Chinese music streamer Cloud Village’s revenues rose 38.6% to RMB 2.07 billion ($310.3 million) in its first full quarter as a standalone company, the company announced Tuesday. Gross profit improved to RMB 251.6 million ($37.8 million) — up from a RMB 54.0 million ($8.1 million) net loss in the prior year — following “favourable industry trends with more reasonable copyright fees and cost structures,” according to the earnings release.
Launched by internet giant Netease in 2013, Hangzhou-based Cloud Village operates NetEase Cloud Music, China’s second-largest music streaming company behind Tencent Music Entertainment. Revenue from Cloud Village’s music services grew 16.5% to RMB 884.8 million ($132.8 million) as monthly subscribers increased 51% to 36.7 million. However, average revenue per subscriber declined about 9.9% to RMB 6.4 ($1.0), primarily due to discounted subscriptions.
Cloud Village’s monthly music services users were roughly flat at 181.7 million, while the ratio of daily to monthly users remained above 30% in the quarter. The increase in music subscribers pushed the ratio of paid-to-total users from 13.3% to 20.2%. The company also boasted an improvement in average daily listening time, from 76.5 minutes to 82.0 minutes, in part because nearly half of users browsed the “comments section” while listening to music.
Cloud Village also operates social entertainment platforms such as LOOK Live Streaming, Sheng Bo and Yin Jie. Social entertainment revenue grew 61.6% to RMB 1.18 billion ($177.5 million) – 78% of the overall revenue growth – after monthly paying users increased 170% to 1.2 million, although the average revenue per social paying user declined 40.4% to RMB 329.8 ($49.50).
Cloud Village shares, which have traded on the Hong Kong Stock Exchange since Dec. 2, fell 2.1% to HKD 57.50. That put Cloud Village down 63.4% year to date; it was also 72% below the 205.00 initial public offering price. Like TME, whose shares are down 46.4% in 2022, Cloud Village has been hurt by uncertainty created by government regulations, including new rules for online advertising, and a U.S. law that could force foreign companies listed in the U.S. to submit to an audit or face being de-listed.
Looking forward, Cloud Village plans to offer more tools to foster user-generated content creation and utilize social networking features, develop independent artists and offer more in-house production music. Additionally, Cloud Village is considering expansion opportunities in new markets.
