SHENZHEN, China, Aug. 11, 2026 /PRNewswire/ -- Tencent Music Entertainment Group ("TME," or the "Company") (NYSE: TME and HKEX: 1698), the leading all-in-one music and audio entertainment platform in China, today announced its unaudited financial results for the second quarter ended June 30, 2026.

Second Quarter 2026 Financial Highlights

• Total revenues were RMB8.93 billion (US$1.32 billion), representing a 5.8% year-over-year increase, primarily due to strong growth in revenues from music related services^[1].
• Revenues from music related services^[1] were RMB7.61 billion (US$1.12 billion), representing 11.0% year-over-year growth, driven by solid growth in revenues from marketing and consumption services^[2], such as offline performance related services, as well as revenues from membership services^[3]. Revenues from membership services^[3] were RMB4.79 billion (US$706 million), representing 8.1% year-over-year growth.
• On an IFRS basis:
  • Net profit attributable to equity holders of the Company was RMB2.47 billion (US$364 million), compared with RMB2.41 billion in the same period of 2025.
  • Diluted earnings per ADS was RMB1.57 (US$0.23), compared with RMB1.55 in the same period of 2025.
• On a non-IFRS basis:
  • Adjusted EBITDA^[4] was RMB3.25 billion (US$480 million), representing 5.2% year-over-year growth.
  • Non-IFRS net profit attributable to equity holders of the Company^[4] was RMB2.69 billion (US$396 million), representing 4.4% year-over-year growth.
  • Non-IFRS diluted earnings per ADS was RMB1.70 (US$0.25), up from RMB1.66 in the same period of 2025.
• Total cash, cash equivalents, term deposits and short-term investments as of June 30, 2026 were RMB44.22 billion (US$6.52 billion).
• In the second quarter of 2026, the Company repurchased 43.5 million ADSs with cash for an aggregate consideration of approximately US$400.0 million.

Mr. Cussion Pang, Executive Chairman of TME, commented, "Our second-quarter results reflect the continued strength of our content-and-platform strategy. Concerts, merchandise, and other IP-driven experiences drove another quarter of solid growth in our marketing and consumption services, underscoring our ability to unlock greater value from premium music IP. Our expansion into digital audio through the integration of Ximalaya broadened our reach and enriched our ecosystem. As the industry evolves, we continue to champion copyright protection, foster a healthy ecosystem, and safeguard the value of creative work."

Mr. Ross Liang, CEO of TME, continued, "Amid a rapidly evolving market, we remain steadfast in building an ecosystem where our users can discover, connect, and be inspired through music and audio experiences. Our focus on differentiated content and a vibrant community continues to deepen engagement with our core users, and SVIP membership continues to grow. The addition of Ximalaya is an exciting milestone that will allow us to deliver an even richer audio experience and serve our users more effectively. Together, we are shaping the future of music and audio entertainment and unlocking long-term growth."

Second Quarter 2026 Operational Highlights

Products & Services – Elevated the music experience through continuous product innovation, ecosystem integration, and thoughtful AI application, to expand user reach and deepen engagement. 

• Enhanced the user experience through a more seamless discovery-to-playback journey, introducing vertical swipe-based discovery, video feeds, and expanded freemium access to drive higher daily time spent per user.
• Expanded distribution and user acquisition through deeper integration with the broader Tencent ecosystem. We strengthened music content distribution through Weixin Video Accounts and improved click-through and conversion to our apps. We also collaborated with Weixin Pay to drive traffic to our lightweight apps, such as Bodian Music and Kugou Concept, which cater to users seeking a simpler music experience.
• Harnessed AI agents to make music discovery more intuitive and personalized. We recently integrated with Weixin XiaoWei, and are pleased that by tapping into Weixin's massive user base, more users can discover songs, generate playlists, stream music with easy commands and instantly share favorite tracks with friends. Within QQ Music and Kugou Music, our upgraded AI agents now act as personal DJs, creating personalized playlists in real time that match what users want to hear in the moment.

IP-Centric Content Ecosystem – Deepened strategic partnerships, strengthened proprietary IP capabilities, and expanded presence in digital audio to reinforce long-term IP value. 

• Expanded strategic partnerships beyond traditional music licensing to unlock greater value. 1) Deepened our partnerships with Dream Music Group, securing first-release for its top artists while expanding into new areas of collaborations including content co-creation, physical offerings, and offline experiences. 2) To enrich how users experience music beyond audio, we partnered with Huace Film & TV, RUYI FILM, and Zhejiang Satellite TV to bring original soundtracks and popular music variety shows to our platform, creating a more immersive connection between music and visual entertainment.
• Advanced our proprietary content creation capabilities and deepened artist development efforts to support growth of IP-driven experiences. 1) Produced hit releases for leading artists and major IPs, including Zhou Shen's Blaze into Bloom, Liu Yuning's Borrow a Little Light from Ordinary Days, and the theme song for the hit animated film All Wishes Come True!. 2) Following rapper Zhou Yan's (GAI) successful EVOLUTION tour in Asia, we elevated his latest tour, REAL G, to stadium scale. We also supported renowned actor and singer Steven Zhang's first-ever arena tour, New Journey. 3) Made a strategic investment in THE BLACK LABEL to help artists deepen connection with Chinese audiences.
• The addition of Ximalaya strengthened our position as a leading music and audio ecosystem. Its extensive content library broadened our user reach and enriched our SVIP offering. Meanwhile, we have begun the backend integration journey, laying the foundation for operational efficiency gains over time.

Holistic IP Value Creation – Extended the value of premium IPs beyond streaming through digital and physical experiences, deepening fan engagement and driving diversified growth.

• Continued to enhance our SVIP offering with differentiated IP-driven benefits, driving growth in user scale, engagement, and consumption of premium ancillary experiences. New benefits, including digital albums and tailored gift packages for artists and groups such as RENJUN, Lay Zhang, aespa, and RIIZE^[5], deepened fan engagement.
• Expanded music IP into more immersive offline experiences, contributing to strong growth in concert-related revenue. 1) Hosted three fan meetings in Macau, China for SM Entertainment's trainee group, SMTR25, attracting tens of thousands of attendees and generating strong merchandise sales. 2) Building on last year's success, we scaled up our proprietary international IP event, TIMA, expanding to a much larger venue to welcome more fans amid growing enthusiasm.
• Extended the value of music IP through end-to-end IP merchandise development and distribution. Physical releases from KUN, Chen Chusheng, Eazin Poe, and Zhou Shen were met with strong demand, highlighting fans' growing appetite for premium music collectibles.

Second Quarter 2026 Financial Review 

Total revenues increased by RMB491 million, or 5.8%, to RMB8.93 billion (US$1.32 billion) from RMB8.44 billion in the same period of 2025. The revenue generated from Ximalaya was RMB407 million (US$60 million)^[6].

• Revenues from music related services increased by 11.0% to RMB7.61 billion (US$1.12 billion), compared with RMB6.85 billion in the same period of 2025. The increase was driven by solid growth in revenues from marketing and consumption services, such as offline performance related services, as well as revenues from membership services. Revenues from membership services were RMB4.79 billion (US$706 million), representing 8.1% year-over-year growth, compared with RMB4.43 billion in the same period of 2025. The consolidation of Ximalaya contributed to the increase of our membership revenues. Additionally, our SVIP membership continued to expand and contributed to our membership revenue growth. Revenues from offline performances related services achieved robust year-over-year growth as we successfully staged several concerts for our strategically collaborated artists.
• Revenues from social entertainment services and others decreased by 16.4% to RMB1.33 billion (US$196 million) from RMB1.59 billion in the same period of 2025.

Cost of revenues increased by 6.2% year-over-year to RMB4.98 billion (US$735 million), mainly due to increased costs related to offline performances, and higher long-form audio content costs due to expansion of content library. Meanwhile, revenue sharing fees decreased, resulting from declines in both revenue sharing ratio and revenues from social entertainment services. 

Gross margin was 44.2%, compared with 44.4% in the same period of 2025. The consolidation of Ximalaya had a positive impact to our gross margin of this quarter.

Total operating expenses increased by 12.0% year-over-year to RMB1.30 billion (US$191 million). Operating expenses as a percentage of total revenues increased to 14.5% from 13.7% in the same period of 2025. The increase was primarily due to the consolidation of Ximalaya, including the amortization of intangible assets arising from the acquisition.

On an IFRS basis, net profit and net profit attributable to equity holders of the Company for the second quarter of 2026 were RMB2.55 billion (US$376 million) and RMB2.47 billion (US$364 million), respectively. Basic and diluted earnings per American Depositary Shares ("ADS") for the second quarter of 2026 were RMB1.58 (US$0.23) and RMB1.57 (US$0.23), respectively. The Company had weighted averages of 1.56 billion basic and 1.58 billion diluted ADSs outstanding, respectively. Each ADS represents two of the Company's Class A ordinary shares.

On a non-IFRS basis, adjusted EBITDA for the second quarter of 2026 were RMB3.25 billion (US$480 million). Non-IFRS net profit was RMB2.78 billion (US$410 million) and non-IFRS net profit attributable to equity holders of the Company was RMB2.69 billion (US$396 million). Non-IFRS basic and diluted earnings per ADS were RMB1.72 (US$0.25) and RMB1.70 (US$0.25), respectively. Please refer to the section in this press release titled "Non-IFRS Financial Measures" for details.

As of June 30, 2026, the combined balance of the Company's cash, cash equivalents, term deposits and short-term investments amounted to RMB44.22 billion (US$6.52 billion), compared with RMB41.00 billion as of March 31, 2026.

Share Repurchase Program

Under our previously announced share repurchase programs, during the three months ended June 30, 2026, we repurchased a total of 43.5 million ADSs in the open market with cash for an aggregate consideration of approximately US$400.0 million at an average price of US$9.2 per ADS.

Environmental, Social, and Governance ("ESG")

We continued to enhance tailored music experiences for users of all ages. This quarter, we enhanced Youth Mode across our core products and introduced a curated, age-appropriate content library for younger users to safely discover and enjoy music.

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.7851 to US$1.00, the noon buying rate in effect on June 30, 2026, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

Non-IFRS Financial Measures 

The Company uses non-IFRS financial measures for the period, including non-IFRS net profit, adjusted EBITDA(inc.SBC) and adjusted EBITDA, in evaluating its operating results and for financial and operational decision-making purposes. TME believes that non-IFRS financial measures help identify underlying trends in the Company's business that could otherwise be distorted by the effect of certain expenses that the Company includes in its profit for the period. TME believes that non-IFRS financial measures for the period provide useful information about its results of operations, enhances the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.

Non-IFRS financial measures for the period should not be considered in isolation or construed as an alternative to operating profit, net profit for the period or any other measure of performance or as an indicator of its operating performance. Investors are encouraged to review non-IFRS financial measures for the period and the reconciliation to its most directly comparable IFRS measure. Non-IFRS financial measures for the period presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data. TME encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.

Adjusted EBITDA(inc.SBC) for the period represents net profit for the period excluding income tax expense, finance cost, share of profit/loss of associates and joint ventures, other gains/losses, interest income, depreciation of property, plant and equipment and right-of-use assets, and amortization of intangible assets.

Adjusted EBITDA for the period represents net profit for the period excluding income tax expense, finance cost, share of profit/loss of associates and joint ventures, other gains/losses, interest income, depreciation of property, plant and equipment and right-of-use assets, amortization of intangible assets, and share-based compensation expenses.

Non-IFRS net profit for the period represents profit for the period excluding amortization of intangible and other assets arising from business acquisitions or combinations, share-based compensation expenses, net losses/gains from investments and related income tax effects.

Please see the "Unaudited Non-IFRS Financial Measures" included in this press release for a full reconciliation of adjusted EBITDA(inc.SBC), adjusted EBITDA and non-IFRS net profit for the period to its net profit for the period.

About Tencent Music Entertainment

Tencent Music Entertainment Group (NYSE: TME and HKEX: 1698) is the leading all-in-one music and audio entertainment platform in China, operating the country's highly popular and innovative music and audio apps: QQ Music, Kugou Music, Kuwo Music, WeSing and Ximalaya. TME's mission is to create endless possibilities with music and technology. Powered by its content-and-platform dual-engine strategy, TME's expansive offerings extend the value of IP beyond online streaming into offline concerts, artist merchandise, and other IP-centric experiences. TME continuously innovates to deliver a seamless experience where users can discover, listen, sing, watch, perform, and connect across diverse scenarios, while unlocking the enduring value of music and audio IP. For more information, please visit ir.tencentmusic.com.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the SEC and the HKEX. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

Investor Relations Contact 
Tencent Music Entertainment Group
[email protected]
+86 (755) 8601-3388 ext. 885034

HONG KONG, Aug. 11, 2026 /PRNewswire/ -- China Literature Limited ("China Literature" or "the Company", stock code: 0772), a leading online literature and intellectual property ("IP") incubation platform in China, today announced its unaudited consolidated financial results for the six months ended June 30, 2026.

Results Highlights ⁽¹⁾⁽³⁾

• Total revenues increased by 10.7% year-over-year to RMB3,531.4 million (USD518.5 million) in the first half of 2026.
  • Revenues from online business decreased by 7.3% year-over-year to RMB1,840.0 million (USD270.2 million).
  • Revenues from intellectual property operations and others increased by 40.3% year-over-year to RMB1,691.4 million (USD248.3 million).

• On an IFRS basis:
  • Profit attributable to equity holders of the Company was RMB135.4 million (USD19.9 million), compared with RMB849.8 million in the first half of 2025, primarily the result of RMB300 million (USD44.0 million) in tax-related payments incurred by a subsidiary of the Company and the high base effect set by a RMB512 million after-tax gain on the deemed disposal of an investee during the prior year period.
  • Basic earnings per share were RMB0.13. Diluted earnings per share were RMB0.13.

• On a non-IFRS ⁽²⁾ basis, which is intended to reflect core earnings by excluding certain one-time and/or non-cash items:
  • Profit attributable to equity holders of the Company was RMB258.8 million (USD38.0 million), compared with RMB507.8 million in the first half of 2025, primarily due to the RMB300 million (USD44.0 million) tax-related impact noted above.
  • Basic earnings per share were RMB0.26. Diluted earnings per share were RMB0.25.

Mr. Hou Xiaonan, Chief Executive Officer of China Literature, commented, "Today, two structural shifts are reshaping the entertainment industry: the continued rise of fragmented content consumption, and AI's disruptive impact on the broader content ecosystem. In response, we have continued to build on our core strengths while expanding our strategic presence in emerging sectors such as short dramas, AI-animated dramas, and IP merchandise. These efforts made solid progress and drove 41.9% year-over-year revenue growth in our IP operations business during the first half of the year.

In the first half of 2026, revenue from our short dramas and AI‑animated dramas exceeded RMB430 million, representing a 2.3‑fold year‑over‑year increase. This business now represents 27% of our IP operations revenue and has become a new growth engine. Notably, the proportion of our blockbuster short dramas was four times the market average; 46 AI‑animated drama titles surpassed 100 million views each, and the proportion of titles with over one million views was five times the industry average. We also launched Qidian Theater (起点剧场) in China and ToonScroll overseas to cultivate premium platforms for AI‑animated content. Meanwhile, our IP merchandise business maintained strong momentum, with GMV reaching RMB780 million, up more than 60% year-over-year. On the online content front, our premium reading ecosystem continued to flourish, attracting emerging writers and seeing established top‑tier writers release new, high‑quality works. We also introduced the Buddy series of vertical AI agents for creative industries, embedding AI across the entire content creation lifecycle. Looking ahead, powered by our 'IP + AI' engine, we are accelerating the high‑quality transformation of stories from texts into visual content, leveraging the synergy between technology and creativity to unlock the next decade of IP value creation."

Financial Review

Revenues increased by 10.7% year-over-year to RMB3,531.4 million (USD518.5 million).

Revenues from online business were RMB1,840.0 million (USD270.2 million), compared with RMB1,985.4 million in the first half of 2025.

1. Online business revenues from self-owned platform products were RMB1,623.4 million (USD238.4 million), compared with RMB1,746.0 million in the first half of 2025, mainly due to competitive pressure which led to increased proportion of lower-monetizing free-to-read content and a shift in content distribution from online reading to short dramas and AI-animated dramas on our self-operated products within the Weixin ecosystem.
2. Online business revenues from channels on Tencent products were RMB84.9 million (USD12.5 million), compared with RMB97.1 million in the first half of 2025, primarily due to a decline in advertising revenues from free-to-read content on Tencent's channels.
3. Online business revenues from third-party platforms were RMB131.7 million (USD19.3 million), compared with RMB142.2 million in the first half of 2025, mainly driven by lower revenues received from third-party distribution partners.

Revenues from IP operations and others increased by 40.3% year-over-year to RMB1,691.4 million (USD 248.3 million).

1. Revenues from IP operations increased by 41.9% year-over-year to RMB1,613.9 million (USD237.0 million), primarily driven by rapid growth across multiple business lines, including short dramas, AI-animated dramas, TV series, and IP merchandise products. In particular,
   • Revenues from short dramas and AI-animated dramas exceeded RMB430 million (USD63.1 million), representing a year-over-year increase of 2.3 times, accounting for approximately 27% of IP operations revenues.
   • GMV of IP merchandise products increased by over 60% year-over-year to RMB780 million (USD114.5 million).
2. Revenues from the "others" category, mainly generated by sales of physical books, increased by 14.4% year-over-year to RMB77.4 million (USD11.4 million).

Cost of revenues increased by 10.2% year-over-year to RMB1,739.3 million (USD255.4 million). The increase was primarily driven by higher production costs for short dramas, AI-animated dramas, and TV and web series which were in line with revenue growth during a period of higher content releases.

Gross profit increased by 11.1% year-over-year to RMB1,792.1 million (USD263.1 million). Gross margin increased from 50.5% to 50.7% year-over-year.

Selling and marketing expenses increased by 9.6% year-over-year to RMB1,011.4 million (USD148.5 million), mainly driven by higher marketing and promotional spending to support the expansion of our IP businesses. As a percentage of revenues, selling and marketing expenses were 28.6% in the first half of 2026, compared with 28.9% in the prior year period.

General and administrative expenses increased by 15.5% year-over-year to RMB560.0 million (USD82.2 million), primarily due to higher personnel and administrative expenses related to scaling our IP businesses. As a percentage of revenues, general and administrative expenses were 15.9% in the first half of 2026, compared with 15.2% in the prior year period.

Net other losses were RMB25.0 million (USD3.7 million), compared with net other gains of RMB582.5 million in the first half of 2025. The change was mainly due to RMB134 million (USD19.6 million) of late-payment tax surcharges incurred by a subsidiary of the Company in the first half of 2026 (see income tax section for the full impact of this matter), compared with RMB597.6 million of net gains before tax recognized on the deemed disposal of an investee in the first half of 2025.

Interest income was RMB81.3 million (USD11.9 million), compared with RMB81.9 million in the first half of 2025.

Net provision for impairment losses on financial assets was RMB6.2 million (USD0.9 million) on a net basis, mainly related to IP businesses.

Operating profit was RMB270.8 million (USD39.8 million), compared with RMB875.8 million in the first half of 2025. On a non-IFRS basis, operating profit was RMB367.2 million (USD53.9 million), compared with RMB448.7 million in the first half of 2025.

Income tax expense increased from RMB149.5 million in the first half of 2025 to RMB224.9 million (USD33.0 million) in the first half of 2026, primarily due to RMB166 million (USD24.4 million) in supplementary income tax payments by a subsidiary of the Company. Together with the related late-payment tax surcharges of RMB134 million (USD19.6 million, recorded in other losses), these items reduced profit attributable to equity holders of the Company by RMB300 million (USD44.0 million).

Profit attributable to equity holders of the Company was RMB135.4 million (USD19.9 million), compared with RMB849.8 million in the first half of 2025. On a non-IFRS basis, profit attributable to equity holders of the Company was RMB258.8 million (USD38.0 million), compared with RMB507.8 million in the first half of 2025, largely due to the RMB300 million (USD44.0 million) tax-related impact noted above.

Key Operating Information

• Average MAUs on self-owned platform products and self-operated channels on Tencent products were 134.1 million, compared with 141.3 million in the first half of 2025.

1. 1. MAUs on self-owned platform products increased by 0.8% year-over-year from 102.7 million to 103.5 million, remaining broadly stable.
   2. MAUs on self-operated channels on Tencent products decreased by 20.5% year-over-year from 38.5 million to 30.6 million, primarily due to our continued shift of core content distribution to our own platform products, leading to lower activity on Tencent's channels.

• Average MPUs on self-owned platform products and self-operated channels on Tencent products were 8.2 million, compared with 9.2 million in the first half of 2025, primarily due to an increased proportion of free-to-read content on our self-owned platform products, resulting in a change in user mix and a corresponding decline in the number of paying users.
• Monthly ARPU increased by 4.5% year-over-year to RMB32.7, mainly due to a mix effect resulting from lower-ARPU users shifting to free-to-read content.

Other Key Information

• EBITDA was RMB302.6 million (USD44.4 million), compared with RMB318.2 million in the first half of 2025. Adjusted EBITDA was RMB384.2 million (USD56.4 million), compared with RMB386.9 million in the first half of 2025.
• As of June 30, 2026, the Company's net cash position was RMB986.14 million (USD1,447.9 million), compared with RMB943.60 million as of December 31, 2025.

Business Highlights

IP Creation

Our online reading ecosystem continues to serve as a "super reservoir" of premium content.

In the first half of 2026, our platform attracted approximately 240,000 new writers, generated over 460,000 online literature works, and added more than 30 billion characters, securing a strong source of content supply. Emerging-generation writers are gaining momentum: among newly signed writers who generated more than RMB1 million in revenue during the first half of the year, those under 30 accounted for 57%, representing a 49% increase year-over-year. Promising works continued to emerge. On Qidian, the number of titles receiving user collections increased by 37% year-over-year, while the number of titles receiving monthly tickets grew 26% year-over-year. With the return of a series of top-tier Platinum and Phenomenal writers, two new titles attracted more than 200,000 readers each on their first day of launch, setting new records for debut performance on the platform.

IP Visualization

We accelerated the transformation from text to visual content. In the first half of 2026, while solidifying our traditional strengths in film, drama series, and animation, we also stepped up our efforts in emerging segments such as short dramas and AI-animated dramas, resulting in exceptional growth. Revenue from short dramas and AI-animated dramas exceeded RMB430 million, representing a 2.3-fold year-over-year increase.

In the premium drama series and film segment, several drama series adapted from China Literature's IPs premiered this year, including top-tier titles such as "Blossoms of Power (百花杀)," "The Heir (家业)," and "Ashes to Crown (翘楚)." All of these titles ranked among the top titles on platform popularity charts during their respective broadcasting periods. Meanwhile, we also released our self-produced drama series "No Pain No Gain (年少有为)," "The Devil Between Us (除恶)," and "Lady Liberty (爱情没有神话)." These titles broke new ground across genres such as urban drama and crime drama, winning both critical acclaim and strong audience traction.

In the animation segment, we released sequels of classic animated titles, including "Battle Through the Heavens (斗破苍穹)," "The Outcast (一人之下)," "Almighty Mage (全职法师)," and "Stellar Transformations (星辰变)." All of these titles ranked among the top titles on platform popularity charts during their respective broadcasting periods. Among them, "The Outcast (一人之下)" achieved a popularity index of over 21,800 on Tencent Video, making it the most popular 2D animated series on the platform in the past three years. According to Enlightent, since the beginning of 2026, eight of the top 10 animation series by cumulative views across all platforms were adapted from China Literature's IPs, further demonstrating our market influence in animation content.

In the short drama and AI-animated drama segment, we achieved major breakthroughs. In the first half of 2026, we launched over 90 short dramas, including many breakout hits. In male-oriented genres, "The Invisible Bodyguard (隐身侍卫)" was a blockbuster, with a popularity index exceeding 100 million and total views across all platforms surpassing 5 billion. In female-oriented genres, sequels of our original "Sweet Wife (甜妻)" IP performed strongly, setting a benchmark for commercialization. In the AI-animated drama segment, our top-tier title "Three Thousand Shelters (三千庇护)" surpassed 3 billion views across all platforms, driving the original novel into the top 10 of the bestseller ranking on Qidian. We also explored opportunities to develop premium AI-animated drama platforms, launching "Qidian Theater (起点剧场)" and "ToonScroll" in China and overseas, respectively. All these achievements were driven by China Literature's extensive IP library, strong creator ecosystem, and robust capabilities in IP development across the industry chain.

IP Commercialization and Monetization

In the first half of 2026, our IP merchandise business continued to maintain rapid growth, with GMV reaching RMB780 million, representing a year-over-year increase of more than 60%. This growth was driven by our continued enhancement across four core areas: product, channel, operation, and ecosystem.

• Product: We strengthened our presence in the light-and-soft merchandise category, which is characterized by high-frequency purchases and strong repeat purchase rates, while expanding into new categories such as plush toys, lifestyle products, and precious metals. Our design excellence and supply chain efficiency enabled us to deliver a steady stream of high-quality products, positioning "Yuewen Goods" as one of the leading brands in China's anime merchandise market.
• Channel: We strengthened our self-operated online sales network, including mini-programs, live-streaming rooms, and flagship e-commerce stores. We also optimized our offline store network and deepened collaboration with our channel partners. These efforts led to improvements in both channel profitability and brand control. We also continued to enhance our sales velocity and supply chain management, improving inventory turnover efficiency and translating sales growth into solid profit contribution.
• Operation: We launched campaigns around iconic IP characters, driving deeper fan engagement and stronger consumer conversion. During the first half of the year, we organized the "Glory Pilgrimage (荣光巡礼)" pop-up event in four cities to celebrate the birthday of Ye Xiu, the leading character of "The King's Avatar (全职高手)." We also launched "The Outcast Boy Group (异人男团)," bringing "The Outcast (一人之下)" IP to a broader audience through idol-style marketing and deepening the emotional connection between the IP and users.
• Ecosystem: We accelerated the expansion of our overseas channels. Together with our partners, we opened our first global collectible toy concept store in Singapore, while selected products on the overseas online store for "Lord of the Mysteries (诡秘之主)" sold out shortly after launch. The popularity of our hit merchandise further amplified the appeal of our IPs, driving users back to our content ecosystem spanning online reading, animation, and drama series.

In the game segment, we launched multiple IP crossover collaborations in the first half of the year, all of which were well received. Partnerships including "The King's Avatar (全职高手)" × "Peacekeeper Elite (和平精英)" and "Soul Land (斗罗大陆)" × "Peacekeeper Elite (和平精英)" generated strong market buzz and engagement. Looking ahead, game adaptations of major IPs such as "Lord of the Mysteries (诡秘之主)" and "My Heroic Husband (赘婿)" are expected to be launched soon.

Widespread Application of AI Technology

At China Literature, AI is not confined to a single application. We have deeply integrated it into every stage of the content creation journey, from creative ideation to global user reach.

We launched the Buddy series of AI agents, purpose-built for the creative content industry, and upgraded three core products: NovelBuddy (作家助手), DramaBuddy (漫剧助手), and IPBuddy (版权助手), to provide content creators and operators with a comprehensive suite of AI-powered tools.

• NovelBuddy: Designed for online literature creators, NovelBuddy provides AI-assisted writing support, as well as copyright protection and anti-plagiarism services, helping safeguard creators' rights.
• DramaBuddy: Focusing on AI-animated drama production, DramaBuddy covers the entire process, including creative ideation, content production, and project management, enabling the scalable production of premium AI-animated dramas.
• IPBuddy: Serving as the "all-seeing eye" of our in-house copyright team, IPBuddy enables the value assessment of a title within minutes and greatly improves the efficiency of selecting IP for adaptation and commercialization.

Meanwhile, AI has accelerated our global expansion. As of June 30, 2026, more than 30,000 AI-translated works were available on our WebNovel platform, contributing 40% of the platform's novel revenue during the first half of the year. AI also facilitated a 160% year‑over‑year increase in revenues for WebNovel's works in less‑commonly spoken languages, enabling Chinese stories to reach global multilingual audiences more efficiently.

Outlook

Over the past two decades, the internet has lowered the barriers to literary creation and underpinned China Literature's growth into the company it is today. We believe that over the next two decades, AI will become a crucial tool for extending creators' capabilities and unlocking a step change in value across the content ecosystem. Deeply integrating AI into the creation process and driving growth through technology form our core strategy for the future, as well as a vital path to amplifying IP value. Through AI, we aim to help great stories realize their full potential. At the same time, we recognize that, as AI becomes more capable, original human creativity will become even scarcer and more valuable. That is why China Literature will continue to strengthen its support for original creators, ensuring that technology empowers creativity and that great stories can flourish for generations to come.

About China Literature Limited

China Literature is dedicated to building a deep and immersive intellectual property ("IP") universe for the Mandarin-speaking world. It incubates original IPs from its online literature platform, which are subsequently adapted to a range of digital entertainment mediums, including comics, animation, film, TV series, web series, games, short dramas and AI-animated dramas. The virtual world created by these digital offerings becomes an inseparable part of a user's daily life. China Literature creates and promotes IPs mainly through Qidian Reading and QQ Reading, its leading online literature platforms, as well as New Classics Media, a renowned film and TV drama series production house in China. China Literature collaborates with Tencent, its shareholder and strategic partner, as well as other third-party partners to distribute and develop IP content and to enhance the value of its IP. Many of the Company's online literature works have been successfully adapted into animation, TV series, web series, films, games, short dramas and AI-animated dramas, including Joy of Life, Candle in the Tomb, Soul Land, The King's Avatar and My Heroic Husband. China Literature's rich and extensive content library as well as its unparalleled capability and resources to adapt IP into various entertainment formats is a significant competitive advantage that lies at the core of its business model. For more information, please visit http://ir.yuewen.com/.

Non-IFRS Financial Measures

To supplement the consolidated financial statements of the Company prepared in accordance with IFRS, certain non-IFRS financial measures, namely non-IFRS operating profit, non-IFRS operating margin, non-IFRS profit for the period, non-IFRS net margin, non-IFRS profit attributable to equity holders of the Company, non-IFRS basic EPS, and non-IFRS diluted EPS, have been presented as additional financial measures in this press release for the convenience of readers. These unaudited non-IFRS financial measures should be considered in addition to, and not as a substitute for, measures of the Company's financial performance prepared in accordance with IFRS. These non-IFRS measures may be defined differently from similar terms used by other companies. In addition, non-IFRS adjustments include relevant adjustments for the Company's material associates based on available published financials of those associates, or estimates made by the Company's management based on available information, expectations, assumptions and premises.

Our management believes that the presentation of these non-IFRS financial measures, when shown in conjunction with the corresponding IFRS measures, provides useful information to investors and management regarding the financial and business trends relating to the Company's financial condition and results of operations. Our management also believes that the non-IFRS financial measures are useful in evaluating the Company's operating performances. From time to time, there may be other items that the Company may include or exclude in reviewing its financial results.

Forward-Looking Statements

This press release contains forward-looking statements relating to the industry and business outlook, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realized in future. Underlying the forward-looking statements is a large number of risks and uncertainties. Further information regarding these risks and uncertainties is included in our other public disclosure documents on our corporate website.