FAST NEWS: Cloud Music posts first annual profit

The latest: Chinese music platform Cloud Music Inc. (9899.HK) on Thursday reported a net profit of 734 million yuan ($102 million) for 2023, reversing a loss of 221 million yuan in 2022 and marking its first-ever annual profit.

Looking up: The company’s annual gross profit jumped 62.6% to 2.1 billion yuan, partly due to improving cost controls and lower R&D spending.

Take Note: Cloud Music’s revenue declined 12.5% to 7.87 billion yuan last year, mainly due to a 33.6% drop in revenue from its social entertainment services, which more than offset a 17.6% rise in its online music services business.

Digging Deeper: Founded in 2013, Cloud Music is the online music arm of NetEase (NTES.US; 9999.HK), one of China’s leading online game operators. It generates revenue by selling membership subscriptions, digital albums and virtual goods for social entertainment services, and by providing advertising services. The company’s monthly paying users have risen steadily in recent years, and continued with 15.3% growth last year to 44.12 million. That rise, combined with a 4.5% increase in average revenue per paying user, were behind last year’s rise in revenue from its online music services.

Market Reaction: Cloud Music shares rose on Friday, closing up 2.5% at HK$90.40 by the midday break. The stock now trades near the upper end of its 52-week range.

Translation by A. Au

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