Source: Business Data School
Article | Small
Editor | Huang Xiaoyi
After three failed returns, Himalayas embarked on the fourth IPO.
Recently, Himalaya, an online audio platform, submitted forms to HKEx. Different from the previous three times, this is the first time that Himalaya has made a profit since its establishment 11 years ago.
According to the prospectus, from 2021-2023, Himalayan revenue will reach 5.857 billion yuan, 6.061 billion yuan and 6.163 billion yuan respectively; Its adjusted net profits from 2021-2023 are RMB -718 million, RMB -296 million and RMB 224 million respectively.
As early as 2021, Himalaya was in the first echelon of online audio industry. In terms of the total listening time of mobile terminals and the total online audio revenue in 2023, the Himalaya has an average of 300 million users listening to its audio content online every month, and the user volume is far larger than that of peers, ranking first. Even so, the Himalayas failed to win the favor of the capital market for the first three submissions.
Now Himalaya has added a new "profitable" weight, and also picked up AI to "arm" itself, and launched the "Everest Audio AI Model". Can it move capital again?
01 Turning loss into profit after cost reduction and efficiency increase
Although the net profit turned from loss to profit for the first time, the income growth in Himalaya slowed down significantly.
According to the prospectus, from 2021 to 2023, the revenue of Himalayas will be 5.857 billion yuan, 6.061 billion yuan and 6.163 billion yuan respectively, with the growth rate of revenue falling from 43.7% to 3.5% and 1.7%.
In this context, the "turnaround" of Himalayas comes from cost reduction.
From 2021 to 2023, the percentage of Himalayan sales and marketing expenditure and R&D expenditure in total revenue has decreased continuously, from 44.9% in 2021 to 33.6% in 2023, and from 17.5% in 2021 to 15.1% in 2023. However, the percentage of administrative expenses excluding share based payment expenses (mainly including employee benefits) in total income decreased from 10.7% in 2021 to 7% in 2023.
Take the sharp decrease in administrative expenses as an example, which is mainly due to the reduction of Himalayan organizations and the drastic salary cut of the management.
According to public data, the Himalaya has 4342 employees by the end of 2021, which will be reduced to 2883 by the end of 2022, and the proportion of layoffs will reach 33.6%; Further layoffs occurred at the end of 2023, with the total number of employees falling to 2637, 8.5% compared with the layoffs at the end of 2022.
Three directors of the management (Yu Jianjun, Li Xingren and Shen Jieqiang) took the lead in reducing their salaries. In 2022, their salaries will be 3.759 million yuan, 2.08 million yuan and 1.909 million yuan respectively, totaling 7.748 million yuan; By 2023, the remuneration of these three directors will be directly halved, namely, 1.798 million yuan, 1.066 million yuan and 1.099 million yuan, totaling 3.963 million yuan.
In addition to the reduction of various expenses, the Himalayas are also trying to control the content cost. According to the financial report, from the gross profit level, it has increased from 54% in 2021 to 56.3% in 2023, mainly due to the reduction of the percentage of authors.
Short term throttling is effective, but open source as soon as possible is fundamental.
From the perspective of Himalayan revenue structure, subscription, advertising, live broadcast and other innovative products and services are still the four pillars of its platform revenue. In 2023, the revenue of each business will account for 51.7%, 23.1%, 18.4% and 6.8% respectively. Among them, subscription accounts for half of the total revenue and is the core component, which is mainly affected by the number of users and the willingness of single users to pay.
At present, the Himalayas are facing the dilemma of slowing down the growth of the number of users and difficulty in expanding their willingness to pay.
According to its prospectus, from 2021-2023, the average monthly active paying subscribers of Himalayan mobile terminals will be about 14.9 million, 15.7 million and 15.8 million respectively; Its user payment rates were 12.9%, 12.9% and 11.9% respectively, and the latter two years were in a negative growth situation.
In this context, the Himalayas are also increasing the number of users and the value of individual users by binding members with the long video platform and increasing the price of members. On the Little Red Book, there are many users lamenting the price increase of Himalayan members.
In fact, the low user payment rate, the peak user increment, and the platform's inability to make money are not only the difficulties faced by Himalayas, but also the problems of the entire online audio industry.
As the industry leader, in 2023, the average monthly active users of the Himalayas will reach 303 million, including 133 million average monthly active users of mobile terminals and 170 million average monthly active users listening to Himalayan audio content through the Internet of Things and other third-party platforms. In terms of online audio revenue in 2023, the Himalayas' market share in China's online audio industry will reach 25%.
However, in terms of the number of users in the entire online audio industry, China, as the world's largest online audio market, has a much lower penetration rate than foreign countries. Relevant data show that in 2023, the penetration rate of monthly mobile online audio users in the United States will exceed 50%, and only 24.6% in China.
This has something to do with the short video and graphic platforms squeezing the living space of the audio platform. What is more troubling is that even in this limited cake, there are not many competitors.
A few years ago, Tencent, Baidu and other Internet companies came to an end and wanted to make some achievements in the online audio field. However, in the second half of 2023, major manufacturers were also retreating, and Penguin FM and other companies announced that they would be out of service.
In the final analysis, the limitation of audio is far more than that of video, the audience is narrower, and no one can see a clear profit model.
02 Online audio is declining, and Himalayas will fight against the wind
The "decline" of the online audio industry also has early signs.
According to the iResearch report, from 2021 to 2022, the market size of online audio platform will be RMB 10.02 billion and 11.58 billion respectively, and it is estimated to be 13.81 billion in 2023. The growth rate of the industry will decline from more than 20% before 2020 to less than 20%. It is estimated that the growth rate of the industry will decline to 9.5% in 2026.
Moreover, the market value of Litchi FM, which was listed first, dropped sharply. After five consecutive years of losses, it received a notice from NASDAQ in 2022 that it no longer met the minimum share price requirements.
However, as the head of the industry, the Himalayas still have opportunities. In recent years, Himalayas have made a lot of efforts in content and distribution channels to find scenarios and compete for users.
First, in terms of content, Himalaya has signed copyright cooperation agreements with many publishers and the online reading overlord Reading Group, and reached cooperation on the audio adaptation of literary works, literary IP derivative development and other directions. Focusing on paying for accompanying listening, users can acquire knowledge and self entertainment through online audio while conducting other activities, so as to meet the demand for listening in more sinking markets.
In terms of PUGC, podcasts are also becoming the focus of Himalayas in recent two years. Now, for Himalayas, podcasting has become the largest track after audio stories. It is understood that at present, its podcasting users are nearly 6 million per day. More investors said that podcasting will bring young users to Himalayas, and it is also a growth point.
According to eMarketer's research forecast, the number of podcast listeners in China will reach 102 million in 2022, and more than 10% of Chinese will become podcast listeners by 2024.
Secondly, in terms of channels, Himalayas are also looking for distribution carriers other than mobile phones to expand user groups. For example, the diversification of application scenarios can be achieved through devices such as Internet of Things platforms and intelligent terminals.
These efforts have all met with considerable challenges in the short term.
The first is the competition for podcasts. As players in the online audio field are also increasing the volume, vigorously developing podcasts to expand more content types and cashing methods, Himalaya may face the situation of being overtaken.
For example, it took only 18 months to launch the podcast platform Xiaouniverse, and the number of users quickly exceeded one million; In less than two years, more than 20000 podcasts and 200000 new episodes have been added.
Not only that, but also the competition of non online audio platforms is intensifying. Netease Cloud and QQ Music have also launched podcasts in their products; WeChat video account will also support the addition of long audio content in 2023.
The Himalayas have left their peers behind, but they may not be able to climb the downward hills of the industry, as well as other giants. For big platforms such as Netease and Tencent, audio is just a piece of puzzle to complement their own content. They often have powerful resources to supplement, such as the complementarity between QQ music and reading articles under Tencent.
Secondly, in terms of channels, after the Internet of Things brings a large number of users to Himalayas in 2022, the growth of users in this channel will stagnate in 2023. Although Himalayas can still be a supplier in new distribution channels and seize opportunities as long as they firmly grasp their own content capabilities, the cost of new channel development, form change and competitive pressure are unknown.
03 Can Himalayas tell the story of AI well?
Entering the AI era, AI's reshaping of audio content production has brought new hope to the Himalayas.
First, from the perspective of cost reduction and efficiency increase of content, AI technology can improve the efficiency and quality of content production. Through intelligent editing, voice synthesis and other technologies, audio content can be generated and optimized quickly.
For online audio platforms, there is no content without copyright. Copyright is the throat of all original content. Without copyright, there is no competitive advantage.
Himalayas are more familiar with this and want to build a content supply pyramid of "PGC+PUGC+UGC". According to its prospectus, based on the head PGC strategy, Himalaya has reached a long-term cooperation strategy with head publishers, online literature platforms, content creators and key opinion leaders (KOLs). The content forms include audiobooks, pan entertainment audio, etc.
But it also brings huge content costs to Himalayas.
In the previous IPO process, Himalayas were trapped in a loss situation. The annual losses from 2019 to 2021 were 1.92 billion yuan, 2.88 billion yuan and 5.11 billion yuan respectively, and the loss in 2021 was 77% larger than the same period last year. In the past three years, the adjusted annual losses were 750 million, 540 million and 760 million respectively, with a total loss of 2.05 billion yuan.
In response, Himalaya also said that the loss was mainly due to the expense of content purchase, sales and marketing activities as well as R&D activities. However, in terms of the strategy at that time, high copyright, creative costs, spending money on marketing and other expenses were inevitable in the Himalayas. Therefore, Himalayas have to spend huge operating costs to keep relevant content on the platform.
According to public information, as of January 30, 2024, Himalayan Technology Company had 248 cases of defendants in intellectual property disputes in the past year. So that they also clearly stated in the prospectus that if the copyright owners no longer cooperate, it will bring great risks to the platform.
Under the trend of AI reshaping thousands of industries, Himalayas has developed the "Everest Audio AI Model", and launched AI driven audiobook production and podcast production.
Compared with the time of artificial creation, AI can increase the timeliness by 50 times; The production participated by AI producers has raised efficiency more than 3 times compared with manual creation. As of December 31, 2023, the Himalayan platform AIGC content will last 240 million minutes, accounting for 6.6% of its audio content.
For Himalayas, the "AI+" platform established through AI technology can also match PUGC creators with high-quality copyrighted content, further reduce the production threshold, and then produce attractive content.
From the perspective of commercial realization, Himalayas are still exploring new business models with AI, for example, through intelligent voice advertising, intelligent paid content and other ways to achieve more efficient commercial realization, and solve the problem of low efficiency of audio content advertising and low advertising revenue.
Himalayas' emphasis on AI can also be seen. According to the prospectus, the funds raised in this listing will be used to improve content and enable content creators, and at the same time, focus on next-generation technology, AI and big data capabilities to enhance the operational efficiency of online audio.
(Statement: This article only represents the author's view, not Sina.com's position.)
