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China’s Tencent Music Entertainment Group (TME.N) beat Wall Street estimates for quarterly revenue on Monday, as a wider content library led to a surge in paid subscribers for the company’s music streaming service.

The company has signed multiple partnerships with international and domestic music labels to expand its premium user base. 

On Monday, it also extended its multi-year licensing agreement with music company Universal Music Group (UMG), home to Taylor Swift and The Beatles, while also announcing a new joint venture music label. 

In March, a consortium including Tencent Music completed a 10% stake purchase in UMG. The deal allowed the China-based music streaming company’s users access to more U.S. artistes, and UMG to tap into the Asian market, including top-selling “K-Pop” Korean pop stars.

Tencent Music, controlled by Chinese tech giant Tencent Holdings Ltd (0700.HK), said paid users of its online music service rose 52% to 47.1 million in the second quarter ended June 30. 

In comparison, investor and peer Spotify Technology SA (SPOT.N) reported 138 million paid users in the quarter. 

Unlike Spotify, Tencent Music generates only a part of its revenue from music subscription packages and relies heavily on services popular in China such as online karaoke and live streaming. 

Revenue from Tencent Music’s social entertainment services, the largest unit that house karaoke platforms, rose 8.6% to 4.71 billion yuan.

Net income attributable to shareholders rose 1.3% to 939 million yuan ($134.89 million) from 927 million yuan a year earlier. 

Revenue jumped 17.5% to 6.93 billion yuan, beating estimates of 6.85 billion yuan, according to IBES data from Refinitiv.

Reuters

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