Ximalaya Denies Laying Off 30%, Profitability and Innovation Remain Two Major Challenges

Ximalaya is once again caught in a wave of personnel changes. According to reports, Ximalaya plans to carry out a comprehensive layoff, with a proportion of about 30%, mainly targeting product positions followed by operations. The report also stated that several senior executives, including Qin Lei, the Senior Vice President, and Wang Chaoyang, the Chief Content Officer, have resigned one after another within the past six months.

On December 6th, in response to the above news, Ximalaya denied it and responded that it was “completely untrue”. In addition, it has been confirmed by Qin Lei, Senior Vice President of Ximalaya, has indeed resigned. Prior to this, Qin Lei was responsible for product development, growth and content ecology after joining Ximalaya.

In the second half of 2022, there were reports that Ximalaya’s COO, Lu Dongdong, has resigned from the company and joined the e-commerce platform Shopee. However, Ximalaya has not responded to this.

According to the Ximalaya’s prospectus, as of December 31, 2021, the company had 4,342 full-time employees, which is more than 1,000 people compared to December 31, 2020 when there were 3,074 employees. Among them, technology and research & development (R&D), as well as platform and content operations are the two largest sectors of the company with proportions of 39.7% and 30.7%, respectively. Last year mid-year, there were also rumors about layoffs at Ximalaya.

Many changes are closely related to the development of Ximalaya itself. In 2021, the company submitted listing applications to both the Securities and Exchange Commission (SEC) and The Stock Exchange of Hong Kong. The most recent update of the prospectus was on March 29, 2022, but it has not yet been officially listed.

And executives are more eager for profitability than ever before. In August 2022, Ximalaya’s founder and CEO, Yu Jianjun, stated at an internal staff meeting that the company plans to achieve quarterly profits in the fourth quarter of 2022, reversing its long-term loss situation. The goal is to achieve annual profitability in 2023 and reach a yearly revenue of 20 billion yuan (approximatly ＄2.8 billion) with a profit of 4 billion yuan in five years. At the beginning of this year, Yu Jianjun revealed at the company’s annual conference that Ximalaya achieved tens of millions in profits for the first time in a single quarter during the fourth quarter of 2022.

However, according to the disclosed data in the Kapbook, Ximalaya is still experiencing continuous losses. In 2019, 2020, and 2021, Ximalaya’s adjusted annual losses (measured by non-international financial reporting standards) were RMB 748 million yuan (approximatly ＄105 billion), RMB 539 million yuan (approximatly ＄75 billion), and RMB 759 million yuan (approximatly ＄106 billion) respectively.

SEE ALSO: Audio Platform Ximalaya Plans to Be Profitable by End of Year

Ximalaya is in a leading position in the audio industry. According to China Insights Consultancy’s data, Ximalaya holds a market share of 28% in the online audio industry in China.

Therefore, the changes in this platform also reflect hidden concerns within the entire industry. Lizhi Inc., an audio content platform, went public on the U.S. stock market several years ago. However, its third-quarter report for 2023 showed a net loss of 62 million yuan (approximatly ＄9 million), while it had a net profit of 19.8 million yuan (approximatly ＄2.8 million) in the third quarter of 2022.

Ximalaya’s revenue comes from paid subscriptions, advertising, live broadcasting, and other sources. Content sharing and copyright acquisition costs are important factors affecting its profitability. In the current situation of increasing revenue without increasing profits, audio companies are seeking innovative business strategies. For example, in the first quarter of 2023, Lizhi launched a chatbot feature on its social product. Ximalaya is also expanding its hardware income and focusing on podcast monetization. However, the short-term effectiveness of these innovative businesses remains to be seen, and audio platforms may continue to face challenging circumstances.