity products of the company increased by 25% to RMB 9.6 billion. In March 2026, we declared a cash dividend of U.S. dollar per ordinary share or USD 0.24 per ADS for the year ended December 31, 2025. The cash dividend of approximately USD 368 million is expected to be paid in the second quarter of 2026. Finally, I'll continue with some remarks on the outlook. Looking ahead, we will continue our strategy to invest in content and technology. We will keep focusing on IP development and sales per use content while advancing innovative integrated products with content and the platform to build a greater and more dynamic news and entertainment ecosystem. We remain confident in the health of our business and are committed to delivering returns for our shareholders. This concludes our prepared remarks. Operator, we are ready to open the call for questions.

[Operator Instructions] And the first question comes from the line of Alicia Yap from Citigroup.

[Foreign Language] In light of the AI wave and also the growing industry competition, what is the company's strategic growth outlook for 2026? And how does the company plans to capture the opportunities and also address the challenges that arise?

[Interpreted] Thank you, Alicia, for your questions. And I will try to answer it from both of the TME's internal and external perspective. Internally, first of all, I think that TME has delivered a very solid results, including both top line and bottom line in 2025, with a healthy growth of subscription and impressive momentum across our non-subscription offerings. In particular, our non-music subscription business continued to grow and scale, further endorsing our content platform flywheel. And for the music subscription side, as we mentioned, we have built a 3-Tier membership system to drive effective member conversions, strong engagement and a deeper wallet share. Our SVIP continue to scale and surpassing 20 million SVIP subscribers in just 2 years. So we piloted our advertising membership in late 2025 as well and which allowing us to compete, broaden and attract new audience setting the stage for long-term growth. On the non-subscription side, I think that we have further expanded deepening the collaborations with artists and labels and penetrated further into the off-line experiences such as the live concerts and merchandise. We believe it is just the beginning. The initiatives are important to enrich the SVIP benefits and allowing us to unlock new growth possibilities and further strengthening our competitive advantage as well. From the external perspective, I think that the competition is not new to us, but our historical performance has proven that we have always remained agile to compete effectively. We remain focused on long-term value creation, and we believe that our unique content and platform strategy will continue to deliver the high-quality growth in a healthy way. Whether it's home or what we firmly believe that content will lasting value is IP-driven and robust IPs will always enjoy the long legacy and their value will be further enhanced through bought-in distribution, cross-media collaborations and diverse monetization opportunities and the rapid revenue growth of our expansive non-music subscription services over the past 2 years illustrated our strength and capability in this regard. So in year 2026, our subscription revenue will experience some short-term pressure due to the intensive competition. But we believe that our 3-tier membership and vibrant non-subscription services will allow us to grow historically, holistically and also sustainably. And the last point that I would like to address in the 2026 outlook is about AI. We continue to embrace AI to improve our user experience on our platform and also using AI technology as a tool to improve the efficiencies in content creation and promotion. With our proficiencies on IP creation and management, we believe that with the help of AI, it will further strengthen our competitive advantage and create business value in the long run.

And the next question comes from [indiscernible].

[Foreign Language] And congrats on the pretty solid financial in 2025. So my question is about AI. So actually, I want to seek management's thoughts around the AI impacting to the overall use of the value chain. How would TME embrace AI as we integrate into our products and our ecosystem and the management thinking around AI impact to music label, streaming platforms and user behavior?

[interpreted] Under the current circumstances, especially in the recent 3 months, we're aware of the fact that AI is profoundly changing not only music industry, but also the overall industry in terms of content creation, distribution, et cetera. We've already seen some of the hit songs in the recent 3 months created by AI. It brings huge challenge to stream music streaming platforms because for us, we're still trying to promote the songs, especially the original songs. We'll continue to embrace the AI technologies. Just now I mentioned music creation, we will continue to provide the most effective, most convenient creation tools for creators so as to create a very low threshold for creators. Music comment remains the most important thing because nowadays apart from the human created content for music will continue to give more distribution resources to that. Apart from that, we'll also give some traffic to the AI generating content. We've noticed that there are a lots of low cost, even some content with some risks of copyright infringement. And even some of the content is ready infringing original copyright and we're spending lots of efforts in educating these markets so as to serve a positive driver to this market. Yes, I mean we are still in a leading position in the music industry. We're also one of the 31st company to fully integrate AI into the music industry. We've already provided a one-stop AI music production tool over tens of millions of average users and over 150,000 professional creators already using our tools. We're also one of the very first of platforms here at home to achieve very good commercial value on AI-generated content. We believe with the further improvement of AI generated tools, we can continue to tap more potential for customer and also tap more commercial value. More importantly, we're also operating our AI agent similar to Hu Hu. We hope that with this AI agent, it could help our users to fulfill their target on our platform. TME indeed faced a lot of challenging stuff lost by AI. It is a big challenge, but we believe it remains to be a huge opportunity for us. We're embracing AI, and we believe AI will serve as a targeted brand to TME. Some additional comments apart from what just Ross discussed. So at TME, we're trying to make user creation more convenient and for us to provide a better user experience. At present, we can see that AI tool indeed is making music creation and production not convenient, but on the copyright, it's not just about size. And IP also matters a lot. So in the future, we'll also give more input into IP creation. The addition of our off-line music experience also matters like live concert, fan-based economy, merchandise and these things can be partly replaced by AI technologies. We will keep investment or giving more input into optimizing our IP. And in the meantime, we will also leverage AI to improve the efficiency of music production.

And the next question comes from Thomas Chong from Jefferies.

[Foreign Language] We talked about during our prepared remarks, the investment in content, IP development, innovative products but if we look at it from a financial perspective, how should we think about the trend in terms of our GP margin, the trend for our OpEx and the earnings growth for this year?

[Interpreted] In general, our 2026 GP will stay flat with 2025. We'll be a little bit lower than 2025. Number one, with continuous growth of our subscription business and advertising business, and we'll continue to optimize our costs and which will boost the ROC. So with the sustained growth of sub and advertisement business, it will contribute positively to our GP margin and total GP profit. In addition, the recent adjustment of our iOS commission fee also serves as a positive driver for our GP market. In addition, number three, we will continue to strengthen our product cooperation with the high-quality IP and also have more self-produced content so as to create a better competitive -- competitiveness. Number four, we will continue to deepen and expand our collaboration with the top-tier labels and artists and so as to create more revenue on live concerts and merchandises. This will enrich and expand our ways of monetization. Well, at the beginning of the development of this business, it may have some minor negative impact on our GP margin. Well, with the changes of the revenue mix, there might be some seasonal fluctuations of our GP. In the long run, with more services needing to diversify demand from users, we will also generate a higher ARPPU of each user. Input into IP and copyright will also help improve our content cost. The deep bundling with the important industrial players will also provide diversified services to us and will also help improve our efficiency of each business. We believe in the long run, we will keep growing our top line and GP margin, and we believe our GP margin will stay at a sound and steady level. About our operating profit, we have to admit that in the face of current fierce competitive landscape and plus the changes brought by AI as we just discussed and we will continue to give more input into content and with our strategic operating and we will keep improving our one-stop music services to our users. We enhance our users' awareness so as to maximize the value of music. We will not just spend on marketing by a very large margin, whereby -- a very large volume. We will still be focused on our core value, which is our users and our ecosystem, and we will keep investing in self-produced content and to improve our channel cost. And based on the ROI calculation, and we will continue to test more value on our paid users so as to achieve a steady and sustained growth. Into 2026, our total net profit will be improved and the margin will be similar to 2025, might be a bit lower than 2025.

And the next question comes from Alex Yao from JPMorgan.

[Foreign Language] I have 2 questions. Number 1 is regarding the impact from AI generated music content, particularly on the demand side. Are we seeing AI content generated additional and incremental demand for music consumption or this is more of a zero-sum game in terms of total consumer time spend on music content? And second question is regarding the royalty pool. If medium to longer term, the AI will demand a price the music content generation, will that gradually eat into the royalty pool from a monetization perspective? And if that's the case, should we consider changes to our business model to fit the new supply side of the change?

[Interpreted] These are very good interesting questions. Number one, I think that in nature, AI is already changing the nature of the music industry. In the past, we saw a lot of hit songs from the Internet, but you never know who is the singer behind it. In the very recent 3 months, very interestingly enough is we do see some hit songs on many music rankings. Well, we have to know the short-form video side have already given a big boost to these AI generated music. But most of the songs are not original songs. So if you look at this sector, the AI generated content are very original. So as you can see on that, most of the songs are to re-sung. So basically, the quality itself is really changed. So what is changing is the sound quality. In the long run, the re-sing by AI will experience a rapid development. But in terms of the question you just asked about the consumption of the original songs, we are not aware of big changes. As to the UGC or well, you may see a similar trend to the UGC texts and videos, which is to say that maybe in the future, many people can make music like there -- they can take pictures and videos now. Well, if you look at Facebook, TikTok, or Douyin, well, it's maybe well distributed among the social media, just between the familiar users. But if you look at the copyright royalty or the revenue sharing as it comes from PGC or OGC. So it's the same for the music industry. So my opinion is that UGC will be well distributed among the familiar users. But in terms of royalty and revenue sharing, we do not see material changes. We are spending a lot of efforts trying to make a platform to allow our users to create or produce music and we hope that in the future on TME platform, we can also make a social platform about music content.

[Interpreted] I want to add some additional comments. First of all, this question really deserves more thought, and I think this is also a critical question. And just a follow-up by what Ross said, AI-generated music or content, if it is still sung by human sound, while the revenue sharing mechanism will remain the same with traditional model. If this is what wholly AI made, while you have a different royalty sharing model. But on those UGC platform, maybe they have to adopt like incentive model or something else, but it doesn't generate any material change or impact on the current business.

Okay. We will have time for 1 more question. It goes to [ Maggie ] from CLSA.

Since this is the last one, I'll get a housekeeping one. Wondering if there's any update you can share with us regarding the proposed Ximalaya acquisition deal. And partly relating to that what's management latest thought on the share repurchase program, we noticed that there's still a large quota left?

[Interpreted] Well, we're still communicating with the regulator on the Ximalaya deal. If there is any update, we will disclose at that point.

[Interpreted] We have always valued our shareholder return. This year, as you can see, our dividend payout is far higher than last year, which shows strong emphasis on shareholders. Currently, about the share buyback will stick to the previous plan, and we will respond to market needs while meeting the regulatory requirements.

Thank you. Thank you, everyone, for joining us today. If you have any further questions, please feel free to contact the IR team and this concludes today's call. And again, thank you, and look forward to speaking to you next quarter.

Thank you very much.

Thank you.

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