SOGP Sound Group Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of December 2024

 

Commission file number: 001-39177

 

 

Sound Group Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

60 Anson Road,

Mapletree Anson,

#09-01/02,

Singapore 079914

(Address of Principal Executive Offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.      Form 20-F x      Form 40-F ¨

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Sound Group Inc.
Date: December 13, 2024	By:	/s/ Jinnan (Marco) Lai
		Name:	Jinnan (Marco) Lai
		Title:	Chief Executive Officer, Director

 

 

EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press Release

 

 

 

Exhibit 99.1

 

Sound Group Inc. Reports First Half of 2024 Unaudited Financial Results

 

Singapore, December 13, 2024 /GLOBE NEWSWIRE/ - Sound Group Inc. (NASDAQ: SOGP) (“SOGP” or the “Company” or “We”), a global audio-centric social and entertainment company, today announced its unaudited financial results for the six months ended June 30, 2024.

 

First Half of 2024 Financial and Operational Highlights

 

	·	Net revenues were RMB924.0 million (US$127.1 million) for the six months ended June 30, 2024, compared with RMB1,223.8 million for the six months ended June 30, 2023.
	·	Net loss was RMB36.5 million (US$5.0 million) for the six months ended June 30, 2024, compared with net income of RMB59.9 million for the six months ended June 30, 2023.
	·	Average total mobile MAUs1 for the six months ended June 30, 2024 was 35.7 million, compared with 47.6 million for the six months ended June 30, 2023.

 

Mr. Jinnan (Marco) Lai, Founder and CEO of SOGP, commented, “For the six months ended June 30, 2024, we remained dedicated to building a more dynamic and healthier user ecosystem. We have empowered our content creators to deliver more diverse and distinctive content by harnessing advanced AI technologies and cultivating strategic partnerships. While facing various challenges, we have continued to integrate our technology applications and strengthen our competitiveness through innovative products and streamlined operations, laying a solid foundation for our market resilience and future growth.”

 

Ms. Chengfang Lu, Acting Chief Financial Officer of SOGP, said, “During the period, we recorded net revenues of RMB924.0 million. Despite the market uncertainties, we are committed to strengthening our core competitiveness through continuous content cultivation and technological innovation. Moving forward, we remained focused on improving organizational efficiency, advancing our globalization capabilities, increasing our overall agility, and delivering sustainable long-term value to our stakeholders.”

 

¹ Refers to the average monthly number of active users across our platforms and Apps in a given period, calculated by dividing (i) the sum of mobile active users for each month of such period, by (ii) the number of months in the same period.

 

 

First Half of 2024 Unaudited Financial Results

 

Net revenues were RMB924.0 million (US$127.1 million) for the six months ended June 30, 2024, compared with RMB1,223.8 million for the same period in 2023, primarily due to the decrease in the number of paying users.

 

Cost of revenues was RMB677.6 million (US$93.2 million) for the six months ended June 30, 2024, compared with RMB853.0 million for the same period in 2023, mainly attributable to (i) the decreased revenue sharing fees to our content creators as the Company’s revenues decreased, as well as (ii) the decreased bandwidth costs, salary and welfare benefits expenses related to the decreased operation staff, share-based compensation expenses, and payment handling costs.

 

Gross profit was RMB246.3 million (US$33.9 million) for the six months ended June 30, 2024, compared with RMB370.8 million for the same period in 2023.

 

Non-GAAP gross profit² was RMB247.7 million (US$34.1 million) for the six months ended June 30, 2024, compared with RMB373.8 million for the same period in 2023.

 

Gross margin for the six months ended June 30, 2024 was 27%, compared with 30% for the same period in 2023, mainly attributable to the increased percentage of the revenue sharing fees to our content creators.

 

Non-GAAP gross margin for the six months ended June 30, 2024 was 27%, compared with 31% for the same period in 2023.

 

Operating expenses were RMB290.6 million (US$40.0 million) for the six months ended June 30, 2024, compared with RMB320.4 million for the same period in 2023.

 

Research and development expenses were RMB122.9 million (US$16.9 million) for the six months ended June 30, 2024, compared with RMB147.1 million for the same period in 2023, primarily due to (i) the decreased salary and welfare benefits expenses related to the decreased number of relevant staff, and (ii) the decreased share-based compensation expenses, partially offset by (iii) the increased expenses related to research and development services provided by third parties.

 

Selling and marketing expenses were RMB123.2 million (US$17.0 million) for the six months ended June 30, 2024, compared with RMB126.4 million for the same period in 2023, primarily attributable to (i) the decreased branding and marketing expenses, and (ii) the decreased salary and welfare benefits expenses related to the reduction in the number of our relevant staff. The Company will monitor its discretionary advertising and promotion expenses and adjust accordingly depending on market conditions.

 

General and administrative expenses were RMB44.5 million (US$6.1 million) for the six months ended June 30, 2024, compared with RMB46.9 million for the same period in 2023, mainly driven by (i) the decreased provision for litigation contingencies, share-based compensation expenses and other miscellaneous expenses, and partially offset by (ii) the increased salary and welfare benefits expenses related to the increased average salary, professional service fees and rental expenses.

 

Operating loss was RMB44.3 million (US$6.1 million) for the six months ended June 30, 2024, compared to operating income of RMB50.5 million for the same period in 2023.

 

Non-GAAP operating loss³ was RMB34.9 million (US$4.8 million) for the six months ended June 30, 2024, compared to non-GAAP operating income of RMB66.4 million for the same period in 2023.

 

² Non-GAAP gross profit is a non-GAAP financial measure, which is defined as gross profit excluding share-based compensation expenses. This adjustment amounted to RMB1.4 million (US$0.2 million) and RMB3.0 million for the six months ended June 30, 2024 and 2023, respectively. Please refer to the section below titled “Unaudited Reconciliations of GAAP and Non-GAAP Results” for details.

³ Non-GAAP operating loss is a non-GAAP financial measure, which is defined as operating loss excluding share-based compensation expenses. This adjustment amounted to RMB9.3 million (US$1.3 million) and RMB15.9 million for the six months ended June 30, 2024 and 2023, respectively. Please refer to the section below titled “Unaudited Reconciliations of GAAP and Non-GAAP Results” for details.

 

 

Net loss was RMB36.5 million (US$5.0 million) for the six months ended June 30, 2024, compared to net income of RMB59.9 million for the same period in 2023.

 

Non-GAAP net loss was RMB27.1 million (US$3.7 million) for the six months ended June 30, 2024, compared to non-GAAP net income of RMB75.8 million for the same period in 2023.

 

Net loss attributable to Sound Group Inc.’s ordinary shareholders was RMB31.0 million (US$4.3 million) for the six months ended June 30, 2024, compared to net income of RMB62.6 million attributable to Sound Group Inc.’s ordinary shareholders for the same period in 2023.

 

Non-GAAP net loss attributable to Sound Group Inc.’s ordinary shareholders⁴ was RMB21.6 million (US$3.0 million) for the six months ended June 30, 2024, compared to non-GAAP net income of RMB78.5 million attributable to Sound Group Inc.’s ordinary shareholders for the same period in 2023.

 

Basic and diluted net loss per ADS⁵ were RMB6.04 (US$0.83) for the six months ended June 30, 2024, compared to basic and diluted net income per ADS of RMB11.73 and RMB11.69 for the same period in 2023, respectively.

 

Non-GAAP basic and diluted net loss per ADS⁶ were both RMB4.22 (US$0.58) for the six months ended June 30, 2024, compared to basic and diluted net income per ADS of RMB14.72 and RMB14.66 for the same period in 2023, respectively.

 

Share Repurchase Program

 

The board of directors (the “Board”) of the Company authorized a share repurchase program in December 2023, under which the Company may repurchase its Class A ordinary shares (including Class A ordinary shares in the form of ADS) with an aggregate value of up to US$3.0 million over a 12-month period. As of June 30, 2024, the Company had repurchased 96,728,600 shares with a total aggregate consideration of US$1.4 million under this program.

 

Balance Sheets

 

As of June 30, 2024, the Company had cash and cash equivalents and restricted cash of RMB464.9 million (US$64.0 million).

 

⁴ Non-GAAP net loss attributable to Sound Group Inc.’s ordinary shareholders is a non-GAAP financial measure, which is defined as net loss attributable to Sound Group Inc.’s ordinary shareholders, excluding share-based compensation expenses. These adjustments amounted to RMB9.3 million (US$1.3 million) and RMB15.9 million for the six months ended June 30, 2024 and 2023, respectively. Please refer to the section below titled “Unaudited Reconciliations of GAAP and Non- GAAP Results” for details.

⁵ ADS refers to American Depositary Share. Each ADS represents two hundred Class A ordinary shares of the Company. Basic and diluted net loss per ADS is net loss attributable to Sound Group Inc.’s ordinary shareholders divided by the weighted average number of ADS.

⁶ Non-GAAP basic and diluted net loss per ADS is a non-GAAP financial measure, which is defined as non-GAAP net loss attributable to Sound Group Inc.’s ordinary shareholders divided by the weighted average number of ADS used in the calculation of basic and diluted net loss per ADS.

 

 

About Sound Group Inc.

 

Sound Group Inc. is a global audio-centric social and entertainment company driven by a clear mission and vision: building the world’s largest audio platform to better connect and communicate. The Company is dedicated to shaping a future where audio not only bridges gaps but also amplifies human connection through the power of sound. Sound Group Inc. has been listed on Nasdaq since January 2020.

 

For more information, please visit: https://ir.soundgroupinc.com/

 

Use of Non-GAAP Financial Measures

 

The unaudited condensed consolidated financial information is prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

SOGP uses non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating loss/income, non-GAAP net loss/income, non-GAAP net loss/income attributable to Sound Group Inc.’s ordinary shareholders and non-GAAP basic and diluted net loss/income per ADS, which are non-GAAP financial measures. Non-GAAP gross profit is gross profit excluding share-based compensation expenses. Non-GAAP gross margin is non-GAAP gross profit as a percentage of net revenues. Non-GAAP operating loss/income is operating loss/income excluding share-based compensation expenses. Non-GAAP net loss/income is net loss/income, excluding share-based compensation expenses. Non-GAAP net loss/income attributable to Sound Group Inc.’s ordinary shareholders is net loss/income attributable to Sound Group Inc.’s ordinary shareholders, excluding share-based compensation expenses. Non-GAAP basic and diluted net loss/income per ADS is non-GAAP net loss/income attributable to Sound Group Inc.’s ordinary shareholders divided by the weighted average number of ADS used in the calculation of basic and diluted net loss/income per ADS. The Company believes that separate analysis and exclusion of the non-cash impact of the above reconciling item adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measure for planning, forecasting and measuring results against the forecast. The Company believes that non-GAAP financial measure is useful supplemental information for investors and analysts to assess its operating performance without the non-cash effect of share-based compensation expenses.

 

However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they do not include all items that impact the Company’s net income for the period. In addition, because non-GAAP financial measures are not measured in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measures in isolation from, superior to, or as an alternative to the financial measure prepared in accordance with U.S. GAAP.

 

The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” near the end of this release.

 

Exchange Rate Information

 

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to RMB are made at a rate of RMB7.2672 to US$1.00, the exchange rate on June 28, 2024, set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or U.S. dollars amounts referred could be converted into U.S. dollar or RMB, as the case may be, at any particular rate or at all.

 

 

Safe Harbor Statement

 

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s goals and strategies; the Company’s future business development, results of operations and financial condition; the expected growth of the online audio market; the expectation regarding the rate at which to gain active users, especially paying users; the Company’s ability to monetize the user base; fluctuations in general economic and business conditions in China and overseas markets; any adverse changes in laws, regulations, rules, policies or guidelines applicable to the Company; and assumptions underlying or related to any of the foregoing. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the Securities Exchange Commission. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

 

For investor and media inquiries, please contact:

 

Sound Group Inc.

IR Department

E-mail: ir@soundgroupinc.com

 

Piacente Financial Communications

Jenny Cai

E-mail: soundgroup@tpg-ir.com

 

 

Sound Group Inc.

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share, ADS, per share data and per ADS data)

 

		December 31, 2023				June 30, 2024				June 30, 2024
		RMB				RMB				US$
ASSETS
Current assets
Cash and cash equivalents			494,965				455,304				62,652
Restricted cash			2,652				9,551				1,314
Accounts receivable, net			1,557				1,175				162
Prepayments and other current assets			33,914				34,213				4,708
Total current assets			533,088				500,243				68,836
Non-current assets
Property, equipment and leasehold improvement, net			17,288				18,045				2,483
Intangible assets, net			1,390				1,131				156
Right-of-use assets, net			13,990				16,207				2,230
Other non-current assets			818				1,309				180
Total non-current assets			33,486				36,692				5,049
TOTAL ASSETS			566,574				536,935				73,885
LIABILITIES
Current liabilities
Accounts payable			43,184				43,407				5,973
Deferred revenue			29,248				29,603				4,074
Salary and welfare payable			136,869				120,402				16,568
Taxes payable			4,463				7,107				978
Short-term loans			-				11,127				1,531
Lease liabilities due within one year			10,351				11,889				1,636
Accrued expenses and other current liabilities			48,510				56,696				7,802
Total current liabilities			272,625				280,231				38,562
Non-current liabilities
Lease liabilities			3,936				4,508				620
Total non-current liabilities			3,936				4,508				620
TOTAL LIABILITIES			276,561				284,739				39,182

 

 

Sound Group Inc.

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(All amounts in thousands, except for share, ADS, per share data and per ADS data)

 

		December 31, 2023				June 30, 2024				June 30, 2024
		RMB				RMB				US$
SHAREHOLDERS’ EQUITY
Class A Ordinary shares (US$0.0001 par value, 1,268,785,000 shares authorized, 838,962,260 shares issued and 819,084,610 shares outstanding as of December 31, 2023; 1,268,785,000 shares authorized, 838,962,260 shares issued and 750,436,010 shares outstanding as of June 30, 2024).			557				557				77
Class B Ordinary shares (US$0.0001 par value, 231,215,000 shares authorized, issued and outstanding as of December 31, 2023 and June 30, 2024, respectively).			168				168				23
Treasury stock			(958	)			(10,185	)			(1,402	)
Additional paid in capital			2,688,450				2,698,432				371,317
Statutory reserves			1,642				1,642				226
Accumulated deficit			(2,408,307	)			(2,439,294	)			(335,658	)
Accumulated other comprehensive income			17,923				15,873				2,184
TOTAL SOGP Inc.’s shareholders’ equity			299,475				267,193				36,767
Non-controlling interests			(9,462	)			(14,997	)			(2,064	)
TOTAL SHAREHOLDERS’ EQUITY			290,013				252,196				34,703
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			566,574				536,935				73,885

 

 

Sound Group Inc.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except for share, ADS, per share data and per ADS data)

 

		Six Months Ended
		June 30, 2023				December 31, 2023				June 30, 2024				June 30, 2024
		RMB				RMB				RMB				US$
Net revenues
Audio entertainment revenues			1,219,296				844,050				918,047				126,327
Podcast, advertising and other revenues			4,552				3,874				5,932				816
Total net revenues			1,223,848				847,924				923,979				127,143
Cost of revenues (1)			(853,005	)			(633,392	)			(677,641	)			(93,247	)
Gross profit			370,843				214,532				246,338				33,896
Operating expenses (1)
Selling and marketing expenses			(126,370	)			(111,276	)			(123,192	)			(16,952	)
General and administrative expenses			(46,902	)			(147,005	)			(44,524	)			(6,127	)
Research and development expenses			(147,095	)			(154,395	)			(122,901	)			(16,912	)
Total operating expenses			(320,367	)			(412,676	)			(290,617	)			(39,991	)
Operating income/(loss)			50,476				(198,144	)			(44,279	)			(6,095	)
Interest expenses			(1,393	)			(170	)			(198	)			(27	)
Foreign exchange losses			(611	)			(877	)			(1,774	)			(244	)
Interest income and investment income			6,277				4,543				4,802				661
Government grants			5,194				4,201				1,116				154
Others, net			410				(3,987	)			5,100				702
Income/(loss) before income taxes			60,353				(194,434	)			(35,233	)			(4,849	)
Income tax (expenses)/credit			(463	)			29				(1,247	)			(172	)
Net income/(loss)			59,890				(194,405	)			(36,480	)			(5,021	)
Net loss attributable to the non-controlling interests shareholders			2,679				5,185				5,493				756
Net income/(loss) attributable to Sound Group Inc.’s ordinary shareholders			62,569				(189,220	)			(30,987	)			(4,265	)

 

 

Sound Group Inc.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

(All amounts in thousands, except for share, ADS, per share data and per ADS data)

 

		Six Months Ended
		June 30, 2023				December 31, 2023				June 30, 2024				June 30, 2024
		RMB				RMB				RMB				US$
Net income/(loss)			59,890				(194,405	)			(36,480	)			(5,021	)
Other comprehensive income/(loss):
Foreign currency translation adjustments			7,203				(3,926	)			(2,092	)			(288	)
Total comprehensive income/(loss)			67,093				(198,331	)			(38,572	)			(5,309	)
Comprehensive loss attributable to non-controlling interests shareholders			2,871				5,082				5,535				762
Comprehensive income/(loss) attributable to Sound Group Inc.’s ordinary shareholders			69,964				(193,249	)			(33,037	)			(4,547	)
Net income/(loss) attributable to Sound Group Inc.’s ordinary shareholders per share
—Basic			0.06				(0.18	)			(0.03	)			(0.00	)
—Diluted			0.06				(0.18	)			(0.03	)			(0.00	)
Weighted average number of ordinary shares
—Basic			1,066,505,256				1,078,969,851				1,026,439,711				1,026,439,711
—Diluted			1,070,735,706				1,078,969,851				1,026,439,711				1,026,439,711
Net income/(loss) attributable to Sound Group Inc.’s ordinary shareholders per ADS
—Basic			11.73				(35.07	)			(6.04	)			(0.83	)
—Diluted			11.69				(35.07	)			(6.04	)			(0.83	)
Weighted average number of ADS
—Basic			5,332,526				5,394,849				5,132,199				5,132,199
—Diluted			5,353,679				5,394,849				5,132,199				5,132,199

 

 

Sound Group Inc.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

(All amounts in thousands, except for share, ADS, per share data and per ADS data)

 

(1)            Share-based compensation was allocated in cost of revenues and operating expenses as follows:

 

		Six Months Ended
		June 30, 2023				December 31, 2023				June 30, 2024				June 30, 2024
		RMB				RMB				RMB				US$
Cost of revenues			2,967				878				1,405				193
Selling and marketing expenses			1,081				931				950				131
General and administrative expenses			5,406				4,052				3,137				432
Research and development expenses			6,484				4,956				3,855				530
Total			15,938				10,817				9,347				1,286

 

 

Sound Group Inc.

 

UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(All amounts in thousands, except for share, ADS, per share data and per ADS data)

 

		Six Months Ended
		June 30, 2023				December 31, 2023				June 30, 2024				June 30, 2024
		RMB				RMB				RMB				US$
Gross profit			370,843				214,532				246,338				33,896
Share-based compensation expenses			2,967				878				1,405				193
Non-GAAP gross profit			373,810				215,410				247,743				34,089
Operating income/(loss)			50,476				(198,144	)			(44,279	)			(6,095	)
Share-based compensation expenses			15,938				10,817				9,347				1,286
Non-GAAP operating income/(loss)			66,414				(187,327	)			(34,932	)			(4,809	)
Net income/(loss)			59,890				(194,405	)			(36,480	)			(5,021	)
Share-based compensation expenses			15,938				10,817				9,347				1,286
Non-GAAP net income/(loss)			75,828				(183,588	)			(27,133	)			(3,735	)
Net income/(loss) attributable to Sound Group Inc.’s ordinary shareholders			62,569				(189,220	)			(30,987	)			(4,265	)
Share-based compensation expenses			15,938				10,817				9,347				1,286
Non-GAAP net income/(loss) attributable to Sound Group Inc.’s ordinary shareholders			78,507				(178,403	)			(21,640	)			(2,979	)
Non-GAAP net income/(loss) attributable to Sound Group Inc.’s ordinary shareholders per share
—Basic			0.07				(0.17	)			(0.02	)			0.00
—Diluted			0.07				(0.17	)			(0.02	)			0.00
Weighted average number of ordinary shares
—Basic			1,066,505,256				1,078,969,851				1,026,439,711				1,026,439,711
—Diluted			1,070,735,706				1,078,969,851				1,026,439,711				1,026,439,711
Non-GAAP net income/(loss) attributable to Sound Group Inc.’s ordinary shareholders per ADS
—Basic			14.72				(33.07	)			(4.22	)			(0.58	)
—Diluted			14.66				(33.07	)			(4.22	)			(0.58	)
Weighted average number of ADS
—Basic			5,332,526				5,394,849				5,132,199				5,132,199
—Diluted			5,353,679				5,394,849				5,132,199				5,132,199

 

 

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