Himalaya, the leader of online audio, has finally embarked on the road of listing in Hong Kong.

Himalaya submitted its listing application to the Hong Kong Stock Exchange on Sept. 13, four days after it announced its application to withdraw its IPO plan to the United States. After twists and turns, Yu Jianjun, who calls himself a "continuous entrepreneur", is finally going to bring the "meaning" of this 30 billion valuation to the market.

According to the prospectus, the latest Himalayan MAU (monthly active users) reached 262 million, making it the top spot in the online audio market. Correspondingly, revenue based on subscription fees continues to grow, reaching 2.514 billion yuan in the first half of 2021.

Even so, the Himalayas are still unprofitable, with a total adjusted loss of more than 2 billion between 2018 and 2020. Himalayas have completed nine rounds of financing, but they have not yet crossed the break-even point, and listing is a quick option to continue to raise food.

Of course, for the absolute first share of platform enterprises, the market may not value their short-term profits. But in any case, the Himalayas, which are already valued at more than 30 billion market capitalization, need to explain one thing to the market: is the audio platform a good business?

Focusing on this question, this article answers the following three questions at once by carefully reading the Himalayan prospectus:

01. How did the Himalayas become the leader?

02. How does the audio business make a moat?

03. What are the foresight and immediate worries of the Himalayas?

Let's move on to the text.

How did the Himalayas become the leader?

Yu Jianjun, founder of the Himalayas, once wrote to himself: the dream is not over, the heart is not dead. His dream is simple: to be an Internet platform with hundreds of millions of users and great influence.

He began to start a business after graduation, but several attempts ended in failure. Yu Jianjun at that time did not find a way to realize his dream. In the first half of 2012, he tried more than 40 entrepreneurial directions, originally a team of more than 80 people. there were only seven or eight people left.

Maybe it was really desperate, or maybe it was a stroke of God's will, and Yu Jianjun finally decided: All-in is in the field of mobile audio.

The audio industry was not favored by mainstream Internet observers at that time. In Yu Jianjun's eyes, audio has a strong advantage in meeting the use of fragmentation time, and the production cost and bandwidth cost is much lower than that of increasingly high-definition video.

In August 2012, Yu Jianjun founded Himalayan FM. As a sound content platform, we first face two questions: where does the content come from? Who do you want to play it to?

In terms of content, Yu Jianjun was relatively direct. he investigated the audio industry at that time and directly put the content of almost all categories on the market on the platform, and finally formed 19 categories, including audio novels, music, and training lectures.

Then in each category, he found several radio anchors as seed writers, who also brought thousands or tens of thousands of fans behind him as seed users very quickly. A large number of radio anchors and their fans left over from the radio era have turned to the Himalayas.

Soon after the Himalayan mobile was launched in 2013, the number of fans quickly exceeded 10 million.

The influx of fans made Yu Jianjun realize that it was immature to rely solely on scattered soldiers and began to develop a regular army. In 2014, Himalayas officially started cooperation with Deyun and completed a $11.5 million round of financing, with hundreds of millions of fans by the end of the year.

In 2015, China Literature and his head invested in Himalayas, while China Literature announced that he would start a cooperation with Himalayas to lay out audio business. At this point, Himalayas have completely gained a foothold in the content side of entertainment audio.

In 2016, the era of paying for knowledge began, and Himalayas began to create paid content. On June 6, "good talk" brought by Ma Dong and the "strange heaven group" was launched as the first paid boutique content, with daily sales exceeding 5 million yuan.

In the same year, the Himalayan knowledge Carnival was launched, with 24-hour knowledge consumption exceeding 50 million. This year, the capital headed by Puhua Capital, XIAOMI and JD.com injected capital into three rounds in a row, with a total amount of more than 100 million yuan.

On June 6, 2017, Himalayas launched paid members with a monthly fee of 18 yuan and an annual membership of 188 yuan, which is similar to the price of video website members. the day is named 66 member days, and the number of members exceeds 3.42 million within 24 hours.

Taking advantage of the soaring user data, the Himalayas completed D-round, which invested by whale and Yuhui, in 2017, raising more than 100 million yuan. Subsequently, Chunhua Capital and Tencent Investment led the E round of financing, with a total amount of 4 billion yuan and a Himalayan valuation of 24 billion yuan.

After nine rounds of financing, Himalayan revenue entered a period of rapid growth. In 2020, driven by the "housing economy" during the epidemic, Himalayan revenue was 4.076 billion yuan, an increase of 51% and 175% respectively compared with 2019 and 2018, but still unprofitable.

Of course, the Himalayas are not short of rivals. In addition to the traditional dragonfly and LIZHI INC, there are also representatives of the national team, the upgraded "Cloud listening" of the Chinese broadcast client, the byte "Tomato listening", and the immediate team-launched podcast platform "Little Universe" and so on.

But these old and new rivals are still struggling to catch up with the Himalayas. In the first half of this year, the Himalayas had an average of 262 million monthly active users in the entire scene, far exceeding all their competitors. The average user time is 146 minutes, accounting for about 70.9% of the total listening time of mobile users of all online audio platforms in China, and the market share is the undisputed first.

In this context, the Himalayas started the process of Hong Kong stock IPO.

How high is the Himalayan wall as a leader?

Before we talk about the moat of Xi Ma, let's take a look at what the "ear economy" is like right now.

According to a survey and analysis of China's online audio market conducted by Himalayan Consulting (which cost 800000), the average number of mobile users of the online audio industry in 2020 is 186 million. The number of monthly active users of the Internet of things and vehicles is 65 million, while the two figures are expected to be 470 million and 423 million respectively by 2025.

According to the same report, the online audio market reached 13.1 billion yuan in 2020 and is expected to be 103.8 billion yuan by 2025 (the growth rate is filmed, of course). As far as the realization mode is concerned, it is divided into three modes: subscription, advertising and live broadcast, and it is expected that the proportion of subscription revenue will continue to expand and become the main revenue model in the future.

According to the competition chart of China's online audio industry shown in the Himalayan prospectus, it deserves to be the largest online integrated audio platform in China in terms of mobile listening time and revenue, and its revenue is about the same as that of the other five companies combined.

LIZHI INC, who won the "first audio share" on Nasdaq in 2020, is not liked by the capital. the issue price is $11, but now it has only fallen by more than 3 yuan, while the current revenue level of Hima is at least equal to the volume of LIZHI INC.

Compared with LIZHI INC, the Himalayan profit story star is much sexier.

On its own model map, there are four major commercial realization paths, supported by AI big data algorithm, PGC/UGC/PUGC training mechanism on the left, and mental training of users on the right, which can be called a perfect set of "voice and meaning", which can quite justify itself.

The perfect system superimposed the leading effect, giving birth to a large number of audio content and creators. As of June 30, 2021, there were nearly 23 million albums and 5.15 million active content creators. Even Boss Dai has a course on it.

On the one hand, the Himalayas have sufficient resources to purchase large amounts of PGC and PUGC content as well as copyrights; on the other hand, a large number of self-employed creators and works further enrich the content supply. This kind of content ecologically builds a high enough city wall.

Himalayan income comes from five parts, membership subscription, pay-on-demand, advertising, live broadcast and others. Member subscription and paid-on-demand revenue is the mainstay, with 54.6% in the first half of 2021, followed by advertising and live streaming, accounting for 24.5% and 16% of total revenue, respectively.

In the early days, advertising was the main source of cash for the Himalayas.

After the rise of pay for knowledge in 2016, pay-on-demand listening has become the largest growth point in Himalayas, but this proportion began to decline after the launch of member subscriptions, and it is clear that Himalayas are adopting a strategy of expanding the base of ordinary basic subscription members.

Himalayan user payment rates have been rising all the way since 2018, with 2021H1 reaching 12.3 per cent, higher than LIZHI INC's 7 per cent and Tencent Music's 8 per cent, but lower than the 2025 per cent level of the head minister's video platform, according to the prospectus.

In addition, according to the prospectus, of the 262 million monthly active users in the Himalayas, there are 146 million monthly active users of the Internet of things and third-party open platforms-in this case, speakers, cars and other usage scenarios. The Himalayas have fewer rivals in this area.

So the question is: why lose money when there are so many active users, so rigid demand in the scene, so high market share, and the competitive pattern is far better than that of video sites and live streaming platforms?

Where is the Himalayan "Sound and meaning Classic" trapped?

The root cause of the loss lies in a contradiction: the audio market has touched the ceiling vs. The Himalayas invested heavily in trying to break through the ceiling.

According to the data reflected in the prospectus, Himalayan marketing expenses have continued to increase over the past year, accounting for 49.1% of total revenue in the first half of this year, while the growth rate of monthly active users has slowed down over the same period. it's like running into an invisible wall.

At the same time, the average daily listening time has increased from 123 minutes in 2018 to 141 minutes in 2020, and the time spent by users cannot be further increased. In other words, the average listening time of about two hours a day is the ceiling of this industry.

From another perspective, Sima's VIP hit list is almost completely occupied by Shuangwen, which is understandable, after all, few people are willing to spend fragmented time to listen to what needs to be thought about, but it also reflects that the Himalayas are "sinking" enough.

In addition: the larger the platform, the more low-quality UGC content will be, and if you want to ensure an increase in the proportion of professional content and paid content, you need to purchase professional content at a high cost. Where is the balance? the audio market still has not found the answer.

Daniel Ek, co-founder of the global music giant Sportify, once asked: "consumers spend about the same amount of time on video and audio, but the video market is $1 trillion, while audio is only $100 billion?" Is it possible that our eyes are worth ten times more than our ears? "

However, from the perspective of realistic feedback, the combined market of long, short and medium video is probably more than 10 times higher than the audio market. Just take advertising as an example: short videos can insert ads in 3 or 4 videos, which is almost impossible for audio to do.

So in the audio scene, the Himalayas are hard to find rivals. But as its name suggests: the audio ceiling is Earth's Himalayas, the video ceiling may be Mount Olympus on Mars, the former can only climb up to 8848 meters, while the latter can climb more than 20, 000 meters-different tracks and different fates.

It is a super growth story that the Himalayas have changed from a small company to a vertical giant valued at tens of billions of dollars. However, after the listing of the Himalayas, it is doubtful whether investors in the secondary market can enjoy the returns of investors in the primary market.

This question can also be seen in many other Internet companies. Investors in the primary and secondary markets may have little in common, but at the moment of IPO, it is who is smarter and who is more stupid.