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This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is partly edited and is designed as a guide.: Operator: 00:02 Hello, ladies and gentlemen. Thank you for standing by for Lizhi Inc.’s Third Quarter Twenty Twenty One 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. 00:20 I will now turn the call over to your host, Effy Kang, Head of Capital Markets for the company. Please go ahead. Effy Kang: 00:27 Thank you very much. Hello, everyone and welcome to Lizhi Inc.’s third quarter twenty twenty one earnings conference call. We released our financial and operating results via Newswire services earlier today and they are available online. 00:42 Participants on today’s call will include our Founder and CEO, Mr. Marco Lai; and our COO, Mr. Zelong Li; and our Acting CFO, Ms. Chengfang Lu. Management will begin with prepared remarks and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, our earnings highlights presentation and the webcast replay of this conference call will be available on the IR section of our website at ir.lizhi.fm. 01:16 Before we continue, please note that today’s discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Secretive Litigation Reform Act of Nineteen Ninety Five. 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 this forward-looking information, except as required under the applicable law. Please also note that Lizhi’s earnings press release and this conference call include discussions of unaudited GAAP financial measures as well as unaudited non-GAAP financial measures. Please refer to Lizhi’s earnings press release for reconciliation of unaudited non-GAAP measures to unaudited GAAP measures. 02:37 I will now turn the call over to our Founder and CEO, Mr. Marco Lai. Please go ahead. Marco Lai: [Foreign Language] 03:08 [Interpreted] Hello, everyone. Thank you for joining us today. I will share our third quarter business overview and future development strategy. Then our COO Mr. Zelong Li will provide more details on the operation of each business line. 04:55 [Interpreted] Overall, Lizhi continue to strive to build competitive global audio ecosystem in the third quarter of twenty twenty one. Total average mobile MAUs reached the fifty eight point nine million and average monthly paying users was four hundred and eighty five thousand in the third quarter. We remain focused on improving user experience and fostering our audio-centric community ecosystem to increase audio entertainment user base, strengthen user connections and thickness and support our sustainable growth. 05:30 [Interpreted] We are delighted to see the audio entertainment average mobile MAUs grew by twenty one percent year-over-year to nine point seventeen million. As we prioritized unlocking commercialization potential, presented in audio entertainment business, coupled with the effective execution of our operational strategy. Our third quarter revenue grew by forty percent year-over-year to RMB 505 million. Pushing our total revenues for the first and nine months of twenty twenty one to surpass the revenues for the full year of twenty twenty. In addition to revenue growth, we are pleased with the continued expansion of our overall gross margin, which grew to thirty percent up five hundred basis points year-over-year. 07:06 [Interpreted] In terms of our strategic priorities in the near future. First of all, we'll continue to build a sustainable and a high quality community ecosystem by providing more valuable content and audio-centric interactive scenarios, enhancing our commercialization capability and supporting more content creators to grow and develop in Lizhi’s audio community. At the current stage, our globalization strategy is to optimize product and ramp up localization teams, we strive to meet users social networking needs in the digital era, capturing more growth opportunities for future prospects. 08:41 [Interpreted] With respect to our audio roadmap [Indiscernible] devices. At current stage product optimization and technology innovation, our main focuses in this area. At the same time, we are strengthening our underlying architecture. In addition, we continue to establish collaboration with more tap-ons to expand our reach in the in-car audio market. In addition, we will adhere to the long-term development pathway with technological empowerment and further apply our in-house developed audio technology solutions to our MAUs system to more devices. Beyond that, we are stepping up the development of our in-house Instant Messaging technology, which is the IM technology. We are expecting to provide more tailored technological support to our various products. 10:00 [Interpreted] In conclusion, we have great confidence in our prospect. We will continue to execute our globalization strategy in the next phase by maximizing Lizhi’s advantages. We are expecting to unlock greater growth potential globally and our shift long-term sustainable development. 10:31 [Interpreted] Thanks, everyone. With that, I will now turn the call over to our COO, Mr. Zelong Li, who will discuss our business development in more detail. Zelong Li: [Foreign Language] 10:52 [Interpreted] Hello everyone and thank you for joining us today. Next, I'd would like to provide more detailed update of each business line. 11:49 [Interpreted] Starting with our audio entertainment business, we aim to focus a sustainable ecosystem across our community by pivoting to optimizing productive functions and harnessing several key content categories. To further and refine our commercialization capabilities and the efficiency, we are working to refine our product operations, which involves employing more precise user targeting. Focusing heavily on content categories with strong commercialization capabilities, optimizing our marketing strategy and enhancing high performance channels. We believe that taking these important steps now, we will lay a solid foundation for us to grow our sustainable ecosystem for their improved pay user commercial rate and operational efficiency and ultimately enable us to achieve a solid long-term growth. 13:27 [Interpreted] Moving to our global business, China is positioned as a digital social networking platform for young people. We continue to improve and optimize our products to meet their social needs in diverse scenarios based on their different habits, interest, and [Indiscernible]. In the third quarter, we concentrated on building a local team for our overseas business development and operating product features and functions to position ourselves among wide with range of user groups. Our emphasis own user experience and users retention is designed to allow our user base to achieve an organic growth. 15:42 [Interpreted] As part of our product optimization strategy, we upgraded Tiya App from status feature and the discovery channel. We now offer more interactive features to guide users to adopt different tools for their interactions on the platform. In particular, we launched the micron status feature that allow users to find brands in a similar status on mood, which reinforces friendship bonds on the platform and ensure a smoother online social experience. We continue to roll-out innovative features to Tiya App. Some of these we added recently include newly optimized [Indiscernible] and screen sharing options both of which provide what that route ways for users to interact socially enhancing the user thickness and engagement after this product upgrades, we will launch. We observed a master increase in the interaction rate of new Tiya users with friends, in the active and the average time spend for user on Tiya. In September, the daily average number of messages sent per user grew by fifty seven percent compared with June, and users number of friend pairs was sixty four percent higher than in June. In the near term, our priorities to continue refining our products to improve these metrics even further, we will be paying closed attention to key metrics such as users activeness and interaction levels well for the calculating user habits and strengthen user relationships on the platform. 17:51 [Interpreted] In the third quarter, we also continued to expand lead to podcast footprint in the encouraging market by broadening and deepening our collaborations with auto companies and the [Indiscernible] platforms. We have also achieved a more official recommendations from auto companies. Currently, our strategic focus, we wealth around product optimization and technology innovation, including audio application functions for the in-car scenarios such as voice activated controls, structural operation and stimulus connectivity. 19:40 [Interpreted] We are pleased that our strong technological capabilities are boosting major podcast competitive performance in the income market. For instance, we have recently been integrated into [Indiscernible] ecosystem through technological innovation and as the first platform to launching in-car life streaming podcast. These podcast rolled out one peak stimulus connectivity feature. A supports cross screen connections to achieve two ways stimulus connectivity between mobile devices and vehicles. Through this technology, we provide uninterrupted life streaming podcasts experiences to users, first becoming the first of podcast platform in China, that enables two-way stimulus connectivity in multiple scenarios. We believe that our technological expertise and product innovation are a key to securing a competitive action in the in-car audio market. In the future, we will continue to optimize our in-house audio technology solutions. Our goal is to accumulate more technological expenses and improve the core technology for multi devices applications of the podcast tap on while satisfying the differentiative demand of awareness of auto companies and IoV platforms. 21:23 [Interpreted] In summary, achievements and experience we have done in the third quarter have set the date for our future development. We are optimistic about future growth opportunities in the audio industry, we will continue working for long-term success and building a leading globalized the audio platform. 21:52 [Interpreted] Thanks to everyone. With that, I will now turn the call over to our acting CFO Chengfang Lu who will discuss our financial results in more details. Chengfang Lu: 22:03 [Interpreted] Okay. Thank you Zelong and hello everyone. First, we are very pleased to see another solid year-over-year revenue growth in the third quarter, driven by our improved operational strategy, our gross margin grew to thirty percent up five hundred basis points year-over-year. We believe the audio entertainment ecosystem will built is fundamental to our long-term growth. Looking ahead, we will continue to optimizing our audio entertainment business. Enhancement commercialization capabilities and leverage our technology innovation and expertise as we are actually, we exploring for international market in order to achieve sustainable growth. 22:43 [Interpreted] Now I'm providing a brief overview of our financial results for the third quarter of twenty twenty one. In the third quarter, our total net revenue were RMB five hundred and four point eight million representing increase of forty eight percent year-over-year, primarily driven by the gross or paying users and in-house commercialization capabilities of our audio entertainment products. 23:08 [Interpreted] Cost of revenue was RMB three hundred and fifty three point six million in the third quarter of twenty twenty one representing an increase of thirty one percent year-over-year. Mainly attributable to an increase revenue sharing fees to our content creators, salary and welfare benefits expenses and bandwidth costs, which were line with our business growth. 23:31 [Interpreted] Gross profit was RMB one hundred and fifty one point three million in the third quarter of twenty-one, representing an increase of sixty seven percent year-over-year. Our Non-GAAP gross profit was RMB one hundred and fifty four point five million in the third quarter of twenty twenty one representing an increase of sixty eight percent year-over-year. 23:52 [Interpreted] Gross margin for the third quarter of twenty twenty one increased to thirty percent from twenty five percent in the third quarter of twenty twenty. And Non-GAAP gross margin for third quarter of twenty twenty one grew to thirty one percent from twenty five percent in the third quarter of twenty twenty. 24:10 [Interpreted] Our operating expenses increased by ninety one percent year-over-year to RMB one hundred ninety one point three million in the third quarter of twenty twenty one. 24:21 [Interpreted] Research and development expenses were RMB seventy three point four million in the third quarter of twenty twenty one representing a year-over-year increase of thirty two percent. The increase was primarily due to the increased salary and welfare benefits expenses related to increase in the number of our research and development staff and average salary. 24:43 [Interpreted] Selling and marketing versus were RMB eighty eight point two million in the third quarter of twenty twenty one compared to RMB twenty seven point one million in third quarter of twenty twenty. This increase was primarily due to our increased promotions and marketing activities. General and administrative expenses were RMB twenty nine point seven million in the third quarter of twenty twenty, representing a year-over-year increase of fifty one percent. The increase was mainly due to the increase in salary and welfare benefits expenses and other professional service fee. 25:19 [Interpreted] Operating loss was RMB forty point one million in third quarter of twenty twenty one compared to RMB nine point six million in the third quarter of twenty twenty. As Non-GAAP operating loss was RMB thirty point one million in the third quarter of twenty twenty one compared to RMB two point nine in the third quarter of twenty twenty. 25:39 [Interpreted] Net loss was RMB thirty seven point one million in the third quarter of twenty twenty one compared to RMB six point one million in third quarter of twenty twenty. And Non-GAAP net was RMB twenty seven point two million compared Non-GAAP net income of RMB zero point six million in the third quarter of twenty twenty. 25:58 [Interpreted] Basic and diluted net loss per ADS were RMB zero point seven three in the third quarter of twenty twenty one compared to RMB zero point one three in the third quarter of twenty twenty. Non-GAAP basic and diluted net loss per ADS were RMB zero point five four in the third quarter of twenty twenty one compared to Non-GAAP basic and diluted net income of RMB zero point zero one per ADS in the third quarter of twenty twenty. As of September thirtieth twenty twenty one, we had cash and cash equivalents and restricted cash of RMB five hundred and fifteen point nine million. 26:33 [Interpreted] Okay. This concludes all our prepared remarks today and we will now open the call to questions. Operator, please go ahead. Operator: 26:42 Thank you. Ladies and gentlemen, we would now begin the question-and-answer session. [Operator Instructions] For the benefit of all participants on today’s call if you wish to ask your questions to management's in Chinese, please immediately repeat your question in English. For the sake of clarity and order, please ask one question at the time. Management will respond and then feel free to follow-up up with your next question. Our first question comes from the line of Vicky Wei of Citi. Please go ahead. Vicky Wei: [Foreign Language] 27:45 The morning management. Thanks for taking my questions. My question is regarding to user spending and user growth. Under the challenging regulation environment and 27:56 [Indiscernible] or if the impact needs user growth and user spending? Thank you. Marco Lai: [Foreign Language] 28:11 [Interpreted] I will translate for Marco. The recent regulatory environment is getting tightened, but we think it's beneficial to the long-term development of the entire industry given more standardized digital content and operation mechanisms especially from the two companies like ours, we gain more advantages. In terms of products and operations, we are also actually monitoring the regulatory quality changes and earliest we optimizing and adjusting our products. This efforts enable us to meet compliance requirements while also providing battery services for our users. 30:35 [Interpreted] In terms of user spending in the third quarter, the overall user spending on tap-ons decreased slightly, which was affected by some factors including the optimization of our operational strategy. In the third quarter, we began to focus more on the content cap queries with higher potential for monetization and reduced the investments on those pre-recorded content with relatively lower long-term commercialization potential and we focus more on the content categories with longer-term commercialization potential. 31:49 [Interpreted] In a short-term, these adjustments may have temporarily back on certain user metrics such as the overall user base. By in the long run, we are confident in further increasing the paying user base through more precise, operational and marketing strategies while maintaining stable user spending level and we are confident it may further foster the both top line growth and improve the operational efficiency. 32:25 [Interpreted] This is my answer. Thank you. Vicky Wei: 32:28 Thank you. Operator: 32:31 Thank you for the questions. Next question will come from the line of Vincent Yu of Needham & Co, please go ahead. Vincent Yu: [Foreign Language] 32:49 Now we will take the [Foreign Language]. Thank you management for taking my question. I have three questions. The first question is about management share insights on our strategy on improving user pain ratio and second question is in terms of our overseas business with our current focus on product optimization and how should we expect the growth in the revenue contribution from this business in twenty twenty two. And the third questions are as we have seen a witness on user base can – user base growth that [Indiscernible] will share more details on what we have done on product change size and the content sites causing such results and what we should expect the trend in twenty two, also we are seeing some looks like we are seeing the revenue sharing to raw captures has been declining and what we have done and the can you share more information on that end as well. Thank you. Zelong Li: [Foreign Language] 34:55 [Interpreted] I will translate for Mr. Zelong Li. With respect to the growth of pain ratio, we have actually two strategic priorities in the next stage. First off all, at the operating strategy level, we will focus on our order entertainment business and the improved user engagement through diverse promotional activities including lowering the participation throughout hold of events and activities and enhancing types between users and host. As per pre-recorded segment, we will further start out and exploit the cores categories with strong monetization potential and better attractive content creators and users to interacting in audio entertainment segment [Indiscernible] improve the user engagement and paying user conversion rate. 37:34 [Interpreted] On the other hand, in terms of the marketing strategy, we will also focus on categories with higher commercialization potential and optimizing the promotional model and materials. We will execute on precise user acquisition strategy to reach core user groups with strong revenues and ability to pay. So as to increase the overall paying user base, we are confident that the [Indiscernible] effectively improve our overall pain ratio. 38:58 [Interpreted] The second question is about the overseas business expansion. So, our current focus, we ropes around user experience as we constantly optimize the product functions and features to meet users social demand, driving the organic user growth. Also, we have experienced marketing increase in the user time spend and user engagement following the launch of new product integration including the launch of more innovative functions. In the near term, we will continue to optimize multiple aspects of our products and our features and take also attention to key metrics such as user’s interaction levels and time spent to layer more solid foundation for the long-term growth. 40:15 [Interpreted] In the future, we will tap the waters with respect to commercialization step by step at an appropriate of timing. We expect that the overall revenue growth in the short-term will be mainly driven by the order and entertainment business, but in the longer term with a growing user base and the stronger network impact. We believe the overseas business expansion to bring us more commercialization potential and build our second curve. 41:57 [Interpreted] For the quarter is about us slowing growth on the user base size. So for that, it's because, mainly because of our optimized strategies in the third quarter. So we made strategic adjustments to our content operations in the domestic business pre-recorded content segments. Accordingly, we choose to optimize our promotional strategy of targeting the content with more commercialization opportunities and we also reduced the marketing expenditures and investments related to the pre-recorded content categories with weak – lower commercialization capabilities. And last relevant to the audio entertainment business, it did have like certain impact from the overall user base in the short-term. 43:18 [Interpreted] In the next year, the commercialization of our audio entertainment business will continue to be the primary driver of our top line growth. In the third quarter, although the total user growth slowed down from last year, our audio entertainment MAUs grew by twenty one percent year-over-year, which provides growth potential for the commercialization of our audio entertainment business. 43:51 [Interpreted] We believe that with our adjusted operating strategy and refined promotional model, we are targeting to improve the paying ratio to foster the top line growth. In addition, with the development of our overseas business, we believe that the digital social networking business could also bring out more growth opportunities. 44:39 [Interpreted] Thank you. That concludes my answer. Vincent Yu: 44:43 Thank you. Operator: 44:43 Thank you for the questions. As there are no further questions. Now, I’d like to turn the call back over to the company for closing remarks. Effy Kang: 44:53 Thank you once again for joining us today. If you have further questions, please feel free to contact Lizhi’s Investor Relations through the content information providing on our website at ir.lizhi.fm or the Piacente Group Investor Relations. Thank you. Operator: 45:13 This concludes the conference call. You may now disconnect your lines. Thank you. Marco Lai: 45:19 Thank you.