Chinese audio content sharing platform Lizhi FM shares closed at USD 11.63 per American depositary shares (ADSs) on its trading debut on Nasdaq last Friday, up 5.73% from its initial pricing of USD 11.03 apiece.
The company, which trades under the ticker symbol LIZI, raised USD 45 million in its IPO by offering 41 million shares. Lizhi is backed by investors including Matrix Partners China, Morningside Venture Capital, and Xiaomi founder Lei Jun’s Shunwei Capital.
Launched in 2013, the Lizhi app is China’s second most popular podcasting platform with over 46.6 million mobile monthly active users (MAUs), as of the third quarter of 2019, according to the firm’s prospectus, behind Ximalaya FM, which reported 73.2 million MAUs as of June, per third-party research institution iiMedia’s report.
Nevertheless, Lizhi’s CEO Lai Yilong told 36Kr that the company’s main rival is not Ximalaya due to the big differences between the two. Lizhi’s content is primarily user-generated, but Ximalaya, in contrast, hosts more professionally generated audio content and has gained an edge in the paid knowledge market.
In 2018, Lizhi booked annual revenues of RMB 798.6 million, indicating a year-on-year increase of 76%. Only in the first nine months of 2019, it grossed RMB 815.3 million (USD 118.9 million) in revenues, according to the firm’s latest financial report.
As most of the podcast content is offered for free, the company derives most of its net revenues from virtual gift sales purchased in-app. The firm generated RMB 807.6 million (USD 113.0 million) from virtual gift sales to users of audio entertainment products in the first nine months ended September 2019, representing 99.1% of total net revenues for the same period.
“The audio live-streaming market is rapidly growing. In the short term, we won’t change our business model,” Lai said. He also predicted that the company could reach profitability in 2020.
The online audio market in China is estimated to grow from approximately RMB 11.3 billion in 2018 to RMB 69.8 billion in 2023, according to Lizhi’s prospectus.