Sound Group Inc.

In third quarter 2023, net revenues were RMB425.1 million versus RMB565.2 million in the same period last year, primarily due to declines in average paying users and user spending on audio entertainment products. Gross profit was RMB107.8 million versus RMB189.1 million last year, with gross margin of 25% versus 33%; non-GAAP gross margin was also 25% versus 34%. Operating loss was RMB60.1 million, net loss was RMB62 million, and basic and diluted net loss per ADS was RMB11.01. As of September 13, 2023, cash and cash equivalents plus restricted cash were RMB615.8 million. The call did not provide next-quarter or full-year financial guidance.

Marco Lai framed the quarter as continued execution of LIZHI’s “online audio-centric globalization strategy,” despite macro headwinds. He highlighted ongoing efforts to improve the creator ecosystem, refresh content and product features, and deepen international expansion using AIGC and voice AI. His tone was constructive and steady, emphasizing long-term capability building, operational streamlining, and stronger resource allocation.

Chengfang Lu focused on the year-over-year decline in revenue and profitability, citing weaker average paying users and user spending in audio entertainment. She noted cost of revenue fell to RMB317.3 million from RMB376.2 million, helping keep gross margin at 25%, while operating expenses were RMB167.9 million, down from RMB176.6 million. She also pointed to R&D expense of RMB83.8 million, selling and marketing expense of RMB59.1 million, G&A of RMB25.1 million, and cash and restricted cash of RMB615.8 million.

There was no analyst Q&A segment in the transcript, so no management responses to external questions were provided. The closest thing to Q&A-style commentary was management’s explanation that the revenue decline came from lower paying users and spending, while cost discipline and efficiency improvements helped offset some pressure. Management also said it will monitor discretionary advertising and promotion spend depending on marketing conditions.