(Yicai Global) May 18 -- Tencent Music Entertainment Group, China’s leading music streaming services provider, increased profit just 4.3 percent in the first quarter from a year earlier because of higher spending on sales and marketing.

Net profit was CNY926 million (USD144.1 million) in the three months ended March 31, the Shenzhen-based company said in an earnings release yesterday. Operating revenue jumped 24 percent to CNY7.8 billion (USD1.2 billion).

The company’s sales and marketing expenses climbed nearly 40 percent to CNY672 million in the period. The increase was mainly due to higher user acquisition fees and expenses related to the Tencent Music Entertainment Awards, an annual honors show recognizing the best-performing artists.

Tencent Music has seen its profit growth slow in recent years. It logged CNY1.8 billion in 2018, CNY4 billion in 2019, and CNY4.2 billion last year, though growth in 2020 slumped to 5 percent from 117 percent in 2019.

First-quarter income from online music services rose almost 35 percent to CNY2.8 billion thanks to an increase in subscriptions. Revenue from subscriptions rose 40 percent to CNY1.7 billion, mainly because of more paying users.

Paying subscribers totaled 60.9 million in the first quarter, an almost 43 percent gain from a year earlier and the largest quarterly increase since 2016. The figure was 4.9 million more than that in the previous three months.

But the number of paid users for Tencent Music’s social entertainment services dropped 12.4 percent to 11.3 million.

Mobile monthly active users of TME’s online music services fell 6.4 percent to 615 million, while social entertainment service MAUs dropped 14.2 percent to 224 million.

Tencent Music’s shares [NYSE: TME] closed up 0.6 percent yesterday at USD15.3 in line with the benchmark NYSE Composite Index, which also ended flat.

Editor: Peter Thomas