KUKE - Earnings call transcript Q3 2021 | Kuke Music Holding Limited

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Operator

Good morning and good evening, ladies and gentlemen. Welcome to Kuke Music Holding Limited Third Quarter 2021 Earning Conference Call. At this time, all [Indiscernible] are in a listen-only mode.

We will be hosting a question-and-answer session after management prepared remarks. I will now turn the call over to the first speaker today. Ms. Director Music Relations Limited. Investor Zuo, of Holding KUKE Jane Please ma'am. go ahead,

Jane Zuo

to Hello, quarter Operator. you, our everyone. Thank Welcome third call. XXXX earnings

our On Tony of focus. will the business on Kuke. the are will Ms. today He Yu CEO, Sun President, with model will we our Yu, And financial Mr. Mr. take operations. call views share and CFO Chairman, results. Sun, Ms. our and Mr. Chan, then from Tony business discuss review will Founder, Afterwards, then Patricia the He me questions the strategic audience.

with and uncertainties, that Before that we unknown the the expectations the and start, call XXXX. actual These forward-looking cause under please not of observations the of provisions Act note statements, and to made for factors control, performance, known risks, Safe forward-looking to in which Company's by qualified any those Reform and Harbor circumstances be All of may Company results, the this health pursuant involve statements contain or expectations based Litigation Securities on management's achievements Private duty other may the expressly or statements. current undertakes are the are implied from the forward-looking statements The entirety statement, materially risk SEC. forward-looking revise or by call. cautionary events to conference factors, performance, this their results, update filing Company after Company's forward-looking of selected the for date statements no or different the

As being a recorded. this reminder, is conference call

a will ir.kuke.com. conference Investor website call be live available of Kuke addition, and Relations the In on at webcast archived

my Founder, and website our our out CEO of Mr. He full Yu, on check Chairman ir You introduce as now well. Is to release pleasure Kuke. can earnings

He Yu

call. joining strength. resilience and good thoughts would morning, the Good I on our third Jane. like in earnings us, quarter evening for model our our you, Thank core start to sharing to welcome our by and Thanks everyone. and business

generated and mission with and leading capabilities We through music China. monetize to leverage impact will XXXX, licensing and we the music content assets classic a classical learning call. lines library copyrighted our We business macro China, I our our exploring deepen supported main by XX how live services, With expanding share platform. ever-growing a online music In survive the core and music Kuke become in to solutions can revenue added in provider consuming with to classic service solutions by [Indiscernible] licensing our in addition, environment. modern Kuke X core of any classical innovation or download musical music content, years keep of music operations digital in almost to licensing has at copyrights subscription content music in We our services, licensing in operation, a for assets, founded digital events. learning subscription, providers music their our music through music and for streaming digital

a is websites deliver as Our by services revenue that databases economy. during These devices. downturn well perform to the mobile customers providing from access content sale smart in generated X flows as well and music the cash subscription of on even apps music through

half contributed quarter. More licensing in the nearly revenues importantly, and of revenues third revenues; subscription our total of total XX.X% to our

as our the copyrighted contents to business classic our continues library of ever-growing strengths, of terms music serve our In core in foundation development. the

is progress content was has on the an regulatory various Naxos's in with business impact it promote distribute the a great and Naxos is Chinese COVID of business, situation cooperation impacting as the and in international to eventful XXXX, is to safe strategic Leveraging a the one views music through guidelines stage the drive Kuke believe content music with year global our that ability our it the as regulatory our efficiency for XXXX say content continued growing we made business deep operations, through to and development. our those asset. checking core be classical and we of of this the music of most Knowing quarter. Our art have and of a keeps are monetization and this, the significant core the objects. always for library, business potential improving valued industries. trends content library classic classical guidelines the core musician. on since founding and Based global regulatory of partner, no on being broader together, rooted making new-generation It has China maintaining China we positive our impact which music and operational music likely and ever-growing learning Naxos innovation. classical And established our to this value

environment. In addition exploring business further regulatory we in enlarge kindergartens, our partnerships our kindergarten, to private with to customer have with in work begun macro middle ways primarily to schools of changing light the and public base

been quarter, our had [Indiscernible] record to target kindergarten. already libraries. team noting educational working already effective sales worth have in of public allocated with such is we institution During and portion and universities that the had a It track experience public as

regulated that efforts our be to for China will convinced helpful ability these our customer probably adapt potential to enhance to will regular going are base, We which -- forward.

we of which Earlier this our Competition in subscription dialogue multi-dimensional customer in Masters Brand in we a classical benefit China. and for a to the International XXth and offerings. mover of as licensing Piano dedicate Beijing the Hall Beethoven to first successful 's XXXst Golden providers true and and celebrate Music the bridge breech Chinese we Korean October, a to held terms in mission composers. of Celebrations, In advantage loyalty, classical from between the month, and XXth content sponsored we also our significant music ourselves remain very early of birthday. one Vienna development Beethoven served China, with reputation, As early service music Festival and theme the

and association and production Shande's launched continue with interest cultivating content in libraries our global than Naxos. services. Leveraging classical the music to recently entertainment classical solutions album including our through Naxos. demise release more copyrighted subsidiary, our confident ever-expanding to record in our of demand XXX Art music China, of learning our unmatched top-tier -- overall We're access companies, Ding our the for Songs and the music Naxos Additionally, foster ability Essential in

I Next, to will of details Kuke, Patricia, pass it over each more segment. our share to business President in

Patricia Sun

Mr. Yu. Thank and everyone. you, Good good evening, morning

strong driven quarter our Naxos, improvements by awareness. We recovery, synergy library million expanding brand XX our year-over-year third were by every licensing increased efficiency strategy quarter execution, to continued ever and business. the results business RMB and with growing further Our XXX.X% with demand revenues, of improved in area our which subscription locked meticulous mainly content in the grew and

itself divisions, global into products, a the with missed and range improved Siemens from in of leveraging international both measured departments. the transformed During the based Hong powerhouse, viewership XXXX, our continue label to quarter, network, recording, label, as Carl our of publication payments. Naxos, it in process logistics engineering its multimedia music classical number Naxos by award-leading streaming couple. breadth significant drive a we and of above Naxos, music budget new a [Indiscernible], of catalog of by Today, continued platforms, and Founded of under by licensing images release Kong. since recording entrepreneur has a downloading

As such not this achievements our recorded year. many strategic impressive largest conference provider partner, an important business global

Shande's Naxos Naxos our Awards China early best best solo subsidiary Art X best XXXX, classical; association in For contemporary classical performance; Essential ensemble and choral producer classical In including chamber instrumental vocal initiated of best its best classical Naxos. and partners classical; the music engineered Grammy of and production November, solo. performance; the landed album; year, release of small in composition; album, example, Ding the with Songs global album the best

our and track. PCs with also Naxos, leveraged expanding tracks, book in content than audio added partnership X.X strategic our over developed we million, to includes global content, we In over made X.XX of library. total million amount XX,XXX further content we which progress of music XXX,XXX more third quarter, our bringing As

and library music. and of X,XXX In hours pieces includes videos, of long-form X,XXX addition, opera, concert sheet also the digital more, over

third music had different expanded has number end library our quarter. of by and brand [Indiscernible offerings, third the ] the and greatly enhanced XX our from the libraries As awareness university subscribers we interest of library a In customers quarter, been and result of accordingly. secured increased our the garnered

RMB In smart music our million, times. terms representing reached solutions X.X year-over-year of of XX.X a learning increase quarter business, in the third revenue

collaborating of September of X,XXX our As XX, XXXX. XXXX, grew number kindergartens the of around to from June XX, we X,XXX as

Wuhan, during of network, added our collaborated provide from established added, X,XXX XXXX, our students kindergartens to active customer training the year-ago, to center kindergarten the -- better in During an quarter. and facilitate we both over the our number operation To the increasing to services XX,XXX. X X,XXX, of services we city a September improve experience, XX-months the XXth, to

as and in public we continue schools, pace the and our changing in channels The private launching chips shortage, slowed are Considering proactively may kindergartens, in exploring topline customer quarter. uncertainties business streams enhance of monetization near-term our shifts the base regulatory strategic our in our schools further primary in kindergarten we fluctuations in revenue regulatory new the and to global Even middle environment. diversify and light cause for macro our the we the services through expansion kindergartens, performance. new actively the

as we additional see, as unlock far remains can As nationwide. demand we strong overall market continued demand to

quarters the come. fulfill that we to confident of in orders the are We can backlog

For music of segment, times. quarter event reached representing XX.X XXX RMB live a our third the year-over-year in revenue increase million,

our execution from performances fourth provided which span hosted main for this launched Thanks Music of it's be film vocal [Indiscernible] music, quarter. early music, we value music highly of XX of at successful and to in Beijing variety theme the We services chamber genre, XXth, encompassing The audiences including for the year's music XX recognized [Indiscernible] Festival classical the across sets in The brands are quarter, from Festival fully to performances music. opera, across and revenue orchestral October. and music assets. Celebrations. days of a symphonic declination undeniable the and groups. Masters a concerts, music, balancing, The celebrating will planning at growing During commercial festival

music professional public also and performances, to of features children's events a concerts, Beyond area diverse audiences. classes, noon at concerts, exciting appeal other lectures, XXth the master BMF to

content Founded completed the International is and the by On Vienna. which pianists and piano leveraging more initial years the Piano and across of XXth and with cities our today. competition we This Chinese for screening with oldest adapted the Xth China the X co-sponsored sure competition unique renowned rounds Performing is Competition to music addition, classical inspire Music Naxos. music of than screening music Competition Piano our ago, classical in synergies The of strong cinemas. Naxos. in the of XXth final we Beethoven is National content generation hosted into future Austria's XX Beethoven November position Arts among University Xth, the In competitions and ranks most by in international

conference continue will viewing to experiences enriched pray We listening innovative and for customers. our and deliver through

our the X third our assets to quarter, copyrighted lines. operating contents leveraged During core classical drive we in main and business growth for our capability music

We diversify further to change also to our in regulatory the various and potential at the potential environments. customers revenue the proactively engaged respond macroeconomic

We quarter. I this that, With solidify the Thank help effort details further to financial forward. over market are us will our you for convinced our who through CFO the will call will Tony that walk Chan, pass you. our shift going

Tony Chan

And everyone. you, Patricia. hello, Thank

our note measures today. we will start detailed we Before - IFRS present please non that discussion, financial

for of IFRS in press reconciliation on Our Details be results a excludes unless our our third numbers which unless non in not part release. RMB are otherwise present non-cash core expenses found operations. the XXXX we - that, expenses, stated. are tables quarter Please these of comparisons basis, today certain terms. the on for year-over-year stated, All are and financial note all otherwise can are

million of year RMB prior the XXX.X% of revenue business XX.X growth driven in period. This increased XX.X from segments. by in During increase RMB third our our X was quarter by revenue all XXXX, million the to

smart to million RMB we expenses. licensing agreement orchestras secured XX.X in Operating prior-year to million Our XX.X million RMB smart million, year. China, administrative period. the million XXX.X% began the million, RMB XX.X compensation XX.X XX.X an in learning to the loss at in increased music year. times music cost sales students RMB expenses licensing same prior-year mainly period, to smart to increase remained to music in prior-year quarter sales quarter. and profit of increased XX by increase an for the distribution increased to third in period. were from increase as prior-year in Revenue of RMB margin compared in the our RMB compared X.X increase expenses by Mostly an were RMB million enrollment from by period. Total providing X.X XX.X performance of increase and in were the million, line was RMB subscription X.XX in from to increased due to mainly the was services million the stable Gross to solutions RMB with prior-year during XX.X our kindergarten in music due of this compared in was share-based both million XX.X distribution and the a growth an million, last revenue sales XXX.X%, million RMB quarter in and in third representing period, associated our XX.X mainly RMB learning also prior-year XXX Operating and Revenue compared and The increase business our X.X both revenue. earlier million XX.X% with the our the solutions. period. was a research period prior-year event RMB period. to in expenses RMB expenses XX RMB due compared business due to million the times learning XX.X the from Selling RMB the quarter Meanwhile expenses robust million XX.X in development third solutions. to of of million Gross

- compared non period profit loss loss the RMB million non was in IFRS million Our period. prior-year the XX.X XX.X for million IFRS the X.X in both both were diluted to XX.X the per and - to compared RMB same was were per RMB period And XXXX. of ADS X.XX, non profit and diluted Basic basic of million and loss IFRS X.X. ADS -

our and Sheet liquidity. to on Moving Balance

exposure, ready improve the XXXX begun As so and diversify cost XXX.X competitiveness million. XXXX, equivalents. COVID be million also higher our kindergartens to of to to Furthermore, had business schools -- exploring for and September deployments, enhances balance to macroeconomic global costs expected we've between total also public and actions we're XXX concludes and we're revenue million hardware revenue of RMB ways taking in and and growth, decrease for to due Full-year and is XXth, our further shortage, and we our risk enhance cash of control. and into account in After streams engage RMB our analyzing to We're proactive we confident RMB the now kindergarten cash our of pace This the impact XXX the Operator, taking to light environment. of our that chips slowdown regulatory changing remarks a doing today. take strengthens our resilience. questions. prepared are customer-base new

Operator

Li question to a Group. opportunity Thank Brian you. just pause take for to Instructions]. Mr. from signal We moment questions. for [Operator everyone an our first allow with We AMTD

Your line is ahead. open. Please go

Brian Li

me? Hello, can hear you

Jane Zuo

Yes.

Tony Chan

Yes.

Brian Li

hi. Hello, Thanks I my have for and X. taking question,

as that you emerging front, noted We technologies how Do strategy. that one. engage such many and competitiveness you with peers, and maintain have on to metaverse your looking opportunities That about innovative is new with many and into the plans will others. your any first opportunities? this WMG, is including First are NTFs

is one second The

Brian Li

The between regarding adjusted less and your full-year XXX -- you million to revenue last RMB quarters. revenue But the RMB full-year million. was now the than guidance guidance. RMB just below XXX in few in have QX, XXX guidance no

or give So guidance less to -- Thanks. which us trend quarters? in factors down? the So not projecting are about and previous are this business could -- you than you what quarter driving details growth the more

Patricia Sun

which an in more event. technology reality opera. technology. October music Actually, tax of X. question And business questions. I are new via is and -- music business [Indiscernible] we technology, Patricia, life your Festival virtual trends experimental first take is It power empower answer but Thank industry. virtual one the called XXXX, we performance you. our watching copyright, Beijing opera, Music music and a launched segment applied This our core The is with also developments already for It reality, with for constantly and to in had is is will live experiment, focus your close one-person

visual engaging next immersively how performances to exploring enjoy through delivering also allow to deliver VR music in our new participates rehearsals also And about new audiences bring may assets we that Thank our these audio action orchestra performance now integrated audience. are be NFT opportunities remote disclose new be and digital that our experience for remote or are seamlessly and and and these we to technologies and We Company's will you. at believe competitive unforgettable in our live event, believe always And which also live first, anticipating time revolutionary metaverse exploring we strategies developments, and will to throughout We actively experience for plans and domains. the industry. the copyrights edge the the the so In are developments music generation she'll technology content advantage. these appropriate business developments respective in future. is

Tony Chan

revenue So I'll take global Xnd million. this revised we yes, question the the is take in have million chip previous light and regarding the no between XXX guidance. million, of the RMB to to our was This due -- XXX rising RMB will shortage. RMB than guidance quarter, guidance revenue hardware our costs, less Yes, XXX in the to I

growth. cost control adventive to our our taking of kindergarten pace exposure, the down music to business. smart we're risks So this business slowing act action And new and is an for by decrease learning balance also deployment also our improve

the be guidance music fast expected the new our year this the Therefore, learning at of not strategy, year. as have smart we adjusted with we of deployment full So accordingly. businesses as beginning will

Brian Li

clear. Very you. Thank Okay.

Tony Chan

month. of end the At

Brian. you, Thank Okay.

Brian Li

for you. you. clear. Thank management. the Thanks Thank Thank Okay. Very you.

Operator

next RiverCircle Investments. with Instructions] take Dong our [Operator Don question you. We Thank from

removed Don the sorry, ahead. go Ms. your Dong is already from please open, Lex We go move Zhang, queue. line Investment is himself please I'm ahead. with Koi Your to Mr. open, line so

Lex Zhang

I Operator. questions. for Thanks have Actually, management. Thanks, the X presentation,

essentially. has given the one margins affected disruption been global the many is consumer situation. the chain also a you've The There companies, regarding quarter. chip first mentioned effect this And especially COVID situation, global supply which shortage

So shortage learning how question from the regarding especially especially solution number. effects the chips of The business? these disruption, margins business, chain is the affects second your your the supply

slight but selling that decrease guess, you while numbers QX. a on colors more you is importantly, also, if increase distribution are expenses? QX, revenue, do I a there solid, and noticed in And situation? the selling expenses And do your that in have So you is that and compare distribution to how you. more there in Thank actually monitor I

Tony Chan

Thank Okay. you, Lex.

your our Let take that questions questions. have development adjusted The disruption chain our actually, is supply Xst we QX now. affect Well, we as going have to explained just margins. about the pace, in me

So able we to actually from very act, that to maintain this QX. of margin gross were similar a level

to control have ability So we margins. costs that and system you margins, a tight maintain can shows our be that monitoring assured our so on

will -- -- We basically. it's effective we very

my the Xst is this answer question. to So

on and the to lot distribution QX and in to you and education despite distribution QX compared was question from overall of as to selling a usually from in That's incur increase increased in being expenses the slightly to mainly in see decrease Xnd slight revenue and in not expenses. live due The performances the distribution revenue selling business and the mainly this expenses. QX. does selling the the and in music distribution due increase smart why For expenses this QX. decreased decrease compared QX as the business subscription licensing revenue and and Selling the revenues from business, business, QX,

question? answer that does So, your

Lex Zhang

indeed. Yes, you. Thank

Tony Chan

Lex. Thank you,

Operator

[Indiscernible] Thank Investments. from you. RiverCircle question We'll take our next

open. ahead. go Your line is Please

Don Dong

Hi, management.

issue. deployment in I've that X Sorry have got one, slowed you the kindergarten you private mentioned for Xst tech this quarter. of down the questions. The have the

we So looks business how Xst question public that your is what year-end progress approaching the Kuke? of be Naxos to relationship, from right is Thanks. you wondering do how think far? of the school That with how the the going Xnd of is And this your know brought you engagement like relationship and benefit now, are now. I'm market question, right so and the kind forward now? would of

Patricia Sun

will these you. Thank questions. take I two

improve first though kindergartens policies to new we our we remained due development affected our taking are our chip call, The is private risk learning even the discussed business, smart rising our education hardware exposure, sector, demand in for and one global earnings that control cost in decrease by still pace light from costs of slowing preemptive government us but balance business action in but kindergarten musical of the -- music shortage. as strong, growth, not to

services the actively primary cooperative while of in slow strategy answer our to our the and of private and including sector And This subscription of public wealth also school public end libraries, more we new and networks, XXX institutional on the down providing current the high is music with of will development the business end private working and QX, schools question. monetize of cultivate sector. developments experienced with secondary organizations kindergartens, So experience actively are in to Xst our is than relationships This existing public for highly we kindergartens were [Indiscernible] kindergarten's schools. strengthen as of schools, public

Naxos be you. about this the opportunities in Kuke. more there believe and And global more strategic Kuke Naxos China. we're Actually, we Thank strategic jointly is for which business the screening to and Naxos, Regarding and a Kuke while opportunities believe Piano sponsor with Naxos cultivating the X Violin Kreisler joint a cinematic business and current in of numerous for Competition our Kuke, we Naxos, is Naxos business the Beethoven in partner have in maintain the relationship Fritz XXth business International across and planning we and And in year. relationship a first and forward, talking cities Kuke time. in many question, collaboration new long-term launched between can is for partner. This early Naxos partnership International relationship China the business competition between stabilize sponsored with next will that future Kuke XXXX Xnd very November, the also business close the future. Competition, business with global together going And Naxos and

Don Dong

you. Thank

Operator

Thank you.

will no the now there call any remarks. closing hand question, for I As the to over is management further

Jane Zuo

you Thank call. our again joining for

IR everyone QX free us. in good impressed next you feel Have have bye. through contact further to website. to look We're call. our We If questions, forward day. a with please speaking our And

Operator

This concludes for Thank today's conference. you your participation.

You disconnect. may now

Kuke Music Holding Limited (KUKE) 29 Nov 212021 Q3 Earnings call transcript