Yu Jianjun, CEO of Ximalaya, made clear the company’s specific profit plan for all employees of the company for the first time, ten years after the establishment of this audio platform, LatePost reported on September 2.
According to the report, Ximalaya’s management team has formulated a five-year plan. It expects to achieve a single-quarter profit in Q4 in 2022, and the net loss this year will narrow to about 300 million yuan ($43 million). In 2023, the annual profit will be 200 million to 300 million yuan. Five years later, the company plans an annual income to be 20 billion yuan and the profit will be 4 billion yuan.
“The risk of fresh e-commerce platform Missfresh has greatly impressed the management team of Ximalaya.” A source said, “They don’t think this is an accident. There may be more such companies in the future. It is very dangerous for companies that can’t make profits.”
According to Ximalaya’s latest prospectus, the company’s revenue in 2021 was about 5.8 billion yuan, which was lower than video and live-streaming platforms such as iQIYI, Bilibili and Huya, but higher than the information platforms such as Zhihu and Qutoutiao. In 2021, net losses of Ximalaya even reached 750 million yuan.
Ximalaya’s latest round of financing took place in April 2021, with a post-investment valuation of about $4.3 billion. Since then, it submitted listing applications three times, but failed to debut.
At any rate, Ximalaya has begun to reduce its costs. The share of funds paid to content creators and copyright owners on total revenue decreased from 33% in 2019 to 27.3% in 2021. According to the prospectus, the annual gross profit margin of the company increased from 44.5% in 2019 to 54% in 2021 while the revenue and the number of users kept increasing.
Yu Jianjun said at the staff meeting that “achieving profit in Q4 2022” has become one of the assessment indicators of the management team, with a weight of 50%. However, he also made clear that Ximalaya’s earnings in Q4 are not bound to employee’s merit pay.
“The amount of profit is not so important,” Yu said, “The significance of profit itself is very important, which shows that the company can support itself without external forces.”
In order to achieve profitability, Ximalaya has begun to undergo some adjustments to its operations. Since March this year, employees in Ximalaya have received layoff notices while merit pay appraisal has become stricter. Ximalaya has also reorganized its business and organization, including integrating businesses with similar models and strong synergy to improve operational efficiency.