HANGZHOU, China, May 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
unaudited consolidated results for the three months ended
March 31, 2022.
Summary of Key
Financial and Operating Metrics
(RMB in thousands,
unless otherwise stated)
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Three months ended
March 31,
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2022
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2021
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Financial
Metrics
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Revenue
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2,067,206
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1,491,167
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Gross
profit/(loss)
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251,557
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(53,951)
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Loss for the
period
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(180,027)
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(1,665,236)
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Non-IFRS
measure:
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Adjusted net
loss1
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(151,719)
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(283,896)
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Operating
Metrics
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Online music
services
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-MAUs
(million)
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181.7
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183.1
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-Monthly paying users
(million)
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36.7
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24.3
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-Monthly ARPPU
(RMB)
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6.4
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7.1
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Social
entertainment services
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-Monthly paying users
(thousand)
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1,181.7
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438.1
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-Monthly ARPPU
(RMB)
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329.8
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553.3
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First Quarter 2022 Key Financial and Operating
Highlights
- Revenue was RMB2.1
billion, an increase of 38.6% compared with 1.5 billion for
the same period of 2021.
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- Online music services:
-Revenue from online music
services was RMB884.8 million, an
increase of 16.5% compared with RMB759.5
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 was 181.7 million compared
with 183.1 million for the same period of 2021.
-Monthly paying users of online music services expanded to
36.7 million from 24.3 million for the same period of 2021.
-Monthly ARPPU (average revenue per paying user) of online music
services was RMB6.4 compared with
RMB7.1 for the same period of 2021.
The decrease was primarily due to the increased use of joint
membership packages in cooperation with other platforms, in which
our membership subscriptions were sold at a discount to promote our
subscriptions and broaden the reach of our services.
- Social entertainment services and others:
-Revenue
from social entertainment services and others was RMB1,182.4 million, an increase of 61.6% from
RMB731.7 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 1,181.7 thousand from 438.1 thousand for the same
period of 2021.
-Monthly ARPPU of social entertainment services was
RMB329.8 compared with RMB553.3 for the same period of 2021.
- Gross profit was RMB251.6
million, compared with a gross loss of RMB54.0 million for the same period of 2021.
Gross margin improved to 12.2% from negative 3.6% for the
same period of 2021, as a result of the significant revenue
increase and control over content licensing fees.
- Net loss was RMB0.2
billion, narrowed by 89.2% compared with RMB1.7 billion for the same period of 2021. We
recognised fair value loss of convertible redeemable preferred
shares of RMB1.3 billion for the
first quarter of 2021 while we did not record any further fair
value changes for the first quarter of 2022 as such convertible
redeemable preferred shares were re-designated from liabilities to
equity as a result of the automatic conversion into ordinary shares
in the Company's initial public offering in December 2021.
- Adjusted net loss was RMB151.7 million, narrowed by 46.6% compared with
RMB283.9 million for the same period
of 2021.
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
Our first quarter performance represents a solid start to 2022.
We continued to improve our differentiated community ecosystem and
users' engagement through product innovation and content
enhancement. At the same time, we successfully increased our
profitability by strengthening our commercialisation capabilities
and optimising our content cost structure.
In the first quarter of 2022, our MAUs of online music services
stood at 181.7 million, largely stable both year-over-year and
quarter-over-quarter, with our DAU/MAU ratio (daily average user/
monthly average user ratio) staying well above 30% in the quarter.
We also continued to improve our monetisation capabilities in the
first quarter of 2022, demonstrated by revenue growth of 38.6%
year-over-year, with our membership paying ratio reaching 20.2%
based on content and service enhancement. Gross margins reached
12.2% in the first quarter of 2022, compared with a negative gross
margin of 3.6% in the first quarter of 2021.
In the online music industry, we are optimistic that our
differentiated content and product offerings, along with
unparalleled community features and strengthened monetisation
efforts, well positioned NetEase Cloud Music to deliver a solid
performance. Looking ahead, we will strive to continue advancing
our competitive edge amid a healthier industry environment.
Our social entertainment services also achieved strong growth in
the first quarter of 2022 against the backdrop of an industry-wide
slowdown, attributable to our differentiated audio-based product
and service offerings.
Looking ahead, we are strategically expanding 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
behavior and music preference to connect users with each other,
providing additional social networking options;
- Further diversifying and rounding out our content offerings
with better investment efficiency, via active negotiation with
copyright holders to secure more high-quality content, as well as
constant 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 and at expansion
opportunities in overseas markets, and potentially game-inspired
initiatives, with an expectation to generate incremental
contribution from these initiatives over time.
Community ecosystem
Throughout the first quarter of 2022, we successfully
revitalised our differentiated community with strong user
engagement across our large and stable user scale. In the first
quarter of 2022, each daily active user spent approximately 82.0
minutes per day on average listening to music on our platform, up
from 76.5 minutes during the first quarter of 2021. Meanwhile,
nearly half of our users browsed the "comments section" while
listening to music demonstrating high engagement levels. As of
March 2022, 33% of music streams were
attributable to platform recommendations, up from 28% in
March 2021, showcasing our robust
technology.
UGC-inspired community ecosystem. In the
first quarter of 2022, we continued fostering our music-oriented
community and UGC ecosystem through constant product improvement
across multiple content formats. Meanwhile, we continued developing
multiple assistant tools to facilitate further UGC creation on our
platform, which will also enhance our vibrant UGC-oriented
community and users' engagement. Our UGC ecosystem is unparalleled
in the market, aided by our strong and supportive community
culture. By the end of the first quarter of 2022, we had
accumulated 3.25 billion UGC playlists on our platform.
Invigorating an immersive and comprehensive content
community. On top of the music comments section and
playlist, we continued diversifying the content offerings on our
platform, to create a one-stop, immersive and comprehensive
music-oriented content community, including Moments, music blogs
(Mlogs), Podcasts, etc. Our UGC-oriented Podcast covered
approximately 20% of our total user base during the first quarter
of 2022, which further augments our all-in-one comprehensive
offerings across online music and audio entertainment.
Product and service innovations
In the first quarter of 2022, we advanced our initiatives to
enhance user experience and community features through product
innovation:
- Joint-collaboration with NetEase
Games. We are actively seeking internal
collaboration opportunities with NetEase Games, beginning with a
joint program with NARAKA: BLADEPOINT (永劫無間) in December 2021 to promote our membership
subscription, followed by Harry
Potter: Magic Awakened (哈利波特魔法覺醒), etc. In the first quarter
of 2022, we made a step in our cooperation with NetEase Games, as
we integrated our Podcast content with the game. More specifically,
we introduced our innovative Harry Potter Magic Radio (哈利波特魔法電台), a
joint-collaboration with NetEase's blockbuster game, which allows
users and gamers to enjoy Harry
Potter -themed podcast content within the game. With this
step, we believe we have laid the foundation for a new
collaboration model, with both internal and external partners,
leveraging our expertise in audio-based services.
- Optimising user experience. We
continued to elevate users' experience in the first quarter of 2022
by launching multiple innovative user-oriented functions, including
Seemless Listening and Multi-speed Listening, to cater to users'
diverse and personalised music listening preferences and
demands.
- Propelled brand. In the first quarter
of 2022, we also conducted multiple content-oriented and
event-driven campaigns to further strengthen our brand awareness
and influence, including but not limited to the NetEase Cloud Level
8 Certificate (網易雲八級證書) and the NetEase Musicians 2021 Annual
Review (網易音樂人 2021 年度盤點).
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 90 million music tracks by the end
of March 2022, including music from
established labels as well as independent artists. Our robust
library, together with music-inspired UGC content, brings users
broad and differentiated content.
Music labels. We continued to secure more high-quality
content with a focus on better return on investment (ROI) in the
first quarter of 2022. We are actively completing our major Chinese
music library and signed copyright collaborations with Linfair
Records, adding music tracks from popular singers to our platform,
including but not limited to, Angela
Chang (張韶涵) and Christine Fan
(范瑋琪). 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 using a more disciplined approach.
Going forward, we are open to collaborating and will actively
negotiate with multiple copyright holders with a goal of securing
more high-quality content that complements our content offerings.
Meanwhile, we will also work alongside other industry players to
foster healthier development of the overall online music industry
in China for the benefit of all music lovers.
Independent artists. In addition to music labels, we have
become 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 March 2022, we were serving more than 450,000
registered independent artists on our platform, representing an
approximately 70% year-over-year growth. Meanwhile, within our
content library, about 2.0 million music tracks came from our
registered independent artists.
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