China's largest UGC audio community Lizhi (荔枝赴美), which submitted its F-1 prospectus to the US Securities and Exchange Commission (SEC) in October last year, will go public on Nasdaq as early as January 17 under the code name 'LIZI.' The latest updated prospectus disclosed plans to issue 4.1 million American Depositary Shares (ADS), with a price range of USD 11 to USD 13 per ADS. Based on this pricing, it is estimated that Lizhi's IPO valuation falls between USD 520 million and USD 620 million, and the company will raise up to USD 61 million.
In its latest filing, Lizhi also made some changes in its IPO's underwriters, removing Credit Suisse and adding new members, including AMTD Global Markets, China Merchants Securities, Valuable Capital and Prime Number Capital. Funds raised from its IPO will mainly be poured into developing innovative AI products, overseas market expansion and IoT ecological layout.
The updated prospectus also revealed that Lizhi is observing a net loss of CNY 104 million (equivalent to USD 14.55 million) in the first three quarters of 2019, nine times higher compared to the same period in 2018. The company states that period to reach profitability will depend much on its ability to grow rapidly in a cost-effective manner.
The company launched its own app in 2013, allowing users to share contents through voice recording, hence it is viewed as the equivalent of Youtube and Instagram's audio version. The platform currently covers 27 categories and over 100 sub-categories, from drama, talk shows to audiobooks. Through its deployment of AI technology, Lizhi is able to provide users with built-in interactive features across its audio products.
Lizhi has grown tremendously since its establishment in 2010, becoming China's second largest online audio platform. A total of 160 million podcasts have been uploaded to its platform, which currently boasts an average mobile MAU of 46.6 million as of the end of the third quarter, an increase of 26.6% from September 2018.
The 'audio economy' is on the rise as it quickly adapts to the mobile phone scene. Consumers' demand is shifting, and audio contents are rapidly exceeding graphical and video contents during certain scenarios such as commuting, exercising and bedtime.
Other platforms that provide similar audio broadcasting services include Qingting FM (蜻蜓FM) which nabs CNY 1 billion in its latest round of financing, and the General Atlantic-backed Ximalaya (喜马拉雅).
According to iResearch, China is already the largest online audio market, with users reaching 377 million by 2018. The online audio market is one of the mobile internet sectors that hasn't hit its peak. Presently, the penetration of mobile Internet users for music, games, and online videos are 89%, 82% and 74% respectively. Online audio on the other hand, only garners 45.5%, hence the huge room for further expansion. Leveraging AI technology, the industry is expected to witness an explosive growth soon, with users in China to exceed 900 million by 2023.