Photo Credit: NetEase
The parent of NetEase Cloud Music posted a nearly 39 percent year-over-year (YoY) revenue improvement during 2022’s first quarter, generating a total of CNY 2.07 billion (currently $310.69 million), according to higher-ups.
NetEase detailed the Q1 2022 financial performance of its Cloud Village division – which arrived on the stock market in December, after Sony Music took a $100 million stake – via an official report today. Besides NetEase Cloud Music itself, a Chinese music streaming platform and Tencent Music competitor, Cloud Village operates an array of “social entertainment services” like LOOK Live Streaming and Sheng Bo.
The distinction is important, for Cloud Village indicated that its main streaming offering had achieved a 16.5 percent YoY income hike throughout the three months ending on March 31st, at $132.98 million (CNY 884.8 million).
This boost was “primarily due to the significant growth in revenues from sales of membership subscriptions,” execs relayed, as the category jumped to $106.74 million (CNY 710.2 million). Moreover, NetEase Cloud Music subscribers increased from 24.29 million in Q1 2021 to 36.74 million in Q1 2022, per the earnings report, against a small YoY slip for MAUs (181.7 million).
However, NetEase Cloud Music’s Q1 2022 expansion – which contrasts the relatively modest growth of Spotify – was minor compared to that turned in by Cloud Village “social entertainment services.”
Cloud Village said that these closely associated social entertainment services had generated $274.13 million (CNY 1.82 billion) on the quarter – up 61.6 percent YoY, as the number of paid users swelled from about 438,000 to over 1.18 million.
(For reference, Tencent Music’s own social entertainment products suffered a 27.7 percent YoY mobile-MAU decrease in 2022’s opening quarter, besides a 26.5 percent falloff specifically for paid users, who nevertheless totaled 8.3 million. Company officials, whose business was previously made to give up exclusive music deals and is facing heightened competition, attributed the declines to “industry and macro headwinds.”)
Back to Cloud Village’s own Q1 2022 showing, the entity communicated that its quarterly cost of revenue had risen 17.5 percent YoY to $272.88 million (CNY 1.82 billion), partially “as a result of an increase in revenue sharing fees along with an increase in revenue from social entertainment services.”
Lastly, regarding the business’s financials, the above-highlighted gains enabled the NetEase Cloud Music parent to record a $37.81 million (CNY 251.56 million) gross profit for Q1 2022 (compared to an $8.11 million/CNY 53.95 million gross loss in Q1 2021), while the quarter’s loss fell by almost 90 percent YoY, to $27.06 million (CNY 180.03 million).
In terms of other noteworthy takeaways, NetEase Cloud Music stated that Q1 2022 had seen daily active users spend “approximately 82.0 minutes per day on average listening to music on our platform, up from 76.5 minutes during the first quarter of 2021.” And in March, one-third of streams “were attributable to platform recommendations,” with north of 90 million tracks on the service.
Relating to each of these points and the cancellation of exclusive deals, the company was “serving more than 450,000 registered independent artists on our platform” as of March, marking a roughly 70 percent YoY increase, execs said.
During today’s trading hours, Cloud Village stock (HKG: 9899) parted with 2.13 percent of its value and finished at $7.33 (HK$57.50) per share, whereas Spotify stock (NYSE: SPOT) sustained a 5.11 percent dip to $103.50 per share and Tencent Music stock (NYSE: TME) experienced a 7.79 percent decline to $3.67 per share.