Participants
Millicent Tu; Head of Investor Relations; Tencent Music Entertainment Group
Cussion Kar Shun Pang; Executive Chairman of the Board; Tencent Music Entertainment Group
Zhu Liang; Chief Executive Officer, Director; Tencent Music Entertainment Group
Min Hu; Chief Financial Officer; Tencent Music Entertainment Group
Alicia Yap; Analyst; Citi
Lincoln Kong; Analyst; Goldman Sachs
Wei Xiong; Analyst; UBS Equities
Alex Yao; Analyst; JPMorgan
Xueqing Zhang; Analyst; CICC
Presentation
Millicent Tu
Good evening and good morning, and welcome to Tencent Music Entertainment Group's fourth-quarter and full-year 2024 earnings conference call. I'm Millicent Tu, Head of IR. We announced our quarterly financial results earlier today before the US market opened. The earnings release is now available on our IR website and via newswire services.
During today's call, you'll hear from Mr. Kar Shun Pang, our Executive Chairman; and Mr. Ross Liang, our CEO, who will share an overview of our operations and business strategy updates. Then Ms. Shirley Hu, our CFO, will discuss our financial results before we open the call for questions.
Before we continue, I refer you to the Safe Harbor statements in our earnings release, which applies to today's call as we may make forward looking statements. Please note that we discuss non-IFRS measures today, which (inaudible) is being and reconciled to the most comparable measures reported under IFRS in our earnings release and filings with the SEC.
(Event Instructions) And please be advised that today's call is being recorded. With that, I'm very pleased to turn the call over to Kar Shun, Executive Chairman of TME. Kar Shun?
Cussion Kar Shun Pang
Thank you, Millicent. Hello, everyone, and thank you for joining our call today. 2024 market year of significant progress for TME 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 enrich our ecosystem.
This, in turn, has effectively boosted our subscriber conversion efficiencies and lifetime value. We closed the fourth quarter with advancements across key areas of online music business. As an example, in addition to continued strength in music subscriptions, our advertising and artist-related services delivered strong growth, laying a stronger foundation for future development (technical difficulty).
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 efficiency 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 USD273 million and a new and expanded share repurchase program of up to USD1 billion.
At the heart of our mission is empowering musicians and 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 2024, our music and audio library exceeded 216 million licensed and co-created tracks from domestic and international labels, up from 200 million at the end of the prior year.
To enhance our users' music listening experience, here are a few highlights worth sharing, which helped contribute to a new record high of users' average daily time spend. First, we recently renewed our strategic contracts 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 sun facts, live concerts and artist merchandise.
Additionally, we have established partnerships with renowned Chinese artists such as Dao Lang and Tayu Lo and reaching our music library with hundreds of Chinese classics and providing TMEs users had started 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, we collaborated with our strategic partner, artists, Angela Zhang [Jiang Shao Han] to produce, we lease and promote her album (spoken in Chinese).
With our platform elevated influence, we expanded her reach to a broader audience of music lovers, earning while widespread acclaim. Additionally, we produced theme songs and original soundtracks for Tencent Video (inaudible), including Blossom and Guardians of the Dafeng, as well as for movies such as A Tapestry of Legendary Land, and TIGER WOLF RABBIT. This sounds quickly downloaded place for 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 live experiences. In the fourth quarter, while we produced physical albums for Xiao Zhan and Lay Zhang, we also provide options for users to purchase as they use to seeing merchandise along with digital albums and create immersive experience, such an approach not only boost album sales, but also opened new avenues for artists to connect with fans.
We also partnered with Mayday, to host a groundbreaking online New Year Eve's concerts, which was promoted across multiple short video platforms and social media channels. The concert success and popularity earned us broad recognition and reinforced our commitment to delivering 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's latest album Turn of a Page, is now available to SVIP members.
We have also introduced new SVIP perks including high-definition willing of Mayday (inaudible) and (inaudible) online concerts, delivering an unparalleled experience for our most loyal members. We will roll out more VIP access, meet and greet opportunities, limited editions, merchandise, personalized experiences and more while empowering artists and record labels to explore new ways to interact with targeted audience.
Last but not least, we 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 being grounded in our culture and business practice.
In 2024, we made significant strides in supporting female musicians to foster a more diverse and inclusive music community. The number of female artists with support reached 192,000. Additionally, in the fourth quarter, we partnered with the Ministry of Education and multiple NGOs to launch the writing songs for Panda's initiative, designed to promote the perfect biodiversity awareness through the influence of music.
Overall, we are pleased with solid performance that we have achieved in 2024. We are looking forward to delivering more high-quality growth in 2025 and we'll continue to collaborate with industry partners to nurture our Vibe 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.
Zhu Liang
Thank you, Kar Shun. Hello, everyone. In addition to our enriched content offering, our own (inaudible) 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 will remain central to our future growth strategy, further enhancing the value of music.
Benefiting from our expanding content ecosystem and a stronger user engagement of online music services was 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 SVIP membership has also made good progress users (inaudible) notable higher and ARPPU steadily expanding.
To foster user loyalty, we have optimized the efficiency of our accommodation algorithm. (inaudible) AI to bolster novel user experiences and enriched music consumption scenarios to expand our reach. This IFRS 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 imported users to curate and accumulate personal music (inaudible). We have enhancing their sense of belonging under stickiness, by optimizing our algorithms and improving the user interface, we made music discovery more fun and efficient. This led to the steady growth of recommendation driven streams year on year and quarter over quarter alongside a 10% year-over-year increase in user song collections. The latest revised to QQ Music and Kugou Music, also private users are more intuitive and personalized way for navigation.
Second, we further elevated on quality with our airport audio effects and voice extraction technology, which are resonating very well with users. These features have become an important drug for our SVIP member share program. Our sound (inaudible) analysis the audio to match its song with the most suitable audio citing, ensure an optimal audio streaming performance. Our AI voice extraction features allows users to separate original (inaudible) and instrumental tracks with a single click. Users can either sing alongside their favorite artists or enjoy instrumental only mode for karaoke sessions.
Third, we continue to expand music consumption scenarios, allowing users to enjoy music wherever they are, however they listen, and whatever moment they are in. During the fourth quarter, we broadened the partnership with [My Ping Service], Amap, and Baidu Maps to roll out a music navigation feature, providing users with a most and uninterrupted new streaming experience on the road.
Through our in-depth collaboration with electric automakers, such as BYD and XPENG, we enriched the user's in-car entertainment experience by introducing AI voice attraction and (inaudible) karaoke features. We are pleased to say that our IoT space recorded steady growth with year-over-year and quarter-over-quarter increase in the fourth quarter.
To (inaudible) users, our (inaudible) terminals on TME, we also refined the PC streaming user interface and introduce an innovative like display function in the Windows task bar, all of which helped enhance user's music companionship.
Moving on to some novel features and the fresh experiences we brought to users through constant innovations. First, we integrated the advanced capability of DeepSeek LLM to enjoy a more tailored and inclusive music creation experience. For instance, leveraging DeepSeek electric generation communities along our AI song writing feature, users can quickly create songs tailored to specific contests or modes. We also integrated DeepSeek in our AI assistance, common sections, recommendation page and other user touch points. This allow users to easily excise interesting music information, we saw song comments in (inaudible) and enjoy a more personalized music experience.
Second, we launched our virtual fund community that impose users to express their feelings for artists and music. This immersive platform co-created by funds and artists enable users to personalize profiles, design communities and engage in multiuser synchronize screen sharing and (inaudible). It has cemented the bond between artists and their followers while driving user engagement and ecosystem vitality. Notable example in the fourth quarter includes virtual committees of GCT (spoken in Chinese) with their fan base growing significantly since launch.
Third, our interactive and incentive advised advertising has been effective in enabling advertisers to reach a broad music audience increasing adoption strength of our users and the brand connections. It in turn contributed strongly to our advertising revenue growth in the fourth quarter.
Altogether, we have progressively redefined the music experience for our users and grew our ecosystem into a striving hub for music creation, promotion, and consumption. As we look at higher to 2025, we will continue to embrace AI technologies to import innovation, always the goal of creating the most beloved music platform for our users and creators. With that, I would like to turn the call over to Shirley, our CFO, for a deep time into our financials.
Min Hu
Thank you, Ross, and greetings to everyone. Let me now turn to our financial results. In the fourth quarter of 2024, 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 8% year-over-year growth.
Average net profit increased by 47% year over year, RMB2.08 billion and non-IFRS net profit rose by 43% year over year to RMB2.4 billion, marking the highest quarterly profit in our history. Total revenues in the fourth quarter of 2024 were RMB7.5 billion, 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 2024 reached RMB4 billion, representing an 18% increase year over year and a 5% rise sequentially. Monthly ARPU was RMB11.1 compared with RMB10.7 in the same period of last year. The number of online music paying users were 121 million representing a 13% increase year over year with quarterly net adds of 2 million users.
We have made good progress in our SVIP membership program, driven by the further expansion of comprehensive user privileges, including enhanced quality and effects and expanded the digital album library and include benefits for online concerts.
Advertising revenues also achieved strong year-over-year growth, primarily due to the growth in ad-support model revenues. We continued to optimize our product offerings and advertising formats, the introduction of attractive interactive futures and enriched benefits, boosted the -- and translate for our Ad-supported advertising, enhanced user engagement and ECP and attracted a great number of advertisers this quarter.
Social entertainment services and other revenues were RMB1.6 billion, down by 13% year over year. We continue to innovate and develop new products and interactive features 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 SVIP memberships, advertising revenues in both online music and social entertainment and raising memberships effectively impacting our gross margin.
Second, the scaling of our own content further improved our gross margin. Third, (inaudible) continues to be a key metric in managing our content royalty costs. Finally, for social entertainment services, the decline in (inaudible) increase outpaced the decrease in revenues.
Moving on to operating expenses. In the fourth quarter of 2024, they amounted to RMB1.2 billion, representing 15.7% of our total revenues compared with 18.4% in the same period of last year. Same and marketing expenses were RMB248 million, 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 content promotion. General and administrative expenses were RMB926 million, down by 8% year over year, primarily driven by lower employee-related frequencies.
The finance cost in the fourth quarter of 2024 reflected an unrealized foreign exchange gain arising from treasury management activities, which was largely affected by the fluctuation of the exchange rate between RMB and USD as of September 30 and December 31, 2024. Our effective tax rate for Q4 2024 was 16.9%, compared to 17.3% in the same period of 2023. We accrued withholding tax of RMB110 million in the fourth quarter of 2024.
In Q4 2024, our net profit increased by 47% to RMB2.1 billion, and the net profit attributable to equity holders of the company increased by 50% to RMB2 billion. Non-IFRS net profit increased by 43% to RMB2.4 billion, and the non-IFRS network 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 RMB1.47, up 47% year over year. These results underscore our effective monetization, enhanced operating efficient, and a benefit from our share repurchase group.
As of December 31, 2024, our combined balances of cash, cash equivalents, time deposits, and short-term investment were RMB37.6 billion, as compared with RMB36 billion as of September 30, 2024. This combined balance was also affected by trends in exchange rate of RMB to USD (inaudible) the balance sheet to date.
In general, 2025, we completed the USD500 million repurchase announced in March 2023, of which approximately [USD100 million] were repurchased in the fourth quarter of 2024. Today, we are announcing a another share repurchase program to repurchase up to USD1 billion during a 24-month period commencing from March 2025.
Next, I'll briefly discuss our performance for the full year of 2024. Total revenues were RMB28.4 billion, up by 2% year over year. Revenues from online music services were RMB21.7 billion, up by 25% year over year. The increase was driven by strong growth in music subscription revenues and revenues from advertising services supplemented by growth in revenues from offline performances.
Our music subscription revenues were RMB15.2 billion, up by 26% year over year, driven by growth in both (technical difficulty). Revenues from social entailment service declined by 36% year over year. Gross margin in 2024 was 42.3%, up by 7 percentage points year over year due to the reasons discussed earlier. Total operating expenses for 2024 were RMB4.7 billion, down by 7% year-over-year, singing and marketing expenses in 2024 where [RMB0.9 billion], down by 4% year over year. General and administrative expenses were RMB3.5 billion, down by 8% year-over-year, primarily due to lower employee-related expenses.
In 2024, we achieved a record high annual net profit of RMB7.1 billion, up by 36% year over year. Net profit attributable to active holders of the company was RMB6.6 billion. Non-IFRS net profit and non-IFRS net profit attributable to equity holders of the company was RMB8.1 billion and RMB7.7 billion, 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 (inaudible) expanding SVIP memberships and growing our Advertising business. We will also continue to diversify our offerings across the (inaudible) value 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, (inaudible) user experience, and enrich our ecosystem.
We remain confident in the health growth prospects of both the music industry that we are part of and we remain committed to delivering strong returns for our shareholders. This concludes our prepared remarks. We are now open for your questions.
Question and Answer Session
Millicent Tu
(Event Instructions) Alicia Yap, Citi.
Alicia Yap
(interpreted) 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. On the net add expectation and the non-subscription music revenue, especially on the online advertising growth as well as the gross margin and also the net margins trends that we should be expecting for 2025?
Cussion Kar Shun Pang
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 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 notable margin expansion, which highlights the potential of our rich service offerings as well. Our focus on user experience and continuous product and service innovation have been crucial for our success.
So this has been evidenced by a balanced expansion in both the subscriber 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, enhanced user engagement and enable advertisers to efficiently with the 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 and ARPPU further demonstrating our strong execution capabilities.
So all of this has really laid a very solid foundation for the future development of our business. So therefore, I think 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 experiences. And we are optimistic about our growth trajectory for the year. and continue to expand accelerated top 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 a steady increase in paying users and ARPU. And we will continue to explore new business opportunities like the content ecosystem, IoT, long-form audios, and international markets as well.
Min Hu
Gross margin is 43.6% in Q4 2024, increased by 5.3% 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 subscription revenue, including SVIP memberships advertising revenues in both online music and social entertainment, and racing memberships has contributed to gross margin expansion.
Second, the scoring of our own content further improved our gross margin. Third, we have continued to optimize our content cost structure and remain focused on improving our (inaudible) all cost items. Fourth, the optimized live streaming revenue-sharing cost strategy, the live streaming revenue sharing ratio decreased. The decline in revenue share increase outpaced the decrease in streaming revenues.
Looking forward to 2025, we believe that both factors will continue to play an important role in further expanding our gross margin. And about the adjusted net [probate] margin, we will continue to manage our business regionally, using an ROI-based approach with increasing investments in online milk and content promotions. We will continue to focus on technology empowerment and explore investor innovations and new opportunities brought by emerging technologies.
Operating expenses are expected to increase slightly with the operating expense ratio remained flat in 2025. Looking forward to 2025, assume a stable external environment. We expect our revenue growth to accelerate with room for improvement in both adjusted net profit and margin.
Zhu Liang
(interpreted) I also would like to comment on the Advertising business. For our existing Advertising business, we have three forms. The first one is a [touch] screen. The second one is free listening mode by watching the ads. But at the same time, we also have the website.
Where I believe that in the net in the future, especially in 2025 with our website model and the online leading model. Our model will help to choose the building advertising to achieve a healthy growth. So at the same time, we will also pay much attention to the operation of the advertisers, 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 industries, help them to further enrich their reach to the target audience. So that we can work with them to help to establish a good corporation model. So we believe that in the 2025, our website model will continue to make good progress, even if the non-subscriber DAU is doing, but 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.
Millicent Tu
Lincoln Kong, Goldman Sachs.
Lincoln Kong
(interpreted) Congrats on the very strong 2024 results. My question is about the balance between subscriber and ARPU growth and our priority here. So first of all, we have seen 2 million as in the fourth quarter. Should we expect a similar pace of growth into 2025 per quarter? And for ARPU, how is 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?
Zhu Liang
(interpreted) 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.
Well, at the same time, we also keep an eye on the potential competitors in the market. We will keep an eye on their dynamics. Therefore, to finance our operational metrics to make sure we have a solid growth on revenue and profit.
Regarding the net [ads], we still would like to maintain our existing growth pace because the ever 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 worth for our attention that there is indeed a guidance, especially the guidance between the subscriber base and the ARPPU. So at the same time, we noticed that subscriber is quite price sensitive. But for our strategy, we will 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, the halfway could be differentiated on the self-produced content and the product portfolio, and we're also innovatively introduce some features, including the sound quality and sound effect to be the privileged futures 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, while at the same time, we also continue to optimize the user experience and engage the privilege to our users. So for us, we have two measures.
First of all, we hope for the basic subscription model, especially those users who pay RMB15 to RMB18 per month per account. We hope that we can continue to improve our service by improving the price. And by so doing, we will be able to consolidate this user base by improving the ARPPU for sustainable growth.
Well, secondly, just now, you also asked about SVIP. In Q4 2024, we also see that for our SVIP, no matter for the size or for the price, we also upward trending, which help us to register a growth exceeding our expectations.
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, we will continue to advance our SVIP business. It is also worth mentioning that the time spent on our platform per subscriber and (inaudible) is always kept the historical high level. So no matter for the general subscriber or our SVIP, we will be able to continue to optimize our operations to retain more healthy subscribers with us.
Millicent Tu
And the next question comes from (inaudible).
(interpreted) Curious if your management 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 it trending up or trending down? And also how is the reception based on your observation so far?
Cussion Kar Shun Pang
Thank you so much for your questions. And we have observed the debt. Simply listening to songs online, no longer satisfied of the mind 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 addition, we are also seeing that fans also want to show the support to the idols through purchasing official merchandise as well. So by attending off the live shows, fans gain a more diverse and in-depth understanding of the artists, which in turn strengthens their (inaudible) for the artists and encourage more songs listening on our platform as well. So it's going to create a positive 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 artists concerts and music festival selling out in seconds. We believe that the music live shows business in China will continue to have a strong performance. And the 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.
Millicent Tu
UBS, Wei Xiong.
Wei Xiong
(interpreted) My question is regarding our strategy around AI in 2025. Are there any new products or features that we plan to launch for 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 margins? And on the other hand, how should we think about maybe the increasing investment around AI for this year?
Zhu Liang
(interpreted) As I have already mentioned, we won't invest too much on the large language model, and we're going to use (inaudible) Tencent and continue to work with a large language model. But it is worth mentioning that we are a tax-driven company. So we do hope that large leverage model capacity could be a part of our product portfolio.
Well, recent notable change, we say is that we're probably among the Tencent ecosystem to first adopt the DeepSeek into our product. And from the actual practice, we can see that in QQ Music, we do have the AI-empowered system, who can offer the users more interactions. And recently, we also leverage is to understand in the music listening history of the users and then to summarize those history and providing a better interest interactions with the user.
Besides DeepSeek, I think for the last meeting, we already mentioned about our AI [Suncover] feature, which allow the users to use their own voice to see the popular songs, which also be commercialized with very good feedback. In the near future, I think we're going to continue to leverage the capacity and the strength from the large language model, especially on the song quality and an effect.
For example, regarding the sound quality, our audio 3D has already been approved with great popularity in the industry. At the same time, we also leverage large language model to further improve our tax to audio technology. It's already the leading technology in our industry. And recently, we also have carding edge technology to help to build the music blogger and which is also performing very well regarding the user retention.
So we make full use of Tencent investment in the large language model, where at the same time, you know that for large language model influence, it actually be quite consuming the computing power. So we actually made many manpower investment in accelerating the influence of the large language model. But still, we have a controllable cost in this regard. But if we identify some new applications, we'll still continue to invest in (inaudible) for the manpower for the large language model, the facilities or the R&D, we will continue to improve our investments.
Millicent Tu
JPMorgan, Alex Yao.
Alex Yao
(interpreted) I have a question with regard to the sequential revenue growth for social entertainment. This 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 we actually see a sequential improvement. Could you elaborate the reason behind the sequential growth for social entertainment revenue. Is it because we think now accounts for a majority of the segment revenues? So we think we'll increasingly represent the social entertainment revenue growth outlook?
Or is it because everything has stabilized such that it's showing a bit of seasonality trend, i.e., the year-end event leads to stronger monetization. Any color would be helpful.
Zhu Liang
(interpreted) And since you know our business pretty well. Yes, indeed, by the end of this year, we do have some celebration. But besides this factor -- and you can see that we actually benefited more from WeSing rather than Kugou.
I have to say that those factors 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 quarter. But starting from Q4 last year, we do notice something that is on Kugou streaming, we have a new interactive feature. That interactive feature actually showcased the performance exceeding our expectations.
It's a feature of the collection just like the store diamond tower. And we also take the social trending regarding (inaudible) as well as (inaudible). So we do believe such collection feature in the near future will continue to drive the live streaming business growth. But I have to reply that for WeSing indeed, it plays a very important role now, especially the size continue to be stabilized.
But at the same time, for WeSing and we also have new futures such as the net earnings, it also registered a very good result. And the VIP membership size continue to see a very healthy growth. At the same time, we also have the song room and video live streaming and the business continued 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, it's going to be stabilized. But still likely to have some downward trending because we do face many changes for this business. As I have already mentioned, what we're trying to do is to roll out new innovations on WeSing and on Kugou to complement on the possible downward trending.
Millicent Tu
CICC, Xueqing.
Xueqing Zhang
(interpreted) My question about capital allocation. The company has announced a cash dividend and a new run of share repurchase this quarter. So what's our plan for capital allocation, both on dividends and shareholder returns? How should we expect to payout ratio in the future?
Min Hu
(interpreted) Our company business continued to progress healthily, and we are also accompanied with healthy cash flow. So indeed, how we're going to use the cash flow would be one of our work priorities. So on one side, we're going to find good opportunities 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.
Where 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 looking to our track record, we have already completed two share repurchase programs, and we have already honored our commitment as been promised to the market.
So based upon our confidence into the company's future operations, we are also going 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 value at USD1 billion.
Regarding the dividend or the payout, and we actually started last year in the initial or the first in (inaudible) dividend to our shareholders to pay back to the support and care from the shareholders to us. As we continue to grow our operating profit, 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 is a significant improvement. So according to our operation 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.
Millicent Tu
Okay. Thank you, Shirley, and thank you, everyone, for joining us today. If you have any further questions, please feel free to contact our team. And this concludes today's call and thank you so much and look forward to speaking next quarter. Thank you and bye.
Cussion Kar Shun Pang
Thank you so much. Bye-bye.
Zhu Liang
Thank you. Bye-bye.
Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.
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