NetEase Cloud Music Inc. Reports Fiscal Year 2024 Financial Results

PR Newswire

HANGZHOU, China, Feb. 20, 2025

HANGZHOU, China, Feb. 20, 2025 /PRNewswire/ -- NetEase Cloud Music Inc. (HKEX: 9899 or the "Company"), a leading interactive music streaming service provider in China, today announced its financial results for the fiscal year 2024 ended December 31, 2024.

Summary of Key Financial Metrics

(RMB in thousands, unless otherwise stated)

 
                             Year ended 31 December 
                               2024         2023 
                            -----------  ----------- 
                            (Unaudited)  (Unaudited) 
Revenue                      7,950,146    7,866,992 
Gross profit                 2,681,512    2,102,670 
Profit before income tax     1,570,255     767,679 
Profit for the period        1,565,369     734,182 
Non-IFRS measure: 
Adjusted net profit (1)      1,700,078     818,500 
 

Fiscal Year 2024 Key Financial Highlights

   -- Revenue was RMB8.0 billion, an increase of 1.1% compared with 
      RMB7.9 billion in 2023. 
 
          -- Online music services: 
 
                 -- Revenue from online music services was RMB5.4 billion, an 
                    increase of 23.1% compared with RMB4.4 billion in 2023. 
 
                 -- Revenue from sales of membership subscriptions increased to 
                    RMB4.5 billion from RMB3.6 billion in 2023, driven by an 
                    increase in monthly paying users of online music services 
                    with the enhanced product and content offerings of our 
                    membership services. 
 
          -- Social entertainment services and others: 
 
                 -- Revenue from social entertainment services and others was 
                    RMB2.6 billion, compared with RMB3.5 billion in 2023. The 
                    decline was primarily attributed to a more prudent 
                    operational approach for our social entertainment services, 
                    along with a focused emphasis on core music business. 
 
   -- Gross profit was RMB2.7 billion, an increase of 27.5% compared with 
      RMB2.1 billion in 2023, due to increased revenues from online music 
      services and continued improvement in cost control measures. 
 
   -- Gross margin improved to 33.7% from 26.7% in 2023. A one-off adjustment 
      of certain content licensing fees increased the gross profit margin by 
      approximately 1.3 percentage points in 2024. 
 
   -- Net profit increased by 113.2% to RMB1,565.4 million, compared with 
      net profit of RMB734.2 million in 2023. 
 
   -- Adjusted net profit reached RMB1,700.1 million, compared with adjusted 
      net profit of RMB818.5 million in 2023. 

Note:

(1) Adjusted net profit is defined as profit for the year attributable to the equity holders of the Company adjusted by adding back equity-settled share-based payments as appropriate.

Business Overview

Throughout 2024, we focused intently on strengthening our core music business while nurturing an enduring and vibrant music-centric community. By enriching our premium offerings such as expanding our content library, refining personalised recommendations, introducing innovative features, and fostering a stronger sense of community, we further deepened user engagement. Additionally, the rollout of enhanced membership benefits spurred rapid growth in our subscription-based memberships, further driving robust revenue growth in our core online music business and profitability.

We continued to engage users across our leading music-inspired community. Our total monthly active users (MAUs) steadily increased and our DAU/MAU ratio remained above 30%. We further enhanced music discovery and consumption via improved personalised recommendations and comprehensive audio-visual experiences. We broadened interactive scenarios across various user-generated content (UGC) formats to further cultivate our music-centric community, driving increased community content generation, consumption and user interactions. Through these efforts, users became more engaged and spent more time on our mobile app. We also continued to expand our music consumption scenarios by partnering with several NetEase games.

Through our rich library of licensed music and original music, we have built a comprehensive and distinctive content ecosystem. In 2024, we continually expanded our music content library, emphasising trending music interests among younger generations while maintaining a focus on improving efficiency. Additions from major Korean music labels, including JYP Entertainment, Kakao Entertainment and CJ ENM, continued to round out our library. We remain dedicated to promoting the growth of high-quality Chinese original music. In 2024, we celebrated the 10th anniversary of our independent musician platform. We have continuously enhanced our in-house music. In 2024, several in-house tracks gained popularity, such as "Follow" ( ).

In 2024, our efforts to strengthen our music-centric monetisation accelerated our growth in online music revenue year-over-year. Revenue from subscription-based memberships grew 22.2% year-over-year, fuelled by an increase in our subscriber base, though slightly offset by a dilution in monthly ARPPU (average revenue per paying user). We rolled out premium offerings, including expanded content and cutting-edge features, expanded membership privileges (such as functional tools, social features and dress-up privileges) and joint programs with external partners. Notably, membership retention rates, time spent and activity ratios grew year over year across our rapidly expanding subscriber base.

We further improved our profitability in 2024, having benefited from economies of scale from our increased subscriber base, strong monetisation of our core online music business and ongoing cost optimisation initiatives. Our gross margins reached 33.7%, up from 26.7% in 2023, and our adjusted net profit surged to RMB1,700.1 million in 2024, more than doubling from RMB818.5 million in 2023.

Looking ahead, our focus will remain on delivering exceptional music experiences, fostering a thriving community, elevating user engagement, and strengthening our operational capabilities. Our strategic vision includes the following key initiatives:

   -- Further diversifying and enhancing our differentiated content offerings 
      with greater efficiency: We plan to deepen our collaboration with 
      copyright holders, boost our independent artist incubation capabilities 
      and elevate our in-house music production competencies, emphasising our 
      strengths in key music genres; 
 
   -- Cultivating our dynamic music-driven community ecosystem: By enriching 
      our offerings with innovative interactive features and expanding 
      opportunities for user communication and connection, we will create more 
      engaging and immersive experiences for our user community; 
 
   -- Driving user willingness to pay for and subscribe to premium 
      offerings: Through enhanced user experiences, deeper engagement, improved 
      membership benefits and expanded consumption scenarios, we will 
      strengthen the appeal of our premium offerings. 
 
   -- Optimising profitability through disciplined approach to operations: We 
      will continue to focus on cost optimisation, operating efficiency and 
      disciplined cost management to achieve sustainable growth. 

Comprehensive and differentiated content ecosystem

We actively broadened our content library to offer users a comprehensive and diverse range of licensed and original music. In 2024, we maintained a steady growth of our music library in terms of the number and variety of music tracks. In addition to rounding out top-tier music, we focused on promoting music genres favoured by music lovers on our platform.

Enhancing partnerships with copyright holders

Throughout the Reporting Period, we remained dedicated to forging expansion of our collaborations with music copyright holders in a cost-effective manner.

   -- Amplifying offerings in signature music genres. Music genres such as 
      hip-hop, rock, Japanese ACG and Western music have surged in popularity 
      on our platform. We broadened our content library in those signature 
      genres, including a newly signed strategic partnership with Modern Sky 
      Entertainment. We are also featuring new songs from rappers like KeyNG, 
      VaVa, AIR, Sha Yiting ( ), as well as rock band Penicillin and artist Dou 
      Wei ( ). Additionally, we are pursuing copyright collaborations with 
      Western artists, particularly in electronic music, hip-hop, folk and rock 
      genres, including a recent agreement with Galen Grew. 
 
   -- Expansive catalogue of music labels. We continued enriching our catalogue 
      of music labels, forming new partnerships with major domestic and 
      international labels and artists. We were pleased to sign copyright 
      agreements with major K-Pop labels, including JYP Entertainment and CJ 
      Entertainment. Additionally, we established a strategic collaboration 
      partnership with Kakao Entertainment. Moreover, we signed a copyright 
      cooperation agreement with Li Jian ( ), authorizing the full release of 
      his classic works including "Legend" ( ) and "Baikal Lake" ( ). 
 
   -- In-depth collaborations with our copyright partners. We worked closely 
      with copyright holders to enhance both content distribution and 
      commercialisation. These efforts drove remarkable digital and physical 
      album sales on our platform. 

Strengthening our leading independent artists' ecosystem

We are committed to investing in initiatives that aid musicians in music creation, promotion and financial support to help them grow their influence and revenue. As of the end of December 2024, our platform had over 773,500 registered independent artists who contributed approximately 4.4 million music tracks. In 2024, our NetEase Musician platform celebrated its 10th anniversary. To celebrate, we launched a series of activities that showcased musicians' 10-year journey, fostering growth, belonging and artists' connection with fans on the platform.

   -- Supporting musicians in content creation. Our diverse range of support 
      throughout the creative process helps artists actualise their creative 
      potential, such as our all-in-one AI music creation tool, NetEase 
      Tianyin. We also organised co-working camps to bring together emerging 
      music talents for collaboration. At our recent in-person camp, we hosted 
      top overseas musicians like Marc Dold and Yuto for the first time to 
      conduct masterclasses and offer guidance to aspiring artists. 
 
   -- Exploring and improving the exposure of musicians and their work. In 
      2024, our region-oriented music promotions included our renowned City 
      Tour Guide special planning series ( ), for which we released the 
      Northeast Special Edition, and launched a new event in Guizhou and 
      Suzhou. Our Project Cornerstone ( ) released nine compilation albums 
      featuring fresh talent from diverse regions. To foster talent in our 
      signature music genres, we introduced the Chinese Rap Rookie Award ( ), 
      focusing on identifying rising rap talent. We released a new project "Rap 
      Map" ( ) to help users better understand Dialect rap. We also launched 
      the "Nation" ( -- ) project, featuring a fusion of ethnic and 
      contemporary popular music. 
 
   -- Helping musicians realise commercial value. We rolled out the latest 
      phase of our renowned musician support project, "Project Cloud Ladder 
      2024" ( 2024), which further bolsters financial backing for musicians by 
      offering a more attractive financial settlement mechanism and a broader 
      scope of incentives. 

Developing and promoting differentiated in-house music

Drawing on our musical expertise, diverse user base and deep user insights, our in-house studios focused on producing high-quality music content. This approach caters to the diverse preferences of different audiences, particularly for the younger generation who is eager to discover new high-quality music. Multiple tracks developed in-house have gone viral on both our community and external platforms.

In 2024, our in-house studios successfully produced and popularised multiple hit songs. We focused on top music genres, such as hip-hop, and produced multiple popular hip-hop tracks, including "Follow" ( ), "Hai Shi Hui Xiang Ni" ( ), "5:20 AM" ( 5: 20 AM ), "Xie Tian Xie Di" ( ) and "Ren Shang Ren" ( ). Our in-house version of Dehors has gained significant popularity. The song combines Cantonese and French languages, creating a unique musical fusion that appeals to a wide range of audiences. Other popular new songs include "Blooming Bauhinia" ( ) and "Yu Shi" ( ), among others.

Diversified audio-based content offerings

Beyond music tracks, we have been actively broadening long-form audio offerings on our platform. In 2024, we achieved steady growth in long-form audio content consumption, with the average listening time per user of long-form audio on our platform having increased significantly by 35.8% year-over-year.

   -- PUGC/UGC -- podcast. By focusing on music-inspired content, podcasts 
      provide an enjoyable avenue for fans to discover quality tracks and 
      lesser-known songs. During the Reporting Period, we launched several 
      customised podcast series interpreting different music genres, such as 
      folk and rock. 
 
   -- PGC -- audio books & radio dramas. We have been expanding our library of 
      PGC long-form audio content in a cost-effective way by creating more 
      popular self-produced content. We introduced Mo Yan's latest audiobook 
      "Not Blown Down by the Strong Wind" ( ) and launched a special project. 
      In this project, Mo Yan addressed young users' concerns through audio 
      recordings, offering a unique companion experience. 

Product innovation and community ecosystem

Throughout 2024, we focused on product innovation and reinvigorating our unique community experience. Since early 2024, we achieved significant results through a comprehensive upgrade to the NetEase Cloud Music App, particularly on emphasising personalised content recommendations and music centric community. Our ongoing efforts elevated the user experience, increased their resonance with our community and boosted music interaction, which led to improved user engagement, such as increased time spent on our mobile app.

Optimising users' music discovery and listening experience

We intensified our focus on improving users' music discovery and consumption experiences by enhancing personalised content recommendations and innovative features that elevate our premium music-inspired audio-visual offerings.

   -- Music content discovery and distribution. We continuously strengthened 
      our app's personalised recommendations functionality, including: 1) 
      enhancing recommendation capabilities by integrating user consumption 
      behaviour across various apps, 2) improving the recommendation function 
      tailored for newer users, and 3) adding new content dimensions for music 
      recommendations, such as playlists based on masterpieces, emotions and 
      genres. These initiatives have increased the efficiency and coverage of 
      content 
 
   -- Enhancing the music consumption experience. We are delving into extended 
      music consumption, and adding more audio-visual and scenario-based 
      features. We upgraded Music Encyclopedia and introduced innovative 
      features such as Lyric Books ( ), AI Singing and Lightbulb ( ) for song 
      recommendations. We released a range of new music player interfaces to 
      enhance the audio-visual experience, such as IP-themed players and the 
      popular Vinyl player DIY feature. 

Fostering music-inspired community resonance and connections

In 2024, we focused on the emotional impact of music to strengthen our community's music-inspired attributes. This approach improved community content consumption, interaction and creation, playing a vital role in sustaining and increasing strong user activity and stickiness.

   -- Community consumption and interaction. We further enhanced the visibility 
      of our iconic comments section in various app scenarios, by displaying 
      popular comments on the vinyl player and introducing a new player that 
      showcases selected comments. We also optimised interactive features 
      around our iconic comments section. These efforts boosted emotional 
      connections inspired by music, encouraging more user interactions. 
 
   -- Community content generation. Utilising our platform resources, we hosted 
      community activities to encourage the creation of UGC content, like music 
      comments and others. Additionally, we diversified our community content 
      by exploring the integration of music-inspired graphic and text content 
      formats. 

Expanding music consumption and communication scenarios

   -- Expanding collaboration with NetEase. In 2024, we expanded our 
      collaborations with NetEase games and online education division 
      (specifically Youdao Dictionary). For example, we introduced 
      music-inspired social interaction features in games, enhancing the 
      integrated music and gaming experience for users. These collaborations 
      boosted our brand awareness and recognition among younger users. 
 
   -- IoT layouts. We continued optimising our functionality that lets users 
      easily switch between different terminals like mobile, PC, TV and in-car 
      scenarios, effectively addressing diverse user needs and improving user 
      experience. These efforts help us improve overall user activity and 
      engagement across multiple terminals and scenarios. In 2024, we further 
      expanded in-car coverage to new brands and models such as Xiaomi, 
      Mercedes-Benz, Harmony lntelligent Mobility Alliance, and Changan. 
      Additionally, we formed a long-term strategic partnership with Great Wall 
      Motors. 

Conference Call

The Company's management will host an earnings conference call at 7:00 p.m. Beijing/Hong Kong Time on Thursday, February 20, 2025 (6:00 a.m. U.S. Eastern Time on the same day). Details for the conference call are as follows:

Event Title: NetEase Cloud Music Inc. Fiscal Year 2024 Earnings Conference Call

Registration Link: https://s1.c-conf.com/diamondpass/10044909-cc7t81.html

All participants must use the link provided above to complete the online registration process in advance of the conference call. Upon registering, each participant will receive a set of dial-in numbers, an event passcode, and a personal access PIN, which will be used to join the conference call.

A replay of the call will be accessible by phone at the following numbers and entering PIN: 10044909. The replay will be available through February 27, 2025.

 
Chinese Mainland:   400-120-9216 
Hong Kong:          800-930-639 
United States:      1-855-883-1031 
 

Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.music.163.com.

About NetEase Cloud Music Inc.

Launched in 2013 by NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), NetEase Cloud Music Inc. (HKEX: 9899) is a well-known online music platform featuring a vibrant content community. Dedicated to providing an elevated user experience, NetEase Cloud Music Inc. provides precise, personalised recommendations, promotes user interaction and creates a strong social community. Its focus on discovering and promoting emerging musicians has made NetEase Cloud Music Inc. a destination of choice for exploring new and independent music among music enthusiasts in China. The platform has been recognised as the most popular entertainment app among China's vibrant Generation Z community.

Please see http://ir.music.163.com/ for more information.

Forward Looking Statements

This press release contains forward-looking statements relating to the business outlook, estimates of financial performance, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realised in the future. Underlying these forward-looking statements are a lot of risks and uncertainties. In light of the risks and uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as representations by the Board or the Company that the plans and objectives will be achieved, and investors should not place undue reliance on such statements.

Non-IFRS Measure

To supplement our consolidated results, which are prepared and presented in accordance with International Financial Reporting Standards ("IFRS"), our Company uses adjusted net loss as an additional financial measure, which is not required by, or presented in accordance with, IFRS. We believe that this measure facilitates comparisons of operating performance from period to period and company to company by eliminating the potential impact of items that our management does not consider to be indicative of our Group's operating performance, such as certain non-cash items. The use of this non-IFRS measure has limitations as an analytical tool, and shareholders and potential investors of our Company should not consider them in isolation from, as a substitute for, analysis of, or superior to, our Group's results of operations or financial condition as reported under IFRS. In addition, this non-IFRS financial measure may be defined differently from similar terms used by other companies, and may not be comparable to other similarly titled measures used by other companies. Our presentation of this non-IFRS measure should not be construed as an implication that our future results will be unaffected by unusual or non-recurring items.

Investor Enquiries:

Angela Xu

NetEase Cloud Music Inc.

music.ir@service.netease.com

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SOURCE NetEase Cloud Music

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February 20, 2025 04:35 ET (09:35 GMT)