Operating cash flow consistently exceeds net income, with an OCF/NI ratio averaging 1.3 over the last ten quarters, indicating high-quality earnings and supporting strong free cash flow generation.
Tencent Music Entertainment Group (TME) cash flow statement — 10-year operating, investing & financing cash flows
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 |
|---|
| Cash from Operations | 11.22B | 10.16B | 10.28B | 7.34B | 7.48B | 5.24B | 4.88B | 6.2B | 5.63B | 2.5B | 873M |
| Operating CF Margin % | - | 30.88% | 36.18% | 26.44% | 26.4% | 16.77% | 16.76% | 24.38% | 29.67% | 22.77% | 20.02% |
| Operating CF Growth % | 131.85% | -1.12% | 40.04% | -1.92% | 42.79% | 7.25% | -21.21% | 10.09% | 125.28% | 186.37% | - |
| Net Income | 8.6B | 10.75B | 8.71B | 6.04B | 4.37B | 3.63B | 4.63B | 4.54B | 2B | 1.6B | 114M |
| Depreciation & Amortization | 1.4B | 1.34B | 978M | 1B | 1.16B | 1B | 824M | 583M | 369M | 379M | 236M |
| Stock-Based Compensation | 374M | 0 | 596M | 649M | 665M | 647M | 569M | 519M | 487M | 362M | 170M |
| Deferred Taxes | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 160M | 150M | -188M | -20M |
| Other Non-Cash Items | 554.21M | -928.01M | -1.57B | -1.15B | -938M | -614M | -643M | -584M | 1.24B | -105M | -32M |
| Working Capital Changes | 0 | -1B | 1.56B | 786M | 2.22B | 573M | -497M | 982M | 1.39B | 455M | 405M |
| Change in Receivables | 0 | -345.33M | -539M | -204M | 906M | -769M | -520M | -733M | -182M | -447M | -266M |
| Change in Inventory | 0 | -16.54M | -15M | 7M | 10M | -6M | 8M | 9M | -4M | -16M | -11M |
| Change in Payables | 0 | -761.67M | 1.84B | 52M | 663M | 631M | 644M | 717M | 780M | 4M | 315M |
| Cash from Investing | -3.3B | -10.27B | -6.82B | -1.86B | -1.45B | -6B | -14.21B | -8.1B | -1.19B | -483M | 496M |
| Capital Expenditures | -857.47M | -1.16B | -319M | -165M | -85M | -159M | -108M | -286M | -144M | -77M | -41M |
| CapEx % of Revenue | 2.6% | 3.51% | 1.12% | 0.59% | 0.3% | 0.51% | 0.37% | 1.12% | 0.76% | 0.7% | 0.94% |
| Acquisitions | 971.08K | -1.03B | -41M | 57M | -144M | -2.08B | -525M | -44M | -693M | -15M | 676M |
| Investments | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | -2.45B | 7.78M | -630M | -895M | -890M | -2.51B | -347M | -14M | -24M | -591M | -510M |
| Cash from Financing | 5.13B | -4.41B | -3.83B | -1.54B | -3.42B | -3.71B | 5.29B | -31M | 7.74B | 99M | 1.71B |
| Debt Issued (Net) | 0 | -2.07B | -134M | -116M | -130M | -116M | 5.33B | -56M | 0 | 0 | 0 |
| Equity Issued (Net) | -651.6M | -234.43M | -1.93B | -1.2B | -3.12B | -3.47B | -134M | 15M | 7.32B | 0 | 1.9B |
| Dividends Paid | 0 | -1.93B | -1.51B | 0 | 0 | 0 | 0 | -32M | -19M | 0 | 0 |
| Share Repurchases | -651.6M | -652.72M | -1.93B | -1.25B | -3.13B | -3.48B | -134M | 0 | 0 | 0 | 0 |
| Other Financing | 5.78B | -173.15M | -263M | -225M | -165M | -128M | 96M | 42M | 441M | 99M | -189M |
| Net Change in Cash | 12.9B | -4.13B | -403M | 4.01B | 2.96B | -4.54B | -4.3B | -1.93B | 12.18B | 2.1B | 3.07B |
| Free Cash Flow | 8.88B | 9.86B | 9.24B | 6.17B | 6.43B | 2.48B | 4.38B | 5.91B | 5.49B | 2.42B | 832M |
| FCF Margin % | 26.92% | 29.98% | 32.54% | 22.24% | 22.68% | 7.94% | 15.04% | 23.25% | 28.91% | 22.07% | 19.08% |
| FCF Growth % | 4.67% | 6.71% | 49.73% | -3.97% | 159.09% | -43.41% | -25.87% | 7.76% | 126.5% | 191.23% | - |
| FCF per Share | 5.71 | 6.35 | 5.90 | 3.90 | 3.97 | 1.48 | 2.61 | 3.53 | 3.47 | 1.48 | 0.51 |
| FCF Conversion (FCF/Net Income) | 1.03x | 0.92x | 1.55x | 1.49x | 2.03x | 1.73x | 1.18x | 1.56x | 3.07x | 1.89x | 10.65x |
| Interest Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Quick answers to the most common questions about buying TME stock.
Tencent Music Entertainment Group (TME) generated $10.16B in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Tencent Music Entertainment Group (TME) generated $9.86B in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Tencent Music Entertainment Group (TME) spent $1.16B on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Tencent Music Entertainment Group (TME) returned $1.93B to shareholders via cash dividends and spent $652.7M on share repurchases. This shows the company's commitment to returning capital to its equity investors.
Key Metrics
Top Statement Risk
Social Entertainment Segment Decline
Earnings Quality Driven by Subscription Shift
Operating cash flow consistently exceeds net income, with an OCF/NI ratio averaging 1.3 over the last ten quarters, suggesting high-quality earnings and minimal accrual-based distortions as reported in the financial statements.
The persistent premium of operating cash flow over net income indicates that TME's earnings are backed by actual cash collections, a positive sign for a business model transitioning toward recurring subscriptions. This strong conversion suggests that the reported profitability is not being inflated by aggressive revenue recognition or non-cash items, reinforcing the quality of the earnings stream.
FCF Generation Remains Robust
Free cash flow margins have remained strong, averaging approximately 30% over the last ten quarters, demonstrating the company's ability to convert revenue into substantial cash after necessary investments.
The consistent generation of high free cash flow, even during quarters with significant capital expenditures like 2025Q4, underscores the underlying cash-generative power of the core music subscription business. This trajectory supports the view that the strategic pivot toward a subscription-heavy model is creating a more predictable and valuable cash flow stream, independent of the more volatile social entertainment segment.
Disciplined Capital Returns and Strategic Investment
In 2024Q4, TME deployed $3.6 billion toward dividends and share repurchases, signaling a commitment to shareholder returns while maintaining a fortress balance sheet with negligible debt.
The significant capital return in 2024Q4, coupled with a low debt-to-equity ratio of 0.05, indicates management is prioritizing direct shareholder returns over aggressive debt-funded expansion. This disciplined approach suggests confidence in the durability of free cash flow generation and provides a buffer against potential regulatory or competitive headwinds in the social entertainment space.
Cash Flow Statement Obscures Content Cost Dynamics
The cash flow statement does not separately disclose cash paid for music content royalties, which is the single largest variable cost and a critical driver of future margin sustainability.
While operating cash flow is strong, the underlying cash outflows for content acquisition are embedded within operating expenses and not explicitly broken out. This opacity makes it difficult to assess the true cash cost of maintaining the music library and whether future royalty negotiations could pressure cash generation. Investors should monitor the relationship between revenue growth and operating cash flow for signs of increasing content cost intensity.