Sound Group, Inc. Q4 FY2021 earnings call

• 2021 saw continuous progress in implementing the strategic plan, achieving rapid growth. - In the fourth quarter of 2021, revenue reached a new high, average monthly paying users increased, and it turned profitable on a GAAP basis for the first time. - In audio entertainment, adjusted operational and marketing strategies in the second half of 2021 to target core content categories with greater monetization potential. - TIYA product was updated, with new features like real time interactive group space, and established a global headquarters in Singapore. - Actively advanced in-house technology development, with RTC real time audio and video streaming technology solutions DOREME and instant voice messaging app VoderX empowering product enhancements.

In the fourth quarter of 2021, Lizhi's total net revenues were RMB560.3 million, an increase of 33% year-over-year. The fourth quarter gross margin hit a record high of 32%, up 400 basis points year-over-year. For the full year 2021, revenue grew 41% to RMB2.1 billion, and the full year gross margin was 29%, an increase of 400 basis points compared with 2020. The average monthly paying users in the fourth quarter increased by 18% year-over-year to 497,300. In the fourth quarter of 2021, the average MAU of the audio entertainment business expanded to 9.4 million.

• 2022 will adhere to a balance of growth strategy, driving robust organic growth while maintaining cost control. - Continue to explore globalization, leveraging operational experience and localized innovation to tap into commercialization potential. - In domestic business, continue to optimize marketing strategy, target core content categories, and expand user base and paying user conversion.

• Forward-looking statements involve inherent risks and uncertainties, and actual results may differ materially from projected due to many uncontrollable business risks and uncertainties.

Q: For profitability in 2022 and mid to long term prospects for profitability, and elaboration on paying rates improvements?

A: Delighted to achieve GAAP profitability in Q4 2021. For 2022, will continue to expand user base and revenue, optimize cost structure. In Q4 2021, 18% y-o-y increase in average monthly pay users due to focusing on audio entertainment business, launching promotional activities, and optimizing marketing strategy to promote pay user conversion.

Q: Share color about 2022 growth strategy, as well as audio entertainment sector outlook for 2022?

A: Confident in continuing growth via globalization strategy, international business to generate incremental growth. Actively explore new markets, build diversified product portfolio. In domestic business, continue to optimize marketing strategy, target core content categories, expand user base and paying user commercialization, and continue to implement optimized operational strategies in audio entertainment sector to promote revenue and profitability growth