Sound Group Inc. Q1 FY2023 earnings call

• The company achieved revenue growth of 22% y-o-y to RMB 631 million in Q1 2023, with net income surging 194% y-o-y to RMB 48.3 million.
• Continued innovating and upgrading audio entertainment product features and functions to boost commercialization efficiency, launched interactive online modules to enhance user participation and engagement.
• Focused on cultivating the content creator ecosystem, implementing a creator partnership mechanism to attract more creators and boost their engagement and creative output, and launched themed activities to enhance interaction in the audio-centric community.
• In global business, launched a chatbot module in the TIYA App in February, optimized and rolled out an upgraded MY AI FRIEND chatbot in March to enrich the online companionship experience, and will further optimize and upgrade MY AI FRIEND features and enrich usage scenarios.
• Pursued global business with localized operations and R&D of self-developed core technologies to power product innovation.

In the first quarter of 2023, Lizhi Inc.'s revenue increased by 22% year-over-year to RMB 631 million. Net income surged by 194% year-over-year to RMB 48.3 million. Total average mobile MAUs amounted to 49.6 million, and average monthly paying users totaled 471.5 thousand. The company's gross profit was RMB 196.4 million in the first quarter, with non-GAAP gross profit at RMB 198.2 million. Operating income was RMB 42.7 million, and non-GAAP operating income was RMB 52.9 million. Net income was RMB 48.3 million, and non-GAAP net income was RMB 58.5 million.

• Overseas revenue scale is expected to be a smaller proportion this year with uncertainties.
• Will continue to invest in marketing, localized operations, and optimize products and business models for overseas business.

• Noted strengthened regulatory environment in the audio live streaming sector with stricter standards; will reinforce overall compliance management including content safety and security, and conduct regular self-examinations in accordance with latest policies.

Q: How should we think of the monetization scale of overseas products in this year in the investment stage? And does management notice any change of regulatory environment on the audio live streaming sector?

A: Regarding overseas monetization, still in early stage of testing subscription models, overseas revenue scale expected to be smaller this year with uncertainties. Regarding regulatory environment, noticed strengthened regulations, will reinforce compliance management including content safety.

Q: Shall the management share more about the progress of the overseas business, including operational level and some of the user matrix, and as well as the outlook for the overseas business for the full year?

A: Overseas business steadily developing, focused on user experience optimization and function upgrades. TIYA App's MY AI Friend chatbot launched, user engagement increased. Continuously enhancing functions, building global capabilities with international teams, will step up investment in line with business growth.