LIZI - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, ladies and gentlemen, thank you for standing by for Lizhi Inc.'s Third Quarter 2020 Earnings Conference Call. [Operator Instructions]. I will 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. to Third welcome Conference XXXX and Call. everyone, Lizhi Quarter Inc.'s Earnings Hello, financial via operating today, released and We our results are online. and available newswire they earlier services Mr. include Participants call our founder on will and today's CEO, Lai; our CFO, Ms. Marco and acting Lu. Chengfang the Management with will a will conclude call remarks, session. begin prepared with and Q&A

a As this is conference reminder, recorded. being

will website earnings the IR on highlights our webcast at addition, available and the replay of be our of In presentation this ir.lizhi.fm. conference call section

made discussion we Reform safe or under target, please continue statements other potential, statements that such contain Before expect, U.S. Act Litigation may, intend, words as These the today's provisions Secretive will similar the continue, XXXX. of typically expressions. harbor contain believe, estimate, will, forward-looking note Private of

to measures. include as will measures of release required applicable Please go note call Please Lizhi's Founder unaudited I the press reconciliation of CEO, measures. these business impacted a many are our to a over under or ahead. contains and affiliates, to release underwriters unaudited except Forward-looking do control. statements involve these conference GAAP of not and inherent this update risks now GAAP measures law. differ representatives projected The factors and company, risks information, earnings financial cause of may non-GAAP number as unaudited as and any materially by press to Mr. statements well and actual obligation of anticipated, that that undertake Marco financial the discussions which accuracy uncertainties. Lizhi's could call uncertainties those results non-GAAP advisers, our Lai. from be forward-looking beyond its unaudited The turn

Marco Lai

today. us Hello, everyone. for Thank you joining

position our online COVID-XX China reflected in sector. results normalization Our healthy leading quarter amid the third audio in national

also time first the testament to our is and a quarterly For achieved which business public, robustness non-GAAP model. of since scalability we profit, a the going

engagement. and leveraging continues drive as and keep high-quality optimizing offering content to to dedication user user-generated content enriching traction Our our as well

more by innovative quarter, average many user year-over-year. introduced grew In million, also the further monthly increased user year-over-year, paying improve XX% and monthly XX% by experiences. XX.X features We base to our reaching user base third average our

ago. Additionally, average our interactions entertainment The average rapidly the environment content million content distinctive Despite of in experiences, growth listening and the and this capture monthly our between in signifying momentum Lizhi to expanding creators And of audio driving user macro experiences developing a penetration forefront market users and audio the captivating interactions. rate providing we increased through features, for efforts user user entertainment of engagement rising during audio of audio users our value the ecosystem. high-quality from engagement number with XX.X% by reached increasing thanks challenges unprecedented a active content creation the premium quarter. digital the audio year at year, saw content -- reaffirms the to XX.X% quarterly our driving ability to creators is and rebound to on entertainment demand opportunities. X.XX spending,

achieve our to We vision key I now the market great will well-defined quarter. during online third focus discuss to are of the the of unlocking the for the potential committed audio future. areas

optimizing Firstly, sustainable content portfolios for to and user-generated extensive well we're diverse and positioned our continuously expanding growth. be

optimized enhanced a audio of number XXX to million support content September on content rapidly. tools XX, the XX% genres strategy, the creation emphasis improved over XXXX, and strong significant reached quarter, as creation through execute We grow of of creation. In our to to platform we In further representing cumulative content a the number to new million uploaded have to we our initiatives our our with As increase third content and XX uploaded initiatives. of quarter, the a podcasts the content number year. further of previous creation platform, continues podcasts continue podcasts

In and materials. more the original content LIZHI provide technology, now refreshed functions based we of audio our celebrities audio-centric We beautification on effects and templates our platform, and user-generated including audio on addition to audio recordings cleaner and With representative exploration and interface organized and a home simplified App genres. platform among user navigation we more wider functions and launched listening the experiences redesigned offerings. page further improved features, and

new strong existing exclusive pleased quarter, trending as we which target are We also and collections users. and that have content genre In and with our of bring content aligned celebrity of especially few in note more Lizhi and high-quality a hot to presents traction to entertainment with topics. such premium, the podcasts, the diversified content genres, gained

We promotional the platform's and enhance creators array fresh appeal are from to generate to distinctive campaigns an leveraging users. activities and of and to creative content operational

live than we more TV interest. of and launched episode Nothing One: on and average X.X example, was with shows produced number and fan exposure. reached For and Each The collaboration a user series podcasts which buzz XXX,XXX created audio such in and times huge played more Band, Thirty Coming shows, by variety times than popular Super million as

quantity. are premium on with Show user we things. of of the engaged and different idols audio to stories our be campaign platform, a based the rewarded playlist enhance and on competition strive content launched feelings we communication off-line Today, including upgraded levels industry various In plans content long-tail in some of best Chinese and XX industry. of operations, creators build share hosts more will podcasts we of of and the we to both Recently, first with off-line support and Moreover, program. channels along systems, we build believe to and X.X, launched increased more to service content the with new launched existing our campaign, every produce of program encouraged talented our and creators offerings invited fans on In salons, salons exposure. quality creators them higher Echo on traffic content their further in Lizhi to We in commercialization the the more Plan the with voice. to resources working and to we sector their and Front podcast business salon XX,XXX host experiences days and creators. in the called support monetization Idol podcast We subscription effective this in pilot Beijing first which traffic to podcast content popular also our active to through interact September, and integrating creation data the plan podcast initiatives in capabilities. leverage to podcast content growing related the podcast our leading content meantime, to aspects on creators and In expanding analytic position platform late actively and More and online participated our We content capabilities. month invited a and Going relationships This Page creators in to their most establish mid- nurture to us in hosted invited creators aimed attract share brand-new podcasters. enrich we captivate than version these We high-quality improve popular to future and help offering. podcast more

Lizhi these in networking We've the exposure engagement our our the utilized other platform. monthly with interact endorse bring of to through our audiences, the the active increasing further involved have can bonds elected hosts times immersive that users. we've users a and of campaigns on have billion third a closer opportunities and grow them AI enables help engagement and effectively generation high campaigns are better a elevates in and creators where community to to efficiently of interact which more This social more more the the our content experiences in record endorsement seen enhancing the vitality, between users. creators. interactions quarter, a performance of efforts the creators user can campaigns In the together, virtuous community. also enhance from focus with of created third of and we of and which endorsement to vitality variety cycle the content engagement, quarter. in with functions. of and To advanced communities build The high strengthening launched a variety users user to technology potential favorite users community Another all subsite content total the quarter reached X.X microblogs Thanks vibrant and post user different identify audio area through their each

seen increasingly of active integration more are attention content addition, creators, of marking converted the podcast hosted both In in in from of growth across content to a platform. participation users indicating as segments closer podcast Over the of creators we've different and and our different podcast we've Moreover, various of XX% segments. audio help gain hosts segments. entertainment were year-over-year content entertainment creators a campaigns creators higher audio XX%,

only their even content audio followers entertainment and show. section features. join of their films more stories audio creators strengthened entertainment motivated have who become podcast streaming and interacted innovative film through users Lizhi streaming of a features not and hosted interactive have podcast produce we interactive audio followers August, and live audiences. in effectively for creators more connection the audio never podcasts has entertainment immersive share festival creators live This invited to example, the tried shows the and through truly had talk and and event kind creators before For have event, to experiences. podcasts some them between They their the through We enabled with gained hosts and various attract believe about

will various strategic us audio this our exploring will initiatives, of business in in strategic technology audio by are the collaborating we industry diversify of believe sizable our allow model. online exploring market market the use audio our and and our maintaining great the advantages optimize and to that to potential new capabilities, Leveraging base the with is development addition massive energy producers. through we In and deploying importance content business opportunities plan values are the diverse vehicle We for growth with leading and expansion content scenarios. further in-car also

in user reach improve the user base the scale of audio increase We throughout will experiences and user strength years and our a and operations. experiences, technology broader

strategies audio our experience a with We companies and in superior users. cooperate audio for our market, the deliver will advance leading in-car

we application content auto and technology of talented joined creators machine learning, will and on of their have understand data recommendation long-tail time creation we creators to number in Echo a dimensions. and different our terms high-potential further platform. big support data analytics gained to upgrade Plan platform. analytics In base advancing with followers X.X, are in our dedicated In large sports technology, our the creators attention fan continuously AI help of we Through the Many inspire of AI-enabled ability newly on a from center system. short more

as will audio with quality continue artificial of improvements intelligence, In AI-supported content. and enhanced Ms. continue value inappropriate online mechanism will such management With content. the we to creators Lu, of making development. identify China's now our our industry and our will we call that, tremendous controllability In more growth an you, discuss maintain the in our has CFO, besides the we capture content the online acting the our empower In to efforts financial conclusion, improved This to for the business develop position content content to and opportunities to established everyone. detail. turn will audio users, Thank results our online and I market. create efficiency addition, over who deal cutting-edge operating leading to audio technologies, future, Chengfang in

Chengfang Lu

and Marco, everyone. you, hello, Thank

net third same line base. We endeavor to paying during by are in quarter, a the about increase user period the pleased increased to the with contributed throughout mainly total third the in quarter. In in brought were quarter results improvements XXXX, million our leverage and growth RMBXXX.X our profitability our our our by of XX% expectations of set operating revenues that financial

the to business, user of number and base Currently, driven third million in was net increasing quarter, of increasingly interactive XXX,XXX The number paying XXXX, for representing of we the and our X%. expanding period. third growth offering which average revenues primarily contributed revenue to XX% unremitting audio mainly content audio our traction in monthly users strategy social engagement. by paying the increased in during RMBXXX.X and year-over-year driving a product increase user around of entertainment entertainment user our from Our by generate efforts due year-over-year quarter our our the to

a that paying as the Cost third due were mainly X%, of partially increase to XXXX launched The became content in scaled million. with share-based program both of offset incentive advertisers. compensation payment quarter to and sharing Additionally, down offset costs advertising in IPO, increased has was by and the XXXX. February the number million of and quarter-over-quarter, year-over-year creators compensation content of well the since other share-based of and after in this fees our services grew line The to for by due users our podcast, increase RMBXXX.X the the mainly sharing by salary decrease handling business mainly in with The increase the in increase welfare revenue of year-over-year benefits, creators, growth by which revenue of the XXXX. the increase in was podcast was effective revenue quarter. our quarter-over-quarter revenue generally upon XX% revenues, bandwidth of because to in partially company's the expenses the as fees of expenses increase quarter year-over-year recognition growth cost, of an and the due and to line to of we third decrease which in been X% was RMBX.X

of the XX% an RMBXX.X Our million of XXXX, quarter and gross profit year-over-year representing X% increase third second quarter-over-quarter. quarter of -- increase was in

million of an XXXX, profit an of quarter and gross increase non-GAAP quarter-over-quarter. third increase Our the was year-over-year of X% in representing XX% RMBXX.X

increased margin quarter second quarter. in points gross basis from XXXX, XXX Our reaching this of by the XX%

IPO. non-GAAP third third compensation RMBXX.X of the RMBXX.X third promotional was and were related in expenses the our services million third quarter and General third branding and XXXX. RMBXXX.X Operating XXXX. and of million expenses, quarter year-over-year due and Research expenses employees XXXX the in of representing of to XX% decreased component margin XX%. XX% year-over-year a second research and the third the professional increase quarter and administrative benefits, development our to upon XXXX. XXXX, the after was expenses, million to increasing of in expenses the well quarter-over-quarter operating RMBXX.X from quarter in of of XX% in quarter the Our million of expenses million and increasing the XX% in compared increase RMBXX.X the and salary number were marketing to XXXX. in RMBXX.X The to third reduced as quarter of Selling million recognized development third due quarter the to and of compensation of due decreased upon in XXXX, mainly of quarter gross decrease by the recognition IPO. quarter our key was was XX% share-based The by in in as XXXX expenses share-based expenses expenses activities increase compared mainly a was The to after of mainly XXXX. welfare

the narrowed Our to was and operating The net the per quarter loss XXXX down RMBXX.XX XX% net million third by quarter quarter loss million down respectively. quarter-over-quarter. of loss quarter EPS income XXXX basic and loss XXXX, compared RMBX.X in in RMBX.XX in XX% of third is loss and and quarter ADS and to quarter-over-quarter. XXXX, adjustments in the respectively. were values Net RMBX.XX accretion RMBX.X narrowed third mainly was down of Non-GAAP and of of second by the diluted compared of of and the diluted reduction compared XX% respectively. XXXX, quarter due XX% was compensation. of million operating and basic diluted the per to ADS RMBX.XX of quarter in net RMBX.XX per the GAAP of by and between RMBXX.X XX% share of the Basic were non-GAAP non-GAAP and quarter year-over-year ADS RMBX.XX the quarter XXXX net preferred and second difference net year-over-year quarter of non-GAAP XXXX, million the in third third share-based third to XXXX, RMBX.X of and income XX% Non-GAAP million third XXXX, loss in quarter-over-quarter. year-over-year RMBX.X Non-GAAP XXXX to non-GAAP million net in RMBX.X in was loss second narrowed of

meaningful XX, had As RMBXXX.X investment Overall, XXXX, cash third restricted of short-term progress equivalents, as September and we achieved XXXX. in of million. quarter cash cash the of as well we

we near advancing sustainable capabilities continue user current customer net for globe. RMBXXX With of to We platform about across content for total to forecast audio the to mind, conditions, remain million will dedicated expanding strengthening of demand, the continue and strategy are awareness, fourth be changes. market COVID-XX to initiatives we the including those carry estimates expect and This RMBXXX our our brand industry in In growth optimistic out XXXX, build revenues in future reflects currently market technology online to the the China to growth. to reflect all and out the the that our enhancing operating and range to quarter strategic subject million. our and conditions be which in of our company's the ecosystem, preliminary and future, related pandemic of

our all open questions. Now will the please go call and this of concludes now remarks today, Operator, we prepared to ahead.

Operator

[Operator Instructions].

of question Yu the Our of from comes first Needham Company. Vincent line &

Vincent Yu

you user this the Have actually COVID-XX comment by regarding subsided? questions. comment our have about live fourth you dual is can the summer is, rebound highest-paying updates total question initiative is, spent Third a celebrity subscription platform program. can The and time any question data -- seen the is, quarter? you podcast on during the break streaming we live the advertisement the third and behaviors, question first on My cohort? I few paying have on streaming initiative? a around after significant regarding shortened do second question was guys user My as

Marco Lai

translate will Marco Okay. questions, X and for the him. first take I will

the For on spent the platform. first the by about it's question, users time

to meeting XX still from daily minutes, maintained of the the is demand with usage which average users. So thanks on our break, diversified shorter summer time we efforts

improved and pool we enhanced quarter, time themed in the our enriched community. to the usage our users; highlighted this further further a massive of events; vitality platform's appeal and So diversified content, and and the interactive of content series our ensured launched features; high-quality premium

Okay.

and highest-paying cohort rebound subsided. about For after COVID-XX user question, second it's the the the the

So of the video streaming audio streaming. the all, live quite is from first live different

market. So with is of top relatively users. is limited lower, online The user revenue mass paying a audio much concentration among the more concentration

So saw of is online school. resumption user last due in the work have is balance consumption overall, user cohort. to the recovering. off-line we ordinary users quarter, while not We a and and better spending And online highest-paying to which consumption of compared rebound average saw

popular celebrities with celebrity interact a interact audio So and in fans provided online features. meet and for willing fans terms closely. celebrities are more streaming, Many our with to to we to interact with communicate live through platform a entertainment channel of fans for and celebrities

So dedicated with celebrities in users' the needs streaming reaching in the content different meantime, we meeting of live and are interaction programs to means. through various through

times. So of we popular Rocket of former and her highly with actively streaming interacted member to exposure Marco example girl might Girls a take Zhang platform heard you more X audio XXX, for which million group, have invited a fans. than for accounted live the Zining, about, The our

show than in Coming The In and SNHXX, Yang also live popular with Super million collaborated audio X a creative performer discussions and addition, TV we Internet XXX,XXX among cooperated Band, The host a with more lot across we fans a attention of times Yingge, a events. with cumulative girl shows the of plays. of the popular group; One: and shows, number times to with exposure

advertising In for streaming believe potential. quite terms of high is the that advertising, audio we live

future. have So stage, expected we the focus in more which impact on platform at management the currently to mainly is the advertising optimizing positive current

Vincent Yu

question? one And more can ask Marco, I

Effy Kang

Yes.

Vincent Yu

mentioned we Sorry, the that developing that ask just question? like are Marco, can audio I on cars. So you of more one

to to on planning manufacturers developments? So like, this we will also, And we feels going are we used while -- software any for more recommendation with going which on Or and Do platforms, will audio, it are voice impact these driving, like control. on, be cars manufacturers? with or are do the work there I'm auto to -- sales Or on are wondering, to be auto which install or provider? rely will also algorithm work heavily some we like, R&D?

Marco Lai

you. Okay. Thank

focus energy audio the product will we the it's think about entire new algorithm. concentrate is especially audio And and side the especially producers. the vehicle market, use more of market the also a the we on, So in high-potential for for application,

going algorithm AI also We product, are with technology. the both to our improve of the combined

Firstly, you experiences in-car the we in in-car product. that will -- might in right the And use products improve are for audio other the system. not applicable audio to be the user

is use audio technology, do the in-car years important Another for AI And have in-car deploy and side technology can recommendation in the to audio we the into very for the AI of market. which capabilities experiences recommendation. leading market. have also, is we we

for focus you. the is on experiences. the now, Thank also user and more of the As technology improvement AI our

Operator

a question Vicky of from have We Citi. Wei

Vicky Wei

profitability the questions. for for this quarter. have Congratulations I two

one initiative. first quarter the The fourth is about

is And of up my activity the major will question donor the any second on the about for if the the we does for regulation about recent is large What on the May I line? there so, ask, user limitation quarterly a was And or marketing it -- expense So imply on basis. implication Lizhi saw implication guidance and any paying the there donor? minor user? quarter? be event the tipping, during including

Chengfang Lu

your will question. sharing in our remains by you. and quarter, on you and actual platform incorporating incentive our voice and events, hold to major expand products I base the well. and generally about focused Meanwhile, and mentioned we which enabling about, operating creators Actually, revenue fourth to into we to policy help me ceremony let of plan adjust second fully share enter products. users believe operating the high-quality stable quarter. situation, will audio revenue policies plan attention the our fourth their well. more to listen in quarter, we believe gain as information in regular for new host expect questions, year, second And And we end and for And we of -- user also the as content an based would the this this efficiency. the audio And in development more investments more we this Marco promotion stimulate will we and to some improving on as in-car will were podcast half turn we Thank year. Thank market, annual and are the Marco addition,

of some about regulations It different long the the according present, actually many the behaviors as like, user streaming is the aspects to in regulatory I the departments streaming for regulations platforms live reasonable the those the is live at to takes -- So and a for industry. more on process which believe market, platforms. time

As user strict to for we and the behavior regulatory on the committed Lizhi, actually been control have functions implementing on identification policies apply platform.

As December for has the underage the users, Lizhi the underage from by rights gifting interests of last functions, underage has risk developed mode and and perspective launched virtual in product their behavior. reduced protect the to which the brought

security with also relevant actively been meet standard. have We network the departments to cooperating

in of For the spread knowledge network our network platform example, actively we on security. audiobook September, teenagers literacy for and launched

So more driver paying host voice as in creators relatively and the sector, content between their voice on well which of activities general, between the The on interaction, user is relationship. the the audio concentration user main the strong is as connection Lizhi entertainment and The the for is low. users as about emotional more bond focuses paying on companionship. based is

behaviors gifting think very In the business current much our our virtual don't will on have we impact platform. regulation rare development. impulsive So are general, on

standardization other who of to requirements the of of the set the audio the related and to in online self-regulation departments. requirements implement industry industry We key and branches players relevant actively meet agencies will to with up promote relevant units the and continue Thank you. and online the intend audio field cooperate to regulatory

Operator

from of is Your next Billy Haitong. question Leung

Billy Leung

two have I questions.

outlook. our any expectations question on revenues share can question investments with going first share guidance of latest or Guangdong management color XXXX The or my revenue is or maybe some forward? cooperation Any And details the is, management users? implications second terms of on Can in government? or

Marco Lai

pilot So question is Lizhi selected has the audiovisual first been online into. about program the

demonstration, is think also the practices. Lizhi selected and fact, in great province companies a one industry recognition in the of from the So online company's authorities audiovisual in top pilot of actually over the as regulatory Lizhi's a was position Guangdong we

content increase AI So data this and also big development technology enable development impact and industry for will support and for our innovation. the and It to a guiding play in of the will us and analytics. also actually role future development technology us categorization receive more our

long-term general, on entertainment our the focus next technology focus and scenarios also growth the through diversified ourselves committing and bringing support content of interactive platform users UGC more audio creators So models, enhancement and the on will the expanding the our explore experiences. construction audio in step business AI unique including feature, our application the to and drive real

Okay.

So we that. early think about still say to too anything forecast, for next year's it's

for need more we So development. future -- time to our

So currently, we Thank discuss you. for will not the forecast detailed next year.

Operator

next Ivy Liu Suisse. is of Your question Credit from

Ivy Liu

streaming on expansion. entertainment live if the management's you landscape plan view competition What's audio or overseas live on on And streaming current audio any sector? do audio have guys -- you guys

Marco Lai

a leading competition, Lizhi the strong audio the a years community we've the other while and on of has and massive efforts, of With audio more development for content built developed committed and engaged market targeting with and model. interactive in UGC platforms a providing always unique terms been business possibilities through technologies. our focus the being to with compared developing diversifying committed So strong and content highly community atmosphere a creating pool to

So mechanism enhanced quality. the content in and terms of commercialization, reward actually established creators our content for we've improved our creation and effective content an further

community actually Lizhi and believe focus will users' audio has to blue we to audio help other creation, industry of variety themselves, we believe Through content creators ocean audio like interaction express recognition and advantages with is diversified in themselves differentiated dedicated continue gain voices. the the for them a content also through meet present help market. features, achieve market, the We are We a companionship considerable and receive voices. then and area and demand income and competitive

is In audio beginning are diverse. of addition, the develop, I to just scenarios application the market think audio personally and

the With vehicles growth smart intelligent audio is sizable. online popularity like and the increasing of home devices, for industry the potential

advantages. we the development As actually we and in-car our devices believe further competitive the audio exploring audio market, mentioned can are of enhance earlier,

terms the market demand And overseas of in a is we the products. actually users audio strong So have overseas huge. for think expansion,

overseas will some efforts to We we have results, are the we more the disclose preparing products developing more of you. have and the Thank when when we and in expansion. And market.

Operator

As call now closing turn the company to back there are over further like to remarks. I'd questions, no the for the

Effy Kang

Lizhi's once Relations on please today. ir.lizhi.fm further joining the website information contact feel again if group. contact through our you. questions, Investor at for Thank Relations free or Thank have provided the TPG you you But us to Investor

Marco Lai

Thank you, you. Thank everyone.

Operator

Thank you. conference Ladies and gentlemen, concludes call. the this

you. lines. your disconnect Thank now may You

Sound (SOGP) 10 Nov 202020 Q3 Earnings call transcript