(Yicai) Aug. 16 -- Tencent Music Entertainment Group, China’s biggest online music platform operator, logged a more than 50 percent jump in net profit in the second quarter from the same period last year on strong growth in music subscriptions and advertising as well as better cost control.

Tencent Music’s net profit surged 51.6 percent in the second quarter from the same period last year to CNY1.3 billion (USD178 million), according to its latest earnings report released yesterday. Revenue climbed 5.5 percent to CNY7.29 billion (USD1 billion)

Revenue from its online music services surged 47.6 percent to CNY4.2 billion (USD576 million), accounting for 58.3 percent of total revenue, the report said. The music subscription revenue soared 37.2 percent to CNY2.8 billion (USD582 million).

There was a drop in monthly active users of 4.7 percent to 594 million, but the number of paying subscribers jumped 20.2 percent to 99.4 million. The monthly average revenue per paying user advanced 14.1 percent to USD9.70, thanks to an increase in membership fees and also the increase in the number of paying users.

Tencent Music’s app QQ Music recently hiked its monthly membership fee to CNY15 (USD2) from CNY13 (USD1.8), its seasonal subscription to CNY45 from CNY35 and its annual fee to CNY158 (USD21) from CNY138. Another app Kuwo Music also hiked its price to CNY158 from CNY88.

Tencent Music was able to squeeze expenses by 11.4 percent to CNY1.2 billion (USD164.5 million), lowering its operating expense ratio to 17.2 percent of total revenue from 20.5 percent. Sales and marketing costs also decreased by 30.4 percent to CNY211 million (USD28.9 million).

The Shenzhen-based company’s gross margin widened 4.4 percentage points to 34.3 percent in the second quarter from the same period last year. This was driven by higher revenue from music subscriptions and advertising, more production of original content and better operational cost efficiency.

But revenue from social entertainment and other services plunged 24.6 percent to CNY3 billion (USD411.2 million), much less than the CNY4 billion earned a year earlier. The number of monthly active users sank by 18.1 percent to 136 million. And the monthly average revenue per paying user plunged 20.5 percent to CNY135.

Tencent Music implemented strict reforms for its live broadcast business in June, limiting some interactive features, Guosen Securities said. This led to a slight dip in revenue from its social entertainment segment.

The social entertainment segment underperformed in the second quarter as some services were enhanced and more risk control measures introduced, Tencent Music said. This will affect its business outlook for the rest of the year.

Revenue in the third quarter is expected to slump between 12 percent and 18 percent year on year, and revenue for the year could slide between 5 percent and 7 percent, it said.

Tencent Music’s share price [HKG:1698] was trading up 1.6 percent at HKD24.45 (USD3.12) as of 11 a.m. China time today. In New York, its stock [NYSE:TME] closed up 0.6 percent at USD6.19 yesterday.

Editor: Kim Taylor