Sound Group(US:SOGP)2022-04-27 20:11Financial 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].