LIZHI INC. Reports First Quarter 2022 Unaudited Financial Results
05/26/2022 - 05:00 PM
GUANGZHOU, China, May 26, 2022 (GLOBE NEWSWIRE) -- LIZHI INC. (“LIZHI” or the “Company” or “We”) (NASDAQ: LIZI), an audio-based social and entertainment platform, today announced its unaudited financial results for the first quarter ended March 31, 2022.
First Quarter 2022 Financial and Operational Highlights
Net revenues were RMB516.7 million (US$81.5 million ) in the first quarter of 2022, representing a 4% increase from RMB495.1 million in the first quarter of 2021.Average total mobile MAUs 1 Average total monthly paying users 2 2% from 474.7 thousand in the first quarter of 2021.“In the first quarter of 2022, we’re pleased to continue seeing the healthy improvement in our profitability, posting revenue growth of 4% and gross profit growth of 34% year-over-year,” said Mr. Jinnan (Marco) Lai, founder and CEO of LIZHI. “During the quarter, our strategic initiatives remained focused on optimizing operational efficiency and improving margins, as well as harnessing our technological capabilities to strengthen the competitiveness of our products and enrich the user experience. Moreover, in our continuous efforts to enhance the vitality of our audio community and boost user interactions, our average audio entertainment mobile MAUs increased by 11% from 8.27 million in the first quarter of 2021 to 9.14 million in the first quarter of 2022. As we move forward, we will explore more commercialization avenues in audio entertainment and social networking while also concentrating on achieving a sustainable growth.
“On the global front, we progressed with refining TIYA App’s features, introducing new functions to enhance its social networking capabilities and further boost TIYA’s user engagement, user activeness as well as its global appeal. In addition, we worked diligently to upgrade our proprietary suite of technologies, empowering us to persistently innovate and enrich product features and functions to align with users’ diverse needs. Looking ahead, we will steadfastly execute our globalization strategy, continue our efforts in developing our in-house technologies, and strive to advance product innovation. We believe that we are well poised to capture a vast array of opportunities in the global audio and social networking space and achieve greater success,” Mr. Lai concluded.
Ms. Chengfang Lu, Acting Chief Financial Officer of LIZHI, said, “Our first quarter results demonstrate our growth trajectory. Driven by the continuous improvements in our operating efficiency, in the first quarter, our gross margin grew to 32% , up 700 basis points year-over-year. More encouragingly, we achieved a net income of RMB16.4 million in this quarter, representing an 84% sequential increase. Going forward, we will carry on building a more competitive audio ecosystem, pursuing diversified commercialization avenues, and advancing our technology capabilities. We are confident that these endeavors will strengthen our core competencies and empower us to create greater value for our users and shareholders.”
First Quarter 2022 Unaudited Financial Results
Net revenues were RMB516.7 million (US$81.5 million ) in the first quarter of 2022, representing an increase of 4% from RMB495.1 million in the first quarter of 2021, primarily due to the increases in the number of paying users and the average amount of user spend on our audio entertainment products, partially offset by the decrease in advertising revenue which was mainly due to the decrease in the number of advertising projects. While the COVID-19 resurgence in various parts of the world continues, the extent to which the pandemic impacts the Company’s operations beyond the first quarter of 2022 depends on COVID-19’s future development in China and across the globe, which is subject to change and substantial uncertainty, and therefore cannot be predicted.
Cost of revenues was RMB348.6 million (US$55.0 million ) in the first quarter of 2022, representing a decrease of 6% from RMB370.0 million in the first quarter of 2021, mainly attributable to a decrease in the revenue sharing fees primarily due to the adjustment in revenue sharing policies, resulting in a decrease in the percentage of the revenue sharing fees in the first quarter of 2022.
Gross profit was RMB168.1 million (US$26.5 million ) in the first quarter of 2022, representing an increase of 34% from RMB125.1 million in the first quarter of 2021.
Non-GAAP gross profit 3 $26.9 million ) in the first quarter of 2022, representing an increase of 34% from RMB127.7 million in the first quarter of 2021.
Gross margin in the first quarter of 2022 was 32% , compared to 25% in the first quarter of 2021. Non-GAAP gross margin in the first quarter of 2022 was 33% , compared to 26% in the first quarter of 2021.
Operating expenses were RMB153.5 million (US$24.2 million ) in the first quarter of 2022, representing a decrease of 22% from RMB197.3 million in the first quarter of 2021.
Research and development expenses were RMB71.1 million (US$11.2 million ) in the first quarter of 2022, representing an increase of 25% from RMB56.9 million in the first quarter of 2021. The increase was primarily due to the higher salary and welfare benefits expenses and rental expenses.
Selling and marketing expenses were RMB60.0 million (US$9.5 million ) in the first quarter of 2022, representing a decrease of 50% from RMB120.8 million in the first quarter of 2021, primarily attributable to the decrease in promotion and marketing expenses, and partially offset by the increased salary and welfare benefits expenses.
General and administrative expenses were RMB22.4 million (US$3.5 million ) in the first quarter of 2022, representing an increase of 14% from RMB19.6 million in the first quarter of 2021. The increase was mainly due to increased salary and welfare benefits expenses and rental expenses.
Operating income was RMB14.6 million (US$2.3 million ) in the first quarter of 2022, compared to operating loss of RMB72.2 million in the first quarter of 2021.
Non-GAAP operating income 4 $3.7 million ) in the first quarter of 2022, compared to non-GAAP operating loss of RMB64.0 million in the first quarter of 2021.
Net income was RMB16.4 million (US$2.6 million ) in the first quarter of 2022, compared to net loss of RMB70.0 million in the first quarter of 2021.
Non-GAAP net income was RMB25.2 million (US$4.0 million ) in the first quarter of 2022, compared to non-GAAP net loss of RMB61.8 million in the first quarter of 2021.
Net income attributable to LIZHI INC. ’s ordinary shareholders was RMB16.4 million (US$2.6 million ) in the first quarter of 2022, compared to net loss attributable to LIZHI INC.’s ordinary shareholders of RMB70.0 million in the first quarter of 2021.
Non-GAAP net income attributable to LIZHI INC. ’s ordinary shareholders 5 $4.0 million ) in the first quarter of 2022, compared to non-GAAP net loss attributable to LIZHI INC.'s ordinary shareholders of RMB61.8 million in the first quarter of 2021.
Basic and diluted net income per ADS 6
Non-GAAP basic and diluted net income per ADS 7
Balance Sheets
As of March 31, 2022, the Company had cash and cash equivalents, short-term investments and restricted cash of RMB515.5 million (US$81.3 million ).
Conference Call
The Company's management will host an earnings conference call at 9:00 PM U.S. Eastern Time on May 26, 2022 (9:00 AM Beijing/Hong Kong Time on May 27, 2022).
For participants who wish to join the call, please access the link provided below to complete the Direct Event online registration and dial in 10 minutes prior to the scheduled call start time.
Upon registration, each participant will receive a set of dial-in numbers by location, a Direct Event passcode, a unique Registrant ID, and further detailed instructions, which will be used to join the conference call.
Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.lizhi.fm .
A replay of the conference call will be accessible approximately two hours after the conclusion of the call until June 2, 2022, by dialing the following telephone numbers:
United States: +1-855-452-5696 International: +61-2-8199-0299 Hong Kong, China: 800-963-117 Mainland, China: 400-820-9035 Replay Access Code: 8376836
About LIZHI INC.
LIZHI INC. has created a comprehensive audio-based social ecosystem with a global presence. The Company aims to cater to users’ interests in audio entertainment and social networking through its product portfolios. LIZHI INC. envisions an audio ecosystem where everyone can be connected and interact through voices. LIZHI INC. has been listed on Nasdaq since January 2020.
For more information, please visit: http://ir.lizhi.fm.
Use of Non-GAAP Financial Measures
The unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
LIZHI uses non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss/income, non-GAAP net loss/income, non-GAAP net loss/income attributable to LIZHI INC.’s ordinary shareholders and non-GAAP basic and diluted net loss/income per ADS, which are non-GAAP financial measures. Non-GAAP gross profit is gross profit excluding share-based compensation expenses. Non-GAAP gross margin is non-GAAP gross profit as a percentage of net revenues. Non-GAAP operating loss/income is operating loss/income excluding share-based compensation expenses. Non-GAAP net loss/income is net loss/income, excluding share-based compensation expenses. Non-GAAP net loss/income attributable to LIZHI INC.’s ordinary shareholders is net loss/income attributable to LIZHI INC.’s ordinary shareholders excluding accretions to preferred shares redemption value and share-based compensation expenses. Non-GAAP basic and diluted net loss/income per ADS is non-GAAP net loss/income attributable to LIZHI INC.’s ordinary shareholders divided by the weighted average number of ADS used in the calculation of basic and diluted net loss/income per ADS. The Company believes that separate analysis and exclusion of the non-cash impact of the above reconciling items adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measure for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measure is useful supplemental information for investors and analysts to assess its operating performance without the non-cash effect of accretions to preferred shares redemption value and share-based compensation expenses.
However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company’s net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measures in isolation from, superior to, or as an alternative to the financial measure prepared in accordance with U.S. GAAP.
The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” near the end of this release.
Exchange Rate Information
This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to RMB are made at a rate of RMB6.3393 to US$1.00, the exchange rate on March 31, 2022 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or U.S. dollars amounts referred could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all.
Safe Harbor Statement
This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: LIZHI’s goals and strategies; LIZHI’s future business development, results of operations and financial condition; the expected growth of the online audio market; the expectation regarding the rate at which to gain active users, especially paying users; LIZHI’s ability to monetize the user base; fluctuations in general economic and business conditions in China and overseas markets; the impact of the COVID-19 to LIZHI’s business operations and the economy in China and elsewhere generally; any adverse changes in laws, regulations, rules, policies or guidelines applicable to LIZHI; and assumptions underlying or related to any of the foregoing. In some cases, forward-looking statements can be identified by words or phrases such as “may”, “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the Securities Exchange Commission. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.
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LIZHI INC.
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LIZHI INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2021 March 31, 2022 March 31, 2022 RMB RMB US$ ASSETS Current assets Cash and cash equivalents 533,293 490,136 77,317 Short-term investments - 20,000 3,155 Restricted cash 4,155 5,327 840 Accounts receivable, net 6,458 3,553 560 Prepayments and other current assets 33,604 29,456 4,647 Total current assets 577,510 548,472 86,519 Non-current assets Property, equipment and leasehold improvement, net 33,391 33,787 5,330 Intangible assets, net 2,245 1,792 283 Right-of-use assets, net 28,941 31,479 4,966 Other non-current assets 799 681 107 Total non-current assets 65,376 67,739 10,686 TOTAL ASSETS 642,886 616,211 97,205 LIABILITIES Current liabilities Accounts payable 80,793 63,033 9,943 Deferred revenue 20,657 22,530 3,554 Salary and welfare payable 123,075 104,630 16,505 Taxes payable 5,564 5,549 875 Short-term loans 68,999 50,000 7,887 Lease liabilities due within one year 13,929 16,649 2,626 Accrued expenses and other current liabilities 53,486 54,273 8,561 Total current liabilities 366,503 316,664 49,951 Non-current liabilities Lease liabilities 17,076 16,968 2,677 Other non-current liabilities 4,452 4,225 666 Total non-current liabilities 21,528 21,193 3,343 TOTAL LIABILITIES 388,031 337,857 53,294
LIZHI INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
December 31, 2021 March 31, 2022 March 31, 2022 RMB RMB US$ SHAREHOLDERS’ EQUITY LIZHI Inc.’s shareholders’ equity Class A Ordinary shares (US$0.0001 par value, 1,268,785,000 shares authorized, 798,962,260 shares 530 543 86 Class B Ordinary shares (US$0.0001 par value, 231,215,000 shares authorized, issued and 168 168 27 Treasury stock (11 ) (22 ) (3 ) Additional paid in capital 2,630,456 2,638,753 416,253 Accumulated deficit (2,366,531 ) (2,350,103 ) (370,720 ) Accumulated other comprehensive loss (9,757 ) (10,975 ) (1,730 ) TOTAL LIZHI Inc.’s shareholders’ equity 254,855 278,364 43,913 Non-controlling interests - (10 ) (2 ) TOTAL SHAREHOLDERS’ EQUITY 254,855 278,354 43,911 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 642,886 616,211 97,205
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 2021 December 31, 2021 March 31, 2022 March 31, 2022 RMB RMB RMB US$ Net revenues Audio entertainment revenues 489,306 556,304 514,022 81,085 Podcast, advertising and other revenues 5,747 4,028 2,691 424 Total net revenues 495,053 560,332 516,713 81,509 Cost of revenues(1) (369,993 ) (378,406 ) (348,621 ) (54,994 ) Gross profit 125,060 181,926 168,092 26,515 Operating expenses (1) Selling and marketing expenses (120,790 ) (70,859 ) (60,009 ) (9,466 ) General and administrative expenses (19,617 ) (32,192 ) (22,378 ) (3,530 ) Research and development expenses (56,868 ) (73,523 ) (71,094 ) (11,215 ) Total operating expenses (197,275 ) (176,574 ) (153,481 ) (24,211 ) Operating (loss)/income (72,215 ) 5,352 14,611 2,304 Interest expenses, net (248 ) (154 ) (55 ) (9 ) Foreign exchange losses (149 ) (311 ) (386 ) (61 ) Investment income 407 - 94 15 Government grants 2,917 3,832 2,626 414 Others, net (749 ) 572 (429 ) (68 ) (Loss)/income before income taxes (70,037 ) 9,291 16,461 2,595 Income tax expenses - (376 ) (43 ) (7 ) Net (loss)/income (70,037 ) 8,915 16,418 2,588 Net loss attributable to the non-controlling interests shareholders - - 10 2 Net (loss)/income attributable to LIZHI INC.’s ordinary shareholders (70,037 ) 8,915 16,428 2,590
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
Three Months Ended March 31, 2021 December 31, 2021 March 31, 2022 March 31, 2022 RMB RMB RMB US$ Net (loss)/income (70,037 ) 8,915 16,418 2,588 Other comprehensive income/(loss): Foreign currency translation adjustments 1,136 (5,152 ) (1,218 ) (192 ) Total comprehensive (loss)/income (68,901 ) 3,763 15,200 2,396 Comprehensive loss attributable to non‑controlling interests shareholders - - 10 2 Comprehensive (loss)/income attributable to LIZHI INC.’s ordinary shareholders (68,901 ) 3,763 15,210 2,398 Net (loss)/income attributable to LIZHI INC.’s ordinary shareholders per share —Basic (0.08 ) 0.01 0.02 0.00 —Diluted (0.08 ) 0.01 0.02 0.00 Weighted average number of ordinary shares —Basic 930,843,416 1,022,278,296 1,022,743,151 1,022,743,151 —Diluted 930,843,416 1,026,331,428 1,027,560,107 1,027,560,107 Net (loss)/income attributable to LIZHI INC.’s ordinary shareholders per ADS —Basic (1.50 ) 0.17 0.32 0.05 —Diluted (1.50 ) 0.17 0.32 0.05 Weighted average number of ADS —Basic 46,542,171 51,113,915 51,137,158 51,137,158 —Diluted 46,542,171 51,316,571 51,378,005 51,378,005
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(1) Share-based compensation was allocated in cost of revenues and operating expenses as follows:
Three Months Ended March 31, 2021 December 31, 2021 March 31, 2022 March 31, 2022 RMB RMB RMB US$ Cost of revenues 2,670 2,519 2,606 411 Selling and marketing expenses 283 1,039 1,007 159 General and administrative expenses 3,228 2,879 2,789 440 Research and development expenses 2,064 2,898 2,361 372
UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS
Three Months Ended March 31, 2021 December 31, 2021 March 31, 2022 March 31, 2022 RMB RMB RMB US$ Gross profit 125,060 181,926 168,092 26,515 Share-based compensation expenses 2,670 2,519 2,606 411 Non-GAAP gross profit 127,730 184,445 170,698 26,926 Operating (loss)/income (72,215 ) 5,352 14,611 2,304 Share-based compensation expenses 8,245 9,335 8,763 1,382 Non-GAAP operating (loss)/income (63,970 ) 14,687 23,374 3,686 Net (loss)/income (70,037 ) 8,915 16,418 2,588 Share-based compensation expenses 8,245 9,335 8,763 1,382 Non-GAAP net (loss)/income (61,792 ) 18,250 25,181 3,970 Net (loss)/income attributable to LIZHI INC.’s ordinary shareholders (70,037 ) 8,915 16,428 2,590 Share-based compensation expenses 8,245 9,335 8,763 1,382 Non-GAAP net (loss)/income attributable to LIZHI INC.’s ordinary shareholders (61,792 ) 18,250 25,191 3,972 Non-GAAP n et (loss)/income attributable to LIZHI INC.’s ordinary shareholders per share —Basic (0.07 ) 0.02 0.02 0.00 —Diluted (0.07 ) 0.02 0.02 0.00 Weighted average number of ordinary shares —Basic 930,843,416 1,022,278,296 1,022,743,151 1,022,743,151 —Diluted 930,843,416 1,026,331,428 1,027,560,107 1,027,560,107 Non-GAAP n et (loss)/income attributable to LIZHI INC.’s ordinary shareholders per ADS —Basic (1.33 ) 0.36 0.49 0.08 —Diluted (1.33 ) 0.36 0.49 0.08 Weighted average number of ADS —Basic 46,542,171 51,113,915 51,137,158 51,137,158 —Diluted 46,542,171 51,316,571 51,378,005 51,378,005
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1 Refers to the average monthly number of active users across our platforms and Apps in a given period, calculated by dividing (i) the sum of mobile active users for each month of such period, by (ii) the number of months in the same period.2 Refers to the average monthly number of paying users in a given period, calculated by dividing (i) the total number of paying users in each month of such period by (ii) the number of months in the same period.3 Non-GAAP gross profit is a non-GAAP financial measure, which is defined as gross profit excluding share-based compensation expenses. This adjustment amounted to RMB2.6 million (US$0.4 million ) in the first quarter of 2022. Please refer to the section below titled “Unaudited Reconciliations of GAAP and Non-GAAP Results” for details.4 Non-GAAP operating income is a non-GAAP financial measure, which is defined as operating income excluding share-based compensation expenses. This adjustment amounted to RMB8.8 million (US$1.4 million ) in the first quarter of 2022. Please refer to the section below titled “Unaudited Reconciliations of GAAP and Non-GAAP Results” for details.5 Non-GAAP net income attributable to LIZHI INC.’s ordinary shareholders is a non-GAAP financial measure, which is defined as net income attributable to LIZHI INC.’s ordinary shareholders excluding share-based compensation expenses. These adjustments amounted to RMB8.8 million (US$1.4 million ) and RMB8.2 million in the first quarter of 2022 and 2021, respectively. Please refer to the section below titled “Unaudited Reconciliations of GAAP and Non-GAAP Results” for details.6 ADS refers to American Depositary Share. Each ADS represents twenty Class A ordinary shares of the Company. Basic and diluted net income per ADS is net income attributable to LIZHI INC.’s ordinary shareholders divided by weighted average number of ADS.7 Non-GAAP basic and diluted net income per ADS is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to LIZHI INC.’s ordinary shareholders divided by weighted average number of ADS used in the calculation of basic and diluted net income per ADS.
