Written | Wu Xianzhi
Edit the | Wang Pan
Himalaya updated its prospectus on March 29 this year, following the expiration of its prospectus to the Hong Kong Stock Exchange on September 13 last year, when the documents were about to enter a state of invalidation.
According to the data, Himalaya's operating income from 2019 to 2021 was 2.68 billion yuan, 4.05 billion yuan and 5.86 billion yuan respectively, an increase of 81.4% year-on-year (prospectus data in September last year), 51.1% and 43.7%, showing an overall rapid growth trend.
In terms of growth rate and revenue scale, Himalaya has been higher than another peer that has been listed on the NASDAQ in recent years - Lychee. But The Himalayas' strengths seem to be based on larger spending. We note that in the past three years, Lychee has accumulated a loss of 340 million yuan, while Himalaya has exceeded 2 billion yuan, which is about 3 lychees based on the closing market value of lychees on March 29.
The ceiling is approaching, and the cost is rising rapidly
Occupying 28% of the market, Himalaya's business model is not much different from its peers, mainly relying on PGC, PUGC, UGC three content production methods to obtain traffic, and then through subscriptions, advertising, live broadcast into revenue.
For the whole of last year, its subscription service revenue composed of membership subscriptions and paid on-demand listening was 2.99 billion yuan, an increase of 32.6% year-on-year, and the revenue scale accounted for the majority of all sources, accounting for 47.2%, 49.2% and 51.1% of the total revenue in the past three years.
The growth of user scale is a prerequisite for ensuring subscription revenue, and in the past three years, the average monthly active life of mobile and IoT has reached 140 million, 220 million and 270 million, nearly doubling. At the same time, the average mobile payment rate also increased from 6.2% in 2019 to 12.9% in 2021.
The way to get traffic with high-quality content and rely on subscription conversions to pay is much the same as online video and online music. Comparing the payment rates of iQiyi and TME (Tencent Music Entertainment), it is not difficult to find that the average monthly active user payment rate growth rate of Himalayas is very similar to that of TME.
The audio and video industry is highly dependent on subscriber conversion, and the high payment rate does not mean that Himalaya will live better than TME, and the sustainability and quality of user payment determine how much commercial imagination a platform has. From the perspective of subscription revenue/monthly active paid users, Himalaya is not a little bit worse than TME.
As of 2021, Himalaya's 267 million monthly active users contributed 1.892 billion yuan (subscription + live broadcast), and the per capita annual consumption was only 7.1 yuan. During the same period, the average monthly active number of TME online music and live broadcasting was 790 million, bringing a total of 31.24 billion yuan of online music and live broadcast service revenue, that is, the per capita annual consumption of 39.5 yuan.
Spending on the Himalayas is equivalent to a breakfast in a bun shop, while TME is similar to a single-person package from KFC.
Advertising and live streaming are the other two main sources of revenue for Himalayas, but in terms of growth rate, the contribution of live broadcasting to revenue is gradually decreasing. In three years, the cumulative growth of advertising revenue is 141.4%, and the live broadcast revenue is 62.0%, and it is obvious that the growth of live broadcast revenue relying on tipping is far less than that of advertisers.
The overall downward pressure on the online advertising and live broadcasting industry is huge, and although The subscription membership revenue of Himalaya has increased significantly, compared with other content platforms, the monetization methods are limited, and its ceiling is recognizable to the naked eye.
At the other end, user growth has driven overall revenue to new highs, but it is still unable to fully cover costs.
In the past three years, The operating costs of Himalayas were 1.5 billion yuan, 2.07 billion yuan and 2.69 billion yuan, respectively. Revenue sharing costs accounted for the absolute majority of the seven costs listed, with 900 million yuan, 1.29 billion yuan and 1.6 billion yuan in 2019, 2020 and 2021 respectively, and the proportion of total revenue fell from 33.3% to 27.3%.
According to the prospectus, the logic of revenue sharing cost is: according to the agreed percentage of Himalaya revenue, content creators and third-party IP partners are paid, in other words, unless the platform actively reduces, then the creator and third-party IP will take a part of the revenue according to the prescribed proportion.
Considering that this part of the cost is relatively rigid, the room for himalayan downward adjustment is extremely limited. On the one hand, within the time agreed in the contract, the platform is unlikely to reduce the proportion of the share, even if the contract expires, in order to ensure the quality of high-quality content, it is difficult to cut this part of the expenditure for cost control.
In addition, Himalaya also needs to pay for certain content rights separately, some of which may come from the conversion of graphic content into audio, which has increased by more than 100% in the past three years to 330 million yuan by 2021, accounting for 5.7% of total revenue.
Revenue cost sharing and copyright amortization costs reflect in a sense how much resources Himalaya has invested in the game with other graphics, audio, and video content platforms. In theory, the higher the share and copyright, the more quality and quantity of content creation, and the stronger the competitiveness of the platform in the content market.
In addition to the above two costs, Himalaya also has to pay transaction fees, employee salaries and benefits, bandwidth fees, product procurement and other expenses to third-party payment platforms, which are 3 percentage points lower than the proportion of total revenue in 2019.
It is worth noting that the salary and benefits of Himalaya employees have increased significantly after 2020, especially in 2021, the expenditure reached 190 million, an increase of 96.2%. Although the prospectus does not indicate how many additional staff members have led to this increase in expenses, we have learned some information from other sources that is not in the statement.
Photon Planet learned from an insider that starting in the second half of 2020, Himalayan Silk will go public and continue to expand its scale. "The main expansion is the operation post, and the personnel include more than just the Internet industry."
"It's two companies around 2020, and before that, only a handful of executives had shares in their hands, but in 2021, in order to retain and attract talent, some options were suddenly issued." The above-mentioned person said that many employees were granted options before the IPO last year, and The exercise method of Himalaya is relatively relaxed compared with Internet companies, with a proportional four-year exercise and no non-compete agreement restrictions.
According to the updated prospectus, Yu Jianjun holds 13.38%; Chen Yuxin holds 13.26%; Xiong Mingwang holds 10.6%; Trustbridge holds 7.38%; and other investors and shareholders hold 55.38%.
An anonymous person who claimed to be a Himalaya employee left a message on the workplace software that the company had "low wages and many things, and Shanghai has six thousand in hand, that is, it is a state of starvation." There are also many comments showing that the company's internal volume is serious, and the situation of upward management is more prominent.
Explore new scenarios
"Building a community with network effects with sound", Himalaya used a lot of "Internet" words in the prospectus to summarize its business model.
However, the dependence of audio on the scene is much higher than that of video and graphics, so Himalaya constantly reiterates its advantages in the Internet of Things and in-vehicle environments, and even distinguishes the average monthly active data of mobile and The Internet of Things.
Since 2020, the scale of users of the Internet of Things and other open platforms has surpassed that of mobile terminals, and the monthly active growth rate of mobile terminals last year was only 13.1%, and fatigue began to appear, while the Internet of Things and other open platforms increased by 34.7% year-on-year. Mobile customers are more diverse, and the Internet of Things only needs to communicate with hardware manufacturers and open platforms.
From the difference in the scale of IoT and mobile users, it can be found that as of the end of last year, at least more than 37 million monthly active users of the IoT terminal did not use mobile terminals, which means that It is difficult for Himalaya to get oil and water from the hands of this part of the people.
In terms of open platforms, the current effect of Himalaya and Baidu Search is similar to the earlier communication with Baidu. In terms of hardware, when the smart speaker was still in the spring in the past few years, it also brought considerable revenue, and the real imaginative scene of future audio is actually in the field of vehicles.
As a content provider in in-vehicle systems, Himalaya plays a role similar to that of a second-tier supplier, with its customers mainly from major in-vehicle systems, which makes it difficult to build a membership system directly from the in-vehicle system.
In addition, The Himalaya's audio content is biased towards knowledge, users will more or less divide a part of the energy in the in-vehicle environment, with the advancement of intelligent assisted driving technology, the landing scene increases, which may be a scene that is not inferior to the mobile terminal.
How long it will take, perhaps by the Himalayas. Although the prospectus claims that the funds raised from the IPO will be mainly used to continue to expand and enhance the content provided and empower content creators, enhance next-generation technology, AI and big data capabilities to further improve operational efficiency, etc., the direct reason may be that cash flow is close to drying up.
As of the end of last year, Himalayas only had 540 million yuan in cash and cash equivalents on its books, calculated based on the adjusted loss of 760 million yuan for the year, and if there is no new living water injection, it can only change the financial assets worth 750 million yuan in hand. This part mainly includes bonds, funds and stocks, considering the sharp fluctuations in the global market this year, It may be difficult for Himalaya to withdraw from the whole body.
In short, the Himalayas need to tell the story of the ear economy well enough without "breaking the sound".