China’s Tencent Music revenue beats estimates on jump in paying users

China’s Tencent Music Entertainment Group topped quarterly revenue estimates on Tuesday as the Spotify-like music streaming platform benefited from growth in paying users, sending its U.S. shares 2% higher in premarket trading.

The company has been ramping up its original content slate to attract more users and stave off competition from the likes of NetEase-owned Cloud Music and Bytedance’s short-video sharing platform Douyin.

Paying users at its online music streaming service rose to 94.4 million in three months to March 31, from 88.5 million in the prior quarter, with revenues from music subscriptions soaring 30.4% year-over-year.

That helped the Tencent Holdings Ltd-controlled company, which owns platforms including QQ Music, Kuwo Music and WeSing, snap five consecutive quarters of revenue declines.

Total revenue rose 5.4% to 7.00 billion yuan ($1.01 billion) in the first quarter, beating analysts’ estimates of 6.86 billion yuan, according to Refinitiv data.

“We are glad to achieve a record-high online music paying ratio and expand ARPU for the fourth consecutive quarter. The broad appeal of our innovative advertising formats and expanded monetization toolbox have been driving our performance,” said Executive Chairman Cussion Pang.

The monthly average revenue per user (ARPU) in its online music business grew 10.8% to 9.2 yuan.

But revenue from social entertainment services and others fell 13% to 3.50 billion yuan.

Net profit attributable to equity holders was 1.15 billion yuan, compared with 609 million yuan a year earlier.

On an adjusted basis, the company earned 0.89 yuan per American depository share, compared with estimates of 0.79 yuan per ADS. Reuters