HANGZHOU, China, March
24, 2022 /PRNewswire/ -- Cloud Village Inc. (HKEX: 9899,
"NetEase Cloud Music" or the "Company"), a leading interactive
music streaming service provider in China, today announced its financial results
for the fiscal year ended December 31,
2021.
Summary of Key Financial and Operating Metrics
(RMB in thousands, unless otherwise stated)
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Year ended 31
December
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2021
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2020
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Financial
Metrics
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Revenue
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6,997,622
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4,895,731
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Gross
profit/(loss)
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142,674
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(595,335)
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Loss before income
tax
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(2,051,423)
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(2,949,887)
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Loss for the
year
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(2,056,092)
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(2,951,463)
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Non-IFRS
measure:
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Adjusted net
loss1
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(1,043,712)
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(1,567,989)
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Operating
Metrics
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Online music
services
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-MAUs
(million)
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182.6
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180.5
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-Monthly paying users
(million)
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28.9
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16.0
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-Monthly ARPPU
(RMB)
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6.7
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8.4
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Social
entertainment services
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-Monthly paying users
(thousand)
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683.3
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327.1
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-Monthly ARPPU
(RMB)
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448.1
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573.8
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Fiscal Year 2021 Key Financial and Operating
Highlights
- Revenue was RMB6,997.6
million, an increase of 42.9% compared with RMB4,895.7 million for the same period of
2020.
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- Online music services:
-Revenue from online music
services was RMB3.3 billion, an
increase of 25.4% compared with RMB2.6
billion for the same period of 2020. The increase was
primarily due to the significant growth in revenues from sales of
membership subscriptions.
-MAUs of online music services grew to 182.6 million from
180.5 million for the same period of 2020.
-Monthly paying users of online music services expanded to
28.9 million from 16.0 million for the same period of 2020.
-Monthly ARPPU (average revenue per paying user) of online music
services was RMB6.7 compared with
RMB8.4 for the same period of 2020.
The decrease was primarily due to the increased use of joint
membership packages in cooperation with other platforms from 2020
to 2021, in which the Company's membership subscriptions were sold
at a discount to promote our subscriptions and broaden the reach of
the Company's services.
- Social entertainment services and others:
-Revenue
from social entertainment services and others was RMB3.7 billion, an increase of 63.1% from
RMB2.3 billion for the same period of
2020, driven by the rapid growth of social entertainment services
revenue, substantially all of which was derived from live streaming
services.
-Monthly paying users of social entertainment services
increased to 683.3 thousand from 327.1 thousand for the same period
of 2020.
-Monthly ARPPU of social entertainment services was
RMB448.1 compared with RMB573.8 for the same period of 2020.
- Gross profit was
RMB142.7 million, compared with a
gross loss of RMB595.3 million for
the same period of 2020. Gross
margin improved to 2.0% from negative 12.2% for the same
period of 2020, as a result of the significant revenue increase and
control over content licensing fees.
- Net loss was
RMB2.1 billion, narrowed by 30.3%
compared with RMB3.0 billion for the
same period of 2020.
- Adjusted net loss was
RMB1.0 billion, narrowed by 33.4%
compared with RMB1.6 billion for the
same period of 2020, mainly due to the increased revenue as well as
improved cost control.
Note:
(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.
Business Overview
We operate a leading online music platform featuring a highly
interactive content community for music enthusiasts in terms of
user scale and engagement. We have built a large-scale, robust and
rapidly growing business to provide community-centric online music
services and social entertainment services to our users. Our brand
appeals to and resonates with the spirit of young, highly engaged
music enthusiasts. Through our online music platform, NetEase
Cloud Music, and ancillary
social entertainment products, such as LOOK Live Streaming,
Sheng Bo and Yin Jie, we empower music enthusiasts with a
wide variety of technology-driven tools to discover, enjoy, share
and create diverse music and music-inspired content and to interact
with each other. Our revenue streams primarily consist of two key
components, online music services and music-inspired social
entertainment services. Our online music services comprise
membership services to our paying users, advertising services to
advertising customers in various formats including brand
advertising and performance-based advertising, sales of digital
albums and singles to purchasers, and copyright sublicensing. Our
music-inspired social entertainment services include hosting live
streaming services through which we generate revenue from virtual
item purchases by our community and consumed on our platform.
We kicked off 2021 with a firm step forward in our evolution
into an all-in-one online music and audio entertainment platform,
home to music enthusiasts in China. Throughout the year, we successfully
enriched our content ecosystem with growing our independent artist numbers and enlarging
our music labels library, elevated our differentiated
community ecosystem and improved user engagement across our large
and stable user scale. Meanwhile, we meaningfully improved our
profitability, mainly attributable to strengthened commercialisation capability and optimised content cost structure. We are now
better positioned to shift our superior offerings into full play
amid a healthier industry environment.
Our MAUs of online music services increased from 180.5 million
in 2020 to 182.6 million in 2021. Our users are highly engaged,
with DAU/MAU ratio staying
well above 30% in 2021, and driven
by enhancements to our comprehensive and unique product and content
offerings, including music tracks from both big labels and
independent musicians, as well as our music-inspired user generated
content ("UGC"). Each daily active user
spent approximately 78.2 minutes per day on average listening to music on
our platform in 2021. Meanwhile, nearly half of users browsed the
"comments section" while listening to music. At the end of 2021,
27% of our users generated content on the platform, and 32% of
music streams were attributable to platform recommendations, up
from 25% and 28%, respectively, as of the end of 2020.
These improvements, along with our continued monetisation efforts, are already
showing meaningful gains in our operating leverage, and for the
full year of 2021, our total revenues grew by 42.9% year-over-year
to RMB6,997.6 million. We have also
managed to improve profitability along with content enhancement,
mainly attributable to cost optimisation of our copyright
structure. As a result, we achieved a positive gross margin of 2.0%
for the full year of 2021.
Looking ahead, we are strategically expanding our prospects
by:
- cultivating our users' willingness to pay and pursuing
commercialisation potential, via
improved user experience, innovative products and content
offerings, and deepened user engagement;
- exploring innovations in social networking, utilising user behaviour and music preference to connect
users with each other, providing additional social networking
options; and
- further diversifying our content offerings with better
investment efficiency, via active negotiation with copyright
holders, as well as progress in in-house music production.
We expect to generate incremental contribution from these
initiatives going forward.
Product and service innovations
We continued our innovation efforts in 2021. Innovation and
superior quality have been the core competitive advantages for our
products and services. Innovative features on our platform enable
users to express themselves and interact with others.
- We introduced a new function called "Sheet Music Library"
in November. Through the official
copyright cooperation with the world-famous digital music score
providers, we have launched millions of authorised music scores, ranging from
classical music to pop music. Through this function, our users can
quickly and accurately check and use the authorised music scores of their favourite music tracks. In addition to
providing more professional and efficient content services for
music lovers, we are further exploring more possibilities in the
music education fields including music score videolization. At the
same time, we are allowing our users to upload music scores to
further diversify our user-generated content and music
ecosystem.
- We launched our brand-new "Beat transaction platform" in
mid-December, accommodating transactions between beat-makers and
musicians or music lovers. We believe this innovation could not
only allow beat-makers to realise
commercial value, but also liberate content creativity by
individual musician with better linkage with upstream content
creators, enriching our content ecosystem.
- We launched innovative function "Audio Artists Comments" in
November, allowing music talents to publish audio-formatted
messages in the comment section under their new music tracks. The
new function provided artists with broadened scenario and formats
to promote their new songs and better connect with audiences,
through their unique voice texture and characteristics.
- Our new function "Music Gift Box" has been well received by our
users, which allows individual users to send customised video content to friends. The new
function not only fosters music content recreation and
distribution, but also enhances the resonance between users.
- We actively expanded our footprint in the IoT market in 2021
with the growth of smart speakers at an accelerated pace beginning
in November 2021 in conjunction with
music copyright opening on smart devices. We believe broader IoT
coverage can help us attract new users, as well as improve our
users' overall activity and stickiness across multiple
devices.
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 approximately 80 million music tracks by the end of 2021,
including music from established labels as well as independent
artists. Our robust library, together with UGC content, brings
users broad and differentiated content.
Music labels. We continued to secure more
high-quality content with better return on investment (ROI). In
July 2021, regulators in the People's Republic of China (the "PRC")
issued an order on anti-monopoly, which has the effect of
preventing exclusivity in the music content of music labels going
forward. We welcomed this favourable shift as it fosters healthier
development of the overall online music industry in China.
- In August 2021, we completed a
direct agreement with Warner Music Group, which means we now have
direct digital distribution contracts with all three of the world's
largest recording labels.
- We are also actively completing our major Chinese music
library, adding new copyrighted music from popular labels in the
second half of 2021, including Modern Sky, Emperor Entertainment
Group, China Record Group, Feng Hua Qiu
Shi, and Yuehua Entertainment, among others. In addition to
bringing on more music copyrights, we strive to deepen our
collaboration with music labels, including customised music,
ticketing and live shows.
More importantly, we are pleased to see favourable industry trends in more
reasonable copyright fees and cost structures, providing us with
the flexibility to optimise our investment in content using a more
disciplined and predictable approach.
Independent artists. In addition to music labels, we
became a natural incubator of music talent looking for an audience,
empowered by our massive community and large cohort of young users
with diverse and personalised tastes. By the end of 2021, we were
serving more than 400,000 registered
independent artists on our platform. Despite our rapid scale
expansion, the activity of our independent artists continued to
steadily improve. Within our content library, about 1.9 million
music tracks came from our registered
independent artists, which represents an increase of
approximately 80% from that at the end of 2020.
In 2021, our support projects for independent artists helped
them create and promote music, as well as realise commercial
value.
- In late November 2021, we
launched "Project Cloud Ladder 2022," upgrading our independent
artists' project with enriched traffic and commercial support. We
firstly extended our independent artist identification system to
music arrangers and producers, in addition to singers and
composers/lyricists. Comprehensive support projects such as this
one help nurture talent across the value chain of music development
and production, further enriching our music ecosystem.
UGC content. In 2021, we continued fostering our UGC
content ecosystem through constant innovation and product
improvement across multiple content formats, including but not
limited to Moments (picture/text), Hot Topic, Podcasts (audio) and
Mlogs (video/picture). We also developed multiple assistant tools
to facilitate UGC creation on our platform, further enhancing our
UGC ecosystem and users' engagement. Furthermore, we have
accumulated 3.1 billion UGC playlists on our platform. Our unique
user base and supportive community culture makes our UGC content
unparalleled in the market.
In-house music. In 2021, we made progress with our
in-house music production initiatives, which further diversify and
differentiate our content offering. Some of our popular in-house
music includes "Dislocation of Time and Space" 《錯位時空》, "Take My
Heart" 《以愛為囚》, "Masquerade" 《假面舞會》 and "Delete It" 《刪了吧》,
demonstrating our ability to produce hit songs in house.
Going forward, we plan to bring more quality content to our
platform to augment our music library, while working together with
other industry players to benefit all music lovers.
Future Development
We seek to further expand the boundaries of our platform and
focus on long-term growth. To that end, we plan to implement the
following strategies over the next three years:
(a) Relentlessly innovating our
products and services. We will continue to relentlessly
innovate and refine our products and services while deepening
our understanding of users' evolving needs and preferences. By
creating a more intelligent, thoughtful user experience, we believe
we will further strengthen our ability to attract and engage users
and to increase their loyalty and commitment to our products and
services. We will also continue to enrich and diversify our music
and music-inspired content to deepen our connection with our users
and strengthen our market position. At the same time, we will
actively explore new business models to keep our finger on the
pulse to ensure that we remain adaptive to trends in the online
music entertainment industry.
(b) Further developing our
community. We will focus on providing more personalised
and diversified music and music-inspired content to our users,
while continuing to encourage and empower them to create content.
In particular, we will uphold our commitment to supporting
independent artists, attracting and cultivating them by leveraging
our unique, engaging community culture, organising various online
and offline events, and inspiring them to continually create
high-quality content on our platform. We are committed to improving
user engagement and deepening users' connection with each other and
with our platform. By further stimulating user participation and
content creation, we believe we are able to organically grow our
user base, increase user stickiness and improve paying user
conversion.
(c) Continuing to invest
in technological capabilities. We will continue to invest
in improving our technological capabilities to better understand
our users and improve user experience. In particular, we will
invest in research and development for artificial intelligence,
machine learning and data analytics to gain more insight into our
users' needs and preferences and to refine our ability to make
personalised content recommendations. At the same time, we will
continue to invest in and upgrade our AI-enabled creative
assistance technologies to empower independent artists and users in
their creative pursuits. We may also explore virtual reality and
augmented reality technologies to offer a more engaging experience
of music and music-inspired content, especially in our
music-inspired social entertainment services space.
(d) Pursuing win-win
collaboration with our partners. Leveraging our brand,
user base, community culture and technological capabilities, we
will continue to deepen our collaboration with a variety of
partners, such as content partners, brands and advertisers and
technology companies, to strengthen our synergy with them and to
achieve more win-win situations. For example, we are able to
achieve further content enrichment and revenue diversification
while empowering our partners with our valuable user and content
pool. We will seek to explore new business models with existing and
potential partners to realise the steady, long-term growth of our
platform.
(e) Further diversifying
our monetisation capabilities. In response to the
continuously evolving needs of our users, we will continue to
leverage our innovations to explore new monetisation channels, further diversifying
our sources of income and realising the commercial potential of our
platform. We will continue to enrich our content offerings and
commercialise our platform. For our online music services, we will
continue to strengthen our leadership position in music streaming
services through diversified music content offerings that appeal to
our users. For our social entertainment services, we plan to expand
our offerings of music-inspired content, such as audio and video
live streaming content by attracting premium performers to our
platform. We will also promote our paid content and services
available in our community and therefore increase the number of
paying users.
About Cloud Village Inc.
Launched in 2013 by NetEase, Inc. (NASDAQ: NTES; HKEX: 9999),
Cloud Village Inc. (HKEX: 9899) is a leading interactive music
streaming service provider in China. Dedicated to providing an elevated user
experience, Cloud Village 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 Village
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 Village Inc.
music.ir@service.netease.com
Media Enquiries:
Li Ruohan
NetEase, Inc.
globalpr@service.netease.com
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SOURCE NetEase Cloud Music