Xiaohongshu CFO Yang Ruo resigned to join Fosun Group

23/09/2022

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Author | Anita Tang

Editor | Yang Xuan

36氪 learned from multiple independent sources that Yang Ruo, the former CFO of Xiaohongshu, has officially resigned recently and joined Fosun Group.

Regarding the above information, Xiaohongshu told 36氪 that Mr. Yang Ruo had recently resigned as the company’s chief financial officer due to family reasons. Thank him for his dedication to the company during his tenure and wish him all the best.

In March 2021, Yang Ruo joined Xiaohongshu as the company’s CFO, responsible for the formulation of the company’s financial strategy, financial management and internal control. Yang Ruo graduated from the University of California, Berkeley. Before joining Xiaohongshu, he was the managing director of the Asia Pacific region of Citigroup’s TMT investment banking department, and also worked for Ernst & Young and PricewaterhouseCoopers.

The coming and going of the CFO is often accompanied by rumors of going public. When Yang Ruo joined Xiaohongshu, Xiaohongshu had been established for nearly 8 years, which was the time when the performance was growing and the business was becoming more and more mature. As the largest lifestyle and grass growing platform in China, according to Quest Mobile data, since 2020, the DAU of Xiaohongshu has risen from 20 million to 65 million, and the MAU has reached about 160 million.

Xiaohongshu has also expanded rapidly with its advertising business. According to Tianfeng Securities, Xiaohongshu’s advertising business revenue will triple in 2020, about 600-800 million US dollars; in 2021, according to 36 Krypton’s previous reports , Xiaohongshu’s advertising revenue is expected to double again.

Its valuation has also risen. After the D round of financing in 2018, Xiaohongshu was valued at $3 billion, and in the following two years, this number has skyrocketed to $20 billion (as of November 2021).

2021 is a big year for the content community to go public. Station B and Zhihu are all listed on the Hong Kong stock market in this year. After Yang Ruo joined Xiaohongshu, starting from 2021, rumors of Xiaohongshu’s listing have been reported frequently:

  • In April 2021, IFR, a media affiliate of Reuters, reported that Xiaohongshu plans to go to the United States for an IPO in the middle of the year, raising about $500 million to $1 billion. Xiaohongshu has confidentially submitted a U.S. listing application, one of the people said.
  • In July 2021, according to Bloomberg, Xiaohongshu considered switching the listing venue from US stocks to Hong Kong stocks, and planned to raise at least US$500 million, but Xiaohongshu denied this. According to other media reports, by mid-2021, Xiaohongshu will be valued at $10 billion in the secondary market.
  • In October 2021, according to Bloomberg, Xiaohongshu may file for an IPO in Hong Kong as soon as 2021 after shelving its U.S. listing plan. In November, Xiaohongshu completed a financing of 500 million yuan, led by Temasek and Tencent, and joined by old shareholders such as Ali, Landfill Investment, and Primitive Capital. The post-investment valuation was as high as 20 billion US dollars.

Changes in the CFO position are often closely related to the listing process. The listing plan of Xiaohongshu is not yet clear, and Yang Ruo’s departure may prove this point.

With the rapid development of the business, the valuation of Xiaohongshu has risen. In just half a year and a year, its valuation has risen from US$10 billion to US$20 billion – which is nearly three times the current market value of the Bilibili stock market – the capital market undoubtedly has high expectations for it.

On the one hand, the challenge stems from the increasingly complete domestic regulatory policies for the overseas listing of Internet companies. In January of this year, the newly revised “Network Security Review Measures” required that online platform operators with personal information of more than 1 million users going public abroad must report to the Cybersecurity Review Office for a network security review. As a content platform with over 100 million users, in July 2021, Xiaohongshu was interviewed by the Cyberspace Administration of China due to content issues. And once you want to become a listed company, how to avoid the risk of content community governance is a work that requires a lot of energy for Xiaohongshu.

While maintaining rapid growth, another challenge for Xiaohongshu is commercialization. In the few years of the epidemic, the number of users of Xiaohongshu has grown against the trend, but the single revenue problem is a common concern in the market. Today, more than 80% of its revenue comes from advertising, and its e-commerce business is still in its early stages.

However, Xiaohongshu is also looking for other ways to commercialize. According to a recent 36氪 report , in the OKRs of Xiaohongshu COO Conan in early 2022, there are two businesses planned from 0 to 1 this year, one is local services including outdoor and urban life, and the other is content payment in virtual goods within.

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