Tencent Music Entertainment Group Price & Performance (TME)

Prashin?

Thank you, Melissa. Hello, everyone, and thank you for joining our call today. 2024 marked a year of significant progress for TMD. Characterized by a return to top line growth and impressive profit margin expansion. Fueled by robust performance in online music services, our pioneering initiatives to grow and diversify our services across the music value chain, have successfully reshaped the industry landscape and enriched our ecosystem. This in turn has effectively pushed our subscriber conversion efficiencies and lifetime value. We closed the fourth quarter with advancements across key areas of online music business. As an example, addition to continued strength in music subscriptions, our advertising and artist related services will develop deliver the strong growth laying a stronger foundation for future development. As we enter 2025, we are building on this momentum to unlock further value for both creators and users alike. Our dual engine strategy combining rich content and platform innovation positions us to capture emerging opportunities and efficiencies gains across our platform. We are optimistic in the company's future growth prospects. Which is reflected in our announcement of an annual dividend of 273,000,000 US dollar. And the new and expanded share repurchase program of up to 1,000,000,000 US dollar.

At the heart of our mission is empowering musicians delighted users with exceptional content. Our vast library of content covers all music genres and almost every aspect of the music industry. Providing a seamless and holistic user experience on our platform, by the end of twenty twenty four our music and audio library exceeded 260,000,000 licensed and cocreator tracks from domestic and international labels. Up from 200,000,000 at the end of the prior year. To enhance our users' music listening experience, here are a few highlights worth sharing. Which help contribute to a new record highs of users average daily time spent.

First, we recently renewed our strategic contract with international labels, including SM Entertainment, and Kakao Entertainment, expanding our coverage of high quality music content libraries. These collaborations have also fostered a deeper cooperation in areas such as premium sound effects. Live concerts, and artist merchandise. Additionally, we have established the partnerships with renowned Chinese artists such as Faulang, and Lodaiyo. Reaching our music library with hundreds of Chinese classics and providing TMEs users head start access to new songs releases. Our industry insights and extensive resources continue to support artists in their creative journey. For example, in the fourth quarter, collaborated with our strategic partner, artist Angela Zhang, Zhang Xiaohan, to produce release, and promote her album, Conflict, our platform elevated influence, we expanded her reach to a broader audience of music lovers. Earning widespread acclaim. Additionally, we produce theme song and original soundtracks for Tencent Video blockbusters including Brimzum. And Guardians of the Da Fang. As well as for movies such as a tapestry of a legendary land, and tiger wolf rabbit. [indiscernible] These songs quickly garner the praise from music lovers and movie viewers alike. Second, we remain at the forefront in music consumption when it comes to innovation.

As an example, we transformed the fan engagement through unique digital and physical experiences, such as artist merchandise, and life experiences. In the fourth quarter, while we produced physical albums for Xiao Zhan, and Lei Zhang, Zhang Yuxin, We also provide options for users to purchase as they use merchandise along with her digital albums and create immersive experience. Such an approach not only boost the album sales, but also opened new avenues for artists to connect with fans. We also partnered with May Day, to host a groundbreaking online New Year eve concert. Which was promoted across multiple short video platforms and social medium channels. The concert success and popularity earned us broad recognition and reinforced our commitment to deliver innovative music experiences. Third, our SVIP membership remains a cornerstone of our strategy. Catering to the unique needs of our most dedicated users, by adding comprehensive privileges to our SVIP experience we saw a strong sequential growth in membership and ARPPU. For example, JJ Lin Lin Junjie's latest album, Turn of a Page. Is now available to SVIP members We have also introduced a new SVIP purse including high definition wearing of Mayday, wearkins, and Jackson Yi, [indiscernible] Online concerts.

Delivering an unparalleled experience for our most loyal members, We will roll out more VIP access meet and greet opportunities, [indiscernible] personalized experiences, and more. While empowering artists and record label to explore new ways to interact with targeted audience. Last but not least, recognize that our success is deeply tied to the well-being of our planet, people, and communities. As such, our commitment to ESG excellence is ingrained in our culture and business practice. In 2024, we make significant strides in supporting female musicians to foster a more diverse and inclusive music community. The number of female artists who support a rich 92,000, Additionally, in the fourth quarter, we partnered with the Ministry of Education and multiple NGOs to launch the writing songs for PANDAS initiative. Signed it to promote the public biodiversity awareness through the influence of music. Overall, we are pleased that we've solid performance that we have achieved it in 2024. We are looking forward to delivering more high quality growth in '25, and we'll continue to collaborate with industry partners to nurture a vibrant music ecosystem that brings people together. Now, I would like to turn the call over to Ross for more details on your overall platform development.

Ross, please go ahead. Thank you. Thank you, Akashian. Hello, everyone. In addition to our enriched content offering, our unwavering focus on exceptional user experiences and music consumption scenarios innovation. Has been a key driver of our growth. These efforts have prepared us to the forefront of China music streaming industry, and we are remain central to our future growth strategy. Further enhancing the value of music. Benefiting from our our expanding content ecosystem, and a stronger user engagement, our online music services once again delivered robust growth in the fourth quarter. Our subscriber base continued to expand and ARPPU showed solid growth year over year and quarter over quarter. Our ISO IP membership has also made a good progress with users' stickiness, notable hair, and ARPPU steadily expanding. To foster user loyalty, we have optimized the efficiency of our accommodation and our goal risk harness the AI to bolster novel user experiences. And enrich music consumption scenarios to expand our reach. This efforts led to a substantial increase in user time spent on our platform in the fourth quarter. Let me give you some key examples.

First, we import users to curate and then accumulate personal music assigns. We'd help enhancing their sense of belongs belonging and stickiness. By optimizing algorithms and improving the user interface we made music discovery more fun and efficient. This led to the stand steady growth of recommendation driven stream year over year and the quarter over quarter. Alongside a 10% year over year increase in user song collections. The latest revives to QQ Music [indiscernible] Also, private users are more intuitive and personalized way for navigation. Second, we further elevated sound quality with our AI powered audio effects and voice extraction technology. Which are resonating very well users. These features have become an important draw for our SYPE membership program. Our sound effect LIM analysis does the audio to match its song with the most suitable audio setting. Ensure an optimal audio streaming performance, Our AI voice extraction filters allows users to separate original vocals and the instrumental tracks with a single click. Users can either sing alongside their favorite artists or enjoy instrumental only mode. For karaoke sessions.

Third, continue to expand music consumption scenarios allowing users to enjoy music wherever they they are however they listen, and whatever moment they are in. During the fourth quarter, we broadened the partnership with mapping service [indiscernible] To roll out a music navigation feature providing users with a smooth and uninterrupted music streaming experience on their road. Through our in-depth collaborations with electric automakers, such as an [indiscernible] We enrich the users in car entertainment experience by introducing AI wise attraction and the make list karaoke features. We are pleased to see that our IoT use base recorded steady growth. With year over year and the quarter over quarter increases in the third fourth quarter. To better serve users, on terminal terminals on TME, We also refined the PC streaming user interface and introduced an innovative Lyricus display function in the Windows task text bar. All of which helped enhance users' music companionship. Moving on to some novel features and the fresh experiences we brought to users, through constant innovations. First, integrated the other ones' capability of DeepSake RM to enjoy a more tailored and inclusive music creation experience. For instance, [indiscernible] generation capabilities along our AI song writing feature.

Users can quickly create songs tailored to [indiscernible] We also integrated a deep sea, into our AI assistance comment sections, recommendation page, and other user touch points. This allow users to easily access interesting music information. Resale song comments in diverse styles, and enjoy a more personal personalized music experience.

Second, we launched our virtual fun community that empowers users to express their feelings for artists and music. This immersive platform co created by fans and artists, enable users to personalize profiles design communities, and engage in multi user synchronizes screen sharing and the voice chat. It has cemented the bond between artists and their followers. While driving user engagement and ecosystem vitality. Notable example in the fourth quarter include the virtual communities of JCT, and the teams in times, with their fans fan base growing significantly since the launch. Third, our interactive and the incentive will advise advertising has been effective in enable advertisers to reach a broad u music audience increasing adoption strength our users and the brand's connections. It in turn contributed strongly to our advertising revenue growth in the fourth quarter. Altogether, we have pro progressively redefined the music experience for our users. And grew our ecosystem into a thriving hub music creation, promotion, and consumption. As we look higher to 02/2022 '25, we will continue to embrace AI technologies to import innovation. Always the goal of creating the most beloved beloved music platform, for our users and the creators. With that, I would like to turn the call over to Shirley.

Our CFO, for a deep dive into our financials.

Thank you, Ross, and greetings to everyone. Let me now turn to our financial results.

In the fourth quarter of twenty twenty four, our effective monetization of online music services and operational efficiency management continued to drive robust financial results. With strong performance in our music subscription and advertising business, Revenues continued its growth trajectory and achieved an 8% year over year growth. IFRS net profit increased by 47% year over year. RMB 2,000,000,000 and the non IFRS net profit rose by 43% year over year. To RMB 2,400,000,000.0, marking the highest quarterly profit in our history. Total revenues in the fourth quarter of twenty twenty four were RMB 7,500,000,000.0, up by 8% year over year. Online music revenues increased by 16% year over year to RMB5.8 billion, The increase was mainly driven by strong growth of our music subscription revenues supplemented by growth in advertising revenues. Music subscription revenues in the fourth quarter of twenty twenty four reached RMB 4,000,000,000 representing an 18% increase year over year. And a 5% rise sequentially Monthly up was RMB 11.1 compared with RMB 10.7 in the same period last year. The number of online music paying users were 121,000,000, representing a 13% increase year over year. With quarterly net adds of 2,000,000 users We have made good progress in our SYP membership program.

Driven by the full expansion of comprehensive user privileges including enhanced audio quality and effects, and expanded the digital album library.

And the exclusive benefits for online concerts. Advertising revenues also achieved strong year over year growth, primarily due to the growth in AD support model revenues. We continue to optimize our product offerings and advertising formats the introduction of attractive interactive features, and enrich the benefits, boosted the entrance rate for our [indiscernible] Enhance the user engagement and the ECPM, and attracted a great number of advertisers this quarter. Social entertainment services and other revenues were RMB 1,600,000,000.0 down by 13% year over year. We continue to innovate and develop the new products and in active filters for social entertainment services. Our gross margin for Q4 reached 43.6% representing an increase of 5.3 percentage points year over year. Driven by several factors. First, the robust growth of our subscription revenue including as VIP memberships advertising revenues in both online music and the social entertainment, [indiscernible] positively impacted our gross margin. Second, the scaling of our own content further improved our gross margin. Third, RLC continues to be a key metric in managing our content royalties costs. Finally, for social entertainment services, the decline [indiscernible] outpaced the decrease in revenues. Moving on to operating expenses, in the fourth quarter of twenty twenty four, they amounted to RMB1.2 billion, representing 15.7% of our total revenues.

Compared with 18.4% in the same period last year. Selling and marketing expenses were RMB $248,000,000 down by 3% year over year. We will maintain our ROI focused approach for promotion expenses while directing investments toward areas with long term growth perspective. Such as online music, and the content promotion. General and administrative expenses were RMB 926,000,000 down by 8% year over year. Primarily driven by lower employee expenses.

The finance cost in the fourth quarter of twenty twenty four reflected an unrealized foreign exchange gain arising from trade management activities which was largely affected by the fluctuation of exchange rate between RMB and the USB as of September 30 and 12/31/2024. Our effective tax rate for Q4 twenty twenty four was 16.9% compared to 17.3% in the same period of 2023. We accrued a withholding tax of RMB110 million in the fourth quarter of twenty twenty four. In Q4 twenty twenty four, our net profit increased by 47% to RMB2.1 billion. And the net profit attributable to equity holder of the company increased by 50% to RMB 2,000,000,000. Non IFRS net profit increased by 43% to RMB2.4 billion. And the non IFRS net profit attributable to equity holders of the company. Increased by 45% to RMB2.3 billion respectively. Our diluted earnings per ADS this quarter was RMB1.26 up 52% year over year. Non IFRS diluted earnings per ADS increased to RMB 1.47. Up 47% year over year. This results underscored our effective monetization enhanced operating efficiency, and the benefit from our share repurchase program. As of 12/31/2024, our combined balances of cash, cash equivalents, [indiscernible] As compared with 36,000,000,000 as of 09/30/2024.

This combined balance was also effected by changes in exchange rate of the RMB to USD if when the balance should date. In general 2025, we completed the 500,000,000 share repurchase plan announced in March 2023, of which [indiscernible] 100,000,000 what you purchased in the fourth quarter of twenty twenty four. Today, we are announcing another share repurchase plan to repurchase up to US $1,000,000,000 during twenty four months period. Commencing from virtual March 2025. Next, I'll briefly discuss our performance. For the full year of 2024 Total revenues were RMB 28.4 billion up by 2% year over year. Revenues from online milk services were RMB21.7 billion, up by 25% year over year. Increase was driven by strong growth in music subscription revenues and the revenues from advertising services supplemented by growth in revenues from offline performances. Our music subscription revenues were RMB 15,200,000,000.0 up by 26% year over year. Driven by growth in both paying users and the monthly per app GPU. Revenues from social entertainment service declined by 36% year over year. Gross margin in 2024 was 42.3 per percent. Up by seven percentage points year over year. Due to the reasons discussed earlier. Total operating expenses for 2024 were RMB 4,700,000,000.0.

Down by 7% year over year. Selling and marketing expenses in 2024 were RMB 900,000,000.0 down by 4% year over year. General and administrative expenses were RMB 3,800,000,000.0. Down by 8% year over year. Primarily due to lower employee related expenses In 2024, we achieved record high annual net profit of RMB 7,100,000,000.0. Up by 36% year over year. Net profit attributable to equity holders of the company was RMB 6,600,000,000.0, Non IFRS net profit and the non IFRS net profit attributable to equity holders of the company was RMB 8,100,000,000.0. And RMB 7 plus 700,000,000.0, respectively. Finally, I'll conclude with some remarks on our outlook for 2025. Looking ahead, we will focus on driving high quality growth in our music business, so we're expanding its VIP memberships and growing our advertising business. We will also continue to diversify our offerings across the mutual chain. We will continue to invest in areas such as original content production, high quality content, and innovative technologies globally. To further boost the user engagement. Elaborate user experience, and enrich our ecosystem. We remain confident in the health growth prospects of both the music industry, that we are part of. We remain committed to delivering strong returns our shareholders.

This concludes our prepared remarks. We are now open for your questions.

Thank you, Shelly. If you are accessing the call from the Tencent Meeting or all of Meeting application, please click raise hand button on the bottom left. The benefit of all participants on today's call, please can you limit yourself to one And if you have additional one, please reenter the queue. If you ask your questions in Chinese, please repeat in English. And the first question comes from Alicia Yap from Citi. Alicia, please. Thank you, Melissa. Good evening, management. Thanks for taking my questions.

I wonder if management can share some guidance and direction of how we should be thinking about the 2025 growth outlook, especially in terms of the music subscription revenue growth. The net add expectation and the nonsubscription music revenue, especially on the online advertising growth, as well as, the gross margin and also the net margin trends that we should be expecting for 2025. Thank you.

Thank you, Alicia. Thank you so much for your questions. And before we are going to dive, into the 2025 outlook, I think it will be good for us to have a quick recap on the key strategy and achievement that we have to we have done in 2024. As I mentioned earlier, during today's call, I think that, 2024 was a very standout year for us. The strong performance of the online music services which drove the high quality growth of the company and we saw the higher fee revenue growth and multiple margin expansion. Which highlights the potential of our rich service offerings as well. Our focus on user experience continuous product and service innovation, have been crucial for our success. So this has been evidenced by a balanced expansion in both the subscribers base and also the ARPPU over the past few quarters. So both of the subscription and other music related businesses record a very strong performance. In particular, our robust content ecosystem continue to be the cornerstone of our subscription service. And has fueled the growth of emerging businesses like the artist merchandise and also concerts, and both of which saw strong top line growth in 2024.

Secondly, we are also seeing that our innovative reward based advertising, enhance the user engagement and enable advertisers to efficiently their target audience and optimizing the ROI. The last but not least, I think that our SVIP services has gained a very significant recognition from both users and the music industry, driving a higher user stickiness in the RPPU, further demonstrating our strong execution capabilities. So all of these, has really laid a very solid foundation for the future development of our business. So, therefore, I think in in a nutshell, in the year of 2025, we will continue to focus on strengthening our business presence across the music value chain to offer the users more diverse and engaging music entertainment [indiscernible] And we are optimistic about our growth trajectory for the year and continue to expand accelerated line growth and better margins for the 2025 as well. And, also, the online music is expected to achieve a healthy growth. And driven by steady increase in paying users and ARPPU. And, we will continue to explore new business opportunities like the content ecosystem, IoT, long form audios, and international markets as well. Thank you.

Gross margin is 43.6% in q four twenty twenty four, increased by 50.3% year over year. And increased 1% quarter over quarter. Our gross margin has been expanding over the past several quarters due to a few key factors. First, the rapid growth of our revenue, including SYRP memberships advertising revenues in both online music and social entertainment, and the racing memberships has contributed to gross margin expansion. Second, the scoring of our own content further improved our gross margin. [indiscernible] we have continued to optimize our content cost structure and remain focused on improving our overall cost items.

So first, the optimizer live streaming revenue sharing cost strategy. The live streaming revenue sharing ratio decreased. The decline in revenue sharing fees outpaced decrease in streaming revenues. Looking forward to 2025, we believe the above factors will continue to play an important role in further expanding our gross margin. And about the adjusted net pro margin, we will continue to manage our [indiscernible] Using an ROI based approach while increasing investments in online music and content promotions. We will continue to focus on technology empowerment and explore industrial innovations [indiscernible] a new opportunities brought by emerging technologies. Operating expenses are expected to increase slightly [indiscernible] ratio remained flat in 2025. Looking forward to 2025, assume a stable external environment We expect our revenue growth to accelerate with room for improve in both adjusted net profit and margin.

I also would like to comment on the advertising business.

For our existing advertising business, we have three forms. The first one is a splash screen. The second one is a free listening mode by watching the ads. But at the same time, we also have the website [indiscernible] Well, I believe that in the in the future, especially in 2025 with our website model and online earning model, Our model will help to driven the bidding advertising to achieve a healthy growth. So at the same time, we will also pay much attention to the operation of the advertiser. Especially in the consumable market and the luxury product market. And also serving the online service and the game industry. We will continue to engage advertisers from different industry. Help them to further enrich their reach to the target audience. So that we can work with them to help to establish a good cooperation model. So we believe that in the 2025, our website model will continue to make good progress. Even if the non subscriber DAU is dropping, still by diversifying the format of the business of advertising, we will continue to improve the stream of the revenue in advertising for healthy growth. Thank you. And the next question comes from Lincoln Kung from Goldman Sachs.

Lincoln, your line is open.

Priority.

So thank you, Mitchell, for taking my questions. So congrats on the very strong 2024 result. My question is about the balance between subscriber and ARPU growth and our priority here.

So first of we have seen 2,000,000 has in the fourth quarter. Should we expect a similar pace of growth into 2025 per quarter? And there for Apple, how how's the sort of the user retention rate for the Super VIP at the moment? How should we think about the potential ARPU continued growth into this year?

Thank you.

Thank you very much. Thanks for your question. As we mentioned earlier, we still remain confident on the revenue and profit growth in 2025. Where at the same time in my presentation, we also mentioned about the subscription model and the subscriber. We believe that the subscriber number and ARPPU will continue to grow. At the same time, we also keep an eye on the potential competitors in the market. We'll work keep an eye on their dynamics. Therefore, to balance our operational metrics to make sure we have a solid growth on revenue and profit.

K. So another is for Regarding the net dates, we still would like to maintain our existing growth pace. Because never for the team or for us, we do have great advantage on content. This is also a target we hope we could achieve. But it is worse for our attention that there is indeed a violence the guidance between the subscriber base and the ARPPU. So at the same time, we noticed that subscriber is quite price sensitive. But for for our strategy, we were not sacrifice our interest by rolling out aggressive low price to gain for the short term growth. So at the same time, we also have the industry leading ARPPU. But at the same time, we still hope that we can continue the ARPPU growth. And based upon the ARPPU growth, halfway could be differentiated on the self produced content and the product of portfolio, and we're also innovatively introduced some features including the sound quality and sound effect. To be the privileged features as our competitive edge. To continue to leverage the healthy growth and engage more subscribers. So regarding the ARPPU, as you may notice, we do have our unique advantage on content itself.

But at the same time, we also continue to optimize the user experience, enrich the privilege to our users. So for us, we have two measures. First of all, we hope for the basic subscription model, especially those user who pay 15 to 80 RMB per month per account? We hope that we can continue to improve service by improving the price, and by so doing, we will be able to consolidate this user base improving the ARPPU for sustainable growth. Well, secondly, just now you also asked about SVIP. In q four twenty twenty four, we also say that for as our SVIP, matter for the size or for the price, we also see the upward trending. Which will help us to register a growth exceeding our expectation. From the user experience perspective, SVIP does provide the long form audio as well as sound quality and sound effect features. The user really like it. Because of the privilege. Over continued advance our SPIP business. It is also worth mentioning that the time spent on our platform per a sub subscriber and the schedule grade is always capping at a historical high level. No matter for the general subscriber or our SVIP, we will be able to continue to optimize our operations to return more healthy subscribers with us.

And the next question comes from Mizuho Fangwei Your line is open. Please go ahead.

Thank you, management, for taking the question. Curious if management can can call out any consumer sentiment changes towards discretionary spending such as music and concerts. And by the way, is the average concert ticketing price, right, recently is trending up or trending down? And also, how is it reception based on your observation so far? Thank you.

Thank you so much for your questions. And we have observed that simply listening to songs online no longer satisfies off the demand of music lovers on music related entertainment. They basically will increasingly seek the live atmosphere and enjoyment that comes from experiencing the live concerts and music festivals. In additions, we are also seeing that fans also want to show the support to their idols through purchasing official merchandise as well. So by attending all of the live shows, fans gain a more diverse and in-depth understanding of the artist which in turn strengthens their four lights for the artist and then encourage more songs listening on our platform as well. So it is going to create a cycle for music content consumption, which benefits all parties. So over the last, two years, I think the music performance industry in China has experienced a robust growth. And the willingness of users to spend on such events has surged dramatically. With tickets for many top tier artist concerts and music festivals selling out in seconds. We believe that the music live shows business in China will continue to have a strong performance and overall market size and ticket price will remain relatively stable in 2025.

But however, I think as more and more live shows are being held, users expectations for the quality of these shows have also increased. So the industry has now entered a phase where only the strongest survive and the weaker are left behind. So TME is committed to team up with the industry leading partners to organize high quality live performance shows for our users. Thank you for your questions.

Okay. And then the next question from UBS at Lychon. Your line is open.

Thank you, management, for taking my question. My question is regarding our strategy around AI in 2025. Are there any new products or features that we plan to launch the new year to drive better user experience And also, how should we think about the financial implication of our AI strategy? On one hand, could we see some help from AI in terms of revenue or or margins? And on the other hand, how should we think about the, maybe the increasing investment around AI for this year? Thank you.

Thank you very much. Thanks for the question. As I have already mentioned, we won't invest too much on the large language model, and we're going to use from Tencent and continue to work with language model. But it is worth mentioning that we are a tech driven company. So we do have that large language model capacity. Could be a part of our product for Fortive. Well, recent notable change we say is that we're probably among the Tencent ecosystem to first adopt the deep sink into our product. And from the actual practice, we can say that in QQ Music, we do have the AI empowered assistant. Who can offer the users more interactions. And recently, we also leveraged deep seq to understanding the music listening history of the users, and then to summarize those history.

Providing a very interesting interactions with the user. Besides deepsake, I think for the last meeting, we already mentioned about our AI sun cover feature. Allow the users to use their own voice to sing the popular sounds. Which also be commercialized with very good feedback. Well, in the near future, I think we're gonna to continue to leverage the and the strengths from the large language model. Especially on the sound quality and sound effect. For example, regarding the sound quality, our audio three d has already been approved with great popularity in the industry. At the same time, we also leverage large language model to further improve our text to audio technology. It's already the leading technology in our industry. And recently, we also have an cutting edge technology to help to build the music blogger. And which is also performing very well regarding the user retention. [indiscernible] So we make full use of Tencent in the large language model, while at the same time, you know that for large language model, inference, it actually be quite consuming the computing power.

So we actually made many more manpower investment in accelerating the inference of the large language model. So but still, we have a controllable cost in this regard. But if we identify some new applications, we'll still continue to invest in For the manpower for the large language model.

The facilities, or the r and d. We will continue to improve our investment.

Okay. And the next question comes from JPMorgan, Alice Yao.

Social Thank you, management, for taking my question. I have a question with regard to the sequential revenue growth for [indiscernible] This line item has been on sequential declining trend for many, many years. And this is actually the first time, I think, since the past two, three years that that the we actually see a sequential improvement Could you could you elaborate the reason behind the sequential growth for social entertainment revenue? Is it because we now accounts for majority of the segment revenue? So we think we'll increasingly represent the social entertainment revenue growth outlook? Or is it because it everything has stabilized such that it's showing a bit of seasonality trend, I e, the year end event leads to a stronger monetization. Any color will be helpful. Thank you.

Thank you very much. Thanks for your question.

It seems you know our business pretty well. Yes, indeed. By the end of this year, we do have some celebrations. But besides this factor, and you can see that we actually benefited more from wasting rather than Google.

But I have to say that those fact is actually fading away compared with the past few years. A key growth driver is because starting from July and August, we have a more stringent compliance. By then, we are at a low point. But starting from Q4 last year, we do notice something. That is on on Google streaming, we have a new interactive feature. That interactive feature actually showcase the performance exceeding our expectation.

But, you know, you may can you share It's a feature of the collection just like the nine story diamond tower. We also take the social trending regarding Hong Kong as well as Jack. So we do believe such collection feature in the near future will continue to drive the live streaming business growth. But I have to decline that for WeSing indeed. It play a very important role especially as the size continue to be stabilized. But at the same time for WeSend, and we also have new features such as net earnings. It also register very good result. And VIP membership size continue to see a very healthy growth. The same time, we also have the sunroom and the video live streaming. The business continue to be stabilized. So that's the key reason why we have a good growth momentum in Q4 last year. Look into 2025, according to our overall judgment, regarding the social entertainment business is going to be stabilized. But it's still likely to have some downward trending because we do face many challenges for this business. As I have already mentioned, what we're trying to do is to roll out new innovations on WeSee and on Google to complement the possible downward trendy.

Okay. In interest of time, we'll take the last question from CICC from Xueqing. ShuiTing, your line is open.

Thanks management for taking my question. My question about the capital allocation, the company had announced the cash dividend and I know run of share repurchase this quarter. So what's your plan for capital allocation both on dividends and the shareholder How should we expect to pay our ratio in the future? Thank you.

Thank you very much. Thanks for the question. Our company business continued to progress healthily and we are also a company with NP cash flow. So indeed, how we're gonna to use the cash flow would be one of our work priorities. So on one side, we're going to fight good at the best timing to invest the future driven opportunities. For example, the content and our technologies and international business Those elements are delivering sustainable growth for our overall business. We're on the other side. We are going to greatly value the return to the shareholders. We're going to evaluate how can we create more value to the shareholders. Including our share repurchase plan and the dividend plan. So look into our track record. We have already completed two share repurchase programs. And we have already honored our commitment as we promised to the market. Based upon our confidence into the company's future operation, we are also gonna to continue to have the share repurchase plan. So that's the reason we also announced a new share repurchase plan. With a term of two years and a total valued 1,000,000,000 USD. Regarding the dividend or the payout, we actually started last year in May the initial or the first in our dividend to our shareholders to pay back to the support and care from the shareholders to us.

As we continue to grow our operating as you may notice from our announcement, we're also going to have a new dividend payout plan for the New Year. From the absolute value perspective, compared with the previous year, there's a significant improvement.

Okay.

So according to our appreciation and our confidence for our future business, we will continue to pay back to the shareholders and thank you for your long term support and care.

Okay. Thank you, Shelley. And thank you everyone for joining us today. If you have any further questions, please feel free to contact our IR team. And this concludes today's call, and thank you so much again and look forward to speaking next quarter. Thank you, and bye.

You so much.

Bye bye. Thank you. Bye bye.