The Ups And Downs Of IPO: Himalaya "Carries" 2 Billion Losses And Rushes To The Hong Kong Stock Exchange

Himalaya's listing road is full of twists and turns.

On the evening of September 13, Himalaya, an online audio platform, submitted its listing application to the Hong Kong stock exchange. Earlier, on April 30, the company filed a prospectus in the United States and planned to list on the New York Stock Exchange. However, due to Didi's listing triggered the state to tighten the supervision of overseas listing of Internet unicorn, Himalaya also terminated its plan to go to the United States for IPO.

However, the willingness and demand of listing are still urgent. According to the prospectus, Himalaya has an average of 262 million active users per month, ranking first in the industry. However, there are not many profitable players on the whole track. In the first half of the year, the company's revenue was 2.51 billion yuan, an increase of 55.5% over the same period of last year, but a loss of 323 million yuan in the first half of the year. From 2018 to 2020, the revenue of Himalaya will be 1.48 billion yuan, 2.697 billion yuan and 4.076 billion yuan respectively, with a net loss of 755 million yuan, 747 million yuan and 539 million yuan in the same period, with a total loss of more than 2 billion yuan in three years.

In fact, whether it's video or audio, there's a huge cost to the content. By expanding the scale of community users, promoting economies of scale, reducing the cost of unit content, so as to achieve profitability. For Himalaya, only by entering the secondary market can we further enhance our competitiveness in the track.

Cao Yiya, deputy director of the cultural and Creative Industry Research Office of Shanghai Academy of Social Sciences, said in an interview with the 21st century economic report that the service of audio platform has been relatively mature, and users' usage habits and payment methods have also changed. Commercialization is not a very difficult thing, but there is still a need for continuous content innovation ability. "The threshold of content production will be higher and higher, and user loyalty is not particularly strong. The platform needs to have more diversified product services."

In addition to marketing expenses, the other side of Himalaya's loss is high operating costs. Visual China

High cost of content

Even if it is already in the top of the industry, Himalaya still faces competition from many new players. In addition to litchi FM and dragonfly FM, Internet giants have entered the game one after another: byte beat's Tomato novel launched "tomato listening", wechat launched "wechat listening", launched podcasting app "kayak", Tencent music released a new long audio brand "lazy listening", and Netease cloud music launched "sound theater". In addition, China Central Radio and television also launched "cloud listening".

These new entrants all rely on the giants and have rich content resources to build barriers. At the same time, they can also drain through their own platforms. Under siege, Himalaya has increased marketing efforts, replenished flow resources to stabilize market share. In the cruel capital competition, they will retreat if they do not advance.

According to the prospectus, Himalaya's sales and marketing expenses in the first half of 2021 nearly doubled year-on-year, reaching 1.233 billion yuan. Sales and marketing expenses are mainly used for channel promotion, brand promotion and advertising, as well as commission payment for distributors and other platforms.

himalaya_said_that_in_the_future_ , _more_marketing_and_promotion_activities_will_be_planned_to_attract_users_and_advertisers_ , _enhance_brand_awareness_and_content_penetration_ , _and_sales_and_marketing_expenses_will_continue_to_increase_ ._ In addition to marketing expenses, the other side of the loss is high operating costs.

According to the data from 2018 to 2020, operating cost has been the largest cost expenditure in Himalaya, accounting for more than 50% of its total expenditure. The operating cost mainly includes the revenue sharing of content creators and the content cost of copyright purchase. Currently, Himalaya is working with 140 publishers to sign a 20-year online audio license with Yuewen group. At the same time, he also established cooperation with Deyunshe, Wu Xiaobo and other performing arts teams or writers to build a moat of content. A lot of collaboration leads to high content costs. In 2020, Himalaya will pay 1.293 billion yuan of revenue to content creators and contractors, accounting for about 32% of the total revenue, while the content cost of copyright purchase will be 255 million yuan, accounting for 6.3% of the total revenue.

As the threshold of content is raised, the cost is also increasing. Cao Yiya believes that audio works are similar to scripts, and there is a process of secondary creation, which requires a high level of innovation and transformation ability. "The first threshold lies in talents, especially in creative industries; the second is the division of labor in the industrial chain, and the content segmentation is also very high. In this case, to meet the needs of a large number of people or a small number of people, it needs to find a good balance."

How to tell the audio story?

Obviously, if Himalaya wants to continue to expand, it will face more capital investment to attract creators and purchase more copyright resources. Himalaya said in its prospectus that the funds raised will be used to enrich the content library and continue to encourage content creators to create high-quality content to meet the needs of different user groups.

Since its establishment in 2012, Himalaya has successively completed 9 rounds of financing. Its strategic investors include Tencent, Yuewen, Baidu, Xiaomi, tal and Sony Music. The main financial investors include pan Atlantic investment group, Zhixin capital, Goldman Sachs, Xingwang investment, Chuangshi partner capital, Puhua capital, Hejing capital, etc.

At present, its main cashing channels include paid subscription, advertising, live broadcast and other innovative products and services. But the story of "audio" doesn't seem so appealing in capital markets.

A few days ago, the second quarter financial report of 2021 released by litchi, which was the first to land in the capital market, showed that its operating income was 559 million yuan, up 59% year on year, the largest increase since its listing; However, its net loss was 29 million yuan, an increase of 31.82% year on year.

In fact, since 2021, the market value of litchi has been shrinking by 76.71%, and the current market value is only US $197 million. In the view of industry insiders, compared with Himalayan FM and dragonfly FM, the content quality of litchi is uneven, the growth is weak, and there is no way to find dislocation competition. The main reason is that the actual payment rate is lower than 1% for a long time.

From the perspective of Himalayan prospectuses, subscription payment and advertising are the main revenue models, accounting for nearly 80% of the revenue. In the first half of 2021, Himalayan revenue reached 2.51 billion yuan, of which subscription contribution exceeded 1.37 billion yuan, accounting for 54.6%; Secondly, advertising contributed more than 600 million yuan in revenue, accounting for 24.5%.

On the other hand, paid subscription is a relatively stable source of income in Himalayas. In the first half of 2021, the monthly average number of active mobile payment users of the platform is 14.2 million, and the average monthly active user payment rate is about 12.8%. In the future, Himalaya will continue to expand its user base in the third tier cities and below.

Under the high cost, in addition to expanding the user base, the online audio platform may need to tell more "stories" in the future, build moats, and continue to explore profit paths.

Cao Yiya pointed out that the core competitiveness of audio platform still lies in the content, especially after the scale-up, the quality control of content should be standardized. "Audio seems to have a low threshold, but people's sense of hearing is quite acute, and the requirements for technical expression and expression are higher. Therefore, the control of quality is very critical and necessary, and the crude content will reduce the user experience, which is a test for any platform."