China’s Tencent Music Reports $1.32 Billion in Q2 Revenue as Ximalaya Integration Marks New Audio Push
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- Tencent Music Entertainment Group posted Q2 2026 total revenues of RMB8.93 billion ($1.32 billion), up 5.8% year-over-year, with music-related services revenue at $1.12 billion (+11%) and membership services revenue at $706 million (+8.1%).
- Ximalaya, the long-form audio platform whose acquisition closed May 18, contributed $60 million in revenue during its first quarter fully consolidated into TME's financial statements.
- TME's adjusted EBITDA (non-IFRS) reached $480 million, up 5.2% year-over-year, while non-IFRS net profit rose 4.4% to $396 million; diluted EPS per ADS came in at $0.25 versus $0.24 a year earlier.
- Tencent Music repurchased 43.5 million ADSs for approximately $400 million during the quarter, and held $6.52 billion in cash, cash equivalents, term deposits, and short-term investments as of June 30.
- Social entertainment services and others revenue declined 16.4% year-over-year to $196 million, while gross margin held roughly flat at 44.2% (vs. 44.4% in Q2 2025); the company noted Ximalaya's consolidation had a positive impact on gross margin.
- TME deepened Tencent ecosystem links during the quarter — rolling out vertical swipe-based discovery, expanding freemium access, and partnering with Weixin Video Accounts, Weixin Pay (Bodian Music, Kugou Concept), and voice-command playback via Weixin XiaoWei.
Why it matters: Ximalaya's first consolidated $60 million quarter gives TME tangible diversification into long-form audio, but a 16.4% decline in social entertainment revenue shows where the legacy model is leaking. The $400 million buyback against $1.32 billion in quarterly revenue signals aggressive capital return even as subscription growth (+11%) becomes the engine compensating for the social segment's erosion.
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