HANGZHOU, China, Aug. 18,
2022 /PRNewswire/ -- Cloud Music Inc. (HKEX: 9899 or
the "Company"), a leading interactive music streaming service
provider in China, today announced
its financial results for the first half of 2022 ended 30 June 2022.
Summary of Key
Financial and Operating Metrics
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(RMB in
thousands, unless otherwise stated)
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Six months
ended 30 June
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2022
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2021
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(Unaudited)
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(Audited)
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Financial
Metrics
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Revenue
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4,258,716
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3,183,674
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Gross
profit/(loss)
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537,113
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(12,856)
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Loss before income
tax
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(266,790)
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(3,806,968)
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Loss for the
period
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(270,810)
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(3,809,147)
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Non-IFRS
measure:
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Adjusted net
loss[1]
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(217,000)
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(532,976)
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Operating
Metrics
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Online music
services
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-MAUs
(million)
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181.9
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184.5
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-Monthly paying users
(thousand)
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37,613.0
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26,134.5
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-Monthly ARPPU
(RMB)
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6.5
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6.8
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Social entertainment
services
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-Monthly paying users
(thousand)
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1,235.4
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496.4
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-Monthly ARPPU
(RMB)
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329.8
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526.5
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First Half 2022 Key Financial and Operating
Highlights
- Revenue was RMB4.3
billion, an increase of 33.8% compared with RMB3.2 billion for the same period of 2021.
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- Online music services:
-Revenue from online music
services was RMB1,783.7 million,
an increase of 11.2% compared with RMB1,604.3 million for the same period of 2021.
The increase was primarily due to the significant growth in
revenues from sales of membership subscriptions.
-MAUs of online music services stood at 181.9 million, which
was largely stable on a sequential and year-over-year basis.
-Monthly paying users of online music services expanded to
37.6 million from 26.1 million for the same period of 2021.
-Monthly ARPPU (average revenue per paying user) of online music
services was RMB6.5 compared with
RMB6.8 for the same period of
2021.
- Social entertainment services and others:
-Revenue
from social entertainment services and others was RMB2,475.0 million, an increase of 56.7% from
RMB1,579.3 million for the same
period of 2021, driven by the rapid growth of social entertainment
services revenue.
-Monthly paying users of social entertainment services
increased to 1.2 million from 496.4 thousand for the same period of
2021.
-Monthly ARPPU of social entertainment services was
RMB329.8 compared with RMB526.5 for the same period of 2021.
- Gross profit was RMB537.1
million, compared with a gross loss of RMB12.9 million for the same period of 2021.
Gross margin improved to 12.6% from negative 0.4% for the
same period of 2021, as a result of the significant revenue
increase and control over content licensing fees.
- Net loss was RMB270.8
million, narrowed by 92.9% compared with RMB3.8 billion for the same period of 2021.
- Adjusted net loss was RMB217.0
million, narrowed by 59.3% compared with RMB533.0 million for the same period of
2021.
Note:
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(1) Adjusted net
loss is defined as loss for the year adjusted by adding back
equity-settled share-based payments and changes in fair value of
convertible redeemable preferred shares.
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Business Overview
In the first half of 2022, we continued to bring innovative
products and content to our followers, improving our differentiated
community ecosystem and user engagement levels. Meanwhile, we also
successfully strengthened our commercialisation capabilities and
further optimised our content cost structure.
In the first half of 2022, our online music services MAUs stood
at 181.9 million, which was largely stable on a sequential and
year-over-year basis, with our DAU/MAU ratio (daily active
user/monthly active user ratio) staying well above 30% in the
period. We have made solid progress in growing and fostering our
leading music-inspired community over the past years, and
will continue our endeavours in doing so.
We have worked diligently to step up our monetisation efforts
since 2019, and these efforts have started to bear fruit. Despite a
more challenging industry environment and macro-headwinds, our
total revenues for the first half of 2022 grew 33.8%
year-over-year. Our commercialisation capabilities further improved
with gains across both our subscription-based memberships as well
as our growing social entertainment services.
In particular, our membership paying ratio reached 20.7%,
soaring from 14.2% in the first half of 2021. Based on our high
quality and young user community, our ongoing initiatives in
content enhancement (from more labels) and premium and innovative
functions (e.g. Hi-Res) for subscribers have collectively
contributed to the increase in our paying user conversion over the
past year.
Gross margins improved significantly as well, soaring to
12.6% in the first half of 2022, compared with a negative 0.4%
gross margin in the first half of 2021. To support our margin
growth, we further scaled our business, while enacting meaningful
copyright cost optimisation.
Looking ahead, we are strategically broadening our prospects
by:
- fostering our music-oriented community ecosystem via
enhancements to our comprehensive and innovative product offerings,
embedded with more interactive features and ecology, along with
advanced tools and technologies to liberate UGC (user-generated
content) content creation;
- exploring innovations in social networking, utilising user
behaviours and music preferences to connect users, and providing
additional social networking options;
- further diversifying and rounding out our content offerings
with better efficiency, via active negotiation with copyright
holders to secure more high-quality content, as well as ongoing
progress in independent artists incubation and in-house music
production;
- cultivating our users' willingness to pay and pursuing
commercialisation potential, via improved user experience and
deepened user engagement, innovative products and content
offerings, and broadened consumption scenarios; and
- looking to include layouts in IoT, as well as potentially
game-inspired initiatives, with an expectation to generate
incremental contribution from these initiatives over time.
Community Ecosystem
Throughout the first half of 2022, we successfully revitalised
our differentiated community with strong user engagement across our
large and stable user scale. During the Reporting Period, each
daily active user spent, on average, approximately 80.6 minutes per
day listening to music on our platform, up from 76.9 minutes during
the first half of 2021. Nearly half of our users browsed the
"comments section" while listening to music. As of 30 June 2022, 31.4% of music streams were
attributable to platform recommendations, up from 30.5% as of
30 June 2021. These metrics
demonstrate the strong stickiness and activities of our
high-quality user group and distinguish our vibrant community
atmosphere and attributes, mutually reinforcing each other within
our ecosystem.
Fostering an interactive music community. The
interactive young generation of music lovers and new breed of
talented independent artists work in harmony with our unique music
content distribution mechanism and diverse array of UGC. Together,
these components facilitate music-inspired content consumption from
both the demand (music lovers) and supply side (artists and UGC
creators). This winning combination promotes interactions among
users and content creators, thus forming a self-perpetuating
community ecosystem.
Our UGC-inspired community ecosystem. We
cultivate our music-oriented community and UGC ecosystem through
constant product improvement across multiple content formats. We
develop multiple assistant tools to facilitate further UGC
creation. Our vibrant UGC ecosystem is unparalleled in the market,
and reinforced by our dynamic, supportive community culture. By the
end of June 2022, we had accumulated
3.4 billion UGC playlists on our platform.
A focus on music-inspired connections. Our
community is centred around music-inspired emotional resonances,
not only between music content and audiences, but also between
musicians and followers, as well as among users. In offering
vibrant community features, social networking options, along with
heart-warming atmosphere, we are nurturing these relationships,
encouraging users, artists and content creators to interact and
engage with each other.
Product and service innovations
In the first half of 2022, we advanced our initiatives to
enhance user experience and community features through product
innovation. The young music enthusiasts on our platform are
passionate about its superior listening experience and are more
willing to express and share, fulfilled by our thoughtful rollout
of innovative products and services.
Optimising users listening experience
- Cloud Shuffle
(雲隨機). We
creatively launched the "Cloud Shuffle" to streamline users' core
listening experience. The new function allows users to shuffle
songs with a suite of personalised preferences in terms of
familiarity and style similarity to gauge the level of randomness
and satisfy users' diverse tastes.
- Hi-Res (High Resolution Audio) and Seamless
Listening. Our newly launched Hi-Res function is the
solution. Hi-Res offers higher audio quality to bring users
an immersive sound experience as the artist intended. Coupled with
our Seamless Listening and Multi-speed Listening
innovations, we are committed to bringing superior sound quality to
users.
- Music Encyclopedia (音樂百科).
We have rolled out the "Music Encyclopedia" function,
integrating fragmented information into an encyclopedia page that
contains professional content including music genre, style,
instruments, BPM (beat count), and awards. This function aims to
fulfil users' musical needs with our platform's enhanced
professional offering.
Fostering social networking features
- Introduced more social attributes. We rolled out
Taste Match (合拍推薦) on the daily recommendation page. The
algorithm-based tool finds new matches with similar listening
tastes according to users listening behaviors. Taste Match
recommends a list of songs of which the user may be interested in
from the matching one's favourite tracks. It represents a creative
approach to recommend music and connect users.
- Launched new social networking App – MUS.
MUS, our new music-inspired social networking app, strives to
utilise music content to connect users. An individual's homepage
showcases their music preferences, based on music consumption
behaviour within NetEase Cloud Music App. We believe music
preference is a good reflection of individual personality, and
similar music taste represents a good starting point to connect
people. We believe this brand-new product provides additional
social networking options to our users, further inspiring
person-to-person connections among our users.
Joint-collaboration with NetEase Games
- We continued to expand our internal collaboration opportunities
with NetEase Games. Following our innovative Harry Potter Magic
Radio (哈利波特魔法電台) with NetEase's blockbuster game, we are
seeking more tie-ups to utilise our strength in content to
integrate user's gaming experience with diverse listening options.
We look forward to new collaborations with NetEase Games to expand
the consumption scenarios of auditory experience, as well as
commercialisation.
Content enhancement
We offer a full spectrum of various content as our young users'
demands are increasingly diverse and personalised. Our content
library consisted of more than 106 million music tracks by the end
of June 2022, including music from
established labels, as well as independent artists and in-house
production. Our robust library expansion, together with music
inspired UGC content, brings users broad and differentiated
content. Consequently, our enhanced content offerings helped
strengthen our brand awareness and develop a mindset among users
that encourages their willingness to pay.
Music labels. We continued to secure more high-quality
content with a focus on better return on investment (ROI) in the
first half of 2022. We are actively completing our music catalog
and have signed copyright collaborations successively with top
labels including Linfair Records, SM Entertainment and TF
Entertainment, adding more popular music tracks from influential
singers and groups to our platform, including, but not limited to,
Angela Chang, SUPER JUNIOR, Girls'
Generation, EXO and TFBOYS.
- Adding top music labels from China and abroad, as well as popular labels
among young generation users, to further diversify and round out
the content library on our platform, and thus better catering to
users' diverse tastes and demands; and
- Content enhancement via collaboration with music labels help us
further improve users' stickiness and activity on our
platform.
More importantly, we are pleased to see favourable industry
trends with more reasonable copyright fees and cost structures,
which provide us with the flexibility to optimise our investments
in content prudently. Going forward, we will look to actively
negotiate with multiple copyright holders to secure more
high-quality content that complements our offerings. Meanwhile, we
will also work alongside other industry players to foster healthier
development of the overall online music industry in China.
Independent artists. Additionally, we have become a
natural incubator of music talent looking for an audience,
supported by our massive community and large cohort of young users
with diverse tastes. We continued growing and empowering
independent artists, serving more than 529,000 registered
independent artists by the end of June
2022. Meanwhile, within our content library, about 2.3
million music tracks came from our registered independent artists.
We continue to nurture independent artists to help them create and
promote music works, as well as realise commercial value.
- Supporting musicians in content creation. NetEase
Cloud Music has been effectively expanding exposure of backstage
musicians to facilitate music cooperation for better returns, and
building their career path.
– As we expanded the certification scope of musicians to arranger
and producer, we officially released the first industry-wide
arranger award "The First Arranger Award by NetEase Cloud
Music" to draw more attention to the backstage musical
professionals. Likewise, the domestic BeatMakers community speaks
highly of our vibrant transaction platform BeatSoul and the
first BeatMaker Contest.
- Improving musicians' exposure. During the
Reporting Period, we further mobilised internal and external
resources to help musicians increase their exposure.
– Local original music zone. We launched locally-based
operations of music content that overlays content ecology of
different regions. By leveraging our massive user scale and strong
social attributes, the local original music zone will be a useful
hinge to intertwine the operation of music content with regional
attributes and lifestyles, as well as offline music event.
In-house music. In the first half of 2022, we further
reinforced our in-house production capabilities with comprehensive
support and elevated industry-wide exposure. We were proud to
cooperate with CCTV to produce "Blooming Bauhinia" (《紫荊花盛開》),
a special song dedicated to the 25th anniversary of Hong Kong's return to China. Additionally, our in-house studios have
successfully popularised a batch of hit songs, including "Goodbye
Monica" (《再見莫妮卡》), further demonstrating our in-house capability to
produce premium music content.
Other Corporate Development
At the annual general meeting of the Company held on
16 June 2022, the special resolution
to change the Company's name from "Cloud Village Inc." to "Cloud Music Inc." was approved and
took effect on the same date. For more information on the name
change and the change in the Company's English short stock name
from "CLOUD VILLAGE" to "CLOUD MUSIC," please see the Company's
announcement of 22 July 2022.
Conference Call
The Company's management will host an earnings conference call
at 7:00 p.m Beijing/Hong Kong Time
on Thursday, August 18, 2022
(7:00 a.m. U.S. Eastern Time).
Details for the conference call are as follows:
Event Title: Cloud Music Inc. First Half 2022 Earnings
Conference Call
Registration Link: https://register.vevent.com/register/BI612167dfb6ce495bb2fe61c4ec8d966d
All participants must use the link provided above to complete
the online registration process in advance of the conference call.
Upon registering, each participant will receive a set of
participant dial-in numbers and a personal PIN, which will be used
to join the conference call.
Additionally, a live and archived webcast as well as the English
transcript of the conference call will be available on the
Company's investor relations website at
http://ir.music.163.com.
About Cloud Music Inc.
Launched in 2013 by NetEase, Inc. (NASDAQ: NTES; HKEX: 9999),
Cloud Music Inc. (HKEX: 9899) is a leading interactive music
streaming service provider in China. Dedicated to providing an elevated user
experience, Cloud Music Inc. provides precise, personalised
recommendations, promotes user interaction and creates a strong
social community. Its focus on discovering and promoting emerging
musicians has made Cloud Music Inc. a destination of choice for
exploring new and independent music among music enthusiasts in
China. The platform has been
recognised as the most popular entertainment app among China's vibrant Generation Z community.
Please see http://ir.music.163.com/ for more information.
Forward Looking Statements
This press release contains forward-looking statements relating
to the business outlook, estimates of financial performance,
forecast business plans and growth strategies of the Company. These
forward-looking statements are based on information currently
available to the Company and are stated herein on the basis of the
outlook at the time of this press release. They are based on
certain expectations, assumptions and premises, some of which are
subjective or beyond our control. These forward-looking statements
may prove to be incorrect and may not be realised in the future.
Underlying these forward-looking statements are a lot of risks and
uncertainties. In light of the risks and uncertainties, the
inclusion of forward-looking statements in this press release
should not be regarded as representations by the Board or the
Company that the plans and objectives will be achieved, and
investors should not place undue reliance on such statements.
Non-IFRS Measure
To supplement our consolidated results, which are prepared and
presented in accordance with International Financial Reporting
Standards ("IFRSs"), the Company uses adjusted net loss as an
additional financial measure, which is not required by, or
presented in accordance with, IFRSs. We believe that this measure
facilitates comparisons of operating performance from period to
period and company to company by eliminating the potential impact
of items that our management does not consider to be indicative of
our group's operating performance, such as certain non-cash items.
The use of this non-IFRS measure has limitations as an analytical
tool, and shareholders and potential investors of our company
should not consider them in isolation from, as a substitute for,
analysis of, or superior to, our group's results of operations or
financial condition as reported under IFRSs. In addition, this
non-IFRS financial measure may be defined differently from similar
terms used by other companies, and may not be comparable to other
similarly titled measures used by other companies. The presentation
of this non-IFRS measure should not be construed as an implication
that our future results will be unaffected by unusual or
non-recurring items.
Investor Enquiries:
Angela Xu
Cloud Music Inc.
music.ir@service.netease.com
Media Enquiries:
Li Ruohan
NetEase, Inc.
globalpr@service.netease.com
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SOURCE NetEase Cloud Music