LIZHI Inc., a leading online audio platform in China, recently reported a decline in its Q3 2023 earnings during a conference call. Despite macroeconomic challenges, the company continues to pursue its long-term vision by strengthening its core business and advancing its global strategy.
Key Takeaways:
- LIZHI's net revenues for Q3 2023 were RMB425.1 million, down from RMB565.2 million in the same period last year.
- The company's total average mobile monthly active users (MAUs) amounted to 42.1 million, while its average monthly paying users totaled 402.6 thousand.
- The company continues to streamline operations, improve organizational efficiency, and reinforce its globalization capabilities.
- LIZHI's technological advancements continue to be the cornerstone of its business development, with a focus on AI voice changing technology and automatic speech recognition for both Chinese and English languages.
- The company was recently recognized as one of China's top 100 internet companies by the Internet Society of China for the fifth consecutive year.
During the call, Jinnan Lai, Founder and CEO of LIZHI Inc. (NASDAQ:LIZI), emphasized the company's commitment to its long-term vision and its efforts to improve operational efficiency. The company continues to reduce costs and increase operating efficiency, while also enhancing its globalization capabilities to support the development of its diverse range of businesses.
Despite facing macroeconomic headwinds, LIZHI Inc. reported a revenue of RMB425 million for Q3 2023. The company's total average mobile MAUs reached 42.1 million, and its average monthly paying users amounted to 402.6 thousand.
The company also highlighted its commitment to technological advancement, with a focus on AI and voice technologies. These technologies have been instrumental in improving the stability and performance of automatic speech recognition and text-to-speech (ASR and TTS) for both Chinese and English languages.
Acting CFO, Ms. Chengfang Lu, noted that despite the complex market uncertainties, LIZHI Inc. remains steadfast in strengthening its core competitiveness through technological innovation. The company's net revenues for the third quarter of 2023 were RMB425.1 million, primarily due to a decline in average paying users and user spending on audio entertainment products.
Despite the lower earnings, the company received recognition from the Internet Society of China as one of the country's top 100 internet companies. This marks the fifth consecutive year that LIZHI Inc. has received this honor, reflecting its comprehensive capabilities and industry recognition.
As the company moves forward, it plans to continue refining its business strategies, improving its core technology capabilities, and integrating AIGC and voice AI technologies throughout its business operations.
InvestingPro Insights
LIZHI Inc. (NASDAQ:LIZI) has shown resilience in the face of economic headwinds, as evidenced by its commitment to technological innovation and global strategy. Here are some InvestingPro Insights that provide a deeper understanding of the company's financial health and stock performance:
InvestingPro Data indicates a robust revenue growth of 13.31% in the last twelve months as of Q2 2023, with a quarterly growth of 14.96% in Q2 2023. This suggests that despite a downturn in Q3, the company's revenue base has been expanding over the year. The company's current P/E Ratio stands at 4.38, which is significantly reduced to 0.93 when adjusted for the last twelve months as of Q2 2023, highlighting potential undervaluation. Moreover, LIZHI's Price / Book ratio of 0.22 for the same period implies that the stock may be trading below its net asset value, which could interest value investors.
In terms of InvestingPro Tips, it's noteworthy that LIZHI holds more cash than debt on its balance sheet, providing financial flexibility and a cushion against market volatility. Additionally, the company's stock is currently trading near its 52-week low, which, coupled with an RSI suggesting the stock is in oversold territory, might present a buying opportunity for contrarian investors.
For those looking to delve deeper into LIZHI's financials and stock performance, InvestingPro offers a wealth of additional tips, with 19 more insights available for subscribers. This Cyber Monday, InvestingPro subscription is now available at a discount of up to 60%, and by using the coupon code sfy23, readers can receive an extra 10% off a 2-year InvestingPro+ subscription. Whether you're considering LIZHI Inc. as an investment or simply wish to stay informed, InvestingPro provides the detailed analysis you need to make informed decisions.
Full transcript - Lizhi Inc (LIZI) Q3 2023:
Operator: Hello, ladies and gentlemen. Thank you for standing by for LIZHI INC.'s Third Quarter 2023 Earnings Conference Call. Please note, all participants are in a listen-only mode now and today’s conference call is being recorded. I'll now turn the call over to your host, Effy Kang, Head of Capital Markets for the company. Please go ahead.
Effy Kang: Thank you very much. Hello everyone, and welcome to the LIZHI INC.'s third quarter 2023 earnings conference call. We released our financial and operating results via Newswire services earlier today, and they are available online. Participants on today's call will include our Founder and CEO, Mr. Marco Lai; and our Acting CFO, Ms. Chengfang Lu. Management will begin with prepared remarks, introducing business development and financial performance in the third quarter. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on the IR section of our website at ir.lizhi.fm. Before we continue, please note that today's discussions will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. These statements typically contain words such as may, will, expect, target, estimate, intend, believe, potential, continue or other similar expressions. Forward-looking statements involve inherent risks and uncertainties. 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 projected or anticipated, many of which factors are beyond our control. The company, its affiliates, advisers, representatives and underwriters do not undertake any obligation to update these forward-looking information except as required under the applicable law. Please also note that LIZHI's earnings press release and this conference call includes discussions of unaudited GAAP financial measures as well as the unaudited non-GAAP financial measures. Please refer to LIZHI's earnings press release for reconciliation of unaudited non-GAAP measures to unaudited GAAP measures. I will now turn the call over to our Founder and CEO, Mr. Marco Lai. Please go ahead.
Jinnan Lai: [Foreign Language] Hello everyone, thank you for joining LIZHI INC.'s third quarter 2023 earnings conference call. [Foreign Language] In the third quarter of 2023, we further strengthened the execution of our online audio-centric globalization strategy, leveraging our long-term technological assets. We consistently empowered domestic business innovation, while steadily advancing our global business, fostering a vibrant and diversified ecosystem. In the third quarter of 2023, our revenue reached the RMB425 million. Our total average mobile MAUs amounted to 42.1 million, and our average monthly paying users totaled 402.6 thousand. Despite macro-headwinds, we steadfastly pursued the course we had charted, reinforcing our commitment to our long-term vision. During the quarter, we continued to reduce costs and increase operating efficiency to improve organizational efficiency and agility, while also reinforcing our globalization capabilities to better support the development of our diverse spectrum of businesses. Now let me go over our business developments during the third quarter. [Foreign Language] In terms of our audio entertainment business, we remain committed to building a healthy and sustainable product ecosystem. Through proactive optimization of our operating strategies and meticulous refinement of our mechanisms for expanding and nurturing our content creator base, we have enhanced the creator quality and increased the scale of our creator base, while also solidifying our platform's competitive edges. During the quarter, in addition to the continuous optimization of our content creator platform, we launched the Starlight Challenge [ph], a strategic initiative designed to cultivate mid and long-term content creators and motivate our top tier contributors. This program empowered content creators to showcase their distinctive vocal talents for the unlocking their creative potential, while also elevating the platform's appeal to the content creator community. [Foreign Language] In addition, we strove to improve the user experience and attract more high-quality users through enriched content offerings and product innovations. During the quarter, based on user preferences, we added a suite of carefully curated modules to enrich our content genres, providing our users with more diverse and engaging content options. Furthermore, we continue to iterate our product design and cultivate new product features and engagement tools, harnessing cutting edge technologies to introduce innovative audio-based interaction experiences. We sustain active user participation through a diverse array of marketing programs and themed events, augmenting both user sickness and engagement. [Foreign Language] As for our global innovative business, we are deeply invested in delighting our users with next-generation social networking products. By integrating advanced features including cross device functionality, real-time capabilities, AIGC technologies and more, we continue to refine our product interface and functionality. We leverage advanced technologies to empower product innovation capturing to diverse user needs. Meanwhile, we endeavor to improve user experience -- user engagement by enhancing the network effect of our offerings, thereby fostering organic user growth. Organizational wise, as we continue to boost our localization capabilities across product development, operations and other key areas, we have also taken a collaborative cross team approach to product innovation to increase innovative productivity. Moving forward, we will continue developing international markets reinforcing globalization capabilities and ultimately accelerating the expansion of our global footprint. [Foreign Language] With respect to technological advancement, we continue to strengthen our R&D capabilities to provide more customized product support. This internally empowers product innovation and drives progress across our global business. We have also consistently deepened the integration and development of multi-model AIGC technologies into our innovative business framework. Through motion-enhanced model training and algorithm optimization, we are fortifying our AI assets unlocking vast opportunities for ongoing product innovation. On voice technologies, we have been constantly improving the stability and performance of automatic speech recognition and text to speech ASR and TTS for both Chinese and English languages, adapting them for diverse scenarios. We have also achieved the breakthroughs in AI voice changing technology, including a seamless integration to DOREME, our in-house RTC platform for real-time audio and video streaming. In the meantime, we further enhance the quality of information transmission on our IM platform, VoderX, empowering our business with high performance, low latency and scalable customized instant messaging capabilities. In terms of our versatile technology platform construction, we further improve the data analytics and data management systems and apply the AI technology to marketing and other fields. Collectively, these initiatives have improved overall operating efficiency. In general, we believe technological advancements are the cornerstone of business development. We remain committed to pursuing industry-leading technological standards and continually fortifying our core technological capabilities to empower the business development. [Foreign Language] We are delighted to announce that last month the company was awarded as one of China's top 100 internet companies by the Internet Society of China. This marks the fifth consecutive year that we have received this honor, representing powerful recognition of our comprehensive capabilities by the Internet Society of China and the broader industry. Going forward, despite the macro challenges, we will spare no effort in proactively refining our business strategies and building a more competitive ecosystem. We will continue to improve our core technology capabilities, while also adopting and more deeply integrating AIGC and voice AI technologies throughout business. Meanwhile, we will further streamline our operations and improve the effectiveness of resource allocation, propelling the company's long-term sustainable development with fresh momentum. [Foreign Language] Thank you all. With that, I will now turn the call over to our acting CFO, Ms. Chengfang Lu, who will discuss our financial results in more detail.
Chengfang Lu: Okay. Thank you, Marco, and hello everyone. Our net revenues in the third quarter of 2023 were on RMB425.1 million. Despite the complex backdrop and market uncertainties and persisted, we remain steadfast in strengthening our core competitiveness through technological innovation during the third quarter. Moving forward, we remain committed to further enhancing organizational efficiency, developing globalization capability, and enhancing overall agility, positioning us to deliver enduring value to our stakeholders. Now, I'd like to provide a brief overview of our financial results for the third quarter of 2023. In this quarter, our total net revenues were RMB425.1 million compared with on RMB565.2 million in the same period of last year, primary due to the decline in average paying users and user spending on our audio entertainment products. Cost of revenue was on RMB317.3 million in this quarter compared with on RMB376.2 million in the same period of last year. Many attributable to the decreased revenue share fees, share-based compensation expenses, payment handling costs, and other miscellaneous costs. Gross profit was RMB107.8 million in the third quarter of 2023 compared with RMB189.1 million in the same period of last year. Non-GAAP gross profit was RMB107.9 million in this quarter compared with RMB190.8 million in the same period of last year. Gross margin in this quarter of 2023 was 25% compared with 33% in the same period of last year. Non-GAAP gross margin in this quarter was 25% compared with 34% in the same period of last year. Operating expenses were RMB167.9 million in the third quarter of 2023 compared with RMB176.6 million in the same period of last year. Research and development expenses were RMB83.8 million in the third quarter of 2023, representing an increase of 7% year-over-year, primary due to the increased salary and welfare benefits expenses, related to increased severance pay to optimize the RD efficiency, partially offset by the decreased expenses related to research and development services provided by third parties. Selling and marketing expenses were RMB59.1 million in this quarter compared with RMB71.2 million in the same period of last year, primary attributable to decreased branding and marketing expenses. The company will monitor its discretionary advertising and promotion expenses, and adjusted economy depending on marketing conditions. General and administrative expenses were RMB25.1 million in the third quarter of 2023 compared with RMB27.1 million in the same period of last year, primary driven by decreased professional service fees provided by third parties, provision for litigation contingencies, and other miscellaneous expenses. Operating loss was RMB60.1 million in the third quarter of 2023 compared with operating income of RMB12.5 million in the same period of last year. Non-GAAP operating loss was RMB55 million in this quarter compared with non-GAAP operating income of RMB12.2 million in the same period of last year. Other expenses were RMB5.9 million in the third quarter of 2023 compared with other income of RMB1.7 million in the same period of last year, primary attributable to the remuneration fees to the deposit back in relation to the ratio change of ADF on September 20, 2023. Net loss was RMB62 million in the third quarter of 2023 compared with the income of RMB19.8 million in the same period of last year. Non-GAAP net loss was RMB56.5 million in this quarter compared with non-GAAP income of RMB27.5 million in the same period of last year. Basic and diluted net loss per ADF were both 11.01 in the third quarter of 2023 compared with basic and diluted net income of RMB3.81 and RMB3.79 per ADF in the same period of last year. Non-GAAP basic and diluted net loss per ADF were both RMB10.07 in the third quarter of 2023 compared with non-GAAP basic and diluted net income of RMB5.29 and RMB5.26 per ADF in the same period of last year. As of September 13, 2023, we had cash and cash equivalents and restricted cash of RMB615.8 million. Okay. This concludes all of our prepared remarks. Thank you once again for joining us today. If you have further questions, please feel free to contact LIZHI's investor relations through the contact information provided on our website ir.lizhi.fm or Piacente Financial Communications.
End of Q&A: Thank you. This concludes the conference call. You may now disconnect your line. Thank you. Have a good day.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.