Tencent Music Entertainment Group (TME) saw its stock price surge 5.17% in trading on Tuesday, following the release of its impressive first-quarter 2025 financial results. The Chinese music streaming giant reported solid growth in key areas, particularly in its online music subscription business, which has become a significant driver of the company's performance.

The company's Q1 revenues reached $1.01 billion, in line with market expectations and representing an 8.7% year-over-year increase. This growth was primarily attributed to the strength of its online music services, which offset a decline in social entertainment revenues. Notably, Tencent Music's music subscription revenue jumped 16.6% year-over-year to $581 million, while the number of paying users for online music grew by 8.3% to 122.9 million.

Investors were particularly encouraged by Tencent Music's improved profitability metrics. The company's gross margin expanded to 44.1% from 40.9% in the previous year, driven by strong revenue growth from music subscriptions and advertising services. Moreover, net profit attributable to equity holders skyrocketed by 201.8% year-over-year to $591 million, partly due to a one-time gain from a distribution of Universal Music Group shares. The company's focus on long-form audio content, especially through its Super VIP (SVIP) program, was highlighted as a key factor in driving subscriber growth and engagement. With a solid start to the year and a positive outlook, Tencent Music appears well-positioned for sustained growth in 2025 and beyond, which has clearly resonated with investors.