Himalayas, no new sounds can be heard

Author: Chen Yan

Edited by Gale

Himalaya has denied that he has laid off his own staff.

In the past few days, news has come out that Himalaya plans to lay off employees across the board in the near future, with a proportion of 20% to 30%. Among them, the product layoffs are the most, the operation is second, the technology is relatively less, and the remaining products and technologies are merged, and the production and research are integrated. In addition, in the past six months, a number of senior executives, including Qin Lei, the SVP in charge of the product, and Wang Chaoyang, the chief content officer, have left one after another.

In this regard, Himalaya staff claimed that the company was carrying out normal organizational adjustment and upgrading at the end of the year, and there was a turnover of personnel, but external recruitment has also been in progress, and 20% to 30% of the statements are not true. But for the resignation of Qin Lei and Wang Chaoyang, Himalaya did not give a clear statement.

This is not the first time that Himalaya has been shrouded in layoffs. Since March 2022, there has been news of layoffs in Himalaya from time to time. According to Tianyancha data, there will be 781 people who pay social security in Shanghai Himalaya Technology Co., Ltd. in 2021, but there are only 593 people left.

In the past two years, Himalaya has failed three IPOs, and investors' attitudes towards it have become visibly cold.

Huge losses have always been a big mountain in front of Himalaya, and it was not until the fourth quarter of 2022 that it barely achieved a single-quarter profit.

The domestic audio market is still waiting for new stimulus, and Ximalaya, as the largest online audio platform in China, still has many problems to solve.

The IPO failed three times, and self-hematopoiesis was difficult

In recent years, the Himalayas have had a lot of bad luck.

As early as 2021, Himalaya submitted a statement to the New York Stock Exchange, planning to land on the U.S. stock market in the first half of the year. However, due to the investment environment, Himalaya withdrew its application in September of the same year, and then switched to Hong Kong stocks, wanting to sprint to the main board of the Hong Kong Stock Exchange for listing, but soon after, the listing application materials "failed".

In March last year, Himalaya submitted a prospectus with updated data, once again wanting to ring the bell of the Hong Kong Stock Exchange. But in the following months, Ximalaya did not negotiate with the investor, and it was unable to make up enough 100 million yuan of cornerstone investment, so it was forced to suspend the IPO plan. According to reports, due to market turmoil, Himalaya and potential investors are at odds on valuation issues, and investors generally have little confidence in it.

Behind the three failures of the IPO is the dilemma that Himalaya has never been able to make a profit.

Since its establishment more than ten years ago, while Himalaya has expanded rapidly, it has also fallen into a strange circle of "increasing income but not increasing profits".

According to the latest prospectus, from 2019 to 2021, Himalaya's revenue has achieved continuous growth, with 2.677 billion yuan, 4.050 billion yuan and 5.86 billion yuan respectively, and the gross profit margin has increased from 44.5% in 2019 to 54.0% in 2021.

The company's main revenue comes from the three businesses of paid subscription, advertising and live broadcast, of which subscription revenue accounted for more than 50% in 2021, making it the most mature monetization channel of Himalaya.

Content is the core competitiveness of Himalaya to win paying users, but the high content cost and marketing cost also make Himalaya fall into the swamp of losses.

According to the prospectus, from 2019 to 2021, the company's content creator revenue share and content cost of purchasing copyright were about 1.064 billion yuan, 1.549 billion yuan and 1.931 billion yuan respectively, accounting for 39.5%, 38% and 33% of the total revenue, respectively, and sales and marketing expenses reached 1.219 billion yuan, 1.707 billion yuan and 2.630 billion yuan, accounting for 45.2%, 41.9% and 44.9% of the total revenue respectively.

In 2019, 2020 and 2021, Himalaya's adjusted loss (non-IFRS measure) for the year was RMB748 million, RMB539 million and RMB759 million, respectively, with a cumulative net loss of more than RMB2 billion in three years.

This also illustrates one thing in disguise, Ximalaya has been supported by financing all these years. By the time of the IPO, Himalaya had completed 9 rounds of financing and received at least 5 billion funds. But after burning all this money, there is little patience left for capital, desperate to see a return.

If it fails to make a profit, Himalaya will naturally continue to be closed to investors and fall into a vicious circle of operation and financing.

The profit model lacks imagination, and there is an urgent need to find a new story

Reducing losses and making profits has become the first priority of Himalayas.

On the occasion of the 10th anniversary of Himalaya last year, CEO Yu Jianjun said frankly: "The specific profit is not so important, but the significance of profit itself is very important, which shows that Himalaya can make its own blood without borrowing external forces." "Finally, in the fourth quarter of 2022, Himalaya achieved a profit of 10 million, which is also the first profit in the ten years since its establishment.

It should be noted that Yu Jianjun mentioned at the annual meeting that the reason for profitability is due to the company's efforts in three directions, namely: continuous improvement of strategic and organizational clarity, long-term commitment to creating user value, cost reduction and efficiency increase, and sustainable profitability.

Yu Jianjun

In other words, the profit has little to do with the changes in the Himalayan business itself, and it mainly depends on spending less money and using fewer people.

This corresponds to the layoffs in Himalaya since last year, according to reports, in April 2022, within a few days of the layoffs of the entire speed version department, the company launched a larger-scale layoff, accounting for 15% of the total number of employees, and some departments even reached more than 20%, of which each track BU is the hardest hit area.

In addition to layoffs, Himalaya is also simultaneously reducing the copyrights that have been heavily invested in the past. Previously, a Himalaya employee told the media that in addition to the top key projects that were bought out in the early years, the newly introduced copyrights in the later period are trying to gradually terminate the contract to reduce costs.

However, this kind of profit from "saving" is too passive and can only solve the worries.

In the final analysis, it is the business model of Himalaya that lacks imagination and urgently needs to find new growth points.

In this matter, Himalaya has not thought of new tricks. Since the beginning of this year, podcasts have become a very frequently mentioned business in Himalaya, and they have been regarded as the next growth point, and even the app's splash screen ads have been replaced with "listening to books, listening to lectures, and listening to podcasts". At the 2023 Himalaya Creator Conference, Yu Jianjun said that podcasts are a blue ocean of content, and Himalaya will "have a big game" next.

Himalayan splash ads

But not to mention whether the podcast business can really "save the day", just compared with its peers, Ximalaya does not have a great advantage. According to the "2022 Original Content Ecology Report" released by Himalaya, as of 2022, the number of podcasts hosted by Himalaya is about 24,848.

Compared with another Chinese podcast platform "Small Universe", in 2022, Small Universe has added a total of 22,740 podcasts and more than 200,000 new episodes. Among the newly launched podcasts in 2022, the number of podcasts with more than 10,000 subscribers has increased nearly fivefold compared to 2021. This platform, which was only launched in 2020, has gradually become equal to the Himalaya in less than two years, and it is bound to compete more fiercely with it in the future.

At present, it seems that Himalaya is still a long way from the goal of "achieving an annual income of 20 billion yuan and a profit of 4 billion yuan after five years" set by Yu Jianjun last year.

The online audio market is still in the winter

Internet traffic is gradually peaking, and under the invasion of short video platforms represented by Douyin and Kuaishou, users' time has been robbed of a lot, not only Himalaya, but also many online audio sharing platforms are becoming more and more difficult.

Lychee FM, which preemptively landed on the NASDAQ before the Himalayas, has seized the timing of its listing, but its performance in the secondary market has not been satisfactory in recent years. On October 11, 2022, Litchi FM received a notice that Nasdaq no longer meets the minimum stock price requirement because its closing price was below $1 for the past 30 consecutive trading days, and it was on the verge of delisting.

As of the close of trading on December 6, Litchi FM was trading at $2.27 per share, with a total market capitalization of $12.01 million, a fraction of the market value of $532 million when it first went public in 2020.

Screenshot of Snowball Net

Litchi FM is still surviving, and Tencent's Penguin FM has announced that it will go offline in July this year. This matter has long been traced, before going offline, its official public account has been stopped for nearly three years, and the Weibo homepage has also been stopped for more than a year, and the qualification has not passed the annual review. At the end of last year, the monthly active activity was only 2 million.

In this era of fragmentation, user distraction has become a common phenomenon.

Compared to 30-second short videos with loud music and vocals, and rich video images, audio content that starts at 10 minutes is not dominant. How to innovate and improve the "ear economy" to provide a more unique and ingenious user experience has also become a challenge for Himalayas.

On the one hand, it has to resist losses and achieve profits, and on the other hand, it has to lay out for long-term development, and the next road for Himalaya is not easy.