Sound Group Inc. Q3 FY2022 earnings call

• Continued to advance dual pillars of growth: interactive entertainment and audio-based social networking business.
• Achieved steady growth in overall business, with revenue and net income reaching new highs.
• In order entertainment business, cultivated audio community ecosystem, launched short audio content module, and optimized user management to enhance engagement.
• In content creator ecosystem, upgraded creative support policies, improved creation tools, and launched innovative features to attract creators.
• In global development, focused on enhancing globalization capabilities, optimized global social product TIF, and expanded global team.
• In technology development, integrated hybrid cloud computing platform, promoted cloud application, and ramped up RTC and instant messaging technology.
• Celebrated 9th anniversary and announced new mission and vision to be the world's biggest audio platform.

In the third quarter of 2022, LIZHI's total revenue reached RMB565 million, up 12% year-over-year and 10% quarter-over-quarter. The interactive order entertainment business had an average mobile MAUs of $9.5 million, with a user penetration rate climbing to 19.1%. Cost of revenue was RMB376.2 million, gross profit was RMB189.1 million, operating expenses were RMB176.6 million, net income was RMB19.8 million. The interactive order entertainment business contributed significantly to the overall revenue, with its revenue growth supported by improved average spend per paying user.

• Aim to continuously develop product metrics, strengthen core technological capabilities, and unleash commercialization potential for sustainable growth.
• Will evaluate and adjust marketing strategy and budget based on performance, operational lease, and market conditions.

Forward-looking statements involve inherent risks and uncertainties due to factors beyond control that could cause actual results to differ materially from projections. The company is not obligated to update forward-looking information except as required by law.

Q: Will management share some color about the overseas business development as well as the amount of investment expense. My second question is will management share some color about your thoughts for when domestic product profitability potential in the longer term amid low in growth and challenging macro conditions.

A: Marco Lai mentioned overseas business development focuses on product, technology, and team. Incubating new products for overseas markets, optimizing TI app for US market. In terms of investment expense, overseas operations investment accounted for no more than 10% of total operating expenses. For domestic product, audio entertainment business is mature, made strategic adjustments to improve efficiency and profitability. Mid to long term, domestic business has growth potential, will expand core user groups and adjust cost structure for sustainable profitability.