Core Insights - The long audio market in China is experiencing rapid growth due to the proliferation of mobile internet and smart devices, with a market size projected to reach 28.7 billion yuan in 2024, a year-on-year increase of 14.8%, and expected to grow to 33.7 billion yuan in 2025, a 17.4% increase [1][10] - Government policies are enhancing copyright protection, regulating AI-generated content, improving data quality, and promoting digital transformation, which supports the sustainable development of the long audio industry [1][10] - The integration of artificial intelligence and digital technologies is driving innovation in the long audio sector, improving content quality across podcasts, audio books, and other formats [1][10] Long Audio Industry Overview - Long audio focuses on non-music content with extended duration and strong narrative, including formats like audiobooks, radio dramas, podcasts, and educational audio [2] - The industry is characterized by a growing demand for immersive audio experiences in daily scenarios such as commuting and bedtime [1][10] Long Audio Classification - Long audio differs from short audio in terms of content completeness, user scenarios, and value logic, with long audio providing continuous, in-depth content suitable for long-term engagement [3][4] Development Stages of Long Audio - The long audio industry has evolved through five stages: nascent, exploratory, expansion, integration, and intelligent [4][5] - The current intelligent stage is marked by the integration of generative AI technologies, enhancing content production and user experience [5][14] Long Audio Industry Value Chain - The industry value chain consists of content creation and copyright provision (upstream), audio platforms and content distribution (midstream), and listening devices and users (downstream) [6][7] Market Competition Landscape - The competitive landscape features a tiered structure, with leading platforms like Ximalaya, Lizhi, and Qingting FM in the first tier, focusing on content richness and user engagement [10][11] - Second-tier platforms like Kuwo Changting and Lazy Listening target niche markets, while third-tier platforms face challenges in competitiveness [10][11] Industry Trends - The industry is undergoing accelerated integration, with major platforms forming strategic alliances to enhance resource sharing and collaboration [13] - AIGC is reshaping the industry by lowering production costs and enhancing user service through personalized content recommendations [14] - The user base is expanding across demographics, leading to a "universal listening" trend alongside the development of niche content for specific audience segments [15]

Group 1 - The core initiative involves the establishment of the "Hong Kong University of Science and Technology (Guangzhou) Information Hub - Litchi Innovation Talent Scholarship" to support students excelling in AI and data science [1] - The scholarship aims to encourage young talents to explore technological frontiers and promote the industrial application of innovative results, aligning with the company's AI business strategy [1] - Litchi Group emphasizes that innovation and talent are the two core driving forces for AI development, collaborating with a prestigious academic institution to create a talent cultivation mechanism focused on innovation [1] Group 2 - Litchi has established a solid foundation for AI technology expansion through years of experience in voice business, developing a full-spectrum AI voice technology capability including speech recognition, semantic understanding, speech synthesis, and interaction [2] - The company continues to optimize its technology and products through rapid validation and iteration, forming a growth flywheel that provides momentum for business expansion [2] - Litchi aims to drive the integration of AI technology in the audio field by promoting collaborative development of technology, products, and talent, thereby unlocking the growth potential of its AI business and contributing to sustainable digital economic development [2]

Financial Performance - For the year ended December 31, 2023, net revenues were RMB 2,071,772 thousand, a decrease of 5.2% from RMB 2,185,266 thousand in 2022[594]. - Gross profit for the year ended December 31, 2023, was RMB 585,375 thousand, down 18.3% from RMB 716,345 thousand in 2022[592]. - Operating income for the year ended December 31, 2023, was a loss of RMB 147,668 thousand, compared to a profit of RMB 66,651 thousand in 2022[592]. - The net loss attributable to the company's ordinary shareholders for the year ended December 31, 2023, was RMB 126,651 thousand[592]. - Net revenue for fiscal year 2024 was RMB2,031.8 million (US$278.4 million), a decrease from RMB2,071.8 million in the prior year, primarily due to a decline in the number of paying users[609]. - Gross profit for fiscal year 2024 was RMB556.8 million (US$76.3 million), compared to RMB585.4 million in the prior year[611]. - Operating loss for fiscal year 2024 was RMB89.7 million (US$12.3 million), an improvement from an operating loss of RMB147.7 million in the prior year[615]. - Net loss for fiscal year 2024 was RMB81.0 million (US$11.1 million), compared to a net loss of RMB134.5 million in the prior year[616]. User Engagement and Growth - Average total mobile MAUs decreased from 49,622 thousand in March 2023 to 35,564 thousand in June 2024, reflecting a decline of approximately 28.3%[581]. - Average total monthly paying users decreased from 471.5 thousand in March 2023 to 363.7 thousand in March 2024, a decline of about 22.9%[588]. - The company plans to enhance user engagement by attracting and nurturing high-quality hosts, which is critical for expanding the user base[582]. Cost and Expenses - Revenue sharing fees accounted for 92.1% of total cost of revenues in 2023, amounting to RMB 1,368,498 thousand[595]. - Cost of revenues for fiscal year 2024 was RMB1,474.9 million (US$202.1 million), slightly down from RMB1,486.4 million in the prior year, attributed to decreased salary and welfare benefits expenses and reduced bandwidth costs[610]. - Total operating expenses for fiscal year 2024 were RMB646.6 million (US$88.6 million), down from RMB733.0 million in the prior year[611]. - Research and development expenses for fiscal year 2024 were RMB232.7 million (US$31.9 million), a decrease from RMB301.5 million in the prior year, mainly due to reduced salary and welfare benefits expenses[612]. - Selling and marketing expenses increased by 29% to RMB307.3 million (US$42.1 million) in fiscal year 2024, driven by increased branding and marketing expenses[613]. - General and administrative expenses for fiscal year 2024 were RMB106.6 million (US$14.6 million), significantly lower than RMB193.9 million in the prior year, primarily due to decreased provision for credit loss and share-based compensation expenses[614]. Cash Flow and Capital Management - As of December 31, 2024, the company had cash and cash equivalents of RMB441.9 million (US$60.5 million) and positive working capital of RMB186.6 million (US$25.6 million)[672][673]. - Net cash used in operating activities was RMB26.5 million (US$3.6 million) in 2024, with a net loss of RMB81.0 million (US$11.1 million)[680]. - The company generated net cash from operating activities of RMB136.3 million in 2022, contrasting with net cash used of RMB117.0 million in 2023[682][681]. - Capital expenditures were RMB12.2 million (US$1.7 million) in 2024, with expectations for continued investment in long-term assets[691]. - The company intends to finance future working capital requirements through cash generated from operations and funds raised from financing activities[675]. - Net cash used in investing activities was RMB12.0 million (US$1.6 million) in 2024, primarily due to short-term investments[684]. - The company had net cash used in financing activities of RMB3.0 million (US$0.4 million) in 2024, mainly for repayments of short-term loans[687]. - Total cash, cash equivalents, and restricted cash at the end of 2024 amounted to RMB453.2 million (US$63.0 million)[700]. Tax and Regulatory Matters - For the years ended December 31, 2022, 2023, and 2024, the company recorded income tax expenses of RMB0.2 million, RMB0.4 million, and RMB3.3 million (US$0.5 million), respectively[710]. - The company has established full valuation allowances on deferred tax assets, indicating uncertainty regarding their realizability as of December 31, 2023, and 2024[712]. - The company regularly reviews its tax positions and may adjust unrecognized tax benefits based on new information, including changes in tax laws[710]. - The company’s deferred tax assets are recognized based on management's judgment regarding their realizability, which may involve various tax planning strategies[711]. - The company is subject to PRC laws and regulations, which restrict the provision of funding to its PRC subsidiaries and VIEs, potentially impacting its ability to use IPO proceeds for capital contributions or loans[702]. Technological Capabilities - The company expects to improve operational efficiency through the adoption of advanced streaming and AI technologies[590]. - The company emphasizes the importance of its technological capabilities, including audio making, AI-enabled discovery, and data storage technologies, to enhance operational efficiency and user experience[703].

User Engagement and Growth - The company plans to enhance user engagement and expand its user base by attracting and nurturing hosts, which is critical for driving net revenue growth [645]. - The company aims to strengthen monetization efforts by providing innovative products and developing a diversified content creator base [736]. Financial Performance - Net revenues for the year ended December 31, 2023, were RMB 2,071,772 thousand, a decline from RMB 2,185,266 thousand in 2022, representing a decrease of approximately 5.2% [658]. - The average total mobile MAUs decreased from 51,495 thousand in March 2022 to 36,022 thousand by December 2023, reflecting a decline of approximately 30% [647]. - The average total monthly paying users dropped from 482.2 thousand in March 2022 to 365.3 thousand by December 2023, indicating a decrease of about 24% [654]. - The company reported a net loss attributable to ordinary shareholders of RMB 126,651 thousand for the year ended December 31, 2023, compared to a net income of RMB 86,517 thousand in 2022 [658]. - Operating income for the year ended December 31, 2023, was a loss of RMB 147,668 thousand, compared to an operating income of RMB 66,651 thousand in 2022 [658]. - Net revenue for fiscal year 2023 was RMB2,071.8 million (US$291.8 million), a decrease of 5.2% from RMB2,185.3 million in 2022, primarily due to a decline in average paying users on audio entertainment products [674]. - Gross profit for fiscal year 2023 was RMB585.4 million (US$82.4 million), down from RMB716.3 million in the prior year [676]. - Operating loss for fiscal year 2023 was RMB147.7 million (US$20.8 million), compared to an operating income of RMB66.7 million in 2022 [680]. - Net loss for fiscal year 2023 was RMB134.5 million (US$18.9 million), compared to net income of RMB86.5 million in the prior year [680]. Revenue Sources - Audio entertainment accounted for 99.6% of total net revenues in 2023, with RMB 2,063,346 thousand generated from this segment [660]. - The company generates most of its net revenues through virtual gift sales, with a strategy to attract more paying users by enhancing content quality and host interactions [650]. Expenses and Costs - Cost of revenues increased by 1% to RMB1,486.4 million (US$209.4 million) in 2023, driven by higher revenue sharing fees and increased salary and welfare benefits [675]. - Total operating expenses rose by 13% to RMB733.0 million (US$103.2 million) in 2023, compared to RMB649.7 million in 2022 [676]. - Research and development expenses increased from RMB 283,349 thousand in 2022 to RMB 301,490 thousand in 2023, reflecting a rise of approximately 6.5% [658]. - Selling and marketing expenses decreased to RMB237.6 million (US$33.5 million) in 2023, down from RMB259.6 million in 2022, mainly due to reduced branding and marketing expenses [678]. - General and administrative expenses surged to RMB193.9 million (US$27.3 million) in 2023, compared to RMB106.7 million in the prior year, driven by increased provisions for credit losses and professional services expenses [679]. Cash Flow and Capital Management - Net cash used in operating activities was RMB117.0 million in 2023, with a net loss of RMB134.5 million attributed to various factors including depreciation and share-based compensation [743]. - Net cash generated from investing activities was RMB105.7 million in 2023, primarily from maturities of short-term investments of RMB111.0 million [747]. - Net cash used in financing activities was RMB71.7 million in 2023, mainly due to third-party loans net repayment by the subsidiary and VIEs [749]. - Capital expenditures were RMB7.2 million (US$1.0 million) in 2023, with expectations for increased spending on long-term assets in the coming year [752]. - The company plans to finance future working capital requirements through cash generated from operations and funds raised from financing activities, including proceeds from the initial public offering [737]. Tax and Regulatory Matters - The company is subject to a value-added tax (VAT) at a rate of 6% on the services provided, which impacts overall revenue recognition [697]. - The company operates primarily through its PRC subsidiaries and VIEs, which are subject to various restrictions under PRC laws regarding dividend payments [759]. - The company has full valuation allowances on deferred tax assets as of December 31, 2022, and 2023, due to insufficient positive evidence for recoverability [773]. Shareholder and Governance Information - The company has a share incentive plan that allows for the issuance of up to 170,000,000 Class A ordinary shares under the Second Amended and Restated 2019 Share Incentive Plan [719]. - The board of directors consists of 5 members, with 1 female and 4 male directors, reflecting a commitment to diversity [815]. - The audit committee is responsible for overseeing the accounting and financial reporting processes and the audits of the financial statements of the company [809]. - The company has established an audit committee, a compensation committee, and a nominating and corporate governance committee [808]. - The company relies on "home country practice" for corporate governance matters, not having a majority of independent directors on its board [805]. Employee and Compensation Matters - The company has not set aside or accrued any amount for pension, retirement, or similar benefits for executive officers and directors [785]. - The compensation committee is responsible for reviewing and approving executive compensation and evaluating management succession plans [810]. - The company participates in various employee social security plans under PRC law, including pension and medical insurance [819]. - As of December 31, 2023, the company had a total of 563 employees, with 68.6% (386 employees) in research and development [817]. - The company reported that 50 of its full-time employees were located outside of China as of December 31, 2023 [817].

Core Insights - Sound Group Inc. is celebrating its fourth anniversary since listing and remains committed to long-term growth despite external challenges in 2023 [1] - The company has implemented transformational initiatives to enhance operational efficiency, drive innovation, and diversify its portfolio [1][2] - Global expansion is a key strategic objective, with a focus on building audio communication capabilities and optimizing growth strategies in emerging markets [2] Company Transformation - The company has officially changed its name from LIZHI INC. to Sound Group Inc., marking a significant milestone in its globalization strategy [3] - This transformation reflects the company's dedication to the audio sector and its confidence in future development prospects [3] Industry Trends - Sound is becoming a crucial medium for applications in the AI era, facilitating more natural human communication and interactions with technology [4][5] - The proliferation of smart voice assistants and audio tools is expected to enhance daily human-device interactions, making sound a primary conduit for communication [6] Philosophical Perspective - Historical figures have used audio dialogue to share wisdom, and the company aims to cultivate this legacy through its engagement in the audio sector [7] - The company is committed to enhancing shareholder value while advancing audio technologies globally [7][8] Company Mission - Sound Group Inc. aims to build the world's largest audio platform to enhance communication and connection through sound [9]

Company Overview - Sound Group Inc. is a global audio-centric social and entertainment company with a mission to build the world's largest audio platform to enhance communication and connection through sound [2] Name Change Announcement - The company announced that its American depositary shares will begin trading on Nasdaq under the new name "Sound Group Inc." starting January 26, 2024 [1] - This name change from "LIZHI INC." was approved at an Extraordinary General Meeting of Shareholders held on January 25, 2024 [1] Impact of Name Change - The trading of ADSs under the new name will not affect shareholders' rights, the company's operations, or its financial position [1] - The company does not plan to change its financial strategy or financial reporting as a result of the name change [1]

Group 1 - The company has officially changed its name from "LIZHI INC." to "Sound Group Inc." and its ticker symbol from "LIZI" to "SOGP" effective January 25, 2024 [1][2] - The new name and ticker symbol reflect the company's mission to build the world's largest audio platform for better connection and communication [2][3] - The changes will not impact shareholders' rights, operations, or financial position, and the company will maintain its current financial strategy and reporting [2] Group 2 - Sound Group Inc. is focused on creating an audio-centric social and entertainment platform, aiming to enhance human connection through sound [3] - The company has been listed on Nasdaq since January 2020, indicating its established presence in the market [3]

Core Viewpoint - LIZHI INC. will change its ticker symbol on the Nasdaq from "LIZI" to "SOGP," effective January 25, 2024, with no impact on shareholder rights or company operations [1]. Company Overview - LIZHI INC. has developed a global audio-based social ecosystem, focusing on audio entertainment and social networking [2]. - The company has been listed on Nasdaq since January 2020 [2].

Financial Data and Key Metrics Changes - In Q3 2023, the company's net revenues were RMB425.1 million, a decrease from RMB565.2 million in the same period last year, primarily due to a decline in average paying users and user spending on audio entertainment products [15][16] - Gross profit for the quarter was RMB107.8 million, down from RMB189.1 million year-over-year, resulting in a gross margin of 25% compared to 33% in the same period last year [16] - The net loss for Q3 2023 was RMB62 million, contrasting with a net income of RMB19.8 million in the same period last year, leading to a basic and diluted net loss per ADF of RMB11.01 [19] Business Line Data and Key Metrics Changes - The audio entertainment business focused on optimizing the content creator platform and launched the Starlight Challenge to enhance creator engagement and quality [7][8] - The company reported a total average mobile MAUs of 42.1 million and average monthly paying users of 402.6 thousand [6] Market Data and Key Metrics Changes - The company faced macroeconomic headwinds but continued to pursue its globalization strategy and improve operational efficiency [7][15] - The decline in revenues was attributed to decreased user spending and average paying users, indicating challenges in the market environment [15] Company Strategy and Development Direction - The company is committed to enhancing its core technology capabilities and integrating AIGC and voice AI technologies throughout its business [14] - Future strategies include improving organizational efficiency, developing globalization capabilities, and enhancing overall agility to deliver value to stakeholders [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the complex market backdrop and uncertainties but emphasized the importance of technological innovation in strengthening core competitiveness [15] - The company aims to refine its business strategies and build a more competitive ecosystem despite macro challenges [13][14] Other Important Information - The company was recognized as one of China's top 100 internet companies for the fifth consecutive year, reflecting its comprehensive capabilities [13] Q&A Session Summary - No specific questions or answers were provided in the transcript, as the call concluded without a detailed Q&A segment [20][21]

Financial Data and Key Metrics Changes - The company's revenue increased by 15% year-over-year to RMB593 million in Q2 2023 [5][14] - Net income for Q2 2023 was RMB11.6 million, down from RMB18.9 million in the same period last year [18] - Gross margin decreased to 29% from 34% year-over-year [15] - Operating income was RMB7.8 million, compared to RMB14.1 million in the same period last year [17] Business Line Data and Key Metrics Changes - The audio entertainment business saw enhanced community engagement through refined operational management and themed activities [6][7] - The average monthly active users (MAUs) reached 45.6 million, with 433,700 average monthly paying users [5] Market Data and Key Metrics Changes - The company continues to expand its global business, launching innovative products like the chatbot MY AI FRIEND in the TIYA App [9][10] - New features such as animated avatars were introduced to enhance user interaction [11] Company Strategy and Development Direction - The company is focused on executing an online audio-centric globalization strategy, optimizing product features, and enhancing user experience [5] - Future plans include advancing product innovation and localization to strengthen global expansion efforts [12][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macro challenges but emphasized commitment to elevating product competitiveness through innovation [13] - The focus will remain on integrating AI technologies and enhancing operational efficiency [12] Other Important Information - Cost of revenues increased by 23% year-over-year, primarily due to higher revenue sharing fees and increased salaries [15] - Cash and cash equivalents, short-term investments, and restricted cash totaled RMB697.1 million as of June 30, 2023 [19] Q&A Session Summary - No specific questions or answers were provided in the transcript, indicating that the call concluded without a Q&A segment [20]