On Tuesday, the Hong Kong Stock Exchange’s website showed that NetEase Cloud Music has uploaded a brand-new post-hearing data set, and its co-sponsors for the listing are BoFA Securities, CICC and Credit Suisse AG.
Previously, this past August, NetEase Cloud Music passed the listing hearing of HKEx. Later, however, the company decided to postpone its listing. At that time, the company commented on the move, “Managing executives decide to postpone the listing after considering comprehensive factors including overall market environment.”
The latest data suggests that, in the first three quarters of 2021, the total revenue of NetEase Cloud Music was 5.1 billion yuan ($799 million), a year-on-year increase of 52%. Over the same period, its net loss narrowed significantly, and gross profit margin increased remarkably to a positive 0.4%. In the first half this year, adjusted net losses decreased to 500 million yuan from 800 million yuan in the same period as last year.
Specifically, in the first three quarters of this year, revenue of the online music sector totalled more than 2.24 billion yuan, up from 1.85 billion yuan in the same period of 2020. Meanwhile, monthly active users (MAU) of the online music sector increased to 184 million from 180 million in the same period last year. The number of paid online music users amounted to 27.52 million, a year-on-year increase of over 93% and online music payment rate reached 14.9%.
The company maintained stable growth in its social entertainment services and other sectors. The company credits the strong development of its live-streaming business. In the first three quarters, the social entertainment service MAU was 21.1 million while the number of paid users reached 580,000, a year-on-year increase of 93%. The average monthly revenue per paying user (ARPPU) of social entertainment services is 504.1 yuan.
Community user-generated content (UGC) and listening length continues to grow as the platform is favored by the younger generation. As a leading music community in the world, in the first half of 2021, daily active users spent 76.9 minutes on the platform, and the number of UGC songs totaled 2.8 billion.
In June 2021, about 27% of MAU created their own content and posted it on the platform, while 3 out of every 10 songs were recommended by the platform. The data set suggests that over 90% of the MAU were born post-90s or post-00s. NetEase Cloud Music is indeed one of the most popular music platforms in China overall.
Recently, NetEase Cloud Music has reached copyright cooperation agreements with Modern Sky, Emperor Entertainment Group (Hong Kong) and the China Record Corporation. The platform now offers songs created by many famous artists, bands and musicians, such as Nicholas Tse, Joey Yung, Twins, New Pants, Miserable Faith and Wutiaoren. According to analysis by Western Securities, under the premise of gradually eliminating copyright monopoly in the music industry, the core competition of online music platform relies on ecological construction and user operation experience, aspects NetEase Cloud Music sees itself as having several advantages.
NetEase Cloud Music’s post-hearing data set also suggests that the new funds will be mainly used for strengthening the music community. This fundraising will also support a greater diversity of music content, innovation and technical capabilities, and is for merger, acquisition and strategic investment purposes.