| --- | --- | --- | --- | |-------|-------|-------|-----------------------------------| | | | | | | | | | LIZHI INC. Investor Presentation | | | | | Q4 2022 | 2 Disclaimer This presentation has been prepared by LIZHI INC. (the "Company") solely for informational purposes. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness, reasonableness or correctness of the information or any opinions presented herein or any oral or w ...

Financial Data and Key Metrics Changes - In Q3 2022, total revenue reached RMB565.2 million, up 12% year-over-year and 10% quarter-over-quarter, marking a new record high [21][22] - Net income was RMB19.8 million, a 5% increase sequentially, achieving profitability for the fourth consecutive quarter [8][21] - Gross profit increased to RMB189.1 million, representing a 25% year-over-year growth, with gross margin rising to 33% from 30% in Q3 2021 [23] Business Line Data and Key Metrics Changes - The average monthly active users (MAUs) totaled 49.7 million, with average monthly paying users at 477,000 [7] - The interactive audio entertainment business saw MAUs grow to 9.5 million, with a user penetration rate of 19.1% [10] - Revenue from the audio entertainment business was driven by increased average user spending [22] Market Data and Key Metrics Changes - The average daily time spent per user increased by 34% year-over-year, and the monthly average user group participation rate rose 94% year-over-year [14] - The number of pairs of friend connections grew by 56% compared to the same period last year [14] Company Strategy and Development Direction - The company is focusing on enhancing its globalization capabilities and optimizing its product matrix ecosystem [13] - A new mission and vision were announced to become the world's biggest audio platform, emphasizing user connection and happiness [19] - The company aims to leverage core technology capabilities to achieve breakthroughs in international business [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in stable growth and sustainable development despite challenging macro conditions [36][37] - The domestic business is expected to have tremendous growth potential, with plans to increase user penetration and conversion rates [36] Other Important Information - The company is actively working on obtaining ISO-27001 and ISO-27701 certifications for data security and privacy management [18] - Investment in overseas operations accounted for no more than 10% of total operating expenses in Q3 2022 [33] Q&A Session Summary Question: Insights on overseas business development and investment expenses - Management highlighted a focus on product development, technology, and team building for overseas markets, with investment expenses being a small portion of total operating costs [31][33] Question: Thoughts on domestic product profitability amid low growth - Management noted that the audio entertainment business is relatively mature and emphasized the importance of timely strategy adjustments to improve operational efficiency and profitability [35][36]

Business Overview - LIZHI's Q2 2022 total average mobile MAUs reached 49.7 million[12] - The average mobile MAUs for audio entertainment was 9.17 million[12, 21] - The user penetration rate for audio entertainment was 18.5%[19] - The average time spent daily on the App per user increased by 44% year-over-year in Q2 2022[23] - The number of friend pairs grew 1.4 times compared to the same period last year as of June 2022[23] - The group penetration rate grew 150% year-over-year in Q2 2022[23] Financial Highlights - LIZHI's Q2 2022 net revenues were RMB 516 million[12, 33] - The gross margin for Q2 2022 was 34%, a +600bps increase[12] - The company achieved an operating income margin of 2.7% and a net income margin of 3.7% in Q2 2022[37, 38] - Non-GAAP net income attributable to LIZHI INC.'s ordinary shareholders for Q2 2022 was RMB 25.961 million[43]

LIZHI Inc. (LIZI) Q2 2022 Earnings Conference Call August 18, 2022 9:00 PM ET Company Participants Effy Kang - Head, Capital Markets Marco Lai - Founder and CEO Zelong Li - Chief Operating Officer Chengfang Lu - Acting Chief Financial Officer Conference Call Participants Vicky Wei - Citi Operator Hello, ladies and gentlemen. Thank you for standing by for LIZHI Inc. Second Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. After managementÂ's remarks, there will be ...

Financial Data and Key Metrics Changes - In Q1 2022, total revenue rose 4.4% year-over-year to RMB 517 million, with a gross margin increase of 700 basis points to 32% [10][32] - Net income surged 84% quarter-over-quarter to RMB 16.42 million, marking the second consecutive quarter of profitability on a GAAP basis [10][39] - Operating income was RMB 14.6 million, compared to a loss of RMB 72.2 million in Q1 2021 [39] Business Line Data and Key Metrics Changes - The audio entertainment business saw user penetration increase from 13.8% to 17.7% year-over-year [13] - Average monthly paying users grew to 482,000, maintaining year-over-year growth [12] - The average daily time spent on the TIYA app increased by 42% year-over-year, with daily messages sent per user rising 57% [20] Market Data and Key Metrics Changes - The group penetration rate grew 257% year-over-year, with active groups increasing 3.77 times compared to the same period last year [21] - The number of brand connections grew 3.87 times year-over-year, indicating strong engagement in the global market [20] Company Strategy and Development Direction - The company is focused on building a competitive audio-centric ecosystem and improving product functionality while exploring overseas markets for globalization [11][29] - Continued investment in in-house technology aims to enhance product innovation and operational efficiency [24][26] - The establishment of a Singapore headquarters is intended to attract talent and support globalization efforts [56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term development of the company, emphasizing the importance of optimizing operational efficiency and exploring new business growth opportunities [29][46] - The company is well-prepared for regulatory changes in the live streaming sector, which are expected to benefit the audio live streaming market in the long run [44] Other Important Information - Cash and cash equivalents, short-term investments, and restricted cash totaled RMB 514.5 million as of March 31, 2022 [41] - The company plans to continue expanding its in-house technology coverage to lower costs and enhance product differentiation [26] Q&A Session Summary Question: Impact of live streaming regulations on audio live streaming sector - Management believes the clarified regulations will promote standardized operations and protect minors, benefiting the sector in the long term [44] Question: Balance between investment in overseas and domestic markets - Domestic business is currently profitable and supports overseas expansion, with a focus on organic growth strategies for international markets [46][49] Question: Business planning after establishing headquarters - The focus is on expanding the U.S. market through the TIYA product, with an emphasis on user experience and organic growth [55] Question: Differentiation of TIYA compared to competitors - The core differentiation lies in in-house technology, allowing for customized features and enhanced user experience [60] Question: Improvement of gross profit margin and revenue sharing - Management plans to optimize cost structures and innovate monetization models to improve gross margins in the medium to long term [66][68]

Financial Performance - The company reported net revenues of RMB 2,119,514,000 for the year ended December 31, 2021, representing a 41.0% increase from RMB 1,502,908,000 in 2020[567]. - The company experienced a net loss attributable to ordinary shareholders of RMB 127,250,000 in 2021, a decrease from RMB 236,250,000 in 2020, suggesting some improvement in financial performance[567]. - The net loss for 2021 was RMB 127.3 million (US$20.0 million), compared to a net loss of RMB 82.2 million in 2020[589]. - Net revenues for the fiscal year 2021 were RMB2,119.5 million (US$332.6 million), representing a 41.0% increase from RMB1,502.9 million in 2020[579]. User Engagement and Growth - Average total mobile MAUs reached 60,877,000 in Q2 2021, up from 58,438,000 in Q1 2020, indicating a growth trend in user engagement[557]. - The average audio entertainment mobile MAUs increased to 9,401,000 in Q4 2021, compared to 8,269,000 in Q1 2021, reflecting a consistent rise in user base[563]. - The number of average audio entertainment paying users rose to 496,800 in Q4 2021, up from 472,900 in Q1 2021, showcasing growth in monetization efforts[563]. - The growth of the user base is influenced by regulatory measures imposed by the PRC government, which could impact the company's operations and market position[555]. Revenue Composition - The company generated 99.1% of its net revenues from audio entertainment in 2021, highlighting the dominance of this segment in its revenue structure[569]. Operating Expenses - Operating loss for the year ended December 31, 2021, was RMB 138,518,000, compared to RMB 88,689,000 in 2020, indicating challenges in managing operating expenses[567]. - Cost of revenues for 2021 was RMB1,502.5 million (US$235.8 million), an increase of 32.4% from RMB1,134.7 million in 2020, primarily due to higher revenue sharing fees and operational costs[579]. - Total operating expenses for 2021 were RMB755.5 million (US$118.6 million), reflecting a 65.4% increase from RMB456.9 million in 2020[581]. - Selling and marketing expenses surged to RMB386.2 million (US$60.6 million) in 2021, a 170.6% increase from RMB142.7 million in 2020, driven by increased branding and promotional activities[582]. - Research and development expenses rose to RMB264.7 million (US$41.5 million) in 2021, a 17.5% increase from RMB225.3 million in 2020, due to higher headcount and salaries[583]. - General and administrative expenses increased to RMB104.6 million (US$16.4 million) in 2021, up 17.7% from RMB88.9 million in 2020, mainly due to rising salary and welfare benefits[585]. Cash Flow and Financing - As of December 31, 2021, the company had cash and cash equivalents of RMB533.3 million (US$83.7 million) and positive working capital of RMB211.0 million (US$33.1 million) due to net proceeds from a follow-on public offering[648][649]. - The net cash used in operating activities was RMB40.4 million (US$6.3 million) in 2021, with a net loss of RMB127.3 million (US$20.0 million) attributed to increases in salary and welfare payable, depreciation, and deferred revenue[656]. - The net cash generated from financing activities was RMB212.7 million (US$33.4 million) in 2021[655]. - The company intends to finance future working capital requirements from cash generated from operating activities and funds raised from financing activities, including net proceeds from the follow-on offering in April 2021[651]. Future Plans and Strategies - The company plans to enhance technological capabilities and infrastructure to support business growth, aiming for improved operational efficiency through advanced streaming and AI technologies[565]. - The company aims to diversify monetization channels and increase the paying ratio by expanding innovative audio entertainment product offerings[563]. - The company plans to strengthen monetization efforts through innovative products and develop a diversified content creator base[650]. - The company intends to continue strengthening its technological capabilities, focusing on audio making, AI-enabled discovery, user experience enhancements, and data storage technologies[677]. Tax and Deferred Revenue - The company’s subsidiaries in China are generally subject to a 25% enterprise income tax rate, with certain entities qualifying for a preferential rate of 15%[608][609]. - For the years ended December 31, 2019, 2020, and 2021, the company recorded income tax expenses of RMB nil, RMB1.0 million, and RMB0.4 million, respectively[683]. - Deferred revenue increased from RMB14.5 million in 2019 to RMB20.7 million in 2021, reflecting a growth of approximately 42.2%[625]. - Revenue recognized from deferred revenue was RMB9.9 million in 2020 and RMB11.0 million (US$1.7 million) in 2021, indicating a year-over-year increase of approximately 11.1%[625].

Financial Data and Key Metrics Changes - In Q4 2021, Lizhi reported a record high revenue of RMB560 million, representing a year-over-year increase of 33% [11][34] - The average monthly paying users increased by 18% year-over-year to 497,300 [11][40] - Gross margin expanded to 32%, up 400 basis points year-over-year [12][32] - The company achieved a net income of RMB8.92 million in Q4 2021, compared to a net loss of RMB5.8 million in Q4 2020 [12][40] - Full year revenue for 2021 grew by 41% to RMB2.1 billion, with a gross margin of 29%, an increase of 400 basis points compared to 2020 [13][34] Business Line Data and Key Metrics Changes - The audio entertainment business saw an increase in average monthly active users to 9.4 million in Q4 2021, with robust growth in both paying user base and revenue [16] - The company organized various events to enhance user engagement, which contributed to the growth in the audio entertainment segment [15][66] Market Data and Key Metrics Changes - By the end of 2021, cumulative downloads of the TIYA app reached nearly 20 million, indicating strong user interest and engagement [19] - The average time spent daily in real-time voice rooms per user increased by 68% year-over-year in December 2021 [18] Company Strategy and Development Direction - Lizhi aims to continue its globalization strategy, exploring new markets and diversifying its product portfolio to enhance its competitive position in the audio ecosystem [29][62] - The company plans to optimize its operational strategies and enhance user engagement through product innovation and marketing [22][66] - Lizhi is focused on building a sustainable audio ecosystem while maximizing value through refined operational strategies [9][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining solid revenue growth momentum in 2022, despite potential fluctuations due to seasonal factors [48][50] - The company anticipates further narrowing of losses in 2022 and aims for overall profitability in the mid to long term [50][52] - Management highlighted the importance of optimizing cost structures and enhancing operational efficiency to achieve profitability [52][66] Other Important Information - The company established its global headquarters in Singapore to support international business expansion and innovation [23] - Lizhi's in-house developed technologies, such as DOREME and VoderX, are expected to enhance product features and user experiences [25][24] Q&A Session Summary Question: What is the outlook for profitability in 2022 and mid to long-term prospects? - Management noted the achievement of GAAP profitability for the first time and emphasized strategies for expanding the user base and increasing user spending to drive revenue growth [46][50] Question: Can management elaborate on the improvements in paying user rates? - Management attributed the increase in paying users to focused marketing strategies and promotional activities that enhanced user engagement and participation [53][54] Question: What is the growth strategy for 2022 and the outlook for the audio entertainment sector? - Management expressed confidence in scaling growth through globalization and product optimization, aiming to replicate successful domestic strategies in international markets [60][62]

LIZHI INC. Investor Presentation Q4 2021 2 Disclaimer This presentation has been prepared by LIZHI INC. (the "Company") solely for informational purposes. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness, reasonableness or correctness of the information or any opinions presented herein or any oral or written communication in connection with the contents contained herein. The information contained in this presentation ...

Business Overview - LIZHI INC 在2021年第三季度的净收入为5.05亿人民币，同比增长40%[13] - LIZHI INC 在2021年第三季度的平均总移动端MAU为5890万，同比增长5%[13, 32] - LIZHI INC 在2021年第三季度音频娱乐的平均移动端MAU为917万，同比增长21%[13, 22, 32] - LIZHI INC 在2021年第三季度的平均每月总付费用户为48.55万，同比增长8%[13, 32] - LIZHI INC 的用户中，超过90%是1990年后出生的[22] - 截至2021年9月，用户的朋友对数比2021年6月增加了64%[24] - 截至2021年9月，每位用户每天发送的消息数量比2021年6月增长了57%[24] Financial Highlights - LIZHI INC 在2021年第三季度的毛利率为30%，非美国通用会计准则（Non-GAAP）毛利率为31%[34] - LIZHI INC 在2021年第三季度的销售和营销费用占总收入的7.4%（Non-GAAP）[35] - LIZHI INC 在2021年第三季度的管理和行政费用占总收入的4.2%（Non-GAAP）[35] - LIZHI INC 在2021年第三季度的研发费用占总收入的14.6%（Non-GAAP）[35]

Financial Data and Key Metrics Changes - Total average mobile MAUs reached 58.9 million, with average monthly paying users at 485,000 in Q3 2021 [9] - Q3 revenue grew by 40% year-over-year to RMB 505 million, surpassing the total revenues for the full year of 2020 [10] - Gross margin increased to 30%, up 500 basis points year-over-year [10][22] - Total net revenue for Q3 was RMB 504.8 million, representing a 48% year-over-year increase [23] - Operating loss was RMB 40.1 million in Q3 2021, compared to RMB 9.6 million in Q3 2020 [30] Business Line Data and Key Metrics Changes - Audio entertainment average mobile MAUs grew by 21% year-over-year to 9.17 million [10] - The company focused on optimizing product functions and enhancing commercialization capabilities in the audio entertainment business [15] - The Tiya App saw increased user engagement, with a 57% rise in daily average messages sent per user compared to June [18] Market Data and Key Metrics Changes - The company is expanding its podcast footprint by collaborating with auto companies and platforms, enhancing its presence in the in-car audio market [19][20] - The strategic focus includes product optimization and technology innovation for in-car audio applications [20] Company Strategy and Development Direction - The company aims to build a sustainable and high-quality community ecosystem by enhancing content and interactive scenarios [11] - Globalization strategy focuses on optimizing products and ramping up localization teams to meet user needs [11] - The company is committed to technological empowerment and developing in-house audio technology solutions [12] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term benefits of a tightened regulatory environment, believing it will standardize digital content and operations [37] - Despite a slight decrease in user spending in Q3, management is optimistic about increasing the paying user base through refined operational strategies [38][39] - The company anticipates that the audio entertainment business will continue to drive top-line growth in the coming year [50] Other Important Information - Operating expenses increased by 91% year-over-year to RMB 191.3 million, driven by higher marketing and R&D costs [28] - As of September 30, 2021, cash and cash equivalents totaled RMB 515.9 million [32] Q&A Session Summary Question: Impact of regulatory environment on user growth and spending - Management believes the tightened regulatory environment will benefit long-term industry development and is adjusting products to meet compliance while enhancing user services [37] Question: Strategy for improving user paying ratio and overseas business growth - The company will focus on enhancing user engagement through promotional activities and optimizing marketing strategies to improve the paying user conversion rate [44][46] - Overseas business growth is expected to be driven by user experience optimization and gradual commercialization [48] Question: Reasons for slowing user base growth and revenue sharing decline - User base growth slowed due to strategic adjustments in content operations, focusing on higher commercialization potential [49] - The company is confident that the audio entertainment business will continue to be the primary driver of top-line growth despite short-term challenges [50]