Chinese podcast and audio platform Ximalaya has reapplied for an initial public offering in Hong Kong as it grapples with increasing marketing expenses and slowing growth amid fierce competition.
Founded in 2012, the Shanghai-based company was the largest online audio platform in China in terms of total mobile listening time and audio revenues in 2021, data from China Insights Consultancy showed.
Ximalaya had 267.9 million average monthly active users in 2021, while its namesake mobile app had the largest number of MAUs among its peers, it said, citing the CIC report.
Ximalaya's audio content includes podcasts, audiobooks, radio dramas and Xiangsheng, a traditional Chinese stand-up comedy.
The platform generates revenue mainly through subscriptions, advertising and live streaming services.
It was co-founded by chairman and chief executive Yu Jianjun, who currently has a 13.38 percent stake. Tech giant Tencent (0700) holds a 5.3 percent stake and its backers include Xiaomi (1810), Baidu (9888) and Sony Music Entertainment.
Like many tech companies, Ximalaya remains unprofitable and its net loss widened by 74.8 percent to 3.9 billion yuan (HK$4.8 billion) last year partly due to an increasing sales and marketing expenses, especially on channel promotions.
Sales and marketing expenses grew 54 percent from a year ago to 2.63 billion yuan in 2021, accounting for 45 percent of the revenue it earned. Revenue over the same period rose 44 percent to 5.86 billion yuan.
Ximalaya mainly relies on income from subscriptions, which accounted for 51.1 percent of its revenue last year with advertising revenue contributing 25.4 percent. Its percentage of live streaming services income has declined over the past three years, down from 22.9 percent in 2019 to 17.1 percent in 2021.
Ximalaya submitted its first application to list in Hong Kong last September, four days after it shelved a US listing plan.
The firm filed for a US IPO last April but Reuters reported in May that it had been pushed by Chinese regulators to withdraw the US listing plan amid tightening scrutiny of overseas listings.
Ximalaya has warned of other regulatory risks in its prospectus, saying the government has closely regulated online audio platforms in the past and may continue to tighten regulations and control on those platforms.
Also, Ximalaya said the regulatory licenses it holds may not be sufficient to meet regulatory requirements due to the uncertainties of interpretation and implementation of existing and future laws and regulations.
As one of the leading players in the "ear economy," Ximalaya's listeners accounted for 68.3 percent of total mobile listening time among all online audio platforms in China last year, according to CIC.
This number fell from 75 percent in 2020 as cited in its US prospectus, which may reflect increasingly fierce competition in the industry.
Apart from rival platforms Lychee FM and Qingting FM, internet giants such as Tencent, ByteDance, NetEase (9999) and Bilibili (9626) have already entered the fray for the online audio market.
Besides, Ximalaya is facing greater competition from short-video platforms such as Tiktok's domestic version Douyin and Kuaishou (0124).
Douyin's daily active users exceeded 600 million as of August 2020 while Kuaishou recorded 308.2 million DAUs and 544.2 million MAUs last year, more than double Ximalaya's MAUs.
Ximalaya plans to use the proceeds from the offering to expand its audio content and the number of content creators as well as improve its artificial intelligence and big data capabilities.
Goldman Sachs, Morgan Stanley, and China International Capital Corporation are the co-sponsors for the proposed deal.
THE EAR ECONOMY: Ximalaya had 268 million average monthly users last year.
