TME-SW beat estimates for second-quarter revenue on Tuesday as an expanded content library drove higher user engagement and robust subscriber growth in its online music services.

Tencent Music shares rose 17% in Hong Kong.

Tencent Music has significantly increased its investments to broaden its content portfolio to include long-form audio such as podcasts and audiobooks. It has also widened its music-related services such as advertising, concerts and artist merchandise, tied to the growth of its Super VIP program.

Serving about 15 million subscribers, the program offers a bundled experience featuring high-quality audio, online karaoke and access to exclusive events designed to boost user engagement.

The company also expanded tie-ups with domestic and overseas labels, tapping surging K-pop demand in China through first-time deals with The Black Label and H MUSIC and extending its collaboration with Chinese artist Wang Feng.

"We believe TME's strategic initiatives, including product innovation, content diversification and AI-powered personalization, position it well for sustained earnings growth ahead," said Ahmad Halim, an analyst at CFRA Research.

Tencent Music agreed to buy Chinese audio platform Ximalaya in June for about $2.4 billion in cash and stock with the aim of deepening its catalog and attracting more paying users to its apps.

The company's total revenue rose 17.9% to 8.44 billion yuan ($1.17 billion) during the quarter. Analysts on average had estimated 7.96 billion yuan, according to data compiled by LSEG.

Revenue from music subscriptions grew 17.1% to 4.38 billion yuan, while that from social entertainment services decreased 8.5% to 1.59 billion yuan.

Tencent Music's adjusted profit of 1.66 yuan per American Depository Share was also above the estimate of 1.46 yuan.