Q4 2021 Lizhi Inc Earnings Call
Hello, Ladies and gentlemen, thank you just on didn't buy it for.
These high Inc's fourth quarter and fiscal year 2021 earnings conference call.
At this time all participants are in a listen only mode. After management's remarks, there will be a question and answer session. Today's conference call is being recorded I would now turn the call over to your host Effie time.
Head of capital markets for the company. Please go ahead.
Thank you very much Hello, everyone and welcome to BG Inc's fourth quarter and fiscal year 2021 earnings conference call, We released our financial and operating results. We our newswire services earlier today and they are available online, but do you sense on today's call will include all our founder and CEO .
Mr. Mok whole life all of C. O O. Mr. So lonely and our acting CFO Ms. Chung Pardon me, Mr. Li and Mr. Lu will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded.
Mission highlights presentation and the webcast a replay of this conference call will be available maybe IR section of our website at IR Dogmeat, just don't have that.
Before we continue piece notes to today's discussions will contain forward looking statements made on the D. C. Pablo prohibition after you'd have to private so quickly litigation Reform Act of 1995. These statements type for me contemporary soccer is made we don't in fact target.
Asking made impact but less.
Potential continue or other C&I Russian forwardlooking statements seem bogey.
And on certainties the accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those appear Jackie I'm keeps taking many of which factors are beyond our control.
The company is affiliate adviser refuse downhole chips and underwriters do not undertake any obligation to update these forward looking information except as required under the applicable law. Please also note that need just on your press release and this conference call include discussions of all that he has got.
[noise] financial measures what are these non-GAAP financial measures. Please refer to me just the earnings press release for them, we have cause to be Asia, and audited non-GAAP measures to GAAP measures I will now turn the call over to our CEO . Mr. Li. Please go ahead.
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Hello, everyone and thank you for joining our fourth quarter and full year. Since you tell me what the news conference call first of all on behalf of the need your management team I would like to express my deep.
Gratitude to our shareholders and investors, who have supported us throughout 2021 we made continuous progress and the successful implementation of our strategic path achieving rapid growth while continuously expanding our global footprint, we actually vacated our efforts to optimize.
Our diversified product portfolio strengthen the development of our core technology cause through efficiency and maximize value with more refined operational strategies. As a result, we continued to achieve key goals, while journey towards building a sustainable audio ecosystem.
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In the fourth quarter of 'twenty 'twenty. One leads you mentioned the steady growth we continue to see heightened our efforts to engage the audience centric ecosystem.
Jonathan user connections and engagement and the vast commercialization initiatives all of which laid a solid foundation for our sustainable growth.
Thanks to the effective execution of our operational strategy average monthly paying users in the fourth quarter increased by 18% year over year to 497.3 thousand in the fourth quarter revenue either new record high of RMB 560 minutes.
Yeah, Dan to your year over year increase of 33%.
In addition to strong revenue growth. We are also encouraged by the continued expansion of our gross margin, which grew to 32% in the quarter up 400 basis points year over year. In addition, we further improved our profitability, notably we turned profitable for the first time.
GAAP basis in the fourth quarter, we reported net income of RMB eight one to 92 million.
Addition to our non-GAAP net income of RMB $18 25 minutes.
Creating 277 times year over year.
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The productivity not just for the future.
2021 all successful commercialization strategy execution fueled full year revenue growth of 41% to RMB. Two one thing on the full year gross margin grew to 29% or an increase of 400 basis points compared with 2020. We are also delighted to see.
Our domestic business achieved the operational profitability in fiscal 2020 , one reaffirming our competitive mode.
Vantage in the audio space, while establishing a solid foundation for future growth.
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In terms of our joins attendance in the second half of 'twenty 'twenty. One we are adjusting our operational and marketing strategy to harness all resources and efforts to target core content categories with greater monetization potential so all.
Finally through the operation management and marketing strategies, we are continuously expanding our most active user groups, while improving user experience and increasing user engagement in the fourth quarter of 2021, we organized in a hosted a series of events and activities extensive just by that.
Means you're adding voice got them unleashing creativity and enthusiasm of our content creators attracting more medium to long tail creators to engaging craving and interrupting on the papillon, which in turn increases user engagement and the boost community connectivity.
We were pleased to see that the average I mean, you are all joined determine visits continue to expand to $9 4 million in the fourth quarter with both the paying user base and the revenue maintaining a robust growth momentum for the ramping up of our commercialization capabilities in the future we will continuously.
Banned the commercialization potential of our audio entertainment business remain steadfast in our efforts to enhance all commercialization efficiency and to ultimately deliver overall growth over the long term.
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In the fourth quarter, we continued to optimize product features and functions of our global social product here include adding access to the Youtube SDK, we remain focused on boosting user engagement through product innovation for the improving user stickiness and active reaction right.
In December the average time spent daily in real time voice room per user increased by 68% year over year and the number of parents or friends connections continue to grow.
And in December to the new one existing forging fold increase compared with December 2020.
In addition by the end of 2021 the cumulative downloads of Geos reached close to 20 minutes recently rolled out a brand new version of <unk>. In addition to optimizing user interface design, we further improved the product, but the agility and the usability for the upgraded version notably.
We launched the innovative future referred to real time Interactive group space.
This new feature is designed to help users from my connections more easily and efficiency as well as build there. Unlike many more engaging martha but typically only one peak is needed for users to switch to the multi user real time interactive space, we have a novel group space.
Which enables faster and more efficient real time voice communication.
What tax image screen sharing Youtube as PK and other multimedia functions users can't have a richer set of real time interaction.
This new version of <unk> is able to support both private and public bogie interaction spaces, enabling users to connect to read their appendices and friends through a private group space in the meantime, public spaces on kiosks can be recommended and discovered based on user preferences.
Is which may help users reached there when my social network. Now we are also planning to entice more offline groups and kols to drawing tee up and create vibrant diverse interest based communities.
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First of all John .
He also a little bit on the chairs to Thomson Gucci.
Two reasons, our EBIT to be up 10 minute due to leases or do you bought yoga products.
This new T. I addition marks another milestone for that innovation roadmap in 'twenty to 'twenty, two we will keep us adhere to a balanced growth strategy and driving robust organic growth, while maintaining cost control. Another highlight of all internationally expansion is that yeah. We're suddenly office.
Surely established its global headquarters in Singapore, The headquarters will serve as the global population, which here as well as the BG group to help nurture teams of talent and fully support the expansion of the beaches International business.
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Oh, Hi, Linda So so who don't want look kaki.
So I think the product.
Looking back on the 'twenty to 'twenty, one while focusing on product innovation. We also actively advanced the development of our in house suite of technology. We are convinced that that core technologies help us for a while users with retail audio entertainment offerings and the more interactive social experiences building a deep mode.
For our business, we're very pleased to see that all in house developed the RTC real time audio and video streaming technology solution that Randy and the instant voice messaging tap on border Act I'll continue empowering our product enhancement capabilities.
Why do you pay those technology solutions, Dr. Remy and voltage class kidney allow us to consistently innovate and enrich product features and functions to our language users' diverse needs ultimately, creating unparalleled value for all users.
In addition, our new Heartbeat of technologies also bolsters, our multi device product roadmap, including having compatibility with a variety of operating systems and international vehicle Papillon supporting various applications of major product under the word you used to just narrows.
Improving user experience through widespread staffing and high definition audio transmission technology in the next phase, we will continuously investing leading edge technologies in Congress in house R&D to strengthen our core technology capabilities and create an industry, leading real time engagement.
Archie ecosystem to power the development of our product portfolio.
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In summary in 2021, the robust growth across our diversified businesses, but the vast amount in our in house technologies and the continuous optimization of our organizational system has built a solid base for our long term development moving into 2022 we remain on baby.
Reading, all globalization strategy exploring more regions and territories with diversified product portfolio, leveraging well established in the operational experience and localized innovation to tap into more commercialization potential building or you're creating competitive audio ecosystem and also.
Three creating more value for our shareholders as well as the wider society.
To do that.
Some of that's a woman 30, therefore lose some bonuses.
Just thought I would do.
With that I will now turn the call over to our acting CFO , Ms Cheng, who will discuss our financial results in more detail.
Okay. Thank you all and Hello, everyone.
Strong financial performance in the fourth quarter and in fiscal 'twenty, two new one existing inside the company successful execution of strategy in meeting growing user demand for audio based entertainment and social networking.
Could you brought the country knows fine tuning of our operations and optimization of our cost structure.
Gross margin in the fourth quarter had a record high at 32% up 400 basis points year over year also added up to a 400 basis points increase in the full year gross margin.
In the fourth quarter, we achieved a net income of RMB eight one lambda as a non-GAAP net income increased by 237% to RMB $84 3 million.
We're encouraged by the robust growth in the audio entertainment business, and our efficient and effective commercialization strategy.
S refers our ROA all global expansion plans continue to need to we will remain our intense focus on providing innovative and valuable products and services to our users well building more competitive audio ecosystem.
And providing a brief overview of our financial results.
Fourth quarter after mid 'twenty one.
First in the fourth quarter. Our total net revenues were RMB $550 3 million, representing an increase of 33% year over year.
Primarily driven by the increase in the number of average monthly paying users as the average amount of user spending our audio entertainment products.
Cost of revenue was RMB 370, 658 4 million in the fourth quarter up 2021, representing an increase of 26% year over year, mainly.
Many are attributable to our increase in revenue sharing fees to our content creators salary and we have a benefit expenses and bandwidth costs as we expanded our business.
Gross profit was RMB 100.
A P wap aligned with them in the fourth quarter up 2021, representing an increase of 53% year over year.
non-GAAP gross profit was RMB Weyerhaeuser $84 4 million in the fourth quarter up to near 21, representing an increase of 50% year over year.
Gross margin for the fourth quarter up 2021 increased to 32% from 28% in the fourth quarter up to into 'twenty.
non-GAAP gross margin for the fourth quarter up 2021 grew to 33%, while 29% in the fourth quarter 2020.
Operating expenses increased by 41% year over year to RMB $176 6 million in the fourth quarter up 2021.
Research and development expenses were RMB $73 5 million in the fourth quarter up 2021, representing a year over year increase of 30%.
Increase was mainly due to the increase in salary and welfare benefits expenses related to the increase in the number of our research and development staff and the average salary.
Selling and marketing expenses were RMB 70 towards naming them in the fourth quarter up to enter it into one representing an increase of 46% year over here.
Chris was attributable to the increased use of marketing expenses to promote the company's audio entertainment products.
The promotional expenses for our international business and the higher salary and benefit expenses.
General and administrative expenses were RMB 36, so about $2 2 million in the fourth quarter 2021 representing a year over year increase of 59%.
The increase was mainly due to the increase of salary and benefit expenses rental expenses and other general and administrative expenses.
Operating income was RMB five 4 million in the fourth quarter, often due 'twenty one compared to a loss of RMB six 4 million in the fourth quarter up 2020.
The non-GAAP operating income was RMB 44, 7 million in the fourth quarter up 2021 coming to argue for pension liability in the fourth quarter 2020.
Net income was RMB eight 9 billion in fourth quarter of 2021 compared to net loss of RMB five 8 million in the fourth call talked into 'twenty.
GAAP net income was RMB $18 3 million, representing a year over year increase of 237%.
Basic and diluted net income per ads were RMB 70 cents fourth car dropped into 'twenty, one caveat to face that diluted net loss per ads of <unk>.
I'll be starting in the fourth quarter of 2020.
non-GAAP basic and diluted net income per ads were RMB, 36% in the fourth product into 'twenty, one compared to RMB, 12% in the fourth quarter of 2020.
As of December 31st 2021, we had cash and cash equivalents and restricted cash of RMB 537 formula.
Okay. This concludes our prepared remarks today and I will now turn the call to questions. Operator. Please go ahead.
For the furniture.
Benefits of all participants on today's call. If you wish to ask your question to management in Chinese. Please immediately repeat your question in English for the sake of clarity on OTA. Please ask one question at a time management will respond and then feel free to follow up with you next question.
And your first question comes from the line of Vincent Yu from Needham and company. Please ask your question.
Thank you management for taking my question.
I have two questions.
The first question is on profitability I do see that in our Q4.
So we have become profitable in terms of GAAP net income so for.
Or.
What's our view.
Profitability in 2020, that's why I say 'twenty going to and our mid to long term perspective.
The profitability.
Question is.
Can management elaborate more on the.
Rates improvement thank you.
Okay.
Okay.
Thank you Mr from either our trustee I will translate the question.
The first the questions from me then.
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I'll translate for muscle. So the first question from Vincent <unk> from Needham is about the profitability and our long term expectations for the other parts of the budget we.
We are delighted to see that for the first time, we achieved profitable from a GAAP basis.
And substantially increased our non-GAAP net income in the fourth quarter of 291.
Which is mainly due to our effective execution of our strategies on the cost reduction and efficiencies and half month.
The profit forecast for the full year of 2022 in terms of top line will continue to expand the user base increased the number of paying users and the users spending levels in the audio entertainment segment other.
Harder to unleash the commercialization potential of the audio entertainment business.
Councilwoman few hot to pencil put on this yourself.
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People can judge whether if you treat them.
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Some of the pricing.
Meanwhile, we also plan to explore more market and develop new commercialization models and drive the overall revenue growth for different quadrants of the year. There may be fluctuations caused by factors such as fast the walls and the holidays, but we expect that the overall revenue we'll maintain.
Saudi the growth momentum in the year.
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In terms of a crazy really expenses will now be attracted resources on location. According to the progress made during each phase for the domestic business will flooding thematic strategies to control costs and enhance efficiency in order to achieve profitability at the operating.
Level for the international business will adopt a strategy of balanced growth, while controlling the investment size maximizing the operational efficiency, establishing a network effect for our product and they're achieving organic growth in our user numbers. Overall, we are confident we will further narrow.
Our losses in 2022.
And build a solid foundation for us to achieve our mid to long term profitability targets.
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For a mid to long term growth, we hope to further diversify our revenue, including developing new markets and the incubation of new products to gradually increase the income from the international business to boost the overall revenue growth. Meanwhile, we will continue to optimize the cost structure.
Improved operating efficiency reduce the overall expense ratio and the promo business grows with the goal of achieving overall profitability in the mid to long term.
This concludes with Marcos answered.
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In the fourth quarter of 2021, we achieved 18% year over year increase in the average monthly pay user base to 500000, while our quarterly revenue hit a new railcar hi. This is mostly due to two reasons first of all we are focused on the audio entertainment business.
And launching diverse promotional activities to further cheese or the creativity and enthusiasm of our content creators in order to boost the user participation and the effect really promote the paying user conversion.
On the other hand on the marketing strategy front.
You focused more on the core content categories to acquire a customer accurately.
Strengthening ties between the users and content creators and leveraging the advantages of audio we can consolidate user connection and engagement to promote the conversion after pay users.
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So people shouldn't you.
<unk> and <unk> solutions.
In countries aren't you too in addition to continuing to explore the domestic market. We are also leveraging our experience to continue to expand our business into more countries and regions through all fine tuning operations increased the overall pay user base right.
<unk> user expanded apples and then tried to top line growth this year.
Thank.
Thank you.
Thank you Marco.
Your next question comes from the line of Vicky Wei from Citi. Please ask your question.
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<unk> got some thoughts.
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Uh huh.
What's really exciting is just.
Good evening management, Thanks for taking my questions and congrats on the profitable corner when management share some color about the 2022 growth strategies as well as audio entertainment sector outlook for 2022. Thank you.
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Ma'am you Chi this is Colin angle.
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Switching grew more than that.
I'll translate for Michael we are confident we can continue to scale all girls in the future with the effective implementation of our globalization strategy, we are expecting the international business to generate incremental growth for our overall user base.
Recently, we have focused on the continuous optimization and upgrading of our products, which we believe will effectively increase the user engagement and grow our user base.
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Hello, Yeah with its moment junior.
Sure.
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Sure.
Punctured query some doubtful accounts, where you can see some of your product you could.
Moments like that.
So all of them.
Well then you see how are you where you fulfill more of them go through.
Welcome to the Merrimack.
This is Jim Goss with them that pinch.
Pinch in Angola, where you thought that you can quibble with the Shaw Oakland here.
Moving forward, we will actively explore and they expand into the new markets and build a more diversified product portfolio. We are looking to reproduce also exactly trends and the business model in the domestic audio entertainment sector into other markets and localize arbitration.
According to a differences of these various market ultimately growing and it's creating new consolidation potentials and we have been preparing for this expansion we are expecting our international business user base to achieve strong growth in the mid to long term and contribute to future.
<unk> revenue growth.
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That sort of add to it.
Thanks, Joe.
Now I will move.
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Tissue tooth Europeans, Jim Cheng God, Egypt.
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Any pune to see ECS who've been on mute.
Yeah.
Closing the inputs.
You can see it in what had been going on at your.
The way our aquatic taking for them to do.
Are you selling them for the Chinese do switching.
Switching until they can put itself.
Tony I choose switching solar that comes out.
In terms of our domestic business, we mainly focus on the user base expansion in the audio entertainment sector and monetization of the core user groups are excellent performance in the fourth quarter also demonstrated the effectiveness of our operational strategies, we will continue to optimize.
I'll walk you through energy and target content cuts agreed with greater monetization potential as well as execute on our precise for user acquisition strategy to reach core user groups with strong spending power and a higher willingness to pay in addition to optimizing product function and.
Launching the diversified activities, we can successfully ensure user engagement and the paying user conversion, thereby driving the topline growth.
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Okay. That's helpful.
She is on a sort of a thumbs up somewhat.
The Muslims the woman.
Of course, I'm thinking of your part D.
Senior pool, which you similar maline disruption.
Mountain women of values.
Probably with the Thunder.
We'll get them done.
Eastern Seaboard, our Catholic familiar so you kind of my own.
I know our Union China for sure.
Cordelia worsening.
Since these are things that you need.
Regarding to the our joint tenderness sector, we think the sector has strong commercialization potential in the second half of last year, we began to optimize operational and marketing strategies, which is in fact can be improved as a collection of paying user base.
And all of the auto entertainment and in turn drove the revenue growth at the same time, we also optimized our partners to talk to her to further improve the gross margin while the gross profit was up 53% year over year. In addition, we turn profitable on a GAAP basis in the fourth quarter.
While it would be just domestic business already achieving the operational profitability in 2021.
Darling Iron Young woman to cloud you should think in Europe I.
I think things seem to pilot Union.
Joe coaching and coaching.
Chris Latoya.
No.
Judy.
The two to dealing with full vigor.
Houston Youll put us within the system.
Sometimes you can show up with Boswell given them.
In 2022 we will continue to.
Implement our optimized operational strategies in the audio entertainment sector.
Expand our most active user groups and launched the diversified functions in order to promote the collection of paying users increased user spend levels and ensure for overall revenue and profitability.
So as it is he sent me too.
Thank you.
Thank you.
Yeah.
I said well no further questions now I'd like to turn the call back over to the company for closing remarks.
Thank you once again for joining us today. If you have further questions. Please feel free to contact me just investor relations through the contact information provided on our website at IR THAAD Aegis <unk> F M and the Piceance group Investor Relations. Thank you.
This concludes the conference call you May now disconnect. Your line. Thank you.
Yeah.
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