Text | Zhao Er's knife
Himalaya is going to hit the IPO again!
Although both Hong Kong stocks and A-shares are still in a stormy stage, for the "unicorn" Himalaya, which was once in the position of the leader of the "ear economy" and was sought after by capital, quickly put the IPO on the agenda after the initial results of "reducing costs and increasing efficiency", and submitted a prospectus to the Hong Kong Stock Exchange a few days ago - Himalaya's repeated impact on the IPO process is particularly tortuous, but as a typical case of the traditional Internet entrepreneurial economy, Himalaya must indeed take "listing" as the phased goal.
The traditional Internet start-up economy is to attract investment by model, expand the market with financing, and then cash out the investment by listing to various institutions, which is also an important model for the domestic Internet economy to flourish in the past 20 years.
For Himalaya, its failure to hit the IPO success in 2019 also means that the "ear economy" it represents is actually difficult to become an outlet.
1
Founded in 2012, the number of users exceeded 10 million at the end of the second year, and exceeded 200 million by the end of 2016. For a time, it set the thousands of favors of capital, and in 10 years, it has raised 9 rounds, with a cumulative financing of more than 9 billion yuan, and the valuation once approached 30 billion yuan.
Indeed, the ear economy represented by Himalaya once became the focus of the center stage of the Internet industry. According to the prospectus, Tencent, China Literature, Xiaomi, Good Future, and Sony Music are strategic investors in Himalaya, and the main financial investors include General Atlantic Investment Group, Trustbridge Capital, Goldman Sachs, Xingwang Investment, Genesis Partner Capital, China Internet Investment Fund, Shanghai Cultural Industry Development Investment Fund, Jiaxing Xiuzhou Financial Holdings, etc.
2016~2019 can be said to be the entire "ear economy", that is, the most prosperous year of the online audio industry.
In addition to the Himalayas, Dragonfly FM was also the darling of the capital market at that time. According to the data, since its establishment in 2011, Dragonfly FM has also had nearly 10 rounds of financing, and the list of investors includes well-known institutions such as Baidu, Xiaomi, Innovation Works, Zhidu and Chinese Online.
Himalaya and Dragonfly FM and Lychee, also known as the top three of online audio, are considered to have the potential to change the map of the Internet economy, but from the perspective of 2024, if it is successfully listed in the most prosperous years, Himalaya may really become the hegemon of the Internet economy. Unfortunately, none of this really happened.
After 2019, the development of online audio began to slow down, and online audio platforms such as Himalaya have also encountered bottlenecks in their development. According to the "2019-2020 China Online Audio Research Report" released by iiMedia Consulting, the number of users in China's online audio industry has increased from 267 million in 2016 to 425 million in 2018, but the growth rate has dropped from 36.9% in 2016 to 22.1% in 2018.
The good days are over, but the days will pass. Himalaya and Dragonfly FM have also embarked on the path of reducing costs and increasing efficiency.
2
Judging from the data, Himalaya's "cost reduction and efficiency increase" is effective.
According to the latest prospectus, Himalaya's revenue in 2023 will be 6.16 billion yuan, and the adjusted net profit will be 224 million yuan. The latest prospectus discloses Himalaya's operations for the full year of 2023. Himalaya's revenue in 2021, 2022 and 2023 will be 5.86 billion yuan, 6.06 billion yuan and 6.16 billion yuan respectively, and the gross profit margin will be 54%, 51.9% and 56.3% respectively. The adjusted net profit in 2021, 2022 and 2023 will be -718 million yuan, -296 million yuan and 224 million yuan respectively.
Prior to this, from 2019 to 2021, Himalaya's losses during the year increased year by year, from 1.925 billion yuan and 2.882 billion yuan to 5.106 billion yuan respectively, and the adjusted annual losses were 749 million yuan, 539 million yuan, and 759 million yuan respectively, with a cumulative net loss of more than 2 billion yuan in three years. Its executives have said that for Himalaya, it is still in a period of strategic loss at this stage, and it will continue to invest in exchange for more share, larger scale and stronger user stickiness, and once these advantages are consolidated, it will be logical to monetize on this basis.
In August 2022, Yu Jianjun, founder and CEO of Himalaya, said at an internal staff meeting that he would achieve a single-quarter profit in the fourth quarter of 2022, reverse the long-term loss situation, and achieve a full-year profit in 2023, and an annual revenue of 20 billion yuan and a profit of 4 billion yuan in 5 years. At present, Ximalaya has achieved a profit of 10 million yuan in a single quarter for the first time in the fourth quarter of 2022, which is also the first time that Himalaya has achieved profitability in ten years.
For the increase in profitability in 2023, Himalaya said in the prospectus that it is mainly due to the improvement of gross profit margin and operating efficiency brought about by the expansion of user base, enhanced liquidity and cost structure optimization.
The data on the prospectus also confirms this, with Himalaya sales and marketing expenses as a percentage of total revenue declining continuously from 2021 to 2023, 44.9% in 2021, 34.9% in 2022, and 33.6% in 2023. R&D expenditure as a percentage of total revenue decreased from 17.5% in 2021 to 15.4% in 2022 and further decreased to 15.1% in 2023, with R&D expenditure of approximately $930 million in 2023.
In addition, administrative expenses (mainly comprising employee benefits) excluding share-based expenses decreased as a percentage of total revenue from 10.7% in 2021 to 9.2% in 2022 and 7% in 2023.
How to understand this data in the prospectus?
To put it simply, Himalaya's revenue growth has been slow - the development has encountered a bottleneck;
Costs have continued to fall, from R&D to the proportion of administrative expenses, which is interpreted by the outside world as layoffs and other behaviors, and the effect is immediate.
In other words, Ximalaya and the independent online audio track where it is located are already a very stable market, and the only way to make a profit is to tap the potential of the interior.
As a problem encountered by the industry leader Himalaya, Dragonfly FM has always existed. Dragonfly FM has always faced common problems in the industry, that is, the industry has a narrow audience and the people's awareness of payment is weak, and it has never been able to make a breakthrough in profit exploration. In addition, in the field of audiobooks, the exploration of Dragonfly FM has not been able to show eye-catching results. It can be said that Dragonfly FM, like Himalaya, is subject to the shackles of the industry and is difficult to break through.
Lychee FM, which successfully went public in the United States in the mode of rewarding, also had a hard time. According to the financial report for the third quarter of 2023 released in November last year, Lizhi's revenue in the third quarter was 425.1 million, with a net loss of 62 million, 42.1 million monthly active users, and 400,000 monthly paying users. In terms of revenue, Lychee is about a quarter of Himalaya's, and in terms of user scale, Himalaya is also "far ahead", according to the prospectus, in 2023, the average monthly active users of Himalaya in all scenarios will reach 303 million, and the average monthly active users on mobile will reach 133 million.
It should be said that Lychee FM has not had any impact on the status of Himalaya after its listing. So, if Himalaya can successfully land on the Hong Kong stock market this time, will it usher in a new spring for the ear economy?
3
According to the prospectus, Himalaya's revenue sources, paid subscriptions, advertising, live broadcasts, and other innovative products and services are the four pillars, with revenue of 3.189 billion yuan, 1.423 billion yuan, 1.13 billion yuan and 418 million yuan in 2023, accounting for 51.7%, 23.1%, 18.4% and 6.8% of revenue respectively.
Paid subscription services are the main source of revenue for Himalaya, including membership subscriptions and paid on-demand listening services, accounting for more than 50% of revenue from 2021 to 2023. Advertising revenue is the second largest source of revenue for Himalaya. In the past three years, advertising revenue accounted for 25.4%, 24.2% and 23.1% of total revenue respectively. The revenue of Himalaya Live streaming services is mainly derived from the sale of consumable virtual gifts and items. In 2021, 2022 and 2023, this part of the revenue accounted for 17.1%, 19.1% and 18.4% of the total revenue, respectively.
In addition, the podcast track is becoming the focus of Himalaya in the past two years. Its executives have introduced that Ximalaya's podcast currently has nearly 6 million users in a single day.
But whether it's membership subscriptions, ads, or podcasts, Ximalaya must face the fact that user growth is slowing down or even churning, as well as the inherent industry difficulties of online audio, such as the loading form of ads.
However, for Himalaya and Dragonfly FM, two independent manufacturers of online audio, the intensification of competition in the big market is also a threshold that it is difficult to cross if they want to achieve a second spring:
Short videos and live broadcasts are still eating away at a lot of user time, and it is difficult for Himalaya and Dragonfly FM to carry this general trend of user preferences alone;
The audio field has long been the hardest hit area for giants. Tencent Music, Station B, Douyin, NetEase Cloud Music, etc. have already been laid out in the audio field, Tencent Music launched Lazy Listening after the merger and acquisition of lazy listening, with the huge user scale of Tencent Music, the growth potential of the long audio business after obtaining resources should not be underestimated; The competition in the audio market has been very sufficient, and users have long been differentiated.
WeChat has also added a "listen" function to the discovery page, and the growth rate of users is very amazing. In addition, in the field of podcasts, Small Universe has also formed a brand influence similar to Zhihu and Douban.
Due to the limitations of the entire industry, Himalaya's growth space has indeed reached its peak in the eyes of the outside world.
But as an industry observer, Reading Yujun also hopes that Ximalaya's IPO will go smoothly, after all, it can give investors from all walks of life a possibility to exit, and it can also allow Himalaya to have better financing channels to continue to struggle in the audio field. Reading Yujun's words in the audio field in 2021 are still valid at this time, "Reading Yujun is still looking forward to Ximalaya's successful IPO in Hong Kong, and even further listing in China." On the one hand, it is because audio does have a unique charm, and on the other hand, through the listing of Himalaya and the degree of pursuit by the capital market, it is possible to see how far the ear economy can go and what kind of surprises it can bring to users......"
Good luck to the Himalayas!
*Original article, reprint must indicate the source