FAST NEWS: Cloud Music’s Loss Narrows on Better User Monetization

The latest: Cloud Music Inc. (9899.HK), the music arm of gaming giant NetEase (NTES.US; 9999.HK), announced Thursday that its revenue rose 28.5% to 8.99 billion yuan ($1.29 billion) last year, while its net loss narrowed sharply by 89.2% to 221 million yuan.

Looking up: The company’s online music and social entertainment services had 38.27 million and 1.33 million monthly paying users, respectively, at the end of last year, up 32.2% and 95%, reflecting the company’s enhanced ability to monetize its users.

Take Note: The company’s cost of revenue rose 12.3% to 7.7 billion yuan last year, accounting for 85.6% of revenue, mainly due to higher revenue sharing fees as social entertainment revenues increased.

Digging Deeper: Founded in 2013 and listed on the Hong Kong Stock Exchange in December 2021, Cloud Music is the online music arm of NetEase, 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. Its biggest domestic competitor is Tencent Music (TME.US; 1698.HK), a subsidiary of leading game operator Tencent (700.HK). Cloud Music has posted net losses of more than 2 billion yuan in each of the four years through 2021. But it benefited from improved operational efficiency and increased revenue capacity last year, narrowing its loss significantly and edging closer to profitability.

Market Reaction: Cloud Music shares fell on Friday, closing down 4.9% at HK$81.15 by the midday break. The stock now trades in the middle of its 52-week range.

Translation by Jony Ho

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