Sound Group Inc. Reports First Half of 2024 Unaudited Financial Results

SINGAPORE, Dec. 13, 2024 (GLOBE NEWSWIRE) -- Sound Group Inc. (NASDAQ: SOGP) ("SOGP" or the "Company" or "We"), a global audio-centric social and entertainment company, today announced its unaudited financial results for the six months ended June 30, 2024.

First Half of 2024 Financial and Operational Highlights

   -- Net revenues were RMB924.0 million (US$127.1 million) for the six months 
      ended June 30, 2024, compared with RMB1,223.8 million for the six months 
      ended June 30, 2023. 
 
   -- Net loss was RMB36.5 million (US$5.0 million) for the six months ended 
      June 30, 2024, compared with net income of RMB59.9 million for the six 
      months ended June 30, 2023. 
 
   -- Average total mobile MAUs1 for the six months ended June 30, 2024 was 
      35.7 million, compared with 47.6 million for the six months ended June 
      30, 2023. 

Mr. Jinnan (Marco) Lai, Founder and CEO of SOGP, commented, "For the six months ended June 30, 2024, we remained dedicated to building a more dynamic and healthier user ecosystem. We have empowered our content creators to deliver more diverse and distinctive content by harnessing advanced AI technologies and cultivating strategic partnerships. While facing various challenges, we have continued to integrate our technology applications and strengthen our competitiveness through innovative products and streamlined operations, laying a solid foundation for our market resilience and future growth."

Ms. Chengfang Lu, Acting Chief Financial Officer of SOGP, said, "During the period, we recorded net revenues of RMB924.0 million. Despite the market uncertainties, we are committed to strengthening our core competitiveness through continuous content cultivation and technological innovation. Moving forward, we remained focused on improving organizational efficiency, advancing our globalization capabilities, increasing our overall agility, and delivering sustainable long-term value to our stakeholders."

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(1) Refers to the average monthly number of active users across our platforms and Apps in a given period, calculated by dividing (i) the sum of mobile active users for each month of such period, by (ii) the number of months in the same period.

First Half of 2024 Unaudited Financial Results

Net revenues were RMB924.0 million (US$127.1 million) for the six months ended June 30, 2024, compared with RMB1,223.8 million for the same period in 2023, primarily due to the decrease in the number of paying users.

Cost of revenues was RMB677.6 million (US$93.2 million) for the six months ended June 30, 2024, compared with RMB853.0 million for the same period in 2023, mainly attributable to (i) the decreased revenue sharing fees to our content creators as the Company's revenues decreased, as well as (ii) the decreased bandwidth costs, salary and welfare benefits expenses related to the decreased operation staff, share-based compensation expenses, and payment handling costs.

Gross profit was RMB246.3 million (US$33.9 million) for the six months ended June 30, 2024, compared with RMB370.8 million for the same period in 2023.

Non-GAAP gross profit(2) was RMB247.7 million (US$34.1 million) for the six months ended June 30, 2024, compared with RMB373.8 million for the same period in 2023.

Gross margin for the six months ended June 30, 2024 was 27%, compared with 30% for the same period in 2023, mainly attributable to the increased percentage of the revenue sharing fees to our content creators.

Non-GAAP gross margin for the six months ended June 30, 2024 was 27%, compared with 31% for the same period in 2023.

Operating expenses were RMB290.6 million (US$40.0 million) for the six months ended June 30, 2024, compared with RMB320.4 million for the same period in 2023.

Research and development expenses were RMB122.9 million (US$16.9 million) for the six months ended June 30, 2024, compared with RMB147.1 million for the same period in 2023, primarily due to (i) the decreased salary and welfare benefits expenses related to the decreased number of relevant staff, and (ii) the decreased share-based compensation expenses, partially offset by (iii) the increased expenses related to research and development services provided by third parties.

Selling and marketing expenses were RMB123.2 million (US$17.0 million) for the six months ended June 30, 2024, compared with RMB126.4 million for the same period in 2023, primarily attributable to (i) the decreased branding and marketing expenses, and (ii) the decreased salary and welfare benefits expenses related to the reduction in the number of our relevant staff. The Company will monitor its discretionary advertising and promotion expenses and adjust accordingly depending on market conditions.

General and administrative expenses were RMB44.5 million (US$6.1 million) for the six months ended June 30, 2024, compared with RMB46.9 million for the same period in 2023, mainly driven by (i) the decreased provision for litigation contingencies, share-based compensation expenses and other miscellaneous expenses, and partially offset by (ii) the increased salary and welfare benefits expenses related to the increased average salary, professional service fees and rental expenses.

Operating loss was RMB44.3 million (US$6.1 million) for the six months ended June 30, 2024, compared to operating income of RMB50.5 million for the same period in 2023.

Non-GAAP operating loss(3) was RMB34.9 million (US$4.8 million) for the six months ended June 30, 2024, compared to non-GAAP operating income of RMB66.4 million for the same period in 2023.

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(2) Non-GAAP gross profit is a non-GAAP financial measure, which is defined as gross profit excluding share-based compensation expenses. This adjustment amounted to RMB1.4 million (US$0.2 million) and RMB3.0 million for the six months ended June 30, 2024 and 2023, respectively. Please refer to the section below titled "Unaudited Reconciliations of GAAP and Non-GAAP Results" for details.

(3) Non-GAAP operating loss is a non-GAAP financial measure, which is defined as operating loss excluding share-based compensation expenses. This adjustment amounted to RMB9.3 million (US$1.3 million) and RMB15.9 million for the six months ended June 30, 2024 and 2023, respectively. Please refer to the section below titled "Unaudited Reconciliations of GAAP and Non-GAAP Results" for details.

Net loss was RMB36.5 million (US$5.0 million) for the six months ended June 30, 2024, compared to net income of RMB59.9 million for the same period in 2023.

Non-GAAP net loss was RMB27.1 million (US$3.7 million) for the six months ended June 30, 2024, compared to non-GAAP net income of RMB75.8 million for the same period in 2023.

Net loss attributable to Sound Group Inc.'s ordinary shareholders was RMB31.0 million (US$4.3 million) for the six months ended June 30, 2024, compared to net income of RMB62.6 million attributable to Sound Group Inc.'s ordinary shareholders for the same period in 2023.

Non-GAAP net loss attributable to Sound Group Inc.'s ordinary shareholders(4) was RMB21.6 million (US$3.0 million) for the six months ended June 30, 2024, compared to non-GAAP net income of RMB78.5 million attributable to Sound Group Inc.'s ordinary shareholders for the same period in 2023.

Basic and diluted net loss per ADS(5) were RMB6.04 (US$0.83) for the six months ended June 30, 2024, compared to basic and diluted net income per ADS of RMB11.73 and RMB11.69 for the same period in 2023, respectively.

Non-GAAP basic and diluted net loss per ADS(6) were both RMB4.22 (US$0.58) for the six months ended June 30, 2024, compared to basic and diluted net income per ADS of RMB14.72 and RMB14.66 for the same period in 2023, respectively.

Share Repurchase Program

The board of directors (the "Board") of the Company authorized a share repurchase program in December 2023, under which the Company may repurchase its Class A ordinary shares (including Class A ordinary shares in the form of ADS) with an aggregate value of up to US$3.0 million over a 12-month period. As of June 30, 2024, the Company had repurchased 96,728,600 shares with a total aggregate consideration of US$1.4 million under this program.

Balance Sheets

As of June 30, 2024, the Company had cash and cash equivalents and restricted cash of RMB464.9 million (US$64.0 million).

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(4) Non-GAAP net loss attributable to Sound Group Inc.'s ordinary shareholders is a non-GAAP financial measure, which is defined as net loss attributable to Sound Group Inc.'s ordinary shareholders, excluding share-based compensation expenses. These adjustments amounted to RMB9.3 million (US$1.3 million) and RMB15.9 million for the six months ended June 30, 2024 and 2023, respectively. Please refer to the section below titled "Unaudited Reconciliations of GAAP and Non-GAAP Results" for details.

(5) ADS refers to American Depositary Share. Each ADS represents two hundred Class A ordinary shares of the Company. Basic and diluted net loss per ADS is net loss attributable to Sound Group Inc.'s ordinary shareholders divided by the weighted average number of ADS.

(6) Non-GAAP basic and diluted net loss per ADS is a non-GAAP financial measure, which is defined as non-GAAP net loss attributable to Sound Group Inc.'s ordinary shareholders divided by the weighted average number of ADS used in the calculation of basic and diluted net loss per ADS.

About Sound Group Inc.

Sound Group Inc. is a global audio-centric social and entertainment company driven by a clear mission and vision: building the world's largest audio platform to better connect and communicate. The Company is dedicated to shaping a future where audio not only bridges gaps but also amplifies human connection through the power of sound. Sound Group Inc. has been listed on Nasdaq since January 2020.

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