HANGZHOU, China, Aug. 22, 2024 /PRNewswire/ -- Cloud Music Inc. (HKEX: 9899, "NetEase Cloud Music" or the "Company"), a leading interactive music streaming service provider in China, today announced its financial results for the first half of 2024 ended June 30, 2024.
Summary of Key Financial Metrics (RMB in thousands, unless otherwise stated)
Six months ended 30 June
2024
2023
(Unaudited)
(Unaudited)
Revenue
4,070,493
3,908,380
Gross profit
1,425,731
965,147
Profit before income tax
813,578
311,961
Profit for the period
809,949
293,750
Non-IFRS measure:
Adjusted net profit (1)
880,749
331,893
First Half 2024 Key Financial Highlights
Revenue was RMB4.1 billion, an increase of 4.1% compared with RMB3.9 billion for the same period of 2023.
Online music services:
Revenue from online music services was RMB2.6 billion, an increase of 26.6% compared with RMB2.0 billion for the same period of 2023.
Revenue from sales of membership subscriptions increased to RMB2.1 billion, driven by an increase in monthly paying users of online music services.
Social entertainment services and others:
Revenue from social entertainment services and others was RMB1.5 billion, compared with RMB1.9 billion for the same period of 2023.
Gross profit was RMB1,425.7 million, an increase of 47.7% compared with RMB965.1 million for the same period of 2023.
Gross margin improved to 35.0 % from 24.7% for the same period of 2023, owing to our increased business scale, strong monetisation of our core online music business that lead to ongoing operating leverage, as well as a one-off adjustment of certain copyright costs that boosted the gross margin by approximately 2.6 percentage points for the first half of 2024.
Net profit was RMB809.9 million, compared with net profit of RMB293.8 million for the same period of 2023.
Adjusted net profit was RMB880.7 million, compared with adjusted net profit of RMB331.9 million for the same period of 2023.
Note:(1) Adjusted net profit is defined as profit for the period attributable to the equity holders of the Company adjusted by adding back equity-settled share-based payments as appropriate.
Business Overview
Coming into 2024, we remained steadfast in prioritizing development in our core music business and fostering a long-lived, thriving community. We continued to propel quality development across our music-centric ecosystem, strengthening our music-centric monetisation, resulting in improved profitability. Our appeal to users was enhanced due to our premium offering enhancements, such as improving our content ecosystem and personalized distribution, adding innovative features, and strengthening community attributes. These successful efforts, including a recent comprehensive upgrade of the "NetEase Cloud Music" app, helped us further augment our unique community and deepen user engagement. Combined with advanced membership privileges offered, we delivered solid growth in our subscription-based memberships, driving monetisation momentum from our core online music business.
During the first half of 2024, we continued to engage users across our leading music-inspired community. Our total user base remained largely stable, with a DAU/MAU ratio (daily active user/monthly active user ratio) consistently staying above 30%. Our growing online music subscriber group is particularly well-engaged on our platform. Along with our unique music- inspired community, personalised recommendation is one of our key focuses and the primary goal of our recent product upgrade is to reinforce these long-term differentiations. In our app's new version, we further improved users' music discovery and consumption via enhanced personalised recommendations and innovative features for a premium listening experience. Additionally, we continued to cultivate our music-centric community centred around our iconic Comments section, leading to increased community content generation and consumption, as well as more user interactions amid a revitalized community atmosphere. These efforts have resulted in improved user engagement, i.e., average time spent listening to music within our mobile app.
In the first half of 2024, we continually broadened our content offerings for our diverse audience. With the addition of major Korean music labels like JYP Entertainment and Kakao Entertainment, we continued rounding out our copyrighted content library. Combined with our strong support for independent artists and enhancements to our in-house music offering, we have created a differentiated content ecosystem. In addition to top-tier music content, we are fuelling growth in our signature music genres, such as hip-hop, through initiatives across copyrighted content collaboration, independent music cultivation, and in-house music production.
We worked diligently to strengthen our music-centric monetisation capabilities during the first half of 2024, achieving solid growth momentum year-over-year. Our revenue from subscription- based memberships continued its healthy upward trend with a 25.5% year-over-year growth, driven by an increase in the number of subscribers. We successfully introduced premium offerings, such as expanded content and innovative features, broadened membership privileges (including various IP-themed music players and a new interpersonal feature, etc.) and joint programs with external partners, as well as innovative promotional campaigns. Notably, membership retention rates, time spent and activity ratios were all improved across our expanding, high-quality subscriber base. In addition to subscriptions, we strengthened our advertising commercialisation capabilities during the period, supported by enhanced operational efficiency and optimized algorithms for performance- based ads, as well as ...
