As filed with the Securities and Exchange Commission on May 10, 2021

Registration No. 333-                 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Soulgate Inc.

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

Cayman Islands	7370	Not Applicable
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

22/F, SCG Parkside, 868 Yinghua Road

Pudong New Area, Shanghai 201204

People’s Republic of China

+86 21-2613-5821

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

(800) 221-0102

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Z. Julie Gao, Esq. Skadden, Arps, Slate, Meagher & Flom LLP c/o 42/F, Edinburgh Tower, The Landmark 15 Queen’s Road Central Hong Kong +852 3740-4700 Li He, Esq. Davis Polk & Wardwell LLP c/o 18th Floor, The Hong Kong Club Building 3A Chater Road Central Hong Kong +852 2533-3300

Approximate date of commencement of proposed sale to the public:

as soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company  ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act.   ☐

†    The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Proposed maximum aggregate offering price(2)(3)	Amount of registration fee
Class A Ordinary Shares, par value US$0.0001 per share(1)	US$100,000,000	US$10,910

(1) American depositary shares issuable upon deposit of Class A ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333-                ). Each American depositary share represents                Class A ordinary shares.

(2) Includes Class A ordinary shares that are issuable upon the exercise of the underwriters’ option to purchase additional ADSs. Also includes Class A ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public. These Class A ordinary shares are not being registered for the purpose of sales outside the United States.

(3) Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(o) under the Securities Act of 1933.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS (Subject to Completion)

Dated             , 2021.

American Depositary Shares

Soulgate Inc.

Representing              Class A Ordinary Shares

We are selling              American depositary shares, or ADSs. Each ADS represents              of our Class A ordinary shares, par value US$0.0001 per share.

This is an initial public offering of American depositary shares, or ADSs, of Soulgate Inc. Prior to this offering, there has been no public market for the ADSs or our ordinary shares. We anticipate that the initial public offering price will be between US$             and US$             per ADS. We intend to apply for the listing of the ADSs on Nasdaq Global Market under the symbol “SSR.”

Following the completion of this offering, our issued and outstanding share capital will consist of Class A ordinary shares and Class B ordinary shares. Our founder, chairwoman and chief executive officer, Ms. Lu Zhang, will beneficially own all of our issued Class B ordinary shares and will be able to exercise         % of the total voting power of our issued and outstanding share capital immediately following the completion of this offering. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to five votes and is convertible into one Class A ordinary share. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances.

We have granted the underwriters a 30-day option to purchase up to an additional              ADSs from us at the initial public offering less the underwriting discounts and commissions.

We are an “emerging growth company” under applicable U.S. federal securities laws and are eligible for reduced public company reporting requirements.

Investing in the ADSs involves risks. See “Risk Factors” beginning on page 16 for factors you should consider before buying the ADSs.

PRICE US$             PER ADS

Neither the United States Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per ADS		Total
Initial public offering price		US$		US$
Underwriting discounts and commissions(1)		US$		US$
Proceeds, before expenses, to us		US$		US$

(1) See “Underwriting” for additional information regarding compensation payable by us to the underwriters.

The underwriters expect to deliver the ADSs to purchasers on or about             , 2021.

MORGAN STANLEY JEFFERIES BofA Securities CICC

The date of this prospectus is             , 2021.

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TABLE OF CONTENTS

Prospectus Summary	1
Summary Consolidated Financial Data	13
Risk Factors	16
Special Note Regarding Forward-Looking Statements	73
Use of Proceeds	75
Dividend Policy	76
Capitalization	77
Dilution	79
Enforceability of Civil Liabilities	81
Corporate History and Structure	83
Selected Consolidated Financial Data	88
Management’s Discussion and Analysis of Financial Condition and Results of Operations	90
Industry	110
Business	115
Regulation	139
Management	155
Principal Shareholders	161
Related Party Transactions	163
Description of Share Capital	164
Description of American Depositary Shares	176
Shares Eligible for Future Sale	184
Taxation	186
Underwriting	192
Expenses Related to this Offering	203
Legal Matters	204
Experts	205
Where You Can Find Additional Information	206
Index to the Consolidated Financial Statements	F-1

Until                , 2021 (the 25th day after the date of this prospectus), all dealers that effect transactions is these ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’ obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.

You should rely only on the information contained in this prospectus or in any free writing prospectus that we authorize to be distributed to you. We and the underwriters have not authorized anyone to provide you with any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you, and neither we, nor the underwriters take responsibility for any other information others may give you. We are offering to sell, and seeking offers to buy the ADSs, only in jurisdictions where such offers and sales are permitted. The information in this prospectus or any free writing prospectus is accurate only as of its date, regardless of its time of delivery or the time of any sale of the ADSs. Our business, financial condition, results of operations and prospectus may have changed since that date.

Neither we nor any of the underwriters has taken any action to permit a public offering of the ADSs outside the United States or to permit the possession or distribution of this prospectus or any filed free writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about and observe any restrictions relating to the offering of the ADSs and the distribution of the prospectus or any filed free writing prospectus outside the United States.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the ADSs discussed under “Risk Factors,” before deciding whether to invest in the ADSs. This prospectus contains information from an industry report commissioned by us dated April 19, 2021 and prepared by iResearch, an independent research firm, to provide information regarding our industry and our market position in China. We refer to this report as the “iResearch Report.”

Our Mission

Our mission is to build a “soul”cial metaverse.

Overview

The Origins of Soul

Identifying, building and maintaining genuine interpersonal connections are universal and indispensable human needs. While advancements in technology have brought us closer by eradicating physical barriers, paradoxically, they have also made us farther apart than ever by perpetuating and amplifying social inequities and pressures. Meanwhile, the complex scope of human emotions and genuine interpersonal connections have been reduced to one-dimensional digital functions: likes, comments, follows, reacts. Rather than expanding social circles, the social networking platforms today are simplified and diminished continuations of the physical dimension people reside in. While influencers and opinion leaders are given podiums to speak, most people do not get much attention and are wary of judgment, and are therefore reluctant to produce content on social media. We are forced to ask the question: is technology being used to contribute to interpersonal connection, or control it?

We created Soul as an innovative solution to address these issues that were plaguing the current paradigm of online social networking. Soul is a virtual social playground, where people can live in the moment, express themselves and draw inspiration from each other’s creativity. It is appearance-agnostic, interest-driven, decentralized and gamified. Our users, or “Soulers,” create brand new identities in our virtual universe to freely create, share, explore and connect, free of the pressure that often comes with the complex and delicate social relations in the physical world and forging the building blocks for a metaverse that defies the traditional boundaries of social networking and games. In March 2021, we had an average DAUs of 9.1 million. In 2019 and 2020, our average DAUs was 3.3 million and 5.9 million, respectively. We have especially attracted young generations in China, who are native to mobile internet and who therefore more palpably experience the loneliness technologies bring. In March 2021, 73.9% of our average DAUs were born in or after 1990.

What makes young people love Soul

Soul is a leading algorithm-driven online social playground in China in terms of MAUs in March 2021, with the highest number of average daily launches per DAU, as well as one of the highest average daily time-spent per DAU and Generation Z user percentages, according to the iResearch Report. We believe several distinct characteristics of Soul have made us a popular virtual social playground for the young generations of China:

• Virtual identity. On Soul, no real identities of our users are displayed. Soulers design brand new identities in the form of avatars to portray their cyber personalities and showcase their talents. They are not required to disclose their real identities, locations or ages, creating a safe, stress-free and

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appearance-agnostic cyber community, away from the complex physical social network surrounding them. Our algorithms are also designed to discourage selfies and self-identifying posts, promising an immersive yet discreet cyber personal space.

• Interest graph-based. We generate interest graphs for each Souler and travel them to different “planets” based on their passions to connect with other like-minded Soulers. See “Business—The Soul Experience—Profound heuristic self-discovery.” We accurately recommend to each Souler curated content and other Soulers with similar personalities, lifestyles and interests, enabling more in-depth interactions and more meaningful connections.

• Decentralization. We employ a decentralized traffic distribution method to ensure that content created by every Souler is distributed equally across the community and receives similar amounts of reach and engagement. This cultivates a welcoming environment where every Souler has a voice on our app, thus encouraging them to continue engaging with the community and creating content.

• Diverse, rich and authentic content. We have designed a variety of fun, powerful and creative tools for Soulers to create content, share day-to-day lives and express themselves in rich media formats, ranging from customized emojis to casual audio and video stories. Our interest graph-based content and decentralized distribution philosophy stimulate the rise of diverse categories and topics on our app. Soulers are more incentivized to interact with one another and socialize through each other’s content, creating a self-reinforcing cycle.

• Gamified features. We create an engaging and immersive environment to streamline and encourage user interaction. Soulers are able to interact without the formality of adding each other as friends. Our users are also able to bond with each other through co-experiencing an array of gamified features across many scenarios and media formats, such as our extensive lens filter library, Soul Pets and Animated Partyrooms. The immersive co-experience serves as a stimulus to enhance and encourage more organic and meaningful interactions among Soulers to form deep connection. See “Business—The Soul Experience—Other gamified interactions.”

• AI-empowered. We have developed powerful proprietary artificial intelligence and data analytics technologies to advance our content recognition and user labeling capabilities. We empower our platform and enhance user experience by intelligently and accurately curating desired content and connections for every Souler. Our robust AI-based content monitoring system ensures the safety of our users. These technologies work in tandem to create a wholesome and interactive environment for our virtual community to flourish.

• Wholesome. We recognize that a safe, inclusive and wholesome environment is crucial to encouraging genuine interactions and forging deep connections. We deploy strong anti-harassment and anti-phishing mechanisms to combat unwelcomed behaviors on Soul. Our anti-harassment system and content monitoring capabilities help us preempt and filter out unpleasant messages.

What Soul has achieved so far

We believe that the following metrics demonstrate the outstanding levels of user growth and retention we have achieved in the Soul playground:

• Growth. In March 2021, the numbers of our MAUs and average DAUs were 33.2 million and 9.1 million, respectively, representing a growth of 109.0% and 94.4% over the same period in 2020, respectively. In 2019 and 2020, our average MAUs were 11.5 million and 20.8 million, respectively. In 2019 and 2020, our average DAUs were 3.3 million and 5.9 million, respectively.

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• Time-spent. Users who used our mobile app in March 2021 spent an average of approximately 40 minutes on our mobile app per day, considerably more than almost all other non-instant messaging centric social networking mobile apps in China, according to the iResearch Report.

• Retention. 56.4% of the users who used our mobile app in March 2021 were active at least 15 days during the month; these users on average maintained four dialogues per day and sent 68.3 private messages daily during the same month. 78.4% of the users who were active at least 15 days in December 2020 were still active at least 15 days in March 2021.

We have also built an engaging and interactive community.

• Posts. In March 2021, 35.0% of our MAUs created content, representing one of the highest percentages among social networking mobile apps in China, according to the iResearch Report; in March 2021, each of those who created content on average generated 5.9 new posts a month, creating a total of 67.8 million new posts in the same month.

• Interactions. In March 2021, posts on Soul received an aggregate of 574 million responses. In the same month, 89.1% of our MAUs interacted with other Soulers on our mobile app.

• Messages. In March 2021, on average 57.1% of our DAUs engaged in private messaging with an average of 62.0 one-to-one messages per day, creating 10.0 billion monthly one-to-one messages on our mobile app.

• Spending. In 2019 and 2020, our numbers of average monthly paying users were 268.9 thousand and 929.3 thousand, respectively, and our average monthly revenues per paying user were RMB21.9 and RMB43.5, respectively. In March 2021, our number of paying users was 1.7 million.

We are in the early stage of monetization but have experienced strong growth in revenues. We primarily generate our revenues from value-added services such as virtual items and membership subscriptions on the Soul app. See “Business—The Soul Experience—Soul Coin.” Our revenues increased by 604.3% from RMB70.7 million in 2019 to RMB498.0 million (US$76.3 million) in 2020. Our revenues increased by 259.8% from RMB66.2 million for the three months ended March 31, 2020 to RMB238.2 million (US$36.4 million) for the same period in 2021. We recorded a net loss of RMB488.1 million (US$74.8 million) in 2020, compared to a net loss of RMB299.5 million in 2019. We recorded net losses of RMB52.8 million and RMB382.5 million (US$58.4 million) for the three months ended March 31, 2020 and 2021, respectively.

Our Strengths

We believe our success to date is largely attributable to the following key competitive strengths:

• leading algorithm-driven social networking platform with large young user base;

• a tightly-knit and fast-growing community keen to create, share, explore and connect;

• gamified and immersive social experience;

• proprietary technologies fueling user growth;

• cohesive community of high commercial value; and

• pioneering and visionary management team dedicated to our users.

Our Strategies

We intend to achieve our mission and further grow our business by pursuing the following strategies:

• further expand user base;

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• effectively connect our users;

• enhance value of our content;

• continue to invest and innovate in technologies;

• strengthen monetization capabilities; and

• pursue strategic partnerships, acquisitions and investment opportunities.

Our Industry

According to the iResearch Report, China has a massive mobile internet user population of 986.0 million as of December 31, 2020, amid the intensified transformation of China’s digital economy and the continuous development of mobile technologies such as 5G telecommunications. Mobile social networking has become a crucial part of China’s mobile internet users’ daily lives, with a penetration of 90.3% in 2020, according to the iResearch Report. Based on the same source, China had the world’s largest mobile social networking market in terms of number of users in 2020 with 890.1 million users, which is expected to grow to 1,060.3 million users in 2024, and the size of China’s mobile social networking market reached RMB116.2 billion in 2020, which is expected to grow at a CAGR of 18.9% from 2020 to 2024, reaching RMB232.2 billion in 2024.

The composition of China’s mobile social networking market mainly consists of revenue from value-added services, or VAS, such as virtual items and membership subscriptions, and revenue from advertising services. According to the iResearch Report, revenues from VAS and advertising contributed 33.5% and 62.9% of the overall mobile social networking market in China in 2020, respectively. It is expected that revenue contribution from VAS will reach 38.7% of the total mobile social networking market in 2024.

According to the iResearch Report, China is the pioneer in developing new forms of online social networking platforms. After more than two decades of development, distinct online social networks with different functionalities and visions have emerged in China, from communication and information exchange tools to mobile-orientated platforms with multi-dimensional interactive features and media formats.

Generation Z is a key driving force of the evolution of China’s mobile social networking industry, with a total mobile internet user base of 324.9 million and a mobile social networking user base of 324.1 million in 2020, representing a penetration rate of 99.8%, according to the iResearch Report. China’s Generation Z mobile social networking market reached RMB64.8 billion in 2020 and is expected to grow at a CAGR of 22.2% from 2020 to RMB144.4 billion in 2024, faster than the growth of the overall mobile social networking market in China. The percentage of revenue in the mobile social networking market generated by Generation Z is expected to grow from 55.8% in 2020 to 62.2% in 2024.

Social networking is a universal need across cultures and age groups. There are large populations of young generations across the world with high mobile and online payment penetration rates. As many teenagers and young adults have strong desires to express their aspirations via various content formats, an interactive, open and interest-based social networking platform will serve their needs and are well positioned to tap into these markets.

According to the iResearch Report, the global mobile social networking market, including companies such as Facebook, Twitter, Snap and Pinterest, reached RMB828.8 billion in 2020 and is expected to grow at a CAGR of 14.6% from 2020 to RMB1,431.4 billion in 2024. The total user base of the global mobile social networking market reached 3.4 billion in 2020, and is expected to grow at a CAGR of 5.0% from 2020 to 4.1 billion in 2024.

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Summary of Risk Factors

Investing in the ADSs involves significant risks. You should carefully consider all of the information in this prospectus before making an investment in the ADSs. Below please find a summary of the principal risks we face, organized under relevant headings. These risks are discussed more fully in the section titled “Risk Factors.”

Risks Relating to Our Business and Industry

Risks and uncertainties related to our business and industry include, but are not limited to, the following:

• If we fail to retain our existing users or further grow our user base, or if our user engagement declines, our business and operating results may be materially and adversely affected;

• Our business depends on our users continually finding interesting content, which in turn depends on the content generated and contributed by our users. If our users cannot create quality content at a consistent rate, we may not be able to attract and retain users to remain competitive;

• We have a limited operating history, and we may not be able to sustain our historical growth, effectively manage our growth, control our costs and expenses, or implement our business strategies;

• Our brand image, business and results of operations may be adversely impacted by user misconduct and misuse of our products and services;

• Content posted or displayed in our community may be found to be objectionable in China and elsewhere and international regulatory authorities and may subject us to penalties and other severe consequences;

• We were penalized in the past for allowing minors to access content prohibited to be consumed by minors by relevant PRC regulations on our mobile app. Our continued compliance efforts may prove costly or ineffective, and any regulatory non-compliance or negative incident in this regard may materially and adversely affect our reputation, business, financial condition and results of operations;

• Our business is subject to the complex and evolving laws and regulations in various countries and regions where we have business. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business;

• The mobile social networking industry is an evolving, dynamic and competitive market, and we operate in an emerging space in this market, which makes it difficult to evaluate our future prospects. Our business, financial condition and results of operations may be materially and adversely affected if we are unable to compete effectively;

• If we fail to attract and retain quality users or our mobile app fails to effectively recommend suitable users, our user retention and engagement may decline, and our business and results of operations could be materially and adversely affected; and

• Any lack of requisite approvals, licenses or permits applicable to our business may have a material and adverse impact on our business, financial condition and results of operations.

Risks Relating to Our Corporate Structure

Risks and uncertainties relating to our corporate structure include, but are not limited to, the following:

• If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations;

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• The contractual arrangements with our VIE and its shareholders may not be as effective as direct ownership in providing operational control; and

• Any failure by our VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.

Risks Relating to Doing Business in China

We are also subject to risks and uncertainties relating to doing business in China in general, including, but are not limited to, the following:

• Changes in China’s economic, political or social conditions or government policies could have a material and adverse effect on our business and results of operations;

• Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us;

• Litigation and negative publicity surrounding China-based companies listed in the U.S. may result in increased regulatory scrutiny of us and negatively impact the trading price of the ADSs and could have a material adverse effect upon our business, including our results of operations, financial condition, cash flows and prospects; and

• Our ADSs may be delisted under the Holding Foreign Companies Accountable Act if the Public Company Accounting Oversight Board, or the PCAOB, is unable to inspect auditors who are located in China. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections.

Risks Relating to Our ADSs and This Offering

In addition to the risks and uncertainties described above, we are subject to risks relating to our ADSs and this offering, including, but not limited to, the following:

• There has been no public market for our shares or ADSs prior to this offering, and you may not be able to resell our ADSs at or above the price you paid, or at all;

• The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors;

• Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial;

• The dual-class structure of our ordinary shares may adversely affect the trading market for our ADSs; and

• If securities or industry analysts do not publish research or publishes inaccurate or unfavorable research about our business, or if they adversely change their recommendations regarding the ADSs, the market price for our ADSs and trading volume could decline.

Corporate History and Structure

We set up Shanghai Soulgate Technology Co., Ltd., or our VIE, in June 2015. We launched our mobile app in November 2016.

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Our holding company, Soulgate Inc., was incorporated in May 2017. Soulgate Inc. then established a wholly owned subsidiary in Hong Kong, Soulgate Hongkong Limited, in May 2017. In August 2017, Soulgate Hongkong Limited established a wholly owned subsidiary in China, Shanghai Soul Technology Co., Ltd., or our WFOE. In August 2017, we gained control over our VIE through our WFOE by entering into a series of contractual arrangements with our VIE and its shareholders. In September 2019, Soulgate Inc. established another wholly owned subsidiary in Hong Kong, Soulgate Egg Holdings Limited, for the purpose of expanding our business to markets outside of China. Two wholly owned subsidiaries of our VIE in China, Shanghai Huxingren Information Technology Co., Ltd. and Nanjing Huxingren Technology Co., Ltd., were established in October and December 2020, respectively.

The following diagram illustrates our corporate structure, including our subsidiaries, our VIE and its subsidiaries, as of the date of this prospectus:

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Note:

(1) Beneficial ownership percentages represent beneficial ownership of our total issued and outstanding share capital immediately after the completion of this offering, assuming the underwriters do not exercise their over-allotment option. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant, or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.

(2) Voting power percentages represent aggregate voting power of our total issued and outstanding share capital immediately after the completion of this offering, assuming the underwriters do not exercise their overallotment option. Voting power percentage of a person is calculated by dividing the voting power beneficially owned by such person by the voting power of all of our issued and outstanding Class A ordinary shares and Class B ordinary shares as a single class. In respect of matters requiring a shareholder vote, each Class A ordinary share is entitled to one vote and each Class B ordinary share is entitled to five votes and is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. See also “Description of Share Capital—Our Memorandum and Articles of Association.”

(3) Shareholders of our VIE and their respective shareholdings in our VIE and relationships with our company are (i) Ms. Lu Zhang (84.0%), our founder, chairwoman and chief executive officer; (ii) Beijing Mingjun Investment Management Co., Ltd. (4.9%), a company incorporated in the PRC and an affiliate of Mingjun Capital Limited, which is a holder of our ordinary shares; (iii) Shanghai Jianming Enterprise Management Co., Ltd. (4.8%), a company incorporated in the PRC and an affiliate of J&M Capital Limited, which is a holder of our ordinary shares; (iv) Zhuanlian Technology (Shenzhen) Co., Ltd. (3.5%), a company incorporated in the PRC and an affiliate of Ventek Limited, which is a holder of our ordinary shares; and (v) Shanghai Moliang Chuangye Investment Center (Limited Partnership) (2.8%), a limited partnership organized in the PRC and managed by MFUND, L.P., which is a holder of our preferred shares. See “Risk Factors—Risks Relating to Our Corporate Structure—The shareholders of our VIE may have actual or potential conflicts of interest with us.”

Implication of Being an Emerging Growth Company

As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. Pursuant to the JOBS Act, we have elected to take advantage of the benefits of this extended transition period for complying with new or revised accounting standards. As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.

We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the

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Exchange Act, which would occur if the market value of the ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

[Implication of Being a Controlled Company

Upon the completion of this offering, our founder, chairwoman and chief executive officer, Ms. Lu Zhang, will beneficially own         % of our total issued and outstanding ordinary shares, representing         % of our total voting power, assuming that the underwriters do not exercise their option to purchase additional ADSs, or         % of our total issued and outstanding ordinary shares, representing         % of our total voting power, assuming that the option to purchase additional ADSs is exercised by the underwriters in full. As a result, we will be a “controlled company” as defined under the Nasdaq Stock Market Rules because Ms. Zhang will hold more than 50% of the voting power for the election of directors. As a “controlled company,” we are permitted to elect not to comply with certain corporate governance requirements. If we rely on these exemptions, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.]

Corporate Information

Our principal executive offices are located at 22/F, SCG Parkside, 868 Yinghua Road, Pudong New Area, Shanghai 201204, People’s Republic of China. Our telephone number at this address is + 86 21 2613 5821. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our main website is www.soulapp.cn. The information contained on our website is not a part of this prospectus. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.

Conventions that Apply to this Prospectus

Unless otherwise indicated or the context otherwise requires, references in this prospectus to:

• “ADRs” are to the American depositary receipts that may evidence the ADSs;

• “ADSs” are to the American depositary shares, each of which represents            Class A ordinary shares;

• “average DAUs” in a given period are to the result of dividing the sum of DAUs in each day of the given period by the number of days in the given period;

• “average MAUs” in a given period are to the result of dividing the sum of MAUs in each month of the given period by the number of months in the given period;

• “average monthly paying users” in a given period are to the sum of the number of paying users for each month in such period divided by the number of months in such period;

• “average monthly revenues generated per paying user” in a given period are to the result calculated by dividing revenues generated from paying users in such period by the sum of the number of paying users for each month in such period;

• “BVI” are to the British Virgin Islands;

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• “China” or the “PRC” are to the People’s Republic of China, excluding, for the purposes of this prospectus only, Hong Kong, Macau and Taiwan;

• “Class A ordinary shares” are to our Class A ordinary shares, par value US$0.0001 per share;

• “Class B ordinary shares” are to our Class B ordinary shares, par value US$0.0001 per share;

• “DAU” are to the number of user accounts, including both paying and non-paying users, that logged in to our mobile app in a given day at least once. We treat each user account as a distinct user when calculating DAU, although it is possible that some users may use more than one user account and multiple users may share one user account to access our mobile app;

• “Generation Z” are to the population born between the years 1990 and 2009;

• “MAU” are to the number of user accounts, including both paying and non-paying users, that logged in to our mobile app in a given month at least once. We treat each user account as a distinct user when calculating MAU, although it is possible that some users may use more than one user account and multiple users may share one user account to access our mobile app;

• “our WFOE” are to Shanghai Soul Technology Co., Ltd.;

• “paying users” in a given period are to user accounts who paid for our value-added services at least once during such period;

• “RMB” and “Renminbi” are to the legal currency of China;

• “shares” or “ordinary shares” are to our Class A and Class B ordinary shares, par value US$0.0001 per share;

• “Soul,” “we,” “us,” “our company” and “our” are to Soulgate Inc., our Cayman Islands holding company, its subsidiaries and our VIE and its subsidiaries;

• “users” or “Soulers” are to user accounts that have registered with our mobile app;

• “US$,” “U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States; and

• “VIE” are to variable interest entity, and “our VIE” are to Shanghai Soulgate Technology Co., Ltd.

Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the underwriters of their option to purchase up to              additional ADSs representing              Class A ordinary shares from us. Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this prospectus are made at the end of the applicable period, that is, RMB6.5250 to US$1.0000, the exchange rate in effect as of December 31, 2020, or RMB6.5518 to US$1.0000, the exchange rate in effect as of March 31, 2021, as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, or at all.

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The Offering

Offering price We currently estimate that the initial public offering price will be between US$             and US$             per ADS.

ADSs offered by us              ADSs (or             ADSs if the underwriters exercise their option to purchase additional ADSs in full).

ADSs outstanding immediately after this offering              ADSs (or             ADSs if the underwriters exercise their option to purchase additional ADSs in full).

Ordinary shares issued and outstanding immediately after this offering              Class A ordinary shares (or             Class A ordinary shares if the underwriters exercise their option to purchase additional ADSs) and              Class B ordinary shares.

The ADSs Each ADS represents              Class A ordinary shares, par value US$0.0001 per share.

The depositary will hold Class A ordinary shares underlying your ADSs. You will have rights as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time.

We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our Class A ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our ordinary shares after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement.

You may surrender your ADSs to the depositary for cancellation in exchange for Class A ordinary shares. The depositary will charge you fees for any cancellation.

We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs after an amendment to the deposit agreement, you agree to be bound by the deposit agreement as amended.

To better understand the terms of the ADSs, you should carefully read the “Description of American Depositary Shares” section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus.

Option to purchase additional ADSs We have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an aggregate of             additional ADSs.

Use of proceeds We expect that we will receive net proceeds of approximately US$             million from this offering, assuming an initial public

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offering price of US$             per ADS, which is the midpoint of the estimated range of the initial public offering price, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use the net proceeds from this offering for (1) research and development to enhance our product offerings and services, investment in technology and development, artificial intelligent technology and big data capacity in particular, (2) marketing activities to fuel user growth, and (3) general corporate purposes. See “Use of Proceeds” for more information.

Lock-up We [and each of our officers, directors, existing shareholders, and holders of our outstanding share incentive awards] have agreed with the underwriters, subject to certain exceptions, not to sell, transfer or otherwise dispose of any ADSs, ordinary shares or similar securities for a period of 180 days after the date of this prospectus. See “Shares Eligible for Future Sale” and “Underwriting” for more information.

Listing We intend to apply to have the ADSs listed on the Nasdaq Global Market under the symbol “SSR.” The ADSs and our ordinary shares will not be listed on any other stock exchange or traded on any automated quotation system.

Payment and settlement The underwriters expect to deliver the ADSs against payment therefor through the facilities of the Depository Trust Company on             , 2021.

Depositary The Bank of New York Mellon.

The number of ordinary shares that will be outstanding immediately after this offering:

• is based on 151,918,420 issued and outstanding ordinary shares as of the date of this prospectus (including 116,104,370 Class A ordinary shares and 35,814,050 Class B ordinary shares);

• includes              Class A ordinary shares represented by ADSs that we will issue and sell in this offering, assuming the underwriters do not exercise their option to purchase additional ADSs; and

• excludes Class A ordinary shares issuable upon exercise of our outstanding options and additional Class A ordinary shares reserved for future issuances upon exercise of options to be granted under our 2017 Share Incentive Plan.

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SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated statements of comprehensive loss and cash flows data for the years ended December 31, 2019 and 2020, and summary consolidated balance sheets data as of December 31, 2019 and 2020 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The following summary consolidated statements of comprehensive loss and cash flows data for the three months ended March 31, 2020 and 2021, and summary consolidated balance sheet data as of March 31, 2021 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results do not necessarily indicate results expected for any future periods. You should read this Summary Consolidated Financial Data section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

	For the Year Ended December 31,									For the Three Months Ended March 31,
	2019			2020						2020			2021
	RMB			RMB			US$			RMB			RMB			US$
	(in thousands, except for share amount and per share data)
Summary Consolidated Statements of Comprehensive Loss:
Revenues		70,707			498,013			76,324			66,211			238,246			36,363
Cost and expenses
Cost of revenues		(36,214	)		(95,489	)		(14,634	)		(17,148	)		(34,125	)		(5,208	)
Selling and marketing expenses		(204,516	)		(621,234	)		(95,208	)		(54,835	)		(470,868	)		(71,868	)
Technology and development expenses		(95,823	)		(180,556	)		(27,671	)		(34,242	)		(81,590	)		(12,453	)
General and administrative expenses		(35,727	)		(89,625	)		(13,736	)		(13,165	)		(34,225	)		(5,224	)
Total cost and expenses(1)		(372,280	)		(986,904	)		(151,250	)		(119,390	)		(620,808	)		(94,754	)
Operating loss		(301,573	)		(488,891	)		(74,926	)		(53,179	)		(382,561	)		(58,390	)
Gains on sales of short-term investments		1,074			180			28			180			—			—
Interest income		953			570			87			218			51			8
Loss before income taxes		(299,546	)		(488,141	)		(74,811	)		(52,781	)		(382,511	)		(58,383	)
Income tax expense		—			—			—			—			—			—
Net loss		(299,546	)		(488,141	)		(74,811	)		(52,781	)		(382,511	)		(58,383	)
Accretion and modification of Redeemable Convertible Preferred Shares		(49,156	)		(112,727	)		(17,276	)		(12,372	)		(27,066	)		(4,131	)
Net loss attributable to ordinary shareholders		(348,703	)		(600,868	)		(92,087	)		(65,153	)		(409,576	)		(62,514	)
Net loss per ordinary share
Basic and diluted		(5.22	)		(9.10	)		(1.39	)		(0.97	)		(6.24	)		(0.95	)
Weighted average number of shares outstanding used in computing net loss per ordinary share
Basic and diluted		66,842,764			66,063,941			66,063,941			66,842,764			65,612,156			65,612,156

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Notes:

(1) Share-based compensation expenses were allocated as follows during the indicated periods:

	For the Year Ended December 31,						For the Three Months Ended March 31,
	2019		2020				2020		2021
	RMB		RMB		US$		RMB		RMB		US$
	(in thousands)
Share-based compensation expenses:
Cost of revenues		1,342		3,003		460		893		1,164		178
Selling and marketing expenses		170		519		80		168		319		49
Technology and development expenses		4,186		11,020		1,689		2,567		4,046		618
General and administrative expenses		731		6,604		1,012		1,039		2,057		314
Total		6,429		21,146		3,241		4,668		7,586		1,158

The following table presents our summary consolidated balance sheets data as of December 31, 2019 and 2020 and as of March 31, 2021:

	As of December 31,									As of March 31,
	2019			2020						2021
	RMB			RMB			US$			RMB			US$
	(in thousands)
Summary Consolidated Balance Sheets Data:
Cash and cash equivalents		41,205			626,031			95,943			475,392			72,559
Short-term investments		50,029			—			—			—			—
Prepayments and other current assets		29,976			53,474			8,195			79,075			12,069
Total current assets		121,210			691,305			105,947			571,805			87,274
Total assets		123,708			701,312			107,481			583,989			89,134
Deferred revenue		12,319			34,516			5,290			42,103			6,426
Accrued expenses and other current liabilities		50,551			284,093			43,539			532,515			81,278
Total liabilities		62,871			319,588			48,979			575,603			87,854
Total mezzanine equity		688,671			1,622,714			248,692			1,661,373			253,575
Total shareholders’ deficit		(627,833	)		(1,240,991	)		(190,190	)		(1,652,988	)		(252,295	)

The following table presents our summary consolidated cash flows data for the years ended December 31, 2019 and 2020 and for the three months ended March 31, 2020 and 2021:

	For the Year Ended December 31,									For the Three Months Ended March 31,
	2019			2020						2020			2021
	RMB			RMB			US$			RMB			RMB			US$
	(in thousands)
Summary Consolidated Cash Flows Data:
Net cash used in operating activities		(284,262	)		(244,788	)		(37,515	)		(24,991	)		(152,567	)		(23,286	)
Net cash (used in)/provided by investing activities		(51,410	)		42,143			6,459			50,098			1,288			197
Net cash (used in)/provided by financing activities		(8,711	)		848,910			130,101			—			(1,042	)		(159	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(8,725	)		(61,440	)		(9,416	)		46			1,682			257

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	For the Year Ended December 31,							For the Three Months Ended March 31,
	2019			2020				2020		2021
	RMB			RMB		US$		RMB		RMB			US$
	(in thousands)
Net (decrease)/increase in cash and cash equivalents		(353,108	)		584,826		89,628		25,153		(150,639	)		(22,992	)
Cash and cash equivalents at the beginning of the year/period		394,314			41,205		6,315		41,205		626,031			95,551
Cash and cash equivalents at the end of the year/period		41,205			626,031		95,943		66,358		475,392			72,559

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RISK FACTORS

An investment in our ADSs involves significant risks. You should carefully consider all of the information in this prospectus, including the risks and uncertainties described below, before making an investment in our ADSs. Any of the following risks could have a material adverse effect on our business, financial condition and results of operations. In any such case, the market price of our ADSs could decline, and you may lose all or part of your investment.

Risks Relating to Our Business and Industry

If we fail to retain our existing users or further grow our user base, or if our user engagement declines, our business and operating results may be materially and adversely affected.

Our ability to maintain and grow our user base while keeping our users highly engaged is critical to the continued success and growth of our business. Since our inception in 2016, we have been striving to create a trusted community and develop more diversified functionalities and features to attract new users while keeping our existing users engaged. To maintain and improve the level of engagement of our users and expand our user base, we must continue to innovate our services, respond promptly to evolving user preferences, implement new technologies, curate interesting content, and stimulate interactions in our community, all of which will require us to incur substantial costs and expenses. If such costs and expenses fail to effectively translate into larger user base and improved user engagement, we may not be able to achieve all these goals and our results of operations may be materially and adversely affected.

If we are not successful in our efforts to retain or grow our user base or maintain or enhance the engagement level of our users, our monetization opportunities may suffer, which may in turn have a material and adverse effect on our business, financial condition and results of operations. If we fail to convert users into paying users, or if the number of our paying users declines, our revenues may decline and our results of operations may be materially and adversely affected.

In particular, there is no assurance that our community will be able to remain popular within our user communities. A number of factors could negatively affect user retention, growth and engagement, such as:

• failure to provide new functionalities and features that are attractive to users;

• changes of service patterns or protocols that are required by, or that we elect to make to stay compliant with, legislation, regulations or government policies;

• failure to combat spam on or inappropriate or abusive use of our products and services, which may lead to declined user trust in us, negative publicity about us and our brand or even cause us to incur legal liabilities;

• failure to protect our brand reputation;

• failure of our algorithms in curating content and generating user recommendations;

• failure to address user concerns related to privacy and communication, safety, security or other factors; and

• failure to successfully compete with existing competitors or new market entrants.

Our business depends on our users continually finding interesting content which in turn depends on the content generated and contributed by our users. If our users cannot create quality content at a consistent rate, we may not be able to attract and retain users to remain competitive.

Our success depends on our ability to drive user engagement. To attract and retain users and compete against our competitors, we must ensure that the content featured in our community is of high quality and

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appealing to our users. The content featured in our community is generated by Soulers for other Soulers to explore and experience. Each Souler has a unique Souler Space where she or he posts content ranging from text to photos, from sound clips to videos. Soulers may come to our Soul Square to read other Soulers’ posts and experience their lives through the content they post. We offer a Recommend tab and Discover tab to help users find the content and Soulers they are interested in via a guided or self-discovery approach. In addition, we provide versatile post editing tools to empower Soulers in expressing themselves in a more personal and lively manner, thereby generating more interesting content. If our users cease to contribute content or contribute content at a slower rate, their uploaded content fails to attract or retain our users, or we fail to adequately support our users in their content creation and discovery efforts, our user experience may be adversely affected and we may experience a decline in user traffic and user engagement. If the number of users or the level of user engagement declines, we may suffer a reduction in revenue.

We have a limited operating history, and we may not be able to sustain our historical growth, effectively manage our growth, control our costs and expenses, or implement our business strategies.

We have experienced rapid growth in our business and operations since our inception in 2016, which places significant demands on our management, operational and financial resources. However, given our limited operating history and the rapidly evolving market in which we compete, we may encounter difficulties as we establish and expand our operations, feature and service development, sales and marketing, technology and general and administrative capabilities.

Many aspects of our business are unique, evolving and relatively unproven. Our business and prospects depend on the continual development of the industry in which we operate. The market for our services is rapidly developing and is subject to significant challenges. Our business relies upon our ability to create a vibrant and interactive community addressing our users’ need for forging genuine interpersonal connections and to successfully monetize our user base, which would increase revenues from various sources. Our historical level of significant growth may not be sustainable or achievable at all in the future. We believe that our continued growth will depend on many factors, including our ability to further expand our user base, effectively connect our users, enhance the value of our content, continue to invest and innovate in technologies, strengthen monetization capabilities and pursue strategic partnerships, acquisitions and investment opportunities. There can be no assurance that we will achieve any of the above, and our failure to do so may materially and adversely affect our business and results of operations.

We expect our costs and expenses to continue to increase in the future as we broaden our user base and increase user engagement, and develop and implement new features and services that may entail more complexity. In addition, our cost and expenses, such as our technology and development expenses, selling and marketing expenses and general and administrative expenses, have been increasing rapidly as we expanded our business, and we expect to continue to incur increasing costs to support our anticipated future growth. We expect to continue to invest in our infrastructure in order to enable us to provide our services rapidly and reliably to users. Continued growth could also strain our ability to maintain reliable service levels for our users and paying users, develop and improve our operational, financial, legal and management controls, and enhance our reporting systems and procedures. If we are unable to generate adequate revenues and to manage our expenses, we may continue to incur significant losses in the future and may not be able to achieve or subsequently maintain profitability. If we fail to achieve the necessary level of efficiency in our operation as it grows, our business, operating results and financial condition could be harmed.

Our brand image, business and results of operations may be adversely impacted by user misconduct and misuse of our products and services.

Our community allows users to communicate with other users and engage in various social networking activities. In China, we require all users to complete account registrations using their mobile phone numbers, and the users with PRC mobile phone numbers have completed real-name registration in accordance with PRC law.

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In countries other than China, our users are required to complete account registrations using their phone numbers; but they are not required to complete real-name registration or verify their personal information when registering with us. In addition, since we have limited control over real-time and offline behavior of our users, our products and services may still be misused by our users for inappropriate or illegal purposes.

We have implemented control procedures to detect and block illegal or inappropriate content and illegal or fraudulent activities conducted through the misuse of our services, including inappropriate user profiles, messages, audio and video content. We may be required by relevant governmental authorities to report certain misbehaviors for further investigation if such misbehaviors are subject to regulatory investigation or other governmental proceedings. Despite our detection and filtering efforts, we may not be able to identify every incident of inappropriate content or illegal or fraudulent activities, or prevent all such content from being further disseminated or prohibit such activities from occurring. Much of the video and audio communications in our community are conducted in real time, we cannot filter all the content generated by our users as they appear. Therefore, it is possible that users may engage in illegal, obscene or incendiary conversations or engage in unethical or illegal activities via our products and services.

If user misconduct and misuse of our products and services for inappropriate or illegal purposes occur in our community, claims may be brought against us for torts, defamation, libel, negligence, copyright, patent or trademark infringement, other unlawful activities or other claims based on the nature and content of the information delivered on or otherwise accessed through our community. In response to allegations of illegal or inappropriate activities conducted through our community, relevant governmental authorities may intervene and hold us liable for non-compliance with applicable laws and regulations and subject us to administrative penalties or other sanctions, such as requiring us to restrict or discontinue some or all of our features and services. In addition, our users may suffer or allege to have suffered physical, financial or emotional harm caused by contacts initiated on our products and services. Our business and public perception of our brand may be materially and adversely affected if we do face civil lawsuits or other liabilities initiated by such affected users. Defending any actions brought by such affected users could be costly and require significant time and attention of our management and other resources, which would materially and adversely affect our business.

Content posted or displayed in our community may be found to be objectionable by regulatory authorities in China and elsewhere and may subject us to penalties and other severe consequences.

The PRC government has adopted laws and regulations governing internet and wireless access and the distribution of information over the internet and wireless telecommunications networks. Under these laws and regulations, internet content providers and internet publishers are prohibited from posting or displaying over the internet or wireless networks content that, among other things, violates the principle of the PRC constitution, laws and regulations, impairs the national dignity of China or the public interest, or is obscene, superstitious, fraudulent or defamatory. Furthermore, internet content providers are also prohibited from displaying content that may be deemed by relevant government authorities as instigating ethnical hatred and harming ethnical unity, harming the national religious policy, “socially destabilizing” or leaking “state secrets” of the PRC. Failure to comply with these requirements may result in the revocation of licenses to provide internet content or other licenses, the closure of the concerned platforms and reputational harm. The operator may also be held liable for any censored information displayed on or linked to their platform. In international markets where we operate, we are also subject to local laws, regulations, policies and government decrees related to online content dissemination and censorship, which we may not be able to comply with consistently. The liabilities and penalties resulting from such non-compliance may materially and adversely damage our business and results of operations.

On December 15, 2019, the Cyberspace Administration of China, or the CAC, released the Provisions on Ecological Governance of Network Information Content, or PEGNIC, which came into force on March 1, 2020. The PEGNIC is one of the latest regulations governing the distribution of information over the internet and wireless telecommunications networks in which it classifies the network information into three categories,

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namely the “encouraged information,” the “illegal information” and the “undesirable information.” While illegal information is strictly prohibited from distribution, the internet content providers are required to take relevant measures to prevent and resist the production and distribution of undesirable information. PEGNIC further clarifies the duties owed by the internet content providers in preventing the display of content that against the PEGNIC, such as obligations to improve the systems for users registration, accounts management, information release review, follow-up comments review, websites ecological management, real-time inspection, emergency response and disposal mechanism for cyber rumor and black industry chain information.

We have designed and implemented procedures to moderate content, including maintenance of a library of keywords to be blocked, in order to comply with applicable laws, regulations, rules and policies. However, it may not be possible to determine in all cases the types of content that could result in our liability as a distributor of such content, and our keyword library may not be always timely updated to capture all violating content, especially in live chats. If any of the content posted or displayed in our community is deemed by the PRC government or any international regulatory authority to violate any content restrictions, we may not be able to continue to display such content and could become subject to penalties, including confiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely affect our business, financial condition and results of operations.

Regulatory authorities in China and elsewhere may conduct various reviews and inspections on our business operations, especially those related to content distribution, from time to time. If any non-compliance incidents in our business operations are identified, we may be required to take certain rectification measures in accordance with applicable laws and regulations, or we may be subject to other regulatory actions such as administrative penalties. It may be difficult to determine the type of content or actions that may result in liability to us and, if we are found to be liable, we may be prevented from operating our business in relevant jurisdictions. Moreover, complying with relevant regulatory requirements may result in limitation to our scope of service, reduction in user engagement or loss of users, diversion of our management team’s attention and increased operational costs and expenses. The costs of compliance with these regulations may continue to increase as a result of more content being made available by an increasing number of users, which may adversely affect our results of operations. Although we have adopted internal procedures to monitor content and to remove potentially offending content once we become aware of any potential or alleged violation, we may not be able to identify all the content that may violate relevant laws and regulations or third-party’s legal rights and interests such as intellectual property rights which may subject us to the aforementioned legal consequences and potential claims from third parties. Even if we manage to identify and remove offensive content, we may still be held liable.

We were penalized in the past for allowing minors to access content prohibited to be consumed by minors by relevant PRC regulations on our mobile app. Our continued compliance efforts may prove costly or ineffective, and any regulatory non-compliance or negative incident in this regard may materially and adversely affect our reputation, business, financial condition and results of operations.

According to the Minors Protection Law latest amended in October 2020, it is illegal to produce, reproduce, publish, release and disseminate books, newspapers and periodicals, films, radio and television programs, stage art works, audio-visual products, electronic publications or network information that promote obscenity, eroticism, violence, cults, superstitions, gambling, suicide seduction, terrorism, separatism and extremism and other content are harmful to the physical and mental health of minors. According to The Provisions on the Administration of Programs for Minors issued by the National Radio and Television Administration, or NRTA, which came in effect on April 30, 2019, online audio-visual program service providers and program producers shall produce and disseminate programs for minors based on the physical and mental development status of the minors at different ages, and there should be images or sounds that prompt such programs.

In June 2019, as part of an industry-wide campaign against illegal activities and inappropriate content on online audio and entertainment platforms, the downloading services of our mobile app were ordered by relevant

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governmental authorities to be temporarily suspended by all app stores due to inadequacies in our measures to protect minors by restricting their access to certain content on our mobile app. In July 2019, we submitted a report to the relevant governmental authorities with proofs of the improvements we had made in our minor protection measures, and our mobile app was subsequently allowed to become available for downloading in all app stores in early September 2019. During such temporary suspension, we were allowed to maintain normal operations of our mobile app that had been already installed by our existing users on their mobile devices and were required to adopt enhanced measures to improve our content monitoring and minor protection scheme. During the temporary suspension, our MAUs, DAUs, growth of MAUs and growth of DAUs decreased. As of the date of this prospectus, no governmental authorities have challenged our remedial measures with respect to minor protection, and we therefore believe that our remedial measures have been effective so far.

To continue to comply with minor protection laws and regulations in the PRC, we have implemented various measures since the temporary suspension of our app store downloading services in June 2019, which include ceasing account registrations for users under the age of 18 based on their own confirmation, publishing a minor-only version of our mobile app, having dedicated personnel monitor content viewable in the minor-only version of the mobile app on a 24/7 basis, and ensuring that minors can only use the minor-only version of our mobile app and be recommended Soulers who are also minors. These efforts may not be sufficient to prevent minors from using the non-minor version of our mobile app and accessing prohibited content thereon, as we currently do not have a way to verify the age of our users in each case. Our continued regulatory compliance efforts in this regard may not be successful and may be costly, as they may divert a significant amount of management time and financial resources. If non-compliance with PRC minor protection laws and regulations occurs again in the future or if the PRC government undertakes further actions against our mobile app, our users may lose trust in us and our reputation may be seriously harmed, our mobile app may again be suspended from all app stores for an indefinite time, and we may be subject to other penalties and heightened regulatory scrutiny in the PRC, thereby having a material and adverse effect on our business, financial condition and business prospects.

Due to the uncertainty of the evolving regulatory regime in the PRC, we may be subject to tightened implementation of applicable regulations in the future and additional restrictive measures may be imposed upon our mobile app. Such evolving changes in regulatory regime may adversely affect our results of operations. Accordingly, we may be required to change our business strategies, substantially change the functions of our products, impose restrictions on user behaviors and content creation, or adjust our monetization methods. Also, we cannot assure you that our new products or features will meet the requirements of governmental authorities in China in a timely manner, or at all.

Our business is subject to the complex and evolving laws and regulations in various countries and regions where we have business. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.

We are subject to a variety of laws and regulations that involve matters important to or may otherwise impact our business, including, among others, provision of value-added telecommunications services, internet advertising business, user privacy protection, foreign exchange and taxation. See also “Regulation.” The introduction of new services, expansion of our activities in certain jurisdictions, or other actions that we may take may subject us to additional laws, regulations, or other government scrutiny. In addition, foreign laws and regulations can impose different obligations or be more restrictive than those in the PRC.

These laws and regulations are continually evolving and can be subject to significant change. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain, particularly in the rapidly evolving industry in which we operate and any new jurisdiction into which we enter. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities and in different jurisdictions, and inconsistently with our current policies and practices. These laws and regulations may

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be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may delay or impede our development of new services, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical business operations, or demands or orders that we modify or cease existing business practices.

The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we provide our services could require us to change certain aspects of our business and operations to ensure compliance, which could decrease demand for services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected.

As our international operations continue to expand, we face significant challenges to ensure the content and communications on our mobile app are in compliance with various local jurisdictions’ regulatory frameworks and social environment, many of which could be substantially different from those of China and each other due to differences in, among others, legal systems, political environment, culture and religion. Such differences may impose more stringent requirements and restrictions on the content we present outside of China. Our experience gained from our operations in China may not apply to our overseas operations. In addition, the regulatory framework for social networking services is still developing and remains uncertain in many countries where we offer our services. New laws and regulations may also be adopted from time to time to address new issues that come to the attention of local government authorities. Considerable uncertainties still exist with respect to the interpretation and implementation of existing and any future laws and regulations governing our business activities in these areas. In addition, we may be required to impose more stringent content monitoring measures, be in compliance with relevant content regulatory regimes, obtain relevant licenses or permits or renew or expand the coverage of our existing licenses, and we cannot assure you that we will be able to timely obtain or maintain all the required licenses or permits or make any necessary filings applicable in the future, or comply with other relevant regulatory requirements. If we fail to obtain, hold or maintain any of the required licenses or permits or make necessary filings on time or at all, or fail to comply with other regulatory requirements, we may be subject to various penalties. Cultural differences may also pose additional challenges to our efforts in content control. Therefore, such different and possibly more stringent regulatory and cultural environments may increase the risk exposure to our daily operations in foreign jurisdictions.

Due to the uncertainties in the regulatory environment of the industry in which we operate, there can be no assurance that we would be able to maintain our existing approvals, permits and licenses, obtain any new approvals, permits and licenses, or comply with other regulatory requirements if required by any future laws or regulations. If we fail to obtain and maintain approvals, licenses or permits required for our business, or to comply with relevant laws and regulations, we could be subject to liabilities, fines, penalties and operational disruptions, or we could be required to modify our business model, which could materially and adversely affect our business, financial condition and results of operations. See also “—Risks Relating to Our Business and Industry—Any lack of requisite approvals, licenses or permits applicable to our business may have a material and adverse impact on our business, financial condition and results of operations.”

The mobile social networking industry is an evolving, dynamic and competitive market, and we operate in an emerging space in this market, which makes it difficult to evaluate our future prospects. Our business, financial condition and results of operations may be materially and adversely affected if we are unable to compete effectively.

The market for mobile social networking platforms is constantly evolving, highly dynamic and competitive, and we operate in an emerging space within this market. The mobile social networking industry and the specific

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market where we operate may not develop as expected. Our users, paying users and business partners may not fully understand the value of our services, and potential new users, paying users and business partners may have difficulty distinguishing our services from those of our competitors. Convincing potential users, paying users and business partners of the value of our services is critical to the growth of our user base and the success of our business.

We launched our mobile app in November 2016, and our relatively short operating history makes it difficult to assess our future prospects or forecast our future results. You should consider our business and prospects in light of the risks and challenges we encounter or may encounter in the developing and rapidly evolving market where we operate. These risks and challenges relate to, among other things:

• the emergence of alternative business models, changes in rules, regulations, government policies or general economic conditions;

• our ability to develop and deploy diversified and unique features and services for our users;

• our ability to hire, retain and motivate talented employees and attract management talents that are compatible with our business expansion;

• decreasing user spending, decreasing user engagement, increasing competition, and declining growth of our overall market or industry;

• our ability to increase the number of users;

• our ability to expand into new markets that are amenable to our business model;

• our ability to develop a reliable, scalable, secure, high-performance technology infrastructure that can efficiently handle increased usage and expanded user base;

• the ability of our users to generate engaging content on our mobile app;

• our ability to develop or implement strategic initiatives to monetize our business;

• our ability to successfully compete with other companies, some of which have substantially greater resources and market power than us, that are currently in, or may in the future enter, our industry, or duplicate the features of our services; and

• our ability to defend ourselves against litigation and/or claims relating to regulatory compliance, intellectual property, privacy or other matters.

If we fail to educate potential users, paying users and business partners about the value of our services, if the market for our mobile app does not develop as we expect or if we fail to address the needs of this dynamic market, our business will be harmed. Failure to adequately address these or other risks and challenges could harm our business and cause our operating results to suffer.

If we fail to attract and retain quality users or our mobile app fails to effectively recommend suitable users, our user retention and engagement may decline, and our business and results of operations could be materially and adversely affected.

The size and engagement level of our user base as well as the quality of the content offered on our mobile app are critical to our success and are closely linked to the quality of users and the ability of our mobile app to recommend Soulers suitable for each user based on interest graph. Because we target user demographics that are looking for profound interpersonal relationships, if our users cannot find enough quality users who share their interest or are otherwise suitable conversation partners or content that piques their interest, or if our mobile app fails to recommend Soulers that meet the needs and interests of our users in sufficient numbers, or at all, our users may spend less and less time on our mobile app or leave our mobile app all together with their social needs unmet. In addition, if our existing Soulers produce less content, or their content starts to be less appealing to

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other users, or Soulers otherwise become less active on our mobile app for whatever reason, we may experience a decline in user traffic and engagement. If our user retention and engagement decline as a result of any of the aforementioned factors, our results of operations, financial conditions and results of operation may be materially and adversely impacted.

Any lack of requisite approvals, licenses or permits applicable to our business may have a material and adverse impact on our business, financial condition and results of operations.

Our business is subject to supervision and regulation by various governmental authorities in China, and such governmental authorities include the CAC, The Ministry of Commerce of the People’s Republic of China, or the MOFCOM, the Ministry of Industry and Information Technology, or the MIIT, the State Administration for Market Regulation, or the SAMR, the Ministry of Culture and Tourism, or the MCT, the NRTA, and the corresponding local regulatory authorities. Such governmental authorities promulgate and enforce laws and regulations that cover a variety of business activities that relate to our operations, such as provision of internet information, sales of internet advertisement, among other things. These regulations in general regulate the entry into, the permitted scope of, as well as approvals, licenses and permits for, the relevant business activities.

As of the date of this prospectus, we have not obtained certain approvals, licenses and permits that may be required for some aspects of our business operations, and we cannot assure the scope of our acquired approvals, licenses and permits is adequate. For example, we cannot assure the authorized scope of our value-added telecommunication service license concerning the internet information service, or ICP license, is sufficient for our current business. See also “Regulation—Regulations Relating to Value-added Telecommunication Services”. If we were found to be in violation of any PRC laws or regulations due to the insufficient scope of our ICP license, we may be subject to fines, confiscation of illegal gains, termination of our license or suspension of our services or other penalties, any of which could materially and adversely affect our business, financial condition and results of operations. In addition, we allow our users to record, post and share short videos on our mobile app. According to the PRC Administrative Provisions on Internet Audio-Visual Program Services, a provider of online audio-visual service is required to obtain a license for online transmission of audio-visual programs, or Audio-Visual License. We have not obtained the Audio-Visual License for providing internet audio-visual program services and content through our mobile app in China, and we may not be eligible to apply for the Audio-Visual License as the current PRC laws and regulations require an applicant to be a wholly state-owned or state-controlled entity. If the PRC government determines that our content should be considered as “internet audio-visual programs” for the purpose of the Audio-Visual Program Provisions, then our failure to obtain the Audio-visual License may result in fines or other penalties being imposed on us or forbid us from performing our current or future business, which may materially and adversely affect our business, financial conditions and results of operations.

As of the date of this prospectus, we have not been subject to any material penalties from the relevant government authorities for failure to obtain any licenses or permits for our business operations in the past, including due to the defects in our ICP license or our lack of the Audio-Visual License. We cannot assure you, however, that the government authorities will not do so in the future. In addition, we may be required to obtain additional license or permits, and we cannot assure you that we will be able to timely obtain, maintain or renew all the required licenses or permits or make all the necessary filings in the future. In particular, as part of our continuous efforts to expand our business scope and explore innovative business models, we cannot guarantee that such strategies and measures will not be challenged under PRC laws and regulations and if so, relevant PRC government authorities may issue warnings, order us to rectify our violating operations and impose fines on us. In the case of serious violations as determined by relevant authorities at their discretion, they may ban the violating operations, seize our equipment in connection with such operations, impose a fine or revoke the license, which may materially and adversely affect our business. If we fail to obtain, hold or maintain any of the required licenses or permits or make the necessary filings on time or at all, we may be subject to various penalties, such as confiscation of the revenues that were generated through the unlicensed activities, the imposition of fines and the discontinuation or restriction of our operations. Any such penalties may disrupt our business operations and materially and adversely affect our business, financial condition and results of operations.

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We may not be able to successfully maintain and increase the number of paying users and average monthly revenues generated per paying user on our mobile app, which may materially and adversely affect our business operation and financial results.

Our revenues and results of operation depends on our ability to monetize, to convert more users to paying users and to increase the spending of our paying users. Whether we can increase the number of paying users and average monthly revenues generated per paying user depends on many factors, and many of them are out of our control. For example, our users may be unwilling to pay for our services, we may fail to develop new services that are attractive enough to our existing paying users for them to pay, our paying users may have less disposable income as they need to meet financial obligations elsewhere, our paying users may no longer find our existing value-added services attractive or useful enough to purchase, and overall worsening economic conditions can lower disposable income for all existing paying users, causing them to spend less on our mobile app. We expect that our business will continue to be significantly dependent on revenue collected from paying users in the near future. Any decline in the number of paying users or average monthly revenues generated per paying user may materially and adversely affect our results of operations.

We have incurred significant net losses since our inception and we may continue to experience significant net losses in the future.

We recorded net losses of RMB299.5 million, RMB488.1 million (US$74.8 million) and RMB382.5 million (US$58.4 million) in 2019, 2020 and the three months ended March 31, 2021, respectively. Our ability to achieve profitability is affected by various factors, many of which are beyond our control, such as the continual development of the industry and markets in which we operate, changes in the macroeconomic and regulatory environment or competitive dynamics and our inability to respond to these changes in a timely and effective manner. We also expect our costs and expenses to increase on an absolute basis due to our continued investment in services, technology and development and our continued sales and marketing initiatives. If we cannot successfully offset our increased costs and expenses with a significant increase in total revenues, our financial condition and results of operations may be materially and adversely affected. We may continue to incur net losses in the future. We have been rapidly increasing our sales and marketing expenses in recent periods. It may become increasingly expensive in the future for us to acquire user traffic through third-party internet platforms, and our ability to obtain user traffic acquisition services from third-party internet platforms may be restricted, which may in turn contribute to continued fast increase in our sales and marketing expenses.

We currently generate substantially all of our revenues from value-added services. We may not be able to continue to grow or eventually achieve profitability from such services.

We generate substantially all of our revenues through the provision of value-added services. If we are to grow our revenues from value-added services, we will need to increase either the number of our paying users and/or average monthly revenues generated per paying user. Our ability to increase the number of paying users and/or average monthly revenues generated per paying user depends on, among other things, our ability to continually roll out more attractive functions, our ability to implement dynamic and precise pricing, and our ability to increase membership renewal rate. There is no guarantee that we will be able to roll out functions attractive enough, or implement pricing dynamic and precise enough for our non-paying users or potential users to start paying for our value-added services. We also cannot assure you that we will be able to maintain or increase our membership renewal rate through either membership rate adjustment or addition of premium member features. Therefore, we may not be able to grow or achieve profitability from value-added services.

We cannot guarantee that our monetization strategies will be successfully implemented or that we will be able to generate sustainable revenues and profits.

We are in the early stage of our business and our monetization model is new and evolving. We began monetizing our business in 2019. Currently, we generate substantially all of our revenues from value-added

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services. We have also diversified our monetization models by leveraging our growing and engaged user base to provide advertising and online marketing services to business customers. As we continue to develop our business, we are making efforts to convert our users into paying users and explore new and innovative revenue streams. As a result, our revenue is affected by our ability to enhance our monetization, expand our user base and increase user engagement, which in turn depends on our ability to continually roll out more attractive functions and features. If we fail to monetize our existing or new services or develop new approaches to monetization, we may not be able to maintain or increase our revenues or recover any associated costs and expenses. We monitor market developments and may adjust our monetization strategies accordingly from time to time, which may result in decreases of our overall revenue or revenue contributions from some monetization channels. In addition, we may have limited or no experience with the new revenue streams that we may introduce in the future. If these new revenue streams fail to engage our users or paying users, we may fail to retain or attract enough users to generate sufficient revenues to justify our investment, and our business and results of operations may suffer as a result.

Our mobile app may be confused with social mobile apps that target the online dating market, potentially negatively affecting our user attraction and retention.

Our potential users may not fully comprehend the purpose and value of our mobile app, and there may be a misperception that our mobile app is used solely or mainly as a tool to start romantic relationships with strangers. If our potential new users, who are looking for genuine, non-romantic interpersonal relationships, are discouraged from downloading and trying our mobile app, or if users looking for romantic relationships start explicitly pursuing romantic relationships on our mobile app, our ability to attract users from our target user demographics may be severely hindered, and some of our existing users may start spending less time on or even be driven away from our mobile app due to them being connected with romance-seeking users that go against our goal and philosophy. Although our marketing efforts may serve to combat any misconception about our mobile app and brand, we cannot ensure you that we will be successfully in effectively eliminating the negative impact of any such misconception. If we are not successful in educating the public about the purpose and target user demographics of our mobile app, our ability to attract and retain users and to maintain user engagement may be adversely affected.

The success of our business depends in part on our ability to develop and provide our users with new and innovative features and services.

Our business is growing and becoming more complex, and our ability to engage, retain, increase and engage our user base and to increase our revenue will depend heavily on our ability to quickly and successfully develop and launch new and innovative services. The industry in which we operate is evolving rapidly and users expect to see new features and experience new services offered by us within a relatively short period of time. Over the years, we have been continually upgrading our mobile app. Users can enjoy our value-added services by subscribing for our membership services, express themselves in various means, such as text, pictures, videos, voice and emojis, share their lives or view the lives of other users, and join the various interest groups on our mobile app. We have also recently started offering our gifting service, Giftmoji, to our users as part of our continuing efforts to offer more play features.

We may introduce significant changes to our existing services or develop and introduce new and unproven services. Developing and integrating new services could also be expensive and time-consuming, and these efforts may not yield the benefits we expect to achieve at all. If new or enhanced services fail to engage or entice our users, paying users or business partners, we may fail to attract or retain users or to generate sufficient revenue, operating margin, or other value to justify our investments, any of which may seriously harm our business.

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If we fail to keep up with technological developments and evolving user expectations, we may fail to maintain or attract users or generate revenues, and our business and results of operations may be materially and adversely affected.

We operate in a market characterized by rapidly changing technologies, evolving industry standards, new service announcements, new improvements to services and application features and functionalities, and changing user expectations. Accordingly, our performance and the ability to further monetize our services will depend on our ability to adapt to these rapidly changing technologies and industry standards, and our ability to continually innovate in response to both evolving demands of the marketplace and competitive services. There may be occasions when we may not be as responsive as our competitors in adapting our services to changing industry standards and the needs of our users.

Introducing new technologies into our systems involves numerous technical challenges, substantial amounts of capital and personnel resources and often takes many months to complete. We intend to continue to devote resources to the development of additional technologies and services. We may not be able to effectively integrate new technologies on a timely basis or at all, which may decrease user satisfaction with our services. Such technologies, even if integrated, may not function as expected or may be unable to attract and retain a substantial number of users to use our mobile app. We also may not be able to protect such technology from being copied by our competitors. Our failure to keep pace with rapid technological changes may cause us to fail to retain or attract users or generate revenues, and could have a material and adverse effect on our business and results of operations.

Our business depends on the perception, awareness and influence of our brand within our addressable user communities. If we become a target for public scrutiny or subject of any negative publicity, including complaints to regulatory agencies, negative media coverage, and public dissemination of malicious reports or accusations about our business, our reputation and brand could be severely damaged, our ability to expand our user base may be impaired, and our business and results of operations may be materially and adversely affected.

We operate our business under the main brand “Soul.” Our mobile app has received wide recognition among our target user demographics. A well-recognized brand is crucial to increasing our user base and, in turn, facilitating our efforts to monetize our services and enhancing our attractiveness to users, paying users and business partners. From time to time, we conduct various marketing activities both online and offline to enhance our brand and to guide public perception of our brand and services. We may need to increase our marketing expenditures in order to create and maintain brand awareness and brand loyalty, to influence public perception, to retain existing and to attract new users and business partners as well as to promote our services. However, there can be no assurance that these activities will be successful or that we will be able to achieve the brand promotion effect we expect.

Since we operate in a highly competitive industry, brand maintenance and enhancement directly affect our ability to maintain our market position. We must continually exercise strict quality control of our mobile app to ensure that our brand image is not tarnished by substandard services. We must also promote and distinguish our mobile app from mobile apps of our competitors. If for any reason we are unable to maintain and enhance our brand recognition, or if we incur excessive expenses in this effort, our business, results of operations and prospect may be materially and adversely affected.

Moreover, as our business expands and grows, we may be exposed to heightened public scrutiny in markets where we already operate as well as in new markets where we may operate. There is no assurance that we would not become a target for regulatory or public scrutiny in the future or that scrutiny and public exposure would not severely damage our reputation as well as our business and prospects.

Furthermore, our brand name and our business may be harmed by aggressive marketing and communication strategies by competitors and third parties. We may be subject to government or regulatory investigation or third-

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party claims as a result and we may be required to spend significant time and incur substantial costs to react to and address these consequences. There is no assurance that we will be able to effectively refute each of the allegations within a reasonable period of time, or at all. Additionally, public allegations, directly or indirectly, against us or our business partners, may be posted on online by anyone on an anonymous basis. The availability of information on social media platforms is virtually immediate, as is its impact. Social media platforms may not necessarily filter or check the accuracy of information before publishing them and we are often afforded little or no time to respond. As a result, our reputation may be materially and adversely affected and our ability to attract and retain users and maintain our market share and our financial conditions may suffer.

We face risks associated with the misconduct of our employees, business partners and their employees and other related personnel.

We rely on our employees to maintain and operate our business and have implemented an internal code of conduct to guide the actions of our employees. However, we do not have control over the actions of our employees, and any misbehavior of our employees could materially and adversely affect our reputation and business. For example, if our employees download pirated software to their work computers or perform other unauthorized actions on our IT system, we may be exposed to security breach. Despite the security measures we have implemented, our systems and procedures and those of our business partners may be vulnerable to security breaches, act of vandalism, software viruses, misplaced or lost data, programming or human errors or other similar events caused by our employees, our business partners and their employees and other related personnel, which may disrupt our delivery of services or expose the identities and confidential information of our users and others. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed, we may lose current and potential users, and we may be exposed to legal and financial risks, including those from legal claims, regulatory fines and penalties, which in turn could adversely affect our business, reputation and results of operations.

With respect to employees or ex-employees, we could also in the future face a wide variety of claims, including discrimination (for example, based on gender, age, race or religious affiliation), sexual harassment, privacy, labor, employment or tort claims. Often these cases raise complex factual and legal issues, and the result of any such claims are inherently unpredictable. Claims against us, whether meritorious or not, could require significant amounts of management time and corporate resources to defend, could result in significant media coverage and negative publicity, and could be harmful to our reputation and our brand. If any of these claims were to be determined adversely to us, or if we were to enter settlement arrangements, we could be exposed to monetary damages or be forced to change the way in which we operate our business, which could have an adverse effect on our business, financial condition and results of operations.

In December 2020, two of our ex-employees, including a former director, previously engaged in our content screening functions were convicted of maliciously and falsely publishing illegal content on an online content platform operated by another PRC company during their employment with us, in their personal capacities and without our authorization. It was reported that the mobile app downloading services of such third-party platform were subsequently suspended. We were not named as a party to, or found liable for the wrongdoings committed by the individuals in, the criminal proceeding against the two individuals in their respective personal capacities. As of the date of this prospectus, neither our company nor any entities controlled by us has been subject to any lawsuits, penalties or other liabilities as a result of such incident. However, there is no guarantee that we will not become subject to any civil lawsuit that may be potentially initiated by the third-party company for damages based on tort and other possible claims. Our involvement in such legal proceedings, if any, would not only be costly and time-consuming but also expose us to reputational damages, and there could be no assurance that regulatory authorities will not take any adverse actions against us.

We also work with our business partners in our business operation, and their performance affects the image of our brand. However, we do not directly supervise them in providing services to us or our users. Although we generally select business partners with strong reputation and track record, we may not be able to successfully

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monitor, maintain and improve the quality of their services. In the event of any unsatisfactory performance by our business partners and/or their employees, our business operation may be negatively impacted and our users may experience disruptions in services or decline in service quality, which may materially and adversely affect our reputation, our ability to retain and expand our user base, and our business, financial condition and results of operations.

Because we collect, store, process and use data, some of which contains sensitive personal information, we face concerns over the collection, improper use or disclosure of personal information, which could discourage current and potential users from using our services, damage our reputation, face regulatory scrutiny, and in turn materially and adversely affect our business, financial condition and results of operations.

Concerns or claims about our practices with regard to the collection, storage, processing or use of personal information or other privacy-related matters, even if unfounded, could damage our reputation and results of operations. Under the Cyber Security Law of China, the owners and administrators of networks and network service providers have various personal information security protection obligations, including restrictions on the collection and use of personal information of users, and they are required to take steps to prevent personal data from being divulged, stolen, or tampered with. See also “Regulation—Regulations on Privacy Protection.” Regulatory requirements regarding the protection of personal information are constantly evolving and can be subject to differing interpretations or significant change, making the extent of our responsibilities in that regard uncertain. An example of such evolving regulatory requirements is the Draft Law of Personal Information Protection, which was published for public comments on October 21, 2020. When it is passed in the future, this law will function jointly with the Cyber Security Law to regulate China’s online spheres in relation to personal information protection. Complying with new laws and regulations could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business.

In July 2019, due to certain defects found in our data privacy measures, we received a written notice from the Personal Information Protection Task Force on Apps, requiring us to rectify our data privacy measures in accordance with the applicable law and regulations of the PRC, without imposing any penalty on us. In August 2019, we submitted a report to show improvements in our data protection measures and we also updated our data privacy policy accordingly for implementation throughout our mobile app. We currently adopt a data privacy policy with respect to how we collect, store, process and use user data and information, and we may only use such data and information to provide and improve our services, content and advertising in strict compliance with such policy. Despite the absence of any material data breach or similar incidents and our continuous efforts to comply with our privacy policy as well as all applicable data protection laws and regulations, any failure or perceived failure to comply with these laws, regulations or policy may result in inquiries and other proceedings or actions against us by governmental authorities or others, as well as negative publicity and damage to our reputation, each of which could cause us to lose users and business partners and have an adverse effect on our business and results of operations.

In particular, if we fail to secure our users’ identity and protect their identity-specific data, including their residential addresses, our users may be vulnerable to insults, harassment, blackmails or physical injuries, and their family, property and other assets may also be put at risk. As a result, we may be held liable for these incidents, and our users may feel insecure and cease to use our services. Our reputation may be seriously harmed and we may be unable to retain existing users and attract new users, which would in turn have a material adverse effect on our business and results of operations.

Any systems failure or compromise of our security that results in the unauthorized access to or release of the data, photo or chat history of our users could significantly limit the adoption of our services, as well as harm our reputation and brand, result in litigation against us, liquidated and other damages, regulatory investigations and penalties, and we could be subject to material liability. We expect to continue expending significant resources to protect against security breaches. The risk that these types of events could seriously harm our business is likely to increase as we expand the scope of services we offer and as we increase the size of our user base.

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Laws, regulations or policies concerning data protection, user privacy, rights of publicity, distribution and protection of minors are continuously evolving, generally becoming more stringent and remain subject to significant changes both in the PRC and abroad. We have operations in China and certain overseas regions, and thus are subject to PRC and overseas laws, regulations, standards, and other obligations on data protection, data privacy and/or information security, which we may not be able to comply with consistently and could result in increased supervision, increased costs of compliance and penalties for non-compliance to us. Many jurisdictions have in the past adopted, and may in the future adopt, new laws and regulations, or amendments to existing laws and regulations, affecting data protection, data privacy and/or information security. The major data privacy or protection laws and regulations in international jurisdictions applicable to us include the Children’s Online Privacy Protection Act, or the COPPA, in the United States, the Privacy Rights for California Minors in the Digital World, or the Digital World Act, in the state of California, other data privacy laws generally applicable to the public in the United States, and the General Data Protection Regulation, and the GDPR, in the European Union. In terms of COPPA compliance, we have been taking measures, including the implementation of a tailored data privacy policy for users and prohibition of account registration for children under 13 years old in the United States. Certain states in the U.S. may also have state data privacy or security laws and regulations that differ from the COPPA in certain aspects, and we may have to make additional adjustments to our account registration and content screening when our mobile app is distributed in these states. In California, for example, the Digital World Act defines a minor as a person under the age of 18 instead of the 13 under the COPPA, effectively affording teenagers between the age of 13 and 18 more protection compared to the requirements of the COPPA. The GDPR imposes stringent operational requirements for processors and controllers of personal data, including, for example, requiring expanded disclosures about how personal information is to be used, limitations on retention of information, mandatory data breach notification requirements, and higher standards for data controllers to demonstrate that they have obtained either valid consent or have another legal basis in place to justify their data processing activities. Although our mobile app currently has a small user base in the United States and very little presence in the European Union, complying with all applicable data privacy or protection laws and regulations may cost us lots of financial resources and divert a considerable amount of management time and attention, and any non-compliance could subject us to significant fines, civil litigations, and reputational damage, all of which can seriously harm our business.

In addition, the interpretation and application of the aforementioned laws and regulations are often uncertain and in flux. Our practice may become inconsistent with these laws and regulations. If so, in addition to the possibility of fines, this could result in an order requiring that we change our practices, which could have an adverse effect on our business and results of operations. Complying with new data laws and regulations could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business. See also “—Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.”

Even if our practices are consistent with existing laws and regulations, we could be subject to enhanced regulatory scrutiny over our data privacy and security practices. Governmental and regulatory authorities could deem the sensitive personal information we handle as putting national security interests at risk. If relevant authorities were to reach similar conclusions about our company and intervene in our business activities, we could be forced to halt or reverse our expansion into certain countries and regions, we may lose existing users and our reputation may be negatively affected, which would in turn materially and adversely affect our business, financial condition and results of operations.

If we cannot maintain our corporate culture as we grow, our user base may decline, which may negatively affect our business prospects.

We believe that a critical component of our success is our corporate culture. We are comprised of a group of team players passionate about connecting strangers together through genuine interpersonal relationships. Powered by technological innovation, we endeavor to develop a community where our users can express themselves freely, experience and enjoy the lives of others, and find meaningful interpersonal relationships with

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users most suitable for them. Any failure to preserve our culture could undermine our reputation in the marketplace and negatively impact our ability to retain existing users and attract new users, which would in turn jeopardize our business prospects.

We may need additional capital, and we may be unable to obtain such capital in a timely manner or on acceptable terms, or at all.

To pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, including to improve our brand awareness, develop new services or further improve existing services, expand into new markets and acquire complementary businesses and technologies, we may require additional capital from time to time. However, additional funds may not be available when we need them on reasonable terms, or at all. Our ability to obtain additional capital is subject to a variety of uncertainties, including:

• our market position and competitiveness in the industry where we operate;

• our future profitability, overall financial condition, results of operations and cash flows;

• general market conditions for capital raising activities by online social networking and other internet companies in China; and

• economic, political and other conditions in China and internationally.

If we are unable to obtain additional capital in a timely manner or on acceptable terms, or at all, our ability to continue to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, results of operations, financial condition and prospects could be materially and adversely affected. In addition, our future capital needs and other business reasons could require us to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could dilute our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations or our ability to pay dividends to our shareholders.

Our mobile app depends on effective interoperation with mobile operating systems, hardware, networks, regulations, and standards that we do not control. Changes in our mobile app or to those operating systems, hardware, networks, regulations, or standards may seriously harm our user retention, growth, and engagement. Our business depends on our ability to maintain and scale our technology infrastructure. Any service disruption in our service could damage our reputation, result in a potential loss of users and decrease in user engagement, and seriously harm our business.

Our mobile app must remain interoperable with popular mobile operating systems, such as iOS and Android, and related hardware. We have no control over these operating systems or hardware, and any changes to these systems or hardware that degrade the functionality of our services, or give preferential treatment to competitive mobile apps, could seriously harm usage of our mobile app. We plan to continue to introduce new services regularly and have experienced that it takes time to optimize such services to function with these operating systems and hardware, impacting the popularity of such services, and we expect this trend to continue.

To deliver high quality services, it is crucial that our services work well with a range of mobile technologies, systems, networks, regulations and standards that we do not control. In particular, any future changes to the iOS or Android operating systems may impact the accessibility, speed, functionality and other performance aspects of our services, which issues are likely to occur in the future from time to time. In addition, the adoption of any laws or regulations that adversely affect the growth, popularity or use of the internet, including laws governing internet neutrality, could decrease the demand for our services and increase our cost of doing business.

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We may fail to successfully cultivate relationships with key industry participants or develop new features and functionalities of our mobile app that operate effectively with these technologies, systems, networks, regulations or standards. If it becomes more difficult for our users to access and use our app on their mobile devices, if our users choose not to access or use our app on their mobile devices, or if our users choose to use mobile apps from our competitors, our user growth, retention, and engagement could be seriously harmed.

To remain functional, our mobile app must remain interoperable with popular mobile operating systems, Android and iOS, app stores, and related hardware, including mobile-device cameras. The owners and operators of such operating systems and major app stores, each have approval authority over our mobile app and provide users with other mobile apps that compete with ours. Additionally, mobile devices are manufactured by a wide array of companies. Those companies have no obligation to test the interoperability of new mobile devices with our mobile app, and may produce new mobile devices that are incompatible with or not optimal for our mobile app. We have no control over these operating systems, app stores, or hardware, and any changes to these systems, app stores or hardware that diminish the performance of our mobile app, or give preferential treatment to competitive mobile apps, could seriously lessen the use of our mobile app on mobile devices. Our competitors that control the operating systems and related hardware where our mobile app runs could make interoperability of our mobile app with those mobile operating systems and related hardware more difficult or display their competitive offerings more prominently than ours. Additionally, our competitors that control the standards for the app stores or operating systems could make our mobile app, or certain features and functionalities of our mobile app, inaccessible for a potentially significant period of time. We plan to continue to introduce new features and functionalities for our mobile app, but our experience indicates that it takes time to optimize such features and functionalities for these operating systems, hardware, and standards, and such delay in optimization could impact the popularity of our mobile app.

Any significant cybersecurity incident or disruption of our information technology systems or those of third-party partners could materially damage our user relationships and subject us to significant reputational, financial, legal and operational consequences.

We depend on our information technology systems, as well as those of third parties, to develop new products and services, operate our platform, host and manage our services, store data, process transactions, and respond to user inquiries. Any material disruption or slowdown of our systems or those of third parties whom we depend upon, including a disruption or slowdown caused by our failure to successfully manage significant increases in user volume, could cause outages or delays in our services, which could harm our brand and adversely affect our operating results.

We rely on cloud servers maintained by cloud service providers such as Alibaba Cloud Services to store our data. Problems with our cloud service providers or the telecommunications network providers with whom they contract could adversely affect the experience of our users. Our cloud service providers could decide to cease providing us with services without adequate prior notice. In particular, a majority of our cloud storage is provided by Alibaba Cloud Services, based on a service contract with one-year terms. We believe the services provided by Alibaba Cloud Services are standardized and can be replaced by services provided by other similar service providers.

Any change in service levels at our cloud servers or any errors, defects, disruptions, or other performance problems with our platform could harm our brand and may damage the data of our users. If changes in technology cause our information systems, or those of third parties whom we depend upon, to become obsolete, or if our or their information systems are inadequate to handle our growth, we could lose users and our business and operating results could be adversely affected.

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We generate a portion of our revenues from advertising. If we fail to attract more advertisers or if advertisers reduce their spending or become less willing to advertise with us, our revenues may be adversely affected.

Although we currently primarily rely on revenues generated from value-added services, we also generate a portion of our revenues from advertising. Our revenues from advertising partly depend on the continued development of the online advertising industry in China and abroad and advertisers’ willingness to allocate budgets to online advertising or advertising at all due to macroeconomic conditions and, more importantly, their willingness to allocate budgets to our mobile app that serves primarily the young generations in China. In addition, companies that decide to advertise or promote online may utilize more established methods or channels, such as more established internet portals or search engines, over advertising on our mobile app, due to their concern about user perception or otherwise. If the online advertising market does not continue to grow, or if we are unable to capture and retain a sufficient share of that market, our ability to increase our current level of advertising revenues and our business prospects may be materially and adversely affected.

Furthermore, our core and long-term priority of optimizing user experience and satisfaction may limit our mobile app’s ability to generate revenues from advertising. Our insistence on putting user experience first may not be in line with the commercial interest of our advertisers, and may not result in the long-term benefits that we expect, in which case the success of our business and results of operations could be affected.

Any non-compliance found in the advertisements shown on our mobile app may subject us to penalties and other administrative actions.

We are responsible for and are obligated to monitor the advertising content shown on our mobile app to ensure that such content is true and accurate and in full compliance with applicable laws and regulations. In addition, where a special government review is required for specific types of advertisements prior to internet posting, such as advertisements relating to drugs, medical devices, health-care food and food for special medical purpose, we are obligated to confirm that such review has been performed and approval has been obtained. While we have made significant efforts to ensure that the advertisements shown on our mobile app are in full compliance with applicable PRC laws and regulations, there can be no assurance that all the content contained in such advertisements or offers is true and accurate as required by the advertising laws and regulations, especially given the uncertainty in the interpretation of these PRC laws and regulations. If content found in the advertisements shown on our mobile app is found to be non-compliant with applicable laws and regulation, we may be ordered to cease dissemination of the advertisements, our advertising income may be confiscated, we may be subject to a fine that greatly exceeds the advertising income, and in severe cases, our business license may be revoked.

We may, from time to time, be subject to legal proceedings during the course of our business operations. Our directors, management, shareholders and employees may also from time to time be subject to legal proceedings, which could adversely affect our reputation and results of operations.

From time to time, we are subject to allegations, and may be party to legal claims and regulatory proceedings, relating to our business operations and business partners. Such allegations, claims and proceedings may be brought by third parties, including users, employees, business partners, governmental or regulatory bodies, competitors or other third parties, and may include class actions. The outcome of litigation, particularly class action lawsuits, is difficult to assess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. We may incur significant expenses related to such proceedings, which may negatively affect our operating results if changes to our business operations are required. There may also be negative publicity associated with litigation that could decrease user acceptance of our social networking service, regardless of whether the allegations are valid or whether we are ultimately found liable. In addition, our directors, management, shareholders and employees may from time to time be subject to litigation, regulatory investigations, proceedings and/or negative publicity or otherwise face potential liability and expense in relation

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to commercial, labor, employment, securities or other matters, which could adversely affect our reputation and results of operations. As a result, litigation may adversely affect our business, financial condition, results of operations or liquidity.

After we become a publicly listed company, we may face additional exposure to claims and lawsuits. These claims could divert management time and attention away from our business and result in significant costs to investigate and defend, regardless of the merits of the claims. In some instances, we may elect or be forced to pay substantial damages if we are unsuccessful in our efforts to defend against these claims, which could harm our business, financial condition and results of operations.

The ongoing outbreak of COVID-19 could adversely affect our business, results of operations and financial condition.

The ongoing outbreak of COVID-19 has continued to spread across the world and has created unique global and industry-wide challenges. COVID-19 has resulted in quarantines, travel restrictions, and the temporary closure of offices and facilities in China and many other countries. New COVID-19 variants have also emerged in a few countries including the United Kingdom, potentially extending the period where COVID-19 will negatively impact the global economy.

We have witnessed growth in our operational performance, user base, user engagement and willingness to pay since the end of the first half of 2020, when the pandemic had been largely contained in China. However, we cannot guarantee that such growth trend in our operational performance will continue as the COVID-19 epidemic drags on. People may spend less time at home or using mobile apps and more time on outdoor activities going forward due to possibilities such as availability of effective vaccines and loosening of restrictions on travel and public gatherings. The increased unemployment and reduced income resulting from COVID-19 could also hinder the disposable income our users can spend in our mobile app. In addition, we may need to make adjustments to operation hours, make work-from-home arrangements and even temporarily close our offices in the event that COVID-19 strikes in a future wave, and we may experience lower work efficiency and productivity during such period.

The potential downturn brought by and the duration of the COVID-19 outbreak may be difficult to assess or predict, and any associated negative impact on us will depend on many factors beyond our control. The extent to which the COVID-19 outbreak impacts our long-term results remains uncertain, and we are closely monitoring its impact on us. Our business, results of operations, financial conditions and prospects could be adversely affected directly, as well as indirectly to the extent that the ongoing COVID-19 outbreak harms the Chinese and global economy in general.

Increasing focus with respect to environmental, social and governance matters may impose additional costs on us or expose us to additional risks. Failure to comply with the laws and regulations on environmental, social and governance matters may subject us to penalties and adversely affect our business, financial condition and results of operation.

The PRC government and public advocacy groups have been increasingly focused on environment, social and governance, or ESG, issues in recent years, making our business more sensitive to ESG issues and changes in governmental policies and laws and regulations associated with environment protection and other ESG-related matters. Investor advocacy groups, certain institutional investors, investment funds, and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments. Regardless of the industry, increased focus from investors and the PRC government on ESG and similar matters may hinder access to capital, as investors may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. Any ESG concern or issue could increase our regulatory compliance costs. If we do not adapt to or comply with the evolving expectations and standards on ESG matters from investors and the PRC government or are

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perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage and the business, financial condition, and the price of our ADSs could be materially and adversely effected.

Computer and mobile malware, viruses, hacking and phishing attacks, spamming and improper or illegal use of our mobile app may affect user experience, which could reduce our ability to attract users and advertisers and materially and adversely affect our business, financial condition and results of operations.

Computer and mobile malware, viruses, hacking and phishing attacks have become more prevalent in our industry, have occurred on our mobile app in the past, and may occur again in the future. Although it is difficult to determine what, if any, direct harm may result from an interruption or attack, any failure to maintain performance, reliability, security and availability of our mobile app and technical infrastructure to the satisfaction of our users may seriously harm our reputation and our ability to retain existing users and attract new users.

In addition, spammers may use our mobile app to send targeted and untargeted spam messages to users, which may affect user experience. In spamming activities, spammers typically create multiple user accounts for the purpose of sending spam messages. Although we attempt to identify and delete accounts created for spamming purposes, we may not be able to effectively eliminate all spam messages from our mobile app in a timely fashion. Our actions to combat spam may also require diversion of significant time and focus of our technology team from improving our mobile app. As a result, our users may use our mobile app less or stop using them altogether, and result in continuing operational costs to us.

If the software used by our mobile app and internal systems contains undetected programming errors or vulnerabilities, our business could be adversely affected.

Our mobile app and internal systems rely on software, including software developed or maintained internally and/or by third parties. In addition, our mobile app and internal systems depend on the ability of such software to store, retrieve, process and manage immense amounts of data. The software on which we rely in the past has contained, and may now or in the future contain, undetected programming errors, bugs, or vulnerabilities. Some errors may only be discovered after the code has been released for external or internal use. Errors, vulnerabilities, or other design defects within the software on which we rely may result in a negative experience for users using our mobile app, delay introductions of new features or enhancements, result in errors or compromise our ability to protect the data of our users and/or our intellectual property or lead to reductions in our ability to provide some or all of our services. In addition, any errors, bugs, vulnerabilities, or defects discovered in the software on which we rely, and any associated degradations or interruptions of service, could result in harm to our reputation and loss of users, which could adversely affect our business, financial condition and operation results.

Our internal systems and mobile app contain open source software, which may pose particular risk to our proprietary software and mobile app features and functionalities in a manner that negatively affect our business.

We use open source software in our internal systems and mobile app and will continue to use open source software in the future. To handle risks in this regard, we have set up an internal system that monitors any change in the source code of any open source software we use in our operation, made risk management plan for open source software, and increasingly invested in developing our proprietary software. Despite these risk management efforts, there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide our services through the various features and functionalities of our mobile app. Additionally, we may face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software. These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated services unless and until we can

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re-engineer them to avoid infringement. This re-engineering process could require significant additional technology and development resources, and we may not be able to complete it successfully.

We are dependent on app stores to disseminate our mobile app.

We offer our social networking services through our mobile app. Our mobile app is offered via smartphone and tablet apps stores operated by third parties, such as Apple App Store and various Android app stores, which could suspend or terminate users’ access to our mobile app, increase access costs or change the terms of access in a way that makes our mobile app less desirable or harder to access. As such, the promotion, distribution and operation of our mobile app are subject to such distribution platforms’ standard terms and policies for application developers, which are subject to the interpretation of, and frequent changes by, these distribution channels. If Apple’s App Store or any Android app stores interpret or change their standard terms and conditions in a manner that is detrimental to us, or terminate their existing relationship with us, our business, financial condition and results of operations may be materially and adversely affected. We have experienced in the past suspension of our mobile app by app stores due to regulations and government scrutiny on our business or industry or applicable requirements of such app stores. In the future, it is possible that compliance requirements of app stores may cause us to suspend our mobile app from such stores. As a result, our ability to expand our user base may be hindered if potential users experience difficulties in or are barred from accessing our mobile app. Any such incident may adversely affect our brand and reputation, business, financial condition and results of operations.

While our mobile app is free to download from third-party app stores, we provide value-added services comprising a wide variety of additional social features and functions that users pay to use. We determine the prices at which these value-added services are sold and, in exchange for facilitating the purchase of these value-added services through our mobile app to users who download the mobile app from these stores, we pay Apple and other Android app store operators, as applicable, a certain share of the revenue we receive from these transactions. As the distribution of our mobile app through app stores increases, we may need to offset any further increase in fees charged by app stores by decreasing traditional marketing expenditures as a percentage of revenue, increasing user volume or monetization per user, or by engaging in other efforts to increase revenue or decrease costs generally, otherwise our business, financial condition and results of operations could be adversely affected.

We are subject to risks relating to third-party online payment platforms.

Currently, we collect payments for our services from paying users through third-party online payment systems. In all these online payment transactions, secured transmission of confidential information such as paying users’ credit card numbers and personal information over public networks is essential to maintaining users’ trust and confidence on our mobile app.

We do not have control over the security measures of our third-party online payment vendors. Any security breaches of the online payment systems that we use could expose us to litigation and possible liability for failing to secure confidential user information and could, among other things, damage our reputation and the perceived security of all of the online payment systems that we use. If a well-publicized internet or mobile network security breach were to occur, users may become reluctant to pay for our services even if the publicized breach did not involve payment systems or methods used by us. In addition, there may be billing software errors that would damage user confidence in these online payment systems. If any of the above were to occur and damage our reputation or the perceived security of the online payment systems we use, we may lose paying users and users may be discouraged from purchasing our services, which may have a material adverse effect on our business.

In addition, there are currently only a limited number of reputable third-party online payment service providers in China and certain other countries where we operate. Currently, we use Apple Pay, Alipay and WeChat Pay as our third party payment service providers. Our contracts with them are highly standardized and are either on one-year terms or without fixed terms. These third-party payment platforms have the right to

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unilaterally terminate their contracts with us. If any of these payment service providers decides to cease to provide services to us, or significantly increase the percentage they charge us for using their payment systems for our services, our results of operations may be materially and adversely affected. However, we view any of these platform services interchangeable and can be replaced by other similar service providers.

One of our principal shareholders offers similar products and services that compete with ours.

Tencent offers products and services that compete with ours. For example, WeChat/Weixin, Tencent’s instant messaging and social service, connects people with each other and allows them to consume and contribute content, which overlaps with our service. Tencent currently beneficially owns 49.9% of our issued and outstanding ordinary shares on an as-converted basis, and will own             % of our issued and outstanding ordinary shares on an as-converted basis immediately after the completion of this offering. Internet service providers in China have strong technological capabilities, and may independently develop more products and services that compete with ours in the future. If competition between us and our shareholders becomes more intense in the future, we cannot guarantee that our business and results of operation will continue to grow at the level we are experiencing now.

Our results of operations are subject to fluctuations due to seasonality.

Our industry generally experiences seasonality, primarily due to variations in young people’s leisure time. For example, we may attract more users to join our mobile app and spend more time during summer, winter vacations and other important holidays such as the Spring Festival in China. Consequently, we may generate more revenues during those periods. Overall, the historical seasonality of our business has been relatively mild, but seasonality may increase in the future. Due to our limited operating history, the seasonal trends that we have experienced in the past may not be indicative of our future operating results. Our financial condition and results of operations for future periods may continue to fluctuate. As a result, the trading price of our ADSs may fluctuate from time to time due to seasonality.

We may not be able to adequately protect our intellectual property, which could cause us to be less competitive, and third-party infringements of our intellectual property rights may adversely affect our business.

We believe that our copyrights, trademarks and other intellectual property are essential to our success. See also “Business—Intellectual Property.” We have devoted considerable time and energy to the development and improvement of our mobile app and our system infrastructure.

We rely on a combination of copyright and trademarks laws, trade secrets protection and other contractual restrictions for the protection of the intellectual property used in our business. Effective intellectual property protection may not be available or may not be sought in every country in which our mobile app is made available, and contractual disputes may affect the use of the intellectual property governed by private contract. Although our contracts with users and business partners typically prohibit the unauthorized use of our brands, images and other intellectual property rights, there can be no assurance that they will always comply with these terms. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Although we enter into confidentiality and intellectual property ownership agreements with our employees, and we also have in place various relevant internal rules and polices that require compliance from our employees, these agreements could be breached, the internal rules and policies could be violated, we may be involved in disputes in respect of these agreements and internal rules and policies for which we may not have adequate remedies, and our proprietary technology, know-how or other intellectual property could otherwise become known to third parties. In addition, third parties may independently discover trade secrets and proprietary information, limiting our ability to assert any trade secret rights against such parties.

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While we actively take steps to protect our proprietary rights, such steps may not be adequate to prevent the infringement or misappropriation of our intellectual property. We cannot assure our registered trademarks have covered an adequate scope of our existing and future business operations and as of the date of this prospectus, we are in the process of registering certain trademarks that are necessary based on the current scope of our business. However, there can be no assurance that any of our trademark applications will ultimately proceed to registration or will result in registration with adequate scope for our business, particularly if such requested trademarks are found to conflict with the registered trademarks owned by third parties, including our competitors. Some of our pending applications or registrations may be successfully challenged or invalidated by others. If our trademark applications are not successful, we may have to use different marks for affected services, or seek to enter into arrangements with any third parties who may have prior registrations, applications or rights, which might not be available on commercially reasonable terms, if at all.

Implementation of intellectual property laws in China has historically been lacking, primarily because of ambiguities in the laws and difficulties in enforcement. Accordingly, intellectual property right protection in China may not be as effective as in other jurisdictions that have a more developed legal framework regulating intellectual property rights. Policing unauthorized use of our proprietary technology, trademarks and other intellectual property is difficult and expensive, and litigation may be necessary in the future to enforce our intellectual property rights. Future litigation could result in substantial costs and diversion of our resources, and could disrupt our business, as well as materially adversely affect our financial condition and results of operations.

We may be subject to intellectual property infringement claims or other allegations by third parties, which may materially and adversely affect our business, financial condition and prospects.

We may in the future be subject to intellectual property infringement claims or other allegations by third party owners or right holders of technology patents, copyrights, trademarks, trade secrets and website content for services we provide or for information or content displayed on, retrieved from or linked to, recorded, stored or made accessible on our mobile app, or otherwise distributed to our users, including in connection with the music, movies and videos played, recorded, stored or made accessible on our mobile app during user profile display or advertisement display, which may materially and adversely affect our business, financial condition and prospects.

Generally, companies in the internet-related industries are frequently involved in litigation based on allegations of infringement of intellectual property rights, unfair competition, invasion of privacy, defamation and other violations of other parties’ rights. The validity, enforceability and scope of protection of intellectual property rights in internet-related industries, particularly in China, are uncertain and still evolving. As we face increasing competition and as litigation becomes a more common method for resolving commercial disputes in China, we face a higher risk of being the subject of intellectual property infringement claims or other legal proceedings.

We allow users to upload text, pictures, audio, video and other content to our mobile app and users to download, share, link to and otherwise access other content on our mobile app. Under relevant PRC laws and regulations, online service providers, which provide storage space for users to upload works or links to other services or content, could be held liable for copyright infringement under various circumstances, including situations where the online service provider knows or should reasonably have known that the relevant content uploaded or linked to on its platform infringes upon the copyright of others and the online service provider failed to take necessary actions to prevent such infringement. We have procedures implemented to reduce the likelihood that content might be used without proper licenses or third-party consents. However, these procedures may not be effective in preventing the unauthorized posting or distribution of copyrighted content and we may be considered failing to take necessary actions against such infringement. Therefore, we may face liability for copyright or trademark infringement, defamation, unfair competition, libel, negligence, and other claims based on the nature and content of the materials that are delivered, shared or otherwise accessed through our mobile app.

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Defending claims is costly and can impose a significant burden on our management and employees, and there can be no assurance that favorable final outcomes will be obtained in all cases. Such claims, even if they do not result in liability, may harm our reputation. Any resulting liability or expenses, or changes required to our mobile app to reduce the risk of future liability, may have a material adverse effect on our business, financial condition and prospects.

If we fail to meet the challenges presented by our increasing international operations, our business, financial condition and results of operations may be adversely affected.

Our mobile app is currently available in certain countries outside of China. Our limited experience and infrastructure in such markets, or the lack of a critical mass of users in such markets, may make it more difficult for us to effectively monetize any increase in user base or user engagement in those markets, and may increase our costs without a corresponding increase in revenue. If we fail to deploy or manage our operations in international markets successfully, our business may suffer. We are subject to a variety of risks inherent in doing business internationally, including but not limited to:

• political, social and economic instability of each foreign jurisdiction where we operate;

• fluctuations in currency exchange rates;

• compliance challenges due to different laws and regulatory environments, particularly in the case of privacy and data security;

• potential non-compliance with tax regulations in multiple tax jurisdictions;

• risks related to the overall legal and regulatory environment in foreign jurisdictions, including with respect to privacy, difficulties understanding and ensuring compliance with multiple, conflicting and changing laws, rules and regulations by both our employees and our business partners, over whom we exert no control, and unexpected changes in law, regulatory requirements and enforcement;

• potential damage to our brand and reputation due to compliance with local laws, including potential censorship and/or requirements to provide user information to local authorities;

• difficulties in staffing and managing global operations and the increased travel, infrastructure and compliance costs associated with multiple international locations; and

• differing levels of technology development in different countries, including third-party payment platforms.

Future strategic alliances, long-term investments and acquisitions may subject us to risks which in turn may have a material and adverse effect on our business, reputation and results of operations.

We may enter into strategic alliances, including joint ventures or minority equity investments, with various third parties to further our business purpose from time to time. These alliances could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.

In addition, if appropriate opportunities arise, we may acquire additional assets, products, technologies or businesses that are complementary to our existing business. Future acquisitions and the subsequent integration of new assets and businesses into our own would require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our business operations. Acquisitions may not achieve our goals and could be viewed negatively by users,

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advertisers, partners or investors. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant. In addition to possible shareholders’ approval, we may also have to obtain approvals and licenses from relevant governmental authorities for the acquisitions and to comply with any applicable PRC laws and regulations, which could result in increased delay and costs.

Our operating metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in those metrics may materially and adversely affect our business and operating results.

We regularly review metrics, including the number of our users and paying users, DAU and MAU, to evaluate growth trends, measure our performance and make strategic decisions. These metrics are calculated using internal company data and have not been validated by an independent third party. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring usage and user engagement across our large user base. We treat each account as a separate user for the purposes of calculating the number of our users. Accordingly, the calculations of our users may not accurately reflect the actual number of people using our mobile app. Errors or inaccuracies in our metrics could result in incorrect business decisions and inefficiencies. For example, if a significant understatement or overstatement of the number of users were to occur, we may expend resources to implement unnecessary business measures or fail to take required actions to attract a sufficient number of users to satisfy our growth strategies.

Our measures of operating metrics may differ from estimates published or adopted by third parties, including but not limited to business partners, market and investment research organizations (including short-selling research firms), investors and media, or from similarly titled metrics used by our competitors or other companies in the relevant industries due to differences in methodology and assumptions. If these third parties do not perceive our operating metrics to be accurate representations of operations, or if we discover material inaccuracies in our operating metrics, our brand value and reputation may be materially harmed, our users and business partners may be less willing to allocate their resources or spending to us, and we may face lawsuits or disputes in relation to the inaccuracies. As a result, our business and operating results may be materially and adversely affected.

Our business is sensitive to economic conditions. A severe or prolonged downturn in the global or Chinese economy could materially and adversely affect our business, financial condition and results of operations.

COVID-19 had a severe and negative impact on the Chinese and the global economy. Even before the outbreak of COVID-19, the global macroeconomic environment was facing numerous challenges. The growth rate of the Chinese economy had already been slowing since 2012 compared to the previous decade and the trend may continue. According to the National Bureau of Statistics of China, China’s gross domestic product (GDP) growth was 6.6% in 2018 and 6.1% in 2019. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies which had been adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China, even before 2020. Unrest, terrorist threats and the potential for war in the Middle East and elsewhere may increase market volatility across the globe. There have also been concerns about the relationship between China and other countries, including the surrounding Asian countries, which may potentially have economic effects. In particular, there is significant uncertainty about the future relationship between the United States and China with respect to trade policies, treaties, government regulations and tariffs. It is unclear whether these challenges and uncertainties will be contained or resolved and what effects they may have on the global political and economic conditions in the long term. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business, results of operations and financial condition.

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Our business depends substantially on the continuing efforts of our executive officers and other key employees. If we lose their services, our business operations and growth prospects may be materially and adversely affected.

Our future success depends heavily on the continuing services of our executive officers and other key employees. In particular, we rely on the expertise, experience and vision of our founder, chairwoman of the board of directors and chief executive officer, Ms. Lu Zhang, as well as other members of our senior management team. If one or more of our executive officers or other key employees were unable or unwilling to continue their services with us or are otherwise subject to any legal or regulatory liabilities in their personal capacity or otherwise, we might not be able to replace them easily, in a timely manner, or at all. Competition for qualified talent is intense, there can be no assurance that we will be able to attract or retain qualified employees. As a result, our business may be materially and adversely affected, our financial condition and results of operations may be severely affected, and we may incur additional expenses to recruit, train and retain key personnel.

Moreover, if any of our executive officers or other key employees joins a competitor or forms a competing company, we may lose know-how, trade secrets, business partners, user base and market share. Each of our executive officers and key employees has entered into an employment agreement, a confidentiality and intellectual property ownership agreement and a non-compete agreement. However, these agreements may be deemed invalid or unenforceable under PRC laws and other applicable laws and regulations in other jurisdictions. If any dispute arises between our executive officers or key employees and us, there can be no assurance that we would be able to enforce these agreements in China and other jurisdictions, where these executive officers and key employees reside.

Competition for qualified personnel is often intense. If we are unable to recruit, train and retain sufficient qualified personnel while controlling our labor costs, our business may be materially and adversely affected.

Our ability to continue to conduct and expand our operations depends on our ability to attract and retain a large and growing number of qualified personnel in China and also globally. Our ability to meet our labor needs, including our ability to find qualified personnel to fill positions that become vacant, while controlling labor costs, is generally subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force of the markets in which we operate, unemployment levels within those markets, prevailing wage rates, changing demographics, health and other insurance costs and adoption of new or revised employment and labor laws and regulations. If we are unable to locate, attract or retain qualified personnel, or manage leadership transition successfully, the quality of service we provide to users may decrease and our financial performance may be adversely affected. In addition, if our costs of labor or related costs increase for other reasons or if new or revised labor laws, rules or regulations or healthcare laws are adopted or implemented that further increase our labor costs, our financial performance could be materially and adversely affected.

We may not have sufficient insurance to cover our business risks, so that any uninsured occurrence of business disruption may result in substantial costs to us and the diversion of our resources, which could have an adverse effect on our results of operations and financial condition.

We provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance and medical insurance for our employees. Additionally, we provide supplementary medical insurance for all management. We do not maintain business-related insurance, nor do we maintain key-man life insurance or any insurance covering liabilities resulting from misconducts or illegal activities committed by our employees, users or business partners. We consider this practice to be reasonable in light of the nature of our business, which is in line with the practices of other companies of similar size in the same industry in China. In addition, insurance companies in China currently offer limited business-related insurance products. Any uninsured occurrence of business disruption, litigation or natural disaster, or significant damages to our uninsured equipment or facilities could disrupt our business operations, requiring us to incur substantial costs and divert our resources, which could have an adverse effect on our business, financial condition and results of operations could be materially and adversely affected.

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If we fail to develop and maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our ADSs may be adversely impacted.

Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal control over financial reporting. In connection with the audit of our consolidated financial statements as of and for the fiscal year ended December 31, 2020, we and our independent registered public accounting firm identified one material weakness in our internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, or PCAOB, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness identified is our company’s lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to properly address complex U.S. GAAP accounting issues and related disclosures in accordance with U.S. GAAP and SEC financial reporting requirements. Neither we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control for purposes of identifying and reporting material weaknesses and other control deficiencies in our internal control over financial reporting. Had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional deficiencies may have been identified.

Following the identification of the material weakness and other significant control deficiencies, we have taken measures and plan to continue to take measures to remediate these deficiencies. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Control Over Financial Reporting.” However, the implementation of these measures may not fully address these deficiencies in our internal control over financial reporting, and we cannot conclude that they have been fully remediated. Our failure to correct these deficiencies or our failure to discover and address any other deficiencies could result in inaccuracies in our financial statements and impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, ineffective internal control over financial reporting could significantly hinder our ability to prevent fraud.

After we become a public company in the United States, we will be subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, will require that we include a report from management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2022. In addition, once we cease to be an “emerging growth company” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal control over financial reporting or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other or more material weaknesses or deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be

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able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Generally speaking, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of our ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our consolidated financial statements for prior periods.

We have granted and expect to continue to grant share-based awards in the future under our share incentive plan, which may result in increased share-based compensation expenses.

In order to attract and retain qualified employees, provide incentives to our directors and employees, and promote the success of our business, we adopted a share incentive plan in November 2017, which was amended and restated in March 2020, or the 2017 Share Incentive Plan. The maximum aggregate number of ordinary shares that may be issued under the 2017 Share Incentive Plan is 18,959,799 as of the date of this prospectus. As of the date of this prospectus, 14,593,211 options to purchase our ordinary shares have been granted and outstanding, excluding options that were forfeited or canceled after the relevant grant dates. In 2019, 2020 and the three months ended March 31, 2021, we recorded RMB6.4 million, RMB21.1 million (US$3.2 million) and RMB7.6 million (US$1.2 million) share-based compensation expenses, respectively.

We believe the granting of share-based awards is of significant importance to our ability to attract and retain key personnel and employees, and we will continue to grant share-based awards to employees in the future. As a result, our expenses associated with share-based compensation expenses may increase, which may have an adverse effect on our results of operations.

Our rights to use our leased properties may be defective and could be challenged by property owners or other third parties, which may disrupt our operations and incur relocation costs.

As of March 31, 2021, we leased premises occupying approximately 8,400 square meters in China, which are used as office space. Under the PRC laws and regulations, all lease agreements are required to be registered with the local land and real estate administration bureau. As of the same date, all of our leased properties in China had not been registered with the relevant PRC government authorities. Although failure to do so does not in itself invalidate the leases, we may be subject to fines if we fail to rectify such non-compliance within the prescribed time frame after receiving notice from the relevant PRC government authorities. The penalty ranges from RMB1,000 to RMB10,000 for each unregistered lease, at the discretion of the relevant authority. In the event that any fine is imposed on us for our failure to register our lease agreements, we may not be able to recover such losses from the lessors.

We face risks related to natural and other disasters, including severe weather conditions or outbreaks of health epidemics, and other extraordinary events, which could significantly disrupt our operations.

In addition to the impact of COVID-19, our business could be materially and adversely affected by natural disasters, other health epidemics or other public safety concerns affecting the PRC, and particularly Shanghai. Natural disasters may give rise to server interruptions, breakdowns, system failures, technology platform failures, internet failures or other operation interruptions for us and our business partners, which could cause the loss or corruption of data or malfunction of software or hardware as well as adversely affect our ability and the ability of our business partners to conduct daily operations. Our business could also be adversely affected if employees of ours or our business partners are affected by health epidemics. In addition, our results of operations could be adversely affected to the extent that any health epidemic harms the Chinese economy in general.

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Our headquarters is located in Shanghai, China, where most of our directors and management and the majority of our employees currently reside. Most of our system hardware and the back-up systems supplied by third-party cloud service providers are hosted in facilities located in China. Consequently, if any natural disasters, health epidemics or other public safety concerns were to affect China and Shanghai in particular, our operation may experience material disruptions, which may materially and adversely affect our business, financial condition and results of operations.

Risks Relating to Our Corporate Structure

If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

Foreign ownership in entities that provide internet and other related businesses, including the value-added telecommunication services and internet culture business, is subject to restrictions under current PRC laws and regulations, unless certain exceptions are available. Specifically, foreign ownership of an internet information service provider may not exceed 50%, and the major foreign investor is required to have a record of good performance and operating experience in managing value-added telecommunications business.

We are a Cayman Islands company and our PRC subsidiary is considered a foreign-invested enterprise. To ensure compliance with the PRC laws and regulations, we conduct our foreign investment-restricted business in China through Shanghai Soulgate Technology Co., Ltd., or our VIE, and our VIE currently holds the value-added telecommunication business license and other licenses necessary for our operation of such restricted business, based on a series of contractual arrangements by and among Shanghai Soul Technology Co., Ltd., or our WFOE, our VIE and its shareholders. These contractual agreements enable us to (i) exercise effective control over our VIE, (ii) receive substantially all of the economic benefits of our VIE, and (iii) have an exclusive call option to purchase all or part of the equity interests in our VIE when and to the extent permitted by PRC law. As a result of these contractual arrangements, we exert control over our VIE and consolidate financial results of our VIE in our financial statements under U.S. GAAP. See “Corporate History and Structure” for further details.

In the opinion of our PRC legal counsel, Shihui Partners, (i) the ownership structures of our VIE and our WFOE in China are not in violation of mandatory provisions of applicable PRC laws and regulations currently in effect; and (ii) the agreements under the contractual arrangements among our WFOE, our VIE and its shareholders governed by PRC law are valid and binding upon each party to such agreements and enforceable against each party thereto in accordance with their terms and applicable PRC laws and regulations currently in effect. However, we have been further advised by our PRC legal counsel that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations. Thus, the PRC government may ultimately take a view contrary to the opinion of our PRC legal counsel. If the PRC government otherwise find that we are in violation of any existing or future PRC laws or regulations or lack the necessary permits or licenses to operate our business, the relevant governmental authorities would have broad discretion in dealing with such violation, including, without limitation:

• revoking the business licenses and/or operating licenses of our PRC entities;

• imposing fines on us;

• confiscating any of our income that they deem to be obtained through illegal operations, or imposing other requirements with which we or our VIE may not be able to comply;

• discontinuing or placing restrictions or onerous conditions on our operations;

• placing restrictions on our right to collect revenues;

• shutting down our servers or blocking our mobile app;

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• requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with our VIE and deregistering the equity pledges of our VIE, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over our VIE and its subsidiaries;

• restricting or prohibiting our use of the proceeds from this offering or other of our financing activities to finance the business and operations of our VIE and its subsidiaries; or

• taking other regulatory or enforcement actions that could be harmful to our business.

Any of these events could cause significant disruption to our business operations and severely damage our reputation, which would in turn have a material adverse effect on our business, financial condition and results of operations. If occurrences of any of these events results in our inability to direct the activities of our VIE and its subsidiaries that most significantly impact their economic performance, and/or our failure to receive the economic benefits and residual returns from our VIE and its subsidiaries, and we are not able to restructure our ownership structure and operations in a satisfactory manner, we may not be able to consolidate the financial results of our VIE and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.

The contractual arrangements with our VIE and its shareholders may not be as effective as direct ownership in providing operational control.

We have to rely on the contractual arrangements with our VIE and its shareholders to operate the business in areas where foreign ownership is restricted, including provision of certain value-added telecommunication services. These contractual arrangements, however, may not be as effective as direct ownership in providing us with control over our VIE. For example, our VIE and its shareholders could breach their contractual arrangements with us by, among other things, failing to conduct the operations of our VIE in an acceptable manner or taking other actions that are detrimental to our interests.

If we had direct ownership of our VIE in China, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of our VIE, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, we rely on the performance by our VIE and its shareholders of their obligations under the contracts to exercise control over our VIE. The shareholders of our VIE may not act in the best interests of our company or may not perform their obligations under these contracts. If any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC law and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system. See “—Any failure by our VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.”

Any failure by our VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.

If our VIE or its shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and contractual remedies, which we cannot assure you will be sufficient or effective under PRC law. For example, if the shareholders of our VIE were to refuse to transfer their equity interests in our VIE to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations. In addition, if any third parties claim any interest in such shareholders’ equity interests in our VIE, our ability to exercise shareholders’ rights or foreclose the share pledge according to the contractual arrangements may be impaired. If these or other disputes between the shareholders of our VIE and third parties were to impair our control over our VIE, our ability to consolidate the financial results of our VIE would be

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affected, which would in turn result in a material adverse effect on our business, operations and financial condition.

All the agreements under our contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. See “Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a consolidated VIE should be interpreted or enforced under PRC law. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC law, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over our VIE, and our ability to conduct our business may be negatively affected.

The shareholders of our VIE may have actual or potential conflicts of interest with us.

Our founder, chairwoman and chief executive officer, Ms. Lu Zhang, is a shareholder of our company and holds 84.0% of the equity interest in our VIE. Mingjun Capital Limited, J&M Capital Limited, Ventek Limited and MFUND, L.P. are also shareholders of our company, and their respective PRC investment vehicles hold 4.9%, 4.8%, 3.5% and 2.8% of the equity interest in our VIE, respectively. These shareholders of our VIE may have actual or potential conflicts of interest with us. See “Corporate History and Structure—Contractual Arrangements with Our VIE and Its Shareholders.” These shareholders may breach, or cause our VIE to breach, or refuse to renew, the existing contractual arrangements we have with them and our VIE, which would have a material and adverse effect on our ability to effectively control our VIE and receive economic benefits from it. For example, the shareholders may be able to cause our agreements with our VIE to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved in our favor.

Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that we could exercise our purchase option under the exclusive call option agreements with these shareholders to request them to transfer all of their equity interests in our VIE to a PRC entity or individual designated by us, to the extent permitted by PRC law. We cannot assure you that such method, or any other methods that we may explore, will be effective in resolving the potential conflicts of interest between these shareholders and our company. In addition, we rely on Ms. Lu Zhang to abide by the laws of the Cayman Islands, which provide that directors and officers owe a fiduciary duty to the company that requires them to act in good faith and in what they believe to be the best interests of the company and not to use their position for personal gains. The shareholders of our VIE have executed powers of attorney to appoint our WFOE to vote on their behalf and exercise voting rights as shareholders of our VIE. If we cannot resolve any conflict of interest or dispute between us and the shareholders of our VIE, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

The shareholders of our VIE may be involved in personal disputes with third parties or other incidents that may have an adverse effect on their respective equity interests in our VIE and the validity or enforceability of our contractual arrangements with our VIE and its shareholders. For example, in the event that Ms. Lu Zhang

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divorces her spouse, the spouse may claim that the equity interest of our VIE held by such shareholder is part of their community property and should be divided between such shareholder and her spouse. If such claim is supported by the court, the relevant equity interest may be obtained by the shareholder’s spouse or another third party who is not subject to obligations under our contractual arrangements, which could result in a loss of the effective control over our VIE by us. Similarly, if any of the equity interests of our VIE is inherited by a third party with whom the current contractual arrangements are not binding, we could lose our control over our VIE or have to maintain such control by incurring unpredictable costs, which could cause significant disruption to our business and operations and harm our financial condition and results of operations.

Although under our current contractual arrangements, (i) Ms. Lu Zhang’s spouse has executed a spousal consent letter under which the spouse agrees not to assert any rights over the equity interest in our VIE held by Ms. Lu Zhang, and (ii) it is expressly provided that our VIE and its shareholders shall not assign any of their respective rights or obligations to any third party without the prior written consent of our WFOE, we cannot assure you that these undertakings and arrangements will be complied with or effectively enforced. In the case any of them is breached or becomes unenforceable and leads to legal proceedings, it could disrupt our business, distract our management’s attention and subject us to substantial uncertainties as to the outcome of any such legal proceedings.

Contractual arrangements in relation to our VIE may be subject to scrutiny by the PRC tax authorities and they may determine that we or our VIE owes additional taxes, which could negatively affect our financial condition and the value of your investment.

Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements in relation to our VIE were not entered into on an arm’s length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust the taxable income of our VIE in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by our VIE for PRC tax purposes, which could in turn increase its tax liabilities without reducing our PRC subsidiary’s tax expenses. In addition, the PRC tax authorities may impose late payment fees and other penalties on our VIE for the adjusted but unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if our VIE’s tax liabilities increase or if it is required to pay late payment fees and other penalties.

Our current corporate structure and business operations may be substantially affected by the newly enacted Foreign Investment Law.

On March 15, 2019, the National People’s Congress promulgated the Foreign Investment Law, which took effect on January 1, 2020. Since it is relatively new, substantially uncertainties exist in relation to its interpretation and implementation. The Foreign Investment Law does not explicitly classify whether VIEs that are controlled through contractual arrangements would be deemed as foreign invested enterprises if they are ultimately “controlled” by foreign investors. However, it has a catch-all provision under definition of “foreign investment” that includes investments made by foreign investors in China through other means as provided by laws, administrative regulations or other methods prescribed by the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions of the State Council to provide for contractual arrangements as a form of foreign investment, at which time it will be uncertain whether our contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment in the PRC and if yes, how our contractual arrangements should be dealt with.

The Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either “restricted” or “prohibited” from foreign investment in the Special Administrative Measures (Negative List) for Foreign Investment Access jointly promulgated by

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the Ministry of Commerce and the National Development and Reform Commission, or the NDRC, and took effect in July 2020. The Foreign Investment Law provides that (i) foreign-invested entities operating in “restricted” industries are required to obtain market entry clearance and other approvals from relevant PRC government authorities;(ii) foreign investors shall not invest in any industries that are “prohibited” under the Negative List. If our control over our VIE through contractual arrangements are deemed as foreign investment in the future, and any business of our VIE is “restricted” or “prohibited” from foreign investment under the “negative list” effective at the time, we may be deemed to be in violation of the Foreign Investment Law, the contractual arrangements that allow us to have control over our VIE may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on our business operation.

Furthermore, if future laws, administrative regulations or provisions mandate further actions to be taken by companies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure and business operations.

We may lose the ability to use and enjoy assets held by our VIE that are critical to the operation of our business if our VIE declare bankruptcy or become subject to a dissolution or liquidation proceeding.

Our VIE holds certain assets that may be critical to the operation of our business. If the shareholders of our VIE breach the contractual arrangements and voluntarily liquidate our VIE, or if our VIE declares bankruptcy and all or part of its assets become subject to liens or rights of third-party creditors or are otherwise disposed of without our consent, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. In addition, if our VIE undergoes an involuntary liquidation proceeding, third-party creditors may claim rights to some or all of its assets, thereby hindering our ability to operate our business, which could materially or adversely affect our business, financial condition and results of operations.

Risks Relating to Doing Business in China

Changes in China’s economic, political or social conditions or government policies could have a material and adverse effect on our business and results of operations.

The vast majority of our operations are located in China. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.

The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China are still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. The mobile social networking industry is highly sensitive to general economic changes. Any adverse changes in economic conditions in China, in the

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policies of the Chinese government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to a reduction in demand for our services and adversely affect our competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. The growth rate of the Chinese economy has gradually slowed since 2010, and the impact of COVID-19 on the global and Chinese economy in 2020 is severe. Any prolonged slowdown in the global and Chinese economy may reduce the demand for our services and materially and adversely affect our business and results of operations.

Uncertainties with respect to the PRC legal system could adversely affect us.

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. The PRC legal system is evolving rapidly, and the interpretations of many laws, regulations and rules may contain inconsistencies and enforcement of these laws, regulations and rules involves uncertainties.

Our WFOE is a foreign-invested enterprise and is subject to laws and regulations applicable to foreign-invested enterprises, and our WFOE and our VIE and its subsidiaries are also subject to various Chinese laws and regulations generally applicable to companies incorporated in China. However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations.

Litigation and negative publicity surrounding China-based companies listed in the U.S. may result in increased regulatory scrutiny of us and negatively impact the trading price of the ADSs and could have a material adverse effect upon our business, including our results of operations, financial condition, cash flows and prospects.

We believe that litigation and negative publicity surrounding companies with operations in China that are listed in the U.S. have negatively impacted stock prices for such companies. Various equity-based research organizations have published reports on China-based companies after examining, among other things, their corporate governance practices, related party transactions, sales practices and financial statements that have led to special investigations and stock suspensions on national exchanges. Any similar scrutiny of us, regardless of its lack of merit, could result in a diversion of management resources and energy, potential costs to defend ourselves against rumors, decreases and volatility in the ADS trading price, and increased directors and officers insurance premiums and could have a material adverse effect upon our business, including our results of operations, financial condition, cash flows and prospects.

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Our ADSs may be delisted under the Holding Foreign Companies Accountable Act if the Public Company Accounting Oversight Board, or the PCAOB, is unable to inspect auditors who are located in China. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections.

The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over the counter trading market in the U.S.

Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Since our auditor is located in China, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of the Chinese authorities, our auditor is currently not inspected by the PCAOB.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above.

The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection. For example, on August 6, 2020, the President’s Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant Risks from Chinese Companies to the then President of the United States. This report recommended the SEC implement five recommendations to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfil its statutory mandate. Some of the concepts of these recommendations were implemented with the enactment of the HFCA Act. However, some of the recommendations were more stringent than the HFCA Act. For example, if a company was not subject to PCAOB inspection, the report recommended that the transition period before a company would be delisted would end on January 1, 2022.

The SEC has announced that the SEC staff is preparing a consolidated proposal for the rules regarding the implementation of the HFCA Act and to address the recommendations in the PWG report. It is unclear when the SEC will complete its rulemaking and when such rules will become effective and what, if any, of the PWG recommendations will be adopted. The implications of this possible regulation in addition the requirements of the HFCA Act are uncertain. Such uncertainty could cause the market price of our ADSs to be materially and adversely affected, and our securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the HFCA Act. If our securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our ADSs.

The PCAOB’s inability to conduct inspections in China prevents it from fully evaluating the audits and quality control procedures of our independent registered public accounting firm. As a result, we and investors in our ordinary shares are deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors

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in our stock to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.

In May 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the CSRC and the PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by the PCAOB in the PRC or by the CSRC or the PRC Ministry of Finance in the United States. The PCAOB continues to be in discussions with the CSRC and the PRC Ministry of Finance to permit joint inspections in the PRC of audit firms that are registered with the PCAOB and audit Chinese companies that trade on U.S. exchanges.

We may rely on dividends and other distributions on equity paid by our PRC subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiary to make payments to us could have a material and adverse effect on our ability to conduct our business.

We are a holding company, and we may rely on dividends and other distributions on equity paid by our PRC subsidiary for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. Current PRC regulations permit our PRC subsidiary to pay dividends to us only out of their accumulated after-tax profits upon satisfaction of relevant statutory conditions and procedures, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our PRC subsidiary is required to set aside at least 10% of its accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. Such reserve funds cannot by distributed to us as dividends. For a detailed discussion of applicable PRC regulations governing distribution of dividends, see “Regulation—Regulations Relating to Dividend Distributions.” Additionally, if our PRC subsidiary incurs debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends or make other distributions to us. Any limitation on the ability of our PRC subsidiary to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

To address the persistent capital outflow and the Renminbi’s depreciation against the U.S. dollar in the fourth quarter of 2016, the People’s Bank of China and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For instance, the Circular on Promoting the Reform of Foreign Exchange Management and Improving Authenticity and Compliance Review, or the SAFE Circular 3, issued on January 26, 2017, provides that the banks shall, when dealing with dividend remittance transactions from domestic enterprise to its offshore shareholders of more than US$50,000 or its equivalent, review the relevant board resolutions, original tax filing form and audited financial statements of such domestic enterprise based on the principal of genuine transaction. The PRC government may continue to strengthen its capital controls and our PRC subsidiary’s dividends and other distributions may be subject to tightened scrutiny in the future. Any limitation on the ability of our PRC subsidiary to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises are tax resident. See “—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.”

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Increases in labor costs and enforcement of stricter labor laws and regulations in China may adversely affect our business and our profitability.

China’s overall economy and the average wage in China have increased in recent years and are expected to continue to grow. The average wage level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to pass on these increased labor costs to those who pay for our services, our profitability and results of operations may be materially and adversely affected.

In addition, we have been subject to stricter regulatory requirements in terms of entering into labor contracts with our employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law and its implementation rules, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employee’s probation and unilaterally terminating labor contracts. In addition, enterprises are forbidden to force laborers to work beyond the time limit and employers shall pay laborers for overtime work in accordance with the laws and regulations. In the event that we decide to terminate some of our employees or otherwise change our employment or labor practices, the PRC Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations.

We engage independent third-party service providers to recruit content reviewers at our request and settle payment of service fees to such third-party service providers. But we cannot preclude the possibility that these workers supplied by third-party service providers may be classified as “dispatched workers” by courts, arbitration tribunals or government agencies. In December 2012, the PRC Labor Contract Law was amended and in January 2014, the Interim Provisions on Labor Dispatch was promulgated, to impose more stringent requirements on the use of employees of temp agencies, who are known in China as “dispatched workers.” For example, the number of dispatched workers may not exceed a certain percentage of the total number of employees and the dispatched workers can only engage in temporary, auxiliary or substitutable work. However, since the application and interpretation of the PRC Labor Contract Law and the Interim Provisions on Labor Dispatch are limited and uncertain, we cannot assure you our business operation will be deemed to be in full compliance with them. If we are found to be in violation of any requirements under the PRC Labor Contract Law, the Interim Provisions on Labor Dispatch or their related rules and regulations, we may be ordered by the labor authority to rectify the non-compliance by entering into written employment contracts with the deemed “dispatched workers,” or be subject to regulatory penalty, other sanction or liability or be subject to labor disputes.

As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our employment practices do not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. We cannot assure you that we have complied or will be able to comply with all labor-related law and regulations. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation to our employees and our business, financial condition and results of operations will be adversely affected.

Our business may be negatively affected by the potential obligations to make additional social insurance and housing fund contributions.

We are required by PRC labor laws and regulations to pay various statutory employee benefits, including pensions insurance, medical insurance, work-related injury insurance, unemployment insurance, maternity insurance and housing fund, to designated government agencies for the benefit of our employees and associates. In October 2010, the Standing Committee of the National People’s Congress promulgated the PRC Social Insurance Law, effective on July 1, 2011 and amended on December 29, 2018. On April 3, 1999, the State

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Council promulgated the Regulations on the Administration of Housing Funds, which was amended on March 24, 2002 and March 24, 2019. Companies registered and operating in China are required under the Social Insurance Law and the Regulations on the Administration of Housing Funds to apply for social insurance registration and housing fund deposit registration within 30 days of their establishment and to pay for their employees different social insurance including pension insurance, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to the extent required by law. We could be subject to orders by the competent labor authorities for rectification and failure to comply with the orders may further subject us to administrative fines. The relevant government agencies may examine whether an employer has made adequate payments of the requisite statutory employee benefits, and employers who fail to make adequate payments may be subject to late payment fees, fines and/or other penalties. We engage third-party human resources agencies to pay social insurance and housing funds for some of our employees. Any failure to make such contribution by these third-party agents may directly expose us to penalties imposed by the local authorities and/or legal claims raised by our employees. As of the date of this prospectus, we have not received any notice from the relevant government authorities or any claim or request from these employees in this regard. However, we cannot assure you that the relevant government authorities will not require us to pay the outstanding amount and impose late fees or fines on us. If the relevant PRC authorities determine that we shall make supplemental social insurance and housing fund contributions or that we are subject to fines and legal sanctions in relation to our failure to make social insurance and housing fund contributions in full for our employees, our business, financial condition and results of operations may be adversely affected.

Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.

The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of Renminbi against the U.S. dollar and other currencies is affected by changes in China’s political and economic conditions and by China’s foreign exchange policies, among other things. We cannot assure you that Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future.

Any significant appreciation or depreciation of Renminbi may materially and adversely affect our revenues, earnings and financial position, and the value of, and any dividends payable on, our ADSs in U.S. dollars. For example, to the extent that we need to convert U.S. dollars we receive into Renminbi to pay our operating expenses, appreciation of Renminbi against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, a significant depreciation of Renminbi against the U.S. dollar may significantly reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the price of our ADSs.

Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.

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PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiary, our VIE and its subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

We are an offshore holding company conducting our operations in China through our PRC subsidiary, our VIE and its subsidiaries. We may make loans to our PRC subsidiary, our VIE and its subsidiaries subject to the approval from or registration with governmental authorities and limitation on amount, or we may make additional capital contributions to our wholly foreign-owned subsidiaries in China.

Any loans to our wholly foreign-owned subsidiaries in China, which are treated as foreign-invested enterprises, or FIEs, under PRC law, are subject to applicable foreign exchange loan registrations. In addition, an FIE shall use its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of an FIE shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of such FIE or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities or investments in financial management other than banks’ principal-secured products unless otherwise provided by relevant laws and regulations; (iii) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).

SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or SAFE Circular 19, effective June 2015 and amended on December 2019, in replacement of a former regulation. According to SAFE Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that RMB capital may not be used for the issuance of RMB entrusted loans (unless otherwise permitted in the business license), the repayment of inter-enterprise loans or the repayment of bank loans that have been transferred to a third party. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used for equity investments within China, it also reiterates the principle that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. Thus, it is unclear whether SAFE will permit such capital to be used for equity investments in China in actual practice. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to transfer any foreign currency we hold, including the net proceeds from this offering, to our PRC subsidiary, which may adversely affect our liquidity and our ability to fund and expand our business in China. On October 23, 2019, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment, or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment. However, since the SAFE Circular 28 is relatively new, it is unclear how SAFE and competent banks will carry this out in practice.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, or at all, with respect to future loans by us to our PRC subsidiary or our VIE or its subsidiaries or with respect to future capital

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contributions by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds from our initial public offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.

The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in RMB. Under our current corporate structure, our company in the Cayman Islands may rely on dividend payments from our PRC subsidiary to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our wholly foreign-owned subsidiaries in China are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders who are PRC residents. But approval from or registration with appropriate government authorities or delegated banks is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.

PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiary’s ability to increase their registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law.

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents for foreign exchange administration purposes) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 further requires amendment to the SAFE registrations in the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as change of a PRC individual shareholder, name and operation term, or any significant changes with respect to the offshore special purpose vehicle, such as increase or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. According to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment released on February 13, 2015 by the SAFE, local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, under SAFE Circular 37 from June 1, 2015. The PRC residents shall, by themselves or entrusting accounting firms or banks, file with the online information system designated by SAFE with respect to its existing rights under offshore direct investment each year prior to the requisite time.

Ms. Lu Zhang has completed initial SAFE registration in connection with our financings. We have used our best efforts to notify PRC residents or entities who directly or indirectly hold shares in our Cayman Islands holding company and who are known to us as being PRC residents or entities to complete the foreign exchange registrations and annual filings of its existing rights under offshore direct investment. However, we may not be

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informed of the identities of all the PRC residents or entities holding direct or indirect interest in our company, nor can we compel our shareholders or beneficial owners to comply with SAFE registration requirements. We cannot assure you that all shareholders or beneficial owners of ours who are PRC residents or entities have complied with, and will in the future make, obtain or update any applicable registrations or approvals required by, SAFE regulations.

The failure or inability of such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiary, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiary’s ability to make distributions or pay dividends to us or affect our ownership structure. As a result, our business operations and our ability to distribute profits to you could be materially and adversely affected.

China’s M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of PRC companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

A number of PRC laws and regulations have established procedures and requirements that could make merger and acquisition activities in China by foreign investors more time consuming and complex. In addition to the Anti-Monopoly Law itself, these include the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006, which was amended in 2009, and the Rules of the Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the Security Review Rules, promulgated in 2011. These laws and regulations impose requirements in some instances that The Ministry of Commerce of the People’s Republic of China, or MOFCOM, be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. In addition, the Anti-Monopoly Law requires that MOFCOM be notified in advance of any concentration of undertaking if certain thresholds are triggered. Moreover, the Security Review Rules specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM, and prohibit any attempt to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the relevant regulations to complete such transactions could be time consuming, and any required approval processes, including approval from MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

The approval of the China Securities Regulatory Commission may be required in connection with this offering, and, if required, we cannot predict whether we will be able to obtain such approval.

The M&A Rules requires overseas special purpose vehicles that are controlled by PRC companies or individuals formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies using shares of such special purpose vehicles or held by their shareholders as considerations to obtain the approval of the China Securities Regulatory Commission, or the CSRC, prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. However, the application of the M&A Rules remains unclear. If CSRC approval is required, it is uncertain whether it would be possible for us to obtain the approval. Any failure to obtain or delay in obtaining CSRC approval for this offering would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies.

Our PRC legal counsel has advised us based on their understanding of the current PRC laws, regulations and rules that the CSRC’s approval may not be required for the listing and trading of our ADSs on the Nasdaq Global Market in the context of this offering, given that: (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like ours in this prospectus are subject to this regulation, (ii) our

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WFOE was incorporated as a wholly foreign-owned enterprise by means of direct investment rather than by merger or acquisition of equity interest or assets of a PRC domestic company owned by PRC companies or individuals as defined under the M&A Rules, and (iii) no explicit provision in the M&A Rules clearly classifies contractual arrangements as a type of acquisition transaction subject to such Rules.

However, our PRC legal counsel has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering and its opinions summarized above are subject to any new laws, regulations and rules or detailed implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC government agencies, including the CSRC, would reach the same conclusion as our PRC legal counsel does. If it is determined that CSRC approval is required for this offering, we may face sanctions by the CSRC or other PRC regulatory agencies for failure to obtain or delay in obtaining CSRC approval for this offering. These sanctions may include fines and penalties on our operations in China, limitations on our operating privileges in China, delays in or restrictions on the repatriation of the proceeds from this offering into the PRC, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt this offering before the settlement and delivery of the ADSs that we are offering. Consequently, if you engage in market trading or other activities in anticipation of and prior to the settlement and delivery of the ADSs we are offering, you would be doing so at the risk that the settlement and delivery may not occur. In addition, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for this offering, we may be unable to obtain a waiver of such approval requirements.

Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, issued by SAFE in February 2012, employees, directors, supervisors and other senior management participating in any stock incentive plan of an overseas publicly listed company who are PRC citizens or who are non-PRC citizens residing in China for a continuous period of not less than one year, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company, and complete certain other procedures. We and our directors, executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of not less than one year and who have been granted share-based awards are subject to these regulations. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our wholly foreign-owned subsidiaries in China and limit these subsidiaries’ ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors and employees under PRC law.

In addition, the State Administration of Taxation, or the SAT has issued certain circulars concerning employee share options and restricted shares. Under these circulars, our employees working in China who exercise share options or are granted restricted shares will be subject to PRC individual income tax. Our PRC subsidiary has obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC government authorities.

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If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a “de facto management body” within the PRC is considered a PRC resident enterprise and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control over and overall management of the business, productions, personnel, accounts and properties of an enterprise. In 2009, the SAT issued a circular, known as Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although Circular 82 only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners like us, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.

We believe that none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” If the PRC tax authorities determine that we are a PRC resident enterprise for enterprise income tax purposes, we will be subject to the enterprise income tax on our global income at the rate of 25% and we will be required to comply with PRC enterprise income tax reporting obligations. In addition, any dividends or gains realized on the sale or other disposition of the ADSs or our ordinary shares may be subject to PRC tax, generally at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (which in the case of dividends would be withheld at source by us) (in each case, subject to the provisions of any applicable tax treaty). If such dividends or gains are deemed to be from PRC sources. Any PRC tax liability may be reduced under applicable income tax treaties. However, it is unclear whether non-PRC shareholders of our company would be able to obtain in practice the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in the ADSs.

In addition to the uncertainty as to the application of the “resident enterprise” classification, we cannot assure you that the PRC government will not amend or revise the taxation laws, rules and regulations to impose stricter tax requirements or higher tax rates. Any of such changes could materially and adversely affect our financial condition and results of operations.

We may not be able to obtain certain benefits under relevant tax treaty on dividends paid by our PRC subsidiary to us through our Hong Kong subsidiary.

We are a holding company incorporated under the laws of the Cayman Islands and as such rely on dividends and other distributions on equity from our PRC subsidiary to satisfy part of our liquidity requirements. Pursuant to the PRC Enterprise Income Tax Law, a withholding tax rate of 10% currently applies to dividends paid by a PRC “resident enterprise” to a foreign enterprise investor, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for preferential tax treatment. Pursuant to the Arrangement between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, such withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC enterprise. According to the Announcement of

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the State Administration of Taxation on Issues concerning the “Beneficial Owner” in Tax Treaties, which became effective in April 2018, whether a resident enterprise is a “beneficial owner” that can apply for a low tax rate under tax treaties depends on an overall assessment of several factors, which may bring uncertainties to the applicability of preferential tax treatment under the tax treaties. Furthermore, the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Treaties, which became effective in January 2020, requires non-resident enterprises to determine whether they are qualified to enjoy the preferential tax treatment under the tax treaties and file relevant report and materials with the tax authorities. There are also other conditions for enjoying the reduced withholding tax rate according to other relevant tax rules and regulations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Taxation.” In the future we intend to re-invest all earnings, if any, generated from our PRC subsidiary for the operation and expansion of our business in China. Should our tax policy change to allow for offshore distribution of our earnings, we would be subject to a significant withholding tax. We cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant tax authority or we will be able to complete the necessary filings with the relevant tax authority and enjoy the preferential withholding tax rate of 5% under the arrangement with respect to dividends to be paid by our PRC subsidiary to our Hong Kong subsidiary.

We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

In February 2015, SAT issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Resident Enterprises, or SAT Public Notice 7. SAT Public Notice 7 extends its tax jurisdiction to not only indirect transfers but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company. In addition, SAT Public Notice 7 provides certain criteria on how to assess reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. SAT Public Notice 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable assets. Where a non-resident enterprise conducts an “indirect transfer” by transferring the taxable assets indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. On October 17, 2017, SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017 and amended on June 15, 2018. The SAT Bulletin 37 further clarifies the practice and procedure of the withholding of nonresident enterprise income tax.

We face uncertainties on the reporting and consequences of future private equity financing transactions, share exchanges or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises. The PRC tax authorities may pursue such non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our PRC subsidiary to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing obligations or being taxed under SAT Public Notice 7 and SAT Bulletin 37, and may be required to expend valuable resources to comply with them or to establish that we and our non-resident enterprises should not be taxed under these regulations, which may have a material adverse effect on our financial condition and results of operations.

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If the custodians or authorized users of controlling non-tangible assets of our company, including our corporate chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations could be materially and adversely affected.

Under PRC law, legal documents for corporate transactions are executed using the chops or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant branch of the Administration for Market Regulation. Although we usually utilize chops to enter into contracts, the designated legal representatives of our WFOE, our VIE and its subsidiaries have the apparent authority to enter into contracts on behalf of these entities without chops and bind the entities. The designated legal representatives of our PRC entities have signed employment agreements with us or these PRC entities under which they agree to abide by various duties. In order to maintain the physical security of our chops and chops of our PRC entities, we generally store these items in secured locations accessible only by the authorized personnel in the administrative department of each of our subsidiaries. Although we monitor such authorized personnel, there is no assurance such procedures will prevent all instances of abuse or negligence. Accordingly, if any of our authorized personnel misuse or misappropriate our corporate chops or seals, we could encounter difficulties in maintaining control over the relevant entities and experience significant disruption to our operations. If a designated legal representative obtains control of the chops in an effort to obtain control over our PRC entities, we or our PRC entities would need to pass a new shareholder or board resolution to designate a new legal representative and we would need to take legal action to seek the return of the chops, apply for new chops with the relevant authorities, or otherwise seek legal redress for the violation of the representative’s fiduciary duties to us, which could involve significant time and resources and divert management attention away from our regular business. In addition, the affected entities may not be able to recover corporate assets that are sold or transferred out of our control in the event of such a misappropriation if a transferee relies on the apparent authority of the representative and acts in good faith.

If additional remedial measures are imposed on the “big four” PRC-based accounting firms, including our independent registered public accounting firm, in administrative proceedings brought by the SEC alleging such firms’ failure to meet specific criteria set by the SEC with respect to requests for the production of documents, we could fail to timely file future financial statements in compliance with the requirements of the Exchange Act.

Starting in 2011 the Chinese affiliates of the “big four” accounting firms, including our independent registered public accounting firm, were affected by a conflict between U.S. and Chinese law. Specifically, for certain U.S.-listed companies operating and audited in mainland China, the SEC and the PCAOB sought to obtain from the Chinese firms access to their audit work papers and related documents. The firms were, however, advised and directed that under Chinese law, they could not respond directly to the U.S. regulators on those requests, and that requests by foreign regulators for access to such papers in China had to be channeled through the CSRC.

In late 2012, this impasse led the SEC to commence administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the Chinese accounting firms, including our independent registered public accounting firm. A first instance trial of the proceedings in July 2013 in the SEC’s internal administrative court resulted in an adverse judgment against the firms. The administrative law judge proposed penalties on the firms including a temporary suspension of their right to practice before the SEC, although that proposed penalty did not take effect pending review by the Commissioners of the SEC. On February 6, 2015, before a review by the Commissioner had taken place, the firms reached a settlement with the SEC. Under the settlement, the SEC accepts that future requests by the SEC for the production of documents will normally be made to the CSRC. The firms will receive matching Section 106 requests, and are required to abide by a detailed set of procedures with respect to such requests, which in substance require them to facilitate production via the CSRC. If they fail to meet specified criteria, the SEC retains authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure. Remedies for any future noncompliance could include, as appropriate, an automatic six-month bar on a single firm’s performance of

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certain audit work, commencement of a new proceeding against a firm, or, in extreme cases, the resumption of the current proceeding against all four firms. If additional remedial measures are imposed on the Chinese affiliates of the “big four” accounting firms, including our independent registered public accounting firm, in administrative proceedings brought by the SEC alleging the firms’ failure to meet specific criteria set by the SEC with respect to requests for the production of documents, we could be unable to timely file future financial statements in compliance with the requirements of the Exchange Act.

In the event that the SEC restarts the administrative proceedings, depending upon the final outcome, listed companies in the United States with major PRC operations may find it difficult or impossible to retain auditors in respect of their operations in the PRC, which could result in financial statements being determined not to be in compliance with the requirements of the Exchange Act, including possible delisting. Moreover, any negative news about any such future proceedings against these audit firms may cause investor uncertainty regarding China-based, U.S.-listed companies and the market price of our ADSs may be adversely affected.

If our independent registered public accounting firm was denied, even temporarily, the ability to practice before the SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not to be in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to the delisting of our ADSs from the Nasdaq Global Market or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of the ADSs in the United States.

Risks Relating to Our ADSs and This Offering

There has been no public market for our shares or ADSs prior to this offering, and you may not be able to resell our ADSs at or above the price you paid, or at all.

Prior to this initial public offering, there has been no public market for our shares or ADSs. We will apply to list our ADSs on the Nasdaq Global Market. Our shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system. If an active trading market for our ADSs does not develop after this offering, the market price and liquidity of our ADSs will be materially and adversely affected.

Negotiations with the underwriters will determine the initial public offering price for our ADSs which may bear no relationship to their market price after the initial public offering. We cannot assure you that an active trading market for our ADSs will develop or that the market price of our ADSs will not decline below the initial public offering price.

The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.

The trading price of the ADSs is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. The securities of some of these companies, including social networking companies, have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in their trading prices. The trading performances of other Chinese companies’ securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading performance of the ADSs, regardless of our actual operating performance.

In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following:

• actual or anticipated variations in our revenues, earnings and cash flow;

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• the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

• fluctuations in key operating metrics;

• announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

• announcements of new offerings, solutions and expansions by us or our competitors;

• announcements of studies and reports relating to the quality of the services offered in our mobile app or those of our competitors;

• failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by securities analysts who follow our company or our failure to meet these estimates or the expectations of investors;

• detrimental adverse publicity about us, our services or our industry;

• announcements of new regulations, rules or policies relevant to our business;

• additions or departures of key personnel;

• release of lockup or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;

• potential litigation or regulatory investigations; and

• other events or factors, including those resulting from war, epidemics, incidents of terrorism or responses to these events.

Any of these factors may result in large and sudden changes in the volume and price at which the ADSs will trade. Furthermore, the stock market in general experiences price and volume fluctuations that are often unrelated or disproportionate to the operating performance of companies like us. These broad market and industry fluctuations may adversely affect the market price of our ADSs. Volatility or a lack of positive performance in our ADS price may also adversely affect our ability to retain key employees, most of whom have been granted equity incentives.

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

Based on our sixth amended and restated memorandum and articles that will remain effective after the completion of this offering, our authorized share capital is divided into Class A ordinary shares and Class B ordinary shares (with certain shares remaining undesignated, with power for our directors to designate and issue such classes of shares as they think fit). Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to five votes per share. We will issue Class A ordinary shares represented by our ADSs in this offering. Each Class B ordinary share is convertible into one Class A

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ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. After this offering, the holder of Class B ordinary shares will have the ability to strongly influence matters requiring shareholders’ approval, including any amendment of our memorandum and articles of association. Any future issuances of Class B ordinary shares may be dilutive to the voting power of holders of Class A ordinary shares. Any conversions of Class B ordinary shares into Class A ordinary shares may dilute the percentage ownership of the existing holders of Class A ordinary shares within their class of ordinary shares. Such conversions may increase the aggregate voting power of the existing holders of Class A ordinary shares. In the event that we have multiple holders of Class B ordinary shares in the future and certain of them convert their Class B ordinary shares into Class A ordinary shares, the remaining holders who retain their Class B ordinary shares may experience increases in their relative voting power.

Upon the completion of this offering, our founder, chairwoman and chief executive officer, Ms. Lu Zhang, will beneficially own all of our issued Class B ordinary shares. These Class B ordinary shares will constitute         % of our total issued and outstanding share capital immediately after the completion of this offering and         % of the aggregate voting power of our total issued and outstanding share capital immediately after the completion of this offering due to the disparate voting powers associated with our dual-class share structure, assuming the underwriters do not exercise their option to purchase additional ADSs. As a result of the dual-class share structure and the concentration of ownership, holders of Class B ordinary shares will have considerable influence over matters such as decisions regarding mergers and consolidations, election of directors and other significant corporate actions. Such holders may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of our ADSs. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial.

The dual-class structure of our ordinary shares may adversely affect the trading market for our ADSs.

Certain shareholder advisory firms have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual-class structure of our ordinary shares may prevent the inclusion of our ADSs representing Class A ordinary shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for our ADSs. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our ADSs.

If securities or industry analysts do not publish research or publishes inaccurate or unfavorable research about our business, or if they adversely change their recommendations regarding the ADSs, the market price for our ADSs and trading volume could decline.

The trading market for our ADSs will depend in part on the research and reports that securities or industry analysts publish about us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who covers us downgrades our ADSs or publishes inaccurate or unfavorable research about our business, the market price for our ADSs would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our ADSs to decline.

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We currently do not expect to pay dividends in the foreseeable future after this offering and you must rely on price appreciation of our ADSs for return on your investment.

We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ADSs as a source for any future dividend income.

Our board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, subject to any rights and restrictions for the time being attached to any shares, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value after this offering or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.

Because our initial public offering price is substantially higher than our net tangible book value per share, you will experience immediate and substantial dilution.

If you purchase ADSs in this offering, you will pay more for your ADSs than the amount paid by our existing shareholders for their ordinary shares on a per ADS basis. As a result, you will experience immediate and substantial dilution of approximately US$                per ADS, representing the difference between the initial public offering price of US$                 per ADS, the midpoint of the estimated public offering price range shown on the front cover of this prospectus, and our net tangible book value per ADS as of                , 2021, after giving effect to the net proceeds we receive from this offering. See “Dilution” for a more complete description of how the value of your investment in the ADSs will be diluted upon the completion of this offering.

Techniques employed by short sellers may drive down the market price of the ADSs.

Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in the market.

Public companies that have substantially all of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.

It is not clear what effect such negative publicity could have on us. If we were to become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we could have to expend a

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significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could distract our management from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact our business operations, and any investment in the ADSs could be greatly reduced or even rendered worthless.

The sale or availability for sale of substantial amounts of the ADSs could adversely affect their market price.

Sales of substantial amounts of the ADSs in the public market, or the perception that these sales could occur, could adversely affect the market price of the ADSs and could materially impair our ability to raise capital through equity offerings in the future. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs. Upon the completion of this offering, we will have                 ordinary shares issued and outstanding, among which                ordinary shares are represented by ADSs, which are freely transferable without restriction or additional registration under the Securities Act. The remaining ordinary shares outstanding will be available for sale, subject to volume and other restrictions as applicable under Rules 144 and 701 under the Securities Act. Certain holders of our ordinary shares may cause us to register under the Securities Act the sale of their shares, subject to the applicable lock-up period. Registration of these shares under the Securities Act would result in ADSs representing these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. Sales of these registered shares represented by ADSs in the public market could cause the price of our ADSs to decline.

Because the amount, timing, and whether or not we distribute dividends at all is entirely at the discretion of our board of directors, you must rely on price appreciation of our ADSs for return on your investment.

Our board of directors has discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profits or share premium account provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in the ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that the ADSs will appreciate in value after our initial public offering or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in the ADSs, and you may even lose your entire investment in the ADSs.

There can be no assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States investors in our ADSs or ordinary shares to significant adverse United States income tax consequences.

A non-U.S. corporation, such as our company, will be classified as a passive foreign investment company, or PFIC, for any taxable year if either (1) at least 75% of its gross income for such year consists of certain types of “passive” income; or (2) at least 50% of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce passive income or are held for the production of passive income (the “asset test”). Although the law in this regard is not entirely clear, we treat our VIE and its subsidiaries as being owned by us for U.S. federal income tax purposes because we control their management decisions and are entitled to substantially all of the economic benefits associated with them. As a

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result, we consolidate their results of operations in our consolidated U.S. GAAP financial statements. If it were determined, however, that we are not the owner of our VIE and its subsidiaries for U.S. federal income tax purposes, we may be treated as a PFIC for the current taxable year and any subsequent taxable year. Assuming that we are the owner of our VIE and its subsidiaries for U.S. federal income tax purposes, and based on the current and anticipated value of our assets and composition of our income and assets (taking into account the expected cash proceeds from, and our anticipated market capitalization following, this offering), we do not presently expect to be a PFIC for the current taxable year or the foreseeable future.

However, while we do not expect to be or become a PFIC, no assurance can be given in this regard because the determination of whether we are or will become a PFIC for any taxable year is a fact-intensive inquiry made annually that depends, in part, upon the composition of our income and assets. Fluctuations in the market price of our ADSs may cause us to be or become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test, including the value of our goodwill and other unbooked intangibles, may be determined by reference to the market price of our ADSs from time to time (which may be volatile). The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering.

If we were to be or become a PFIC for any taxable year during which a U.S. Holder (as defined in “Taxation—United States Federal Income Tax Considerations”) holds our ADSs or ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. See “Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.”

Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares and ADSs.

Our memorandum and articles of association contain certain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions, including a provision that grants authority to our board of directors to establish and issue from time to time one or more series of preferred shares without action by our shareholders and to determine, with respect to any series of preferred shares, the terms and rights of that series, any or all of which may be greater than the rights associated with our ordinary shares represented by ADSs. These provisions could have the effect of depriving our shareholders of the opportunity to sell their shares at a premium over the prevailing market price by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transactions.

[Our memorandum and articles of association and the deposit agreement provide that the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) is the exclusive judicial forum within the U.S. for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, and any suit, action or proceeding arising out of or relating in any way to the ADSs or the deposit agreement, which could limit the ability of holders of our ordinary shares, the ADSs or other securities to obtain a favorable judicial forum for disputes with us, our directors and officers, the depositary, and potentially others.

Our memorandum and articles of association provide that the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New York County, New York) is the exclusive forum within the United States for the resolution of any complaint asserting a cause of action arising out of or relating in any way to the federal securities laws of the United States, regardless of whether such legal suit, action, or proceeding also involves parties other than our company. The deposit agreement provides that the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, the state courts in New

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York County, New York) shall have exclusive jurisdiction over any suit, action or proceeding against or involving us or the depositary, arising out of or relating in any way to the deposit agreement or the transactions contemplated thereby or by virtue of owning the ADSs. The enforceability of similar federal court choice of forum provisions in other companies’ organizational documents has been challenged in legal proceedings in the United States, and it is possible that a court could find this type of provision to be inapplicable or unenforceable. If a court were to find the federal choice of forum provision contained in our memorandum and articles of association or the deposit agreement to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. If upheld, the forum selection clause in our memorandum and articles of association, as well as the forum selection provision in the deposit agreement, may limit a security-holder’s ability to bring a claim against us, our directors and officers, the depositary, and potentially others in his or her preferred judicial forum, and this limitation may discourage such lawsuits. The exclusive forum provision in our memorandum and articles of association will not operate so as to deprive the courts of the Cayman Islands from having jurisdiction over matters relating to our internal affairs. Holders of our shares or the ADSs will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder pursuant to the exclusive forum provision in the memorandum and articles of association and deposit agreement. In addition, the forum selection provision of the deposit agreement does not affect the right of an ADS holder or the depositary to require any claim against us, including a federal securities law claim, to be submitted to arbitration or to commence an action in any court in aid of that arbitration provision or to enter judgment upon or enforce any arbitration award.]

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands, or the Companies Act, and the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors owed to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors owed to us under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than copies of the memorandum and articles of association, the register of mortgages and charges and any special resolutions passed by our shareholders) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our memorandum and articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of our board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital—Our Memorandum and Articles of Association—Differences in Corporate Law.”

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You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management named in the prospectus based on foreign laws.

We are an exempted company incorporated under the laws of the Cayman Islands. However, we conduct the vast majority of our operations in China. In addition, all of our directors and senior executive officers reside within China for at least a significant portion of the time. As a result, it may be difficult for you to effect service of process upon us or our management residing in China. It may also be difficult for you to enforce in U.S. courts of the judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state.

The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.

It may be difficult for overseas regulators to conduct investigation or collect evidence within China.

Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests. See also “—Risks Relating to Our ADSs and This Offering—You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law” for risks associated with investing in us as a Cayman Islands company.

[You may experience dilution of your holdings due to inability to participate in rights offerings.

We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. However, we cannot make such rights available to you in the United States unless we register both the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective.

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Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.]

[You may not receive cash dividends if the depositary decides it is impractical to make them available to you.

The depositary will pay cash dividends on the ADSs only to the extent that we decide to distribute dividends on our ordinary shares or other deposited securities, and we do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future. To the extent that there is a distribution, the depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary may, at its discretion, decide that it is inequitable or impractical to make a distribution available to any holders of ADSs. For example, the depositary may determine that it is not practicable to distribute certain property through the mail, or that the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may decide not to distribute such property to you.]

We have not determined a specific use for a portion of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree.

We have not determined a specific use for a portion of the net proceeds of this offering, and our management will have considerable discretion in deciding how to apply these proceeds. You will not have the opportunity to assess whether the proceeds are being used appropriately before you make your investment decision. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. Our management has discretion over the use of proceeds we receive from this offering, and we could spend the proceeds we receive from this offering in ways our ADS holders may not agree with or that do not yield a favorable return, or no return at all. Our actual use of these proceeds may differ substantially from our plans, if any, in the future. We cannot assure you that the net proceeds will be used in a manner that would improve our results of operations or increase our ADS price, nor that these net proceeds will be placed only in investments that generate income or appreciate in value.

[You may be subject to limitations on transfer of your ADSs.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of the ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.]

We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”

After we become a public company, we expect to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the Nasdaq Global Market, impose various requirements on the corporate governance practices of public companies. We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly.

As a result of becoming a public company, we will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We also expect that operating

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as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

In addition, after we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.

Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

• the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;

• the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;

• the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time;

• the selective disclosure rules by issuers of material nonpublic information under Regulation FD; and

• certain audit committee independence requirements in Rule 10A-3 of the Exchange Act.

We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of the Nasdaq Global Market. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

As a company with less than US$1.07 billion in revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. Therefore, we may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies. As a result, if we elect not to comply with such reporting and other requirements, in particular the auditor attestation requirements, our investors may not have access to certain information they may deem important.

We cannot predict if investors will find our ADSs less attractive or our company less comparable to certain other public companies because we may rely on these exemptions and elections. If some investors find our ADSs

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less attractive as a result, there may be a less active trading market for our ADSs and our ADS price may be more volatile.

[We will be a “controlled company” within the meaning of the Nasdaq Stock Market Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

We will be a “controlled company” as defined under the Nasdaq Stock Market Rules because our founder, chairwoman and chief executive officer, Ms. Lu Zhang, will beneficially own more than 50% of our total voting power immediately after the completion of this offering. For so long as we remain a controlled company under that definition, we are permitted to elect to rely on, and may rely on, certain exemptions from corporate governance rules, including an exemption from the rule that a majority of our board of directors must be independent directors. As a result, you may not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.]

As an exempted company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with such corporate governance listing standards.

After we are listed on the Nasdaq Global Market, we will be subject to the Nasdaq Stock Market’s corporate governance listing standards. However, Nasdaq Stock Market’s rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq Stock Market’s corporate governance listing standards. For example, Cayman Islands does not require us to comply with the following corporate governance listing standards of the Nasdaq Stock Market: (i) having the majority of our board of directors composed of independent directors, (ii) having a minimum of three members in our audit committee, (iii) holding annual shareholders’ meetings, (iv) having a compensation committee composed entirely of independent directors, and (v) having a nominating and corporate governance committee composed entirely of independent directors. If we choose to follow home country practices in the future, our shareholders may be afforded less protection than they would otherwise enjoy under the Nasdaq Stock Market’s corporate governance listing standards applicable to U.S. domestic issuers.

The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to direct how the Class A ordinary shares which are represented by your ADSs are voted.

Holders of ADSs do not have the same rights as our shareholders. As a holder of our ADSs, you will not have any direct right to attend general meetings of our shareholders or to cast any votes at such meetings. As an ADS holder, you will only be able to exercise the voting rights carried by the underlying Class A ordinary shares which are represented by your ADSs indirectly by giving voting instructions to the depositary in accordance with the provisions of the deposit agreement. Under the deposit agreement, you may vote only by giving voting instructions to the depositary. Upon receipt of your voting instructions, the depositary will try, as far as is practicable, to vote the underlying Class A ordinary shares represented by your ADSs in accordance with your instructions. If we ask for your instructions, then upon receipt of your voting instructions, the depositary will try to vote the underlying Class A ordinary shares in accordance with these instructions. If we do not instruct the depositary to ask for your instructions, the depositary may still vote in accordance with instructions you give, but it is not required to do so. You will not be able to directly exercise your right to vote with respect to the underlying Class A ordinary shares unless you withdraw the shares, and become the registered holder of such shares prior to the record date for the general meeting. Under our memorandum and articles of association, the minimum notice period required to be given by our company to our registered shareholders to convene a general meeting will be seven days. When a general meeting is convened, you may not receive sufficient advance notice

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of the meeting to withdraw the shares underlying your ADSs and become the registered holder of such shares to allow you to attend the general meeting and to vote directly with respect to any specific matter or resolution to be considered and voted upon at the general meeting. In addition, under our memorandum and articles of association, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register of members and/or fix in advance a record date for such meeting, and such closure of our register of members or the setting of such a record date may prevent you from withdrawing the underlying Class A ordinary shares represented by your ADSs and becoming the registered holder of such shares prior to the record date, so that you would not be able to attend the general meeting or to vote directly. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We have agreed to give the depositary notice of shareholder meetings sufficiently in advance of such meetings. Nevertheless, we cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote the underlying Class A ordinary shares represented by your ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to direct how the shares underlying your ADSs are voted and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested. In addition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting. Except in limited circumstances, the depositary for our ADSs will give us a discretionary proxy to vote the Class A ordinary shares underlying your ADSs if you do not vote at shareholders’ meetings, which could adversely affect your interests.

[We are entitled to amend the deposit agreement and to change the rights of ADS holders under the terms of such agreement, or to terminate the deposit agreement, without the prior consent of the ADS holders.

We are entitled to amend the deposit agreement and to change the rights of the ADS holders under the terms of such agreement, without the prior consent of the ADS holders. We and the depositary may agree to amend the deposit agreement in any way we decide is necessary or advantageous to us. Amendments may reflect, among other things, operational changes in the ADS program, legal developments affecting ADSs or changes in the terms of our business relationship with the depositary. In the event that the terms of an amendment impose or increase fees or charges (other than in connection with foreign exchange control regulations, and taxes and other governmental charges, delivery and other such expenses) or materially prejudice an existing substantial right of the ADS holders, ADS holders will only receive                days’ advance notice of the amendment, and no prior consent of the ADS holders is required under the deposit agreement. Furthermore, we may decide to terminate the ADS facility at any time for any reason. For example, terminations may occur when we decide to list our shares on a non-U.S. securities exchange and determine not to continue to sponsor an ADS facility or when we become the subject of a takeover or a going-private transaction. If the ADS facility will terminate, ADS holders will receive at least                 days’ prior notice, but no prior consent is required from them. Under the circumstances that we decide to make an amendment to the deposit agreement that is disadvantageous to ADS holders or terminate the deposit agreement, the ADS holders may choose to sell their ADSs or surrender their ADSs and become direct holders of the underlying common shares, but will have no right to any compensation whatsoever.]

[ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.

The deposit agreement governing the ADSs representing our Class A ordinary shares provides that, subject to the depositary’s right to require a claim to be submitted to arbitration, the United States District Court for the Southern District of New York (or, if the United States District Court for the Southern District of New York lacks subject matter jurisdiction over a particular dispute, in the state courts in New York County, New York) shall have exclusive jurisdiction to hear and determine claims arising out of or relating in any way to the deposit agreement (including claims arising under the Exchange Act or the Securities Act) and in that regard, to the fullest extent permitted by law, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws.

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If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which govern the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waives the right to a jury trial. We believe that this is the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiver provision before investing in the ADSs.

If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us or the depositary, lead to increased costs to bring a claim, limited access to information and other imbalances of resources between such holder and us, or limit such holder’s ability to bring a claim in a judicial forum that such holder finds favorable. If a lawsuit is brought against us or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action.

Nevertheless, if this jury trial waiver provision is not enforced, to the extend a court action proceeds, it would proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs shall relieve us or the depositary from our respective obligations to comply with the Securities Act and the Exchange Act nor serve as a waiver by any holder or beneficial owner of ADSs of compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.]

[The depositary for the ADSs will give us a discretionary proxy to vote our ordinary shares underlying your ADSs if you do not vote at shareholders’ meetings, except in limited circumstances, which could adversely affect your interests.

Under the deposit agreement for the ADSs, if you do not vote, the depositary will give us a discretionary proxy to vote our ordinary shares underlying your ADSs at shareholders’ meetings unless:

• we have instructed the depositary that we do not wish a discretionary proxy to be given;

• we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;

• a matter to be voted on at the meeting may have a material adverse impact on shareholders; or

• the voting at the meeting is to be made on a show of hands.

The effect of this discretionary proxy is that if you do not vote at shareholders’ meetings, you cannot prevent our ordinary shares underlying your ADSs from being voted, except under the circumstances described above. This may make it more difficult for shareholders to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.]

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current expectations and views of future events. The forward looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” Known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

• our mission, goals and strategies;

• our future business development, financial condition and results of operations;

• the expected growth of the mobile social networking industry in China;

• our expectations regarding the prospects of our business model and demand for and market acceptance of our services;

• our expectations regarding maintaining and strengthening our relationships with users, business partners and other stakeholders;

• competition in our industry;

• our proposed use of proceeds from this offering;

• relevant government policies and regulations relating to our industry;

• general economic and business conditions globally and in China; and

• assumptions underlying or related to any of the foregoing.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Prospectus Summary—Summary of Risk Factors,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Regulation” and other sections in this prospectus. You should read thoroughly this prospectus and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This prospectus contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also includes projections based on a number of assumptions. Our industry may not grow at the rate projected by market data, or at all. Failure of this market to grow at the projected rate may have a material and adverse effect on our business and the market price of the ADSs. In addition, the rapidly evolving nature of this industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

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The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

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USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of approximately US$                 , or approximately US$                if the underwriters exercise their option to purchase additional ADSs, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us. These estimates are based upon an assumed initial public offering price of US$                per ADS, which is the midpoint of the price range shown on the front page of this prospectus. A US$1.00 increase (decrease) in the assumed initial public offering price of US$                per ADS would increase (decrease) the net proceeds to us from this offering by US$                , assuming the number of ADSs offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.

The primary purposes of this offering are to create a public market for our shares for the benefit of all shareholders, retain talented employees by providing them with equity incentives, and obtain additional capital. We plan to use the net proceeds of this offering as follows:

• approximately 40% for research and development to continue to invest in and develop our technologies, particularly with respect to artificial intelligence, big data capability and technology infrastructure, and to enhance our product and service offerings;

• approximately 40% for marketing and promotional activities to promote our brand and fuel the growth of our user base; and

• the balance for general corporate purposes and capital expenditures, which may include, among others, acquisitions of, or investments in, technologies, solutions or businesses that complement our business, although we have no present commitments or agreements to enter into any acquisitions or investments.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. See “Risk Factors—Risks relating to Our ADSs and This Offering—We have not determined a specific use for a portion of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree.”

To the extent that the net proceeds we receive from this offering are not immediately applied for the above purposes, we plan to invest the net proceeds in short-term, interest-bearing, debt instruments or demand deposits.

In using the proceeds of this offering, we are permitted under PRC laws and regulations as an offshore holding company to provide funding to our PRC subsidiary only through loans or capital contributions and to our consolidated VIE only through loans, subject to satisfaction of applicable government registration and approval requirements. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, or at all. See “Risk Factors—Risks relating to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiary, our VIE and its subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”

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DIVIDEND POLICY

Our board of directors has discretion on whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case, all dividends are subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium account, and provided always that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. Even if we decide to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

We do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future after this offering. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

We are a holding company incorporated in the Cayman Islands. We may rely on dividends from our subsidiary in China for our cash requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiary to pay dividends to us. See “Regulation—Regulations Relating to Foreign Exchange.”

If we pay any dividends on our ordinary shares, we will pay those dividends which are payable in respect of the underlying Class A ordinary shares represented by the ADSs to the depositary, as the registered holder of such Class A ordinary shares, and the depositary then will pay such amounts to the ADS holders in proportion to the underlying Class A ordinary shares represented by the ADSs held by such ADS holders, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See “Description of American Depositary Shares.” Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.

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CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2021:

• on an actual basis;

• on a pro forma basis to reflect (i) the re-designation of 35,814,050 ordinary shares beneficially owned by our founder, chairwoman and chief executive officer, Ms. Lu Zhang, into Class B ordinary shares on a one-for-one basis on May 10, 2021, (ii) the re-designation of all of the remaining 29,798,106 outstanding ordinary shares into Class A ordinary shares on a one-for-one basis on May 10, 2021; and (iii) the conversion and the re-designation of the then issued and outstanding preferred shares on a one-for-one basis into Class A ordinary shares on May 10, 2021; and

• on a pro forma as adjusted basis to reflect (i) the re-designation of 35,814,050 ordinary shares beneficially owned by our founder, chairwoman and chief executive officer, Ms. Lu Zhang, into Class B ordinary shares on a one-for-one basis on May 10, 2021, (ii) the re-designation of all of the remaining 29,798,106 outstanding ordinary shares into Class A ordinary shares on a one-for-one basis on May 10, 2021; (iii) the conversion and the re-designation of the then issued and outstanding preferred shares on a one-for-one basis into Class A ordinary shares on May 10, 2021; and (iv) the issuance and sale of                Class A ordinary shares represented by ADSs by us in this offering at an assumed initial public offering price of US$                per ADS, the midpoint of the estimated range of the initial public offering price shown on the front cover of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, assuming the underwriters do not exercise their option to purchase additional ADSs.

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You should read this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

	As of March 31, 2021
	Actual						Pro Forma unaudited						Pro Forma As Adjusted(1) unaudited
	(in thousands)
	RMB			US$			RMB			US$			RMB	US$
Mezzanine Equity:
Total mezzanine equity		1,661,373			253,575			—			—
Shareholders’ (Deficit) Equity:
Ordinary Shares (US$0.0001 par value; 413,693,736 shares authorized and 65,612,156 shares issued and outstanding on an actual basis, and none authorized, issued and outstanding on a pro forma or a pro forma as adjusted basis)		45			7			—			—
Class A ordinary shares (US$0.0001 par value; none authorized, issued and outstanding on an actual basis, 840,000,000 shares authorized and 116,104,370 shares issued and outstanding on a pro forma basis, and              shares issued and outstanding on a pro forma as adjusted basis)		—			—			77			12
Class B ordinary shares (US$0.0001 par value; none authorized, issued and outstanding on an actual basis, 60,000,000 shares authorized and 35,814,050 shares issued and outstanding on a pro forma basis, and              shares issued and outstanding on a pro forma as adjusted basis)		—			—			25			4
Additional paid-in capital		—			—			1,661,317			253,566
Accumulated other comprehensive income		26,227			4,003			26,227			4,003
Accumulated deficit		(1,679,260	)		(256,305	)		(1,679,260	)		(256,305	)
Total shareholders’ (deficit) equity(2)		(1,652,988	)		(252,295	)		8,386			1,280
Total mezzanine equity and shareholders’ (deficit) equity		8,386			1,280			8,386			1,280

(1) The pro forma as adjusted information discussed above is illustrative only. Our additional paid-in capital and total shareholders’ deficit following the completion of this offering are subject to adjustment based on the actual initial public offering price and other terms of this offering determined at pricing.

(2) A US$1.00 increase (decrease) in the assumed initial public offering price of US$                per ADS, which is the midpoint of the estimated range of the initial public offering price shown on the cover page of this prospectus, would increase (decrease) each of total shareholders’ deficit and total mezzanine equity and shareholders’ deficit by US$                million.

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DILUTION

If you invest in the ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after this offering. Dilution results from the fact that the initial public offering price per ordinary share is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares on an as-converted basis.

Our net tangible book value as of March 31, 2021 was approximately negative US$252.3 million, or negative US$3.85 per ordinary share and US$                 per ADS. Net tangible book value represents the amount of our total consolidated assets less the amount of our total consolidated liabilities and total mezzanine equity. Dilution is determined by subtracting net tangible book value per ordinary share, after giving effect to the additional proceeds we will receive from this offering, from the assumed initial public offering price of US$                 per Class A ordinary share, which is the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus adjusted to reflect the ADS-to-ordinary share ratio, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Because the Class A ordinary shares and Class B ordinary shares have the same dividend and other rights, except for voting and conversion rights, the dilution is presented based on all issued and outstanding ordinary shares, including Class A ordinary shares and Class B ordinary shares.

Without taking into account any other changes in pro forma net tangible book value after March 31, 2021, other than to give effect to our sale of the ADSs offered in this offering at the assumed initial public offering price of US$                 per ADS, which is the midpoint of the estimated initial public offering price range, after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of March 31, 2021 would have been US$                 , or US$                 per ordinary share and US$                 per ADS. This represents an immediate increase in net tangible book value of US$                 per ordinary share and US$                 per ADS to the existing shareholders and an immediate dilution in net tangible book value of US$                 per ordinary share and US$                 per ADS to investors purchasing ADSs in this offering. The following table illustrates such dilution:

	Per Ordinary Share			Per ADS
Assumed initial public offering price	US$			US$
Net tangible book value as of March 31, 2021	US$	(3.85	)	US$
Pro forma net tangible book value after giving effect to the conversion of our preferred shares	US$			US$
Pro forma as adjusted net tangible book value after giving effect to the conversion of our preferred shares and this offering	US$			US$
Amount of dilution in net tangible book value to new investors in this offering	US$			US$

A US$1.00 increase (decrease) in the assumed initial public offering price of US$                 per ADS would increase (decrease) our pro forma as adjusted net tangible book value after giving effect to this offering by US$                 , the pro forma as adjusted net tangible book value per ordinary share and per ADS after giving effect to this offering by US$                 per ordinary share and US$                 per ADS, and the dilution in pro forma as adjusted net tangible book value per ordinary share and per ADS to new investors in this offering by US$                 per ordinary share and US$                 per ADS, assuming no change to the number of ADSs offered by us as set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, on a pro forma as adjusted basis as of March 31, 2021, the differences between existing shareholders and the new investors with respect to the number of ordinary shares (in the form of ADSs or shares) purchased from us, the total consideration paid and the average price per ordinary share and per

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ADS paid before deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The total number of ordinary shares does not include ordinary shares underlying the ADSs issuable upon the exercise of the option to purchase additional ADSs granted to the underwriters.

	Ordinary Shares Purchased		Total Consideration				Average Price Per Ordinary Share	Average Price Per ADS
	Number	Percent	Amount	Percent
Existing shareholders			US$			%	US$	US$
New investors			US$			%	US$	US$
Total			US$		100.0	%

The pro forma as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of the ADSs and other terms of this offering determined at pricing.

The discussion and tables above assume no exercise of options outstanding as of the date of this prospectus. As of the date of this prospectus, there are 14,593,211 outstanding options with a weighted average exercise price of US$0.2329 per share. To the extent that any of these options are exercised, there will be further dilution to new investors.

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ENFORCEABILITY OF CIVIL LIABILITIES

We are incorporated in the Cayman Islands as an exempted company with limited liability in order to enjoy the following benefits:

• political and economic stability;

• an effective judicial system;

• a favorable tax system;

• the absence of exchange control or currency restrictions; and

• the availability of professional and support services.

However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include but are not limited to:

• the Cayman Islands has a less developed body of securities laws as compared to the United States and these securities laws provide significantly less protection to investors as compared to the United States; and

• Cayman Islands companies may not have standing to sue before the federal courts of the United States.

Our currently effective memorandum and articles of association that will remain effective after the completion of this offering do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders, be arbitrated.

Substantially all of our operations are conducted in China. A majority of our directors and executive officers are nationals or residents of jurisdictions other than the United States and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

We have appointed Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168, as our agent upon whom process may be served in any action brought against us under the securities laws of the United States.

We have been informed by Maples and Calder (Hong Kong) LLP, our counsel as to Cayman Islands law, that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the civil liability provisions of the federal securities laws of the United States or the securities laws of any state in the United States, or (ii) entertain original actions brought in the Cayman Islands against us or our directors or officers that are predicated upon the federal securities laws of the United States or the securities laws of any state in the United States. We have also been advised by Maples and Calder (Hong Kong) LLP that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any reexamination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (a) is given by a foreign court of competent jurisdiction, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (c) is final, (d) is not in respect of taxes, a fine or a penalty, and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

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Shihui Partners, our counsel as to PRC law, has advised us that there is uncertainty as to whether the courts of China would:

• recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or

• entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

Shihui Partners has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law and other applicable laws and regulations based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against a company in China for disputes if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit. It will be, however, difficult for U.S. shareholders to originate actions against us in the PRC in accordance with PRC laws because we are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding the ADSs or ordinary shares, to establish a connection to the PRC for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.

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CORPORATE HISTORY AND STRUCTURE

Corporate History

We set up Shanghai Soulgate Technology Co., Ltd., or our VIE, in June 2015. We launched our mobile app in November 2016.

Our holding company, Soulgate Inc., was incorporated in May 2017. Soulgate Inc. then established a wholly owned subsidiary in Hong Kong, Soulgate Hongkong Limited, in May 2017. In August 2017, Soulgate Hongkong Limited established a wholly owned subsidiary in China, Shanghai Soul Technology Co., Ltd., or our WFOE. In August 2017, we gained control over our VIE through our WFOE by entering into a series of contractual arrangements with our VIE and its shareholders. In September 2019, Soulgate Inc. established another wholly owned subsidiary in Hong Kong, Soulgate Egg Holdings Limited, for the purpose of expanding our business to markets outside of China. Two wholly owned subsidiaries of our VIE in China, Shanghai Huxingren Information Technology Co., Ltd. and Nanjing Huxingren Technology Co., Ltd., were established in October and December 2020, respectively.

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The following diagram illustrates our corporate structure, including our subsidiaries, our VIE and its subsidiaries, as of the date of this prospectus:

Note:

(1) Beneficial ownership percentages represent beneficial ownership of our total issued and outstanding share capital immediately after the completion of this offering, assuming the underwriters do not exercise their over-allotment option. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant, or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.

(2) Voting power percentages represent aggregate voting power of our total issued and outstanding share capital immediately after the completion of this offering, assuming the underwriters do not exercise their overallotment option. Voting power percentage of a person is calculated by dividing the voting power

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beneficially owned by such person by the voting power of all of our issued and outstanding Class A ordinary shares and Class B ordinary shares as a single class. In respect of matters requiring a shareholder vote, each Class A ordinary share is entitled to one vote and each Class B ordinary share is entitled to five votes and is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. See also “Description of Share Capital—Our Memorandum and Articles of Association.”

(3) Shareholders of our VIE and their respective shareholdings in our VIE and relationships with our company are (i) Ms. Lu Zhang (84.0%), our founder, chairwoman and chief executive officer; (ii) Beijing Mingjun Investment Management Co., Ltd. (4.9%), a company incorporated in the PRC and an affiliate of Mingjun Capital Limited, which is a holder of our ordinary shares; (iii) Shanghai Jianming Enterprise Management Co., Ltd. (4.8%), a company incorporated in the PRC and an affiliate of J&M Capital Limited, which is a holder of our ordinary shares; (iv) Zhuanlian Technology (Shenzhen) Co., Ltd. (3.5%), a company incorporated in the PRC and an affiliate of Ventek Limited, which is a holder of our ordinary shares; and (v) Shanghai Moliang Chuangye Investment Center (Limited Partnership) (2.8%), a limited partnership organized in the PRC and managed by MFUND, L.P., which is a holder of our preferred shares. See “Risk Factors—Risks Relating to Our Corporate Structure—The shareholders of our VIE may have actual or potential conflicts of interest with us.”

Contractual Arrangements with Our VIE and Its Shareholders

Current PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in value-added telecommunication services and certain other businesses. We are an exempted company incorporated in the Cayman Islands. Our WFOE is our PRC subsidiary and is a foreign-invested enterprise under PRC Laws. To comply with PRC laws and regulations, we conduct certain of our business in the PRC through our VIE based on a series of contractual arrangements by and among our WFOE, our VIE and its shareholders.

Our contractual arrangements with our VIE and its shareholders allow us to (i) exercise effective control over our VIE, (ii) receive substantially all of the economic benefits of our VIE, and (iii) have an exclusive call option to purchase all or part of the equity interests in our VIE when and to the extent permitted by PRC law.

As a result of our direct ownership in our WFOE and the contractual arrangements with our VIE, we are regarded as the primary beneficiary of our VIE, and we treat our VIE and its subsidiaries as our consolidated affiliated entity under U.S. GAAP. We have consolidated the financial results of our VIE and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.

The following is a summary of the currently effective contractual arrangements by and among our WFOE, our VIE and its shareholders.

Agreements that provide us with effective control over our VIE

Powers of Attorney. Pursuant to the powers of attorney executed by our VIE’s shareholders, each of them irrevocably authorized our WFOE or its designee(s) to act on their respective behalf as proxy attorney, to the extent permitted by law, to exercise all rights of shareholders concerning all the equity interest held by each of them in our VIE, including but not limited to (i) proposing to convene or attend shareholder meetings, (ii) receiving notifications of any procedures with respect to shareholder meetings, (iii) exercising voting rights with respect to any matters discussed in shareholder meetings, (iv) signing and delivering any written resolutions and minutes, (v) selling, transferring, pledging or disposing of equity interests in part or in whole, (vi) nominating, electing, designating, appointing or removing the legal representative, directors and other senior management of our VIE, (vii) approving annual budget and declaring dividends, (viii) approving amendments of articles, and (iv) exercising all other rights conferred by our VIE’s memorandum and articles and relevant laws and regulations. The powers of attorney remain irrevocably effective as long as such VIE shareholders remain as our VIE’s shareholders, unless otherwise instructed by our WFOE.

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Loan Agreement. Pursuant to the loan agreement between our WFOE and Ms. Lu Zhang, a shareholder of our VIE and our chief executive officer, our WFOE made certain loan to Ms. Zhang solely for the purpose of operating our VIE’s business. Pursuant to the loan agreement, Ms. Zhang shall repay the loan by the transfer of all her equity interest in our VIE to our WFOE or its designated person(s) pursuant to the exclusive call option agreement to be described below. Ms. Zhang must pay all the proceeds from transfer of such equity interest to our WFOE. In the event that Ms. Zhang transfers her equity interest to our WFOE or its designated person(s) with a price equivalent to or less than the amount of the principal, the loans will be interest free. If the price is higher than the amount of the principal, the excess amount will be paid to our WFOE as the loan interest. The loan must be repaid immediately when permitted by PRC laws at our WFOE’s request. The term of loan is ten years and will be extended automatically for another ten years on each expiration.

Equity Interest Pledge Agreement. Under the equity interest pledge agreement among our WFOE, our VIE and its shareholders, our VIE’s shareholders pledged all of their equity interests of our VIE to our WFOE as security for performance of the obligations of our VIE and its shareholders under the exclusive call option agreement, the exclusive business cooperation agreement, the powers of attorney and the loan agreement (in the case of Ms. Lu Zhang). During the term of the equity interest pledge agreement, our WFOE has the right to receive all of our VIE’s dividends and profits distributed on the pledged equity. If any of the specified events of default occurs, our WFOE, as pledgee, will have the right to auction or sell all or part of the pledged equity interests in our VIE and will have priority in receiving the proceeds from such disposal. Our WFOE may transfer all or any of its rights and obligations under the equity interest pledge agreement to its designee(s) at any time. Our VIE and its shareholders undertake that, without the prior written consent of our WFOE, they will not transfer, or create or allow any encumbrance on the pledged equity interests. The agreement will remain in effect until the fulfillment of all the obligations under the exclusive call option agreement, the exclusive business cooperation agreement and the powers of attorney.

In July and August 2020, we have completed the registration of the equity interest pledge under the equity interest pledge agreement in relation to our VIE with the relevant office of the State Administration for Market Regulation in accordance with applicable PRC laws and regulations.

Agreement that allows us to receive economic benefits from our VIE

Exclusive Business Cooperation Agreement. Pursuant to the exclusive business cooperation agreement between our WFOE and our VIE, our WFOE has the exclusive right to provide or designate any third-party to provide, among other things, permission of intellectual property rights, technological support, business support and related consultancy services to our VIE. In exchange, our VIE pays service fees to our WFOE in an amount equal to our VIE’s annual revenue minus costs and expenses agreed to by our WFOE and can be adjusted by our WFOE without the consent of our VIE. Without the prior written consent of our WFOE, our VIE cannot accept services provided by, or establish similar cooperation relationship with, any third-party. Our WFOE has the exclusive ownership of all intellectual property rights created as a result of the performance of this agreement. The exclusive business cooperation agreement will remain effective unless otherwise terminated according to PRC law. Our WFOE may terminate the exclusive business cooperation agreement unilaterally with a 30-day written notice.

Agreements that provide us with the option to purchase the equity interests in our VIE

Exclusive Call Option Agreement. Under the exclusive call option agreement among our WFOE, our VIE and its shareholders, each of the shareholders of our VIE has irrevocably granted our WFOE an exclusive call option to purchase, or designate a third-party to purchase, all or any part of their equity interests in our VIE at a purchase price equal to the lowest price permissible by the then-applicable PRC laws and regulations at our WFOE’s sole and absolute discretion to the extent permitted by PRC law. The shareholders of our VIE shall promptly give all considerations they received from the exercise of the options to our WFOE or its designee(s). Our VIE and/or its shareholders covenant that, without our WFOE’s prior written consent, they will not, among

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other things, (i) sell, transfer, pledge or otherwise dispose of their equity interests in our VIE, or create any encumbrance on their equity interests in our VIE, except for those encumbrances created by our VIE’s shareholders on our VIE under the equity interest pledge agreement; (ii) amend our VIE’s articles of association, or change our VIE’s registered capital or shareholding structure; (iii) cause our VIE to enter into any material contract, being contracts with value exceeding RMB100,000, except in the ordinary course of business; (iv) allow our VIE to incur, inherit, guarantee or permit any debts, except for those payables incurred in the ordinary course of business but not incurred by way of borrowing; (v) merge or consolidate our VIE with any other entity or acquire or invest in any other entity; (vi) distribute any dividend, however, upon request by our WFOE, our VIE shall immediately distribute all distributable profits to its shareholders; (vii) sell, transfer, mortgage or otherwise dispose of any of our VIE’s assets or allow any encumbrance of any assets; or (viii) terminate, liquidate or dissolve our VIE. The exclusive call option agreement can be terminated by us unilaterally with a 30-day written notice, or it will be terminated when the entire equity interests in our VIE have been transferred to our WFOE or its designee(s) pursuant to the agreement.

Spousal Consent Letter. Pursuant to the spousal consent letter executed by the spouse of Ms. Lu Zhang, the sole individual shareholder of our VIE and our chief executive officer, the signing spouse unconditionally and irrevocably agreed that the equity interest in our VIE held by and registered in the name of such shareholder be disposed of in accordance with the exclusive call option agreement, the exclusive business cooperation agreement, the equity interest pledge agreement, the loan agreement and the power of attorney described above, and that such shareholder may perform, amend or terminate such agreements without the signing spouse’s consent. Additionally, the signing spouse agreed not to assert any rights over the equity interest in our VIE held by such shareholder. In addition, in the event that the signing spouse obtains any equity interest in our VIE held by such shareholder for any reason, he agrees to be bound by and sign any legal documents substantially similar to the contractual arrangements described above, as may be amended from time to time.

In the opinion of Shihui Partners, our PRC legal counsel:

• the ownership structures of our VIE and our WFOE in China, both currently and immediately after giving effect to this offering, are not in violation of applicable PRC laws and regulations currently in effect; and

• the contractual arrangements between our WFOE, our VIE and its shareholders governed by PRC law are valid, binding and enforceable, and will not result in any violation of applicable PRC laws and regulations currently in effect.

However, our PRC legal counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. Accordingly, the PRC regulatory authorities may take a view that is contrary to the opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to VIE structures will be adopted or if adopted, what they would provide. If we or our VIE are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Risk Factors—Risks relating to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations,” “Risk Factors—Risks relating to Our Corporate Structure—Our current corporate structure and business operations may be substantially affected by the newly enacted Foreign Investment Law” and “Risk Factors—Risks relating to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.”

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SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated statements of comprehensive loss and cash flows data for the years ended December 31, 2019 and 2020, and selected consolidated balance sheets data as of December 31, 2019 and 2020 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The following selected consolidated statements of comprehensive loss and cash flows data for the three months ended March 31, 2020 and 2021, and selected consolidated balance sheet data as of March 31, 2021 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Our historical results do not necessarily indicate results expected for any future periods. You should read this Selected Consolidated Financial Data section together with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

	For the Year Ended December 31,									For the Three Months Ended March 31,
	2019			2020						2020			2021
	RMB			RMB			US$			RMB			RMB			US$
	(in thousands, except for share amount and per share data)
Selected Consolidated Statements of Comprehensive Loss:
Revenues		70,707			498,013			76,324			66,211			238,246			36,363
Cost and expenses
Cost of revenues		(36,214	)		(95,489	)		(14,634	)		(17,148	)		(34,125	)		(5,208	)
Selling and marketing expenses		(204,516	)		(621,234	)		(95,208	)		(54,835	)		(470,868	)		(71,868	)
Technology and development expenses		(95,823	)		(180,556	)		(27,671	)		(34,242	)		(81,590	)		(12,453	)
General and administrative expenses		(35,727	)		(89,625	)		(13,736	)		(13,165	)		(34,225	)		(5,224	)
Total cost and expenses(1)		(372,280	)		(986,904	)		(151,250	)		(119,390	)		(620,808	)		(94,754	)
Operating loss		(301,573	)		(488,891	)		(74,926	)		(53,179	)		(382,561	)		(58,390	)
Gains on sales of short-term investments		1,074			180			28			180			—			—
Interest income		953			570			87			218			51			8
Loss before income taxes		(299,546	)		(488,141	)		(74,811	)		(52,781	)		(382,511	)		(58,383	)
Income tax expense		—			—			—			—			—			—
Net loss		(299,546	)		(488,141	)		(74,811	)		(52,781	)		(382,511	)		(58,383	)
Accretion and modification of Redeemable Convertible Preferred Shares		(49,156	)		(112,727	)		(17,276	)		(12,372	)		(27,066	)		(4,131	)
Net loss attributable to ordinary shareholders		(348,703	)		(600,868	)		(92,087	)		(65,153	)		(409,576	)		(62,514	)
Net loss per ordinary share
Basic and diluted		(5.22	)		(9.10	)		(1.39	)		(0.97	)		(6.24	)		(0.95	)
Weighted average number of shares outstanding used in computing net loss per ordinary share
Basic and diluted		66,842,764			66,063,941			66,063,941			66,842,764			65,612,156			65,612,156

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Notes:

(1) Share-based compensation expenses were allocated as follows during the indicated periods:

	For the Year Ended December 31,						For the Three Months Ended March 31,
	2019		2020				2020		2021
	RMB		RMB		US$		RMB		RMB		US$
	(in thousands)
Share-based compensation expenses:
Cost of revenues		1,342		3,003		460		893		1,164		178
Selling and marketing expenses		170		519		80		168		319		49
Technology and development expenses		4,186		11,020		1,689		2,567		4,046		618
General and administrative expenses		731		6,604		1,012		1,039		2,057		314
Total		6,429		21,146		3,241		4,668		7,586		1,158

The following table presents our selected consolidated balance sheets data as of December 31, 2019 and 2020 and as of March 31, 2021:

	As of December 31,									As of March 31,
	2019			2020						2021
	RMB			RMB			US$			RMB			US$
	(in thousands)
Selected Consolidated Balance Sheets Data:
Cash and cash equivalents		41,205			626,031			95,943			475,392			72,559
Short-term investments		50,029			—			—			—			—
Prepayments and other current assets		29,976			53,474			8,195			79,075			12,069
Total current assets		121,210			691,305			105,947			571,805			87,274
Total assets		123,708			701,312			107,481			583,989			89,134
Deferred revenue		12,319			34,516			5,290			42,103			6,426
Accrued expenses and other current liabilities		50,551			284,093			43,539			532,515			81,278
Total liabilities		62,871			319,588			48,979			575,603			87,854
Total mezzanine equity		688,671			1,622,714			248,692			1,661,373			253,575
Total shareholders’ deficit		(627,833	)		(1,240,991	)		(190,190	)		(1,652,988	)		(252,295	)

The following table presents our selected consolidated cash flow data for the years ended December 31, 2019 and 2020 and for the three months ended March 31, 2020 and 2021:

	For the Year Ended December 31,									For the Three Months Ended March 31,
	2019			2020						2020			2021
	RMB			RMB			US$			RMB			RMB			US$
	(in thousands)
Selected Consolidated Cash Flows Data:
Net cash used in operating activities		(284,262	)		(244,788	)		(37,515	)		(24,991	)		(152,567	)		(23,286	)
Net cash (used in)/provided by investing activities		(51,410	)		42,143			6,459			50,098			1,288			197
Net cash (used in)/provided by financing activities		(8,711	)		848,910			130,101			—			(1,042	)		(159	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(8,725	)		(61,440	)		(9,416	)		46			1,682			257
Net (decrease)/increase in cash and cash equivalents		(353,108	)		584,826			89,628			25,153			(150,639	)		(22,992	)
Cash and cash equivalents at the beginning of the year/period		394,314			41,205			6,315			41,205			626,031			95,551
Cash and cash equivalents at the end of the year/period		41,205			626,031			95,943			66,358			475,392			72,559

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled “Selected Consolidated Financial Data” and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that reflect our current expectations and views of future events, which may involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

Overview

Our Soul app is an algorithm-driven online social playground, where young generations in China connect and build social relationships in a “soul”cial metaverse. We provide a virtual universe for Soulers to freely express their aspirations and personality with virtual identities, removing unnecessary social hurdle, allowing our users to interact more comfortably and effortlessly. Soulers connect with each other, generate multi-media content, explore other’s lives and draw inspiration from other Soulers with similar interests and personalities.

We are still in an early stage of monetization. We generate revenues primarily through value-added services. Users can acquire virtual items such as virtual gifts and avatars, through Soul Coins, the virtual currency used on our mobile app. Users who subscribe to our membership can enjoy various time-based privileges during the membership period, such as access to members-only virtual items and enhanced social networking functionalities.

Selling and marketing expenses comprise a majority of our operating expenses, consisting primarily of advertising expenses. We promote our Soul app primarily through advertisements placed in popular mobile apps and major app stores. Recently, we have implemented several innovative initiatives to further promote our Soul app, such as co-branding with other renowned brands, collaborations with variety shows, and offline events and exhibitions.

Key Factors Affecting Our Results of Operations

Our business and operating results are affected by general factors affecting China’s online social platforms, including:

• User preferences and overall trend in China’s social networking and social media industries;

• Growth and competitive landscape of China’s social networking and social media industries;

• Governmental policies and initiatives affecting China’s social networking and social media industries; and

• Seasonality affecting young generations’ leisure time, in particular summer and winter vacations for students.

Unfavorable changes in any of the above industry conditions could negatively affect demand for our services and materially and adversely affect our results of operations.

Our results of operations, financial condition, and the period-to-period comparability of our financial results have been, and are expected to continue to be, more specifically affected by the below factors:

Our ability to expand our user base as well as maintain and enhance user engagement

Our ability to attract and grow our user base and to maintain and enhance user engagement is fundamental to the success of our business. Soul is a leading online social networking platform in China in terms of MAUs in

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March 2021, with one of the highest Generation Z user percentages, according to the iResearch Report. In 2019 and 2020, we had average MAUs of 11.5 million and 20.8 million, respectively, representing a growth rate of 80.7%. In the three months ended March 31, 2021, we had average MAUs of 32.3 million.

Our ability to attract and grow our user base and to maintain and enhance user engagement depends on, among other things, our ability to continue to cultivate an engaging and warm community, facilitate genuine and long-term interpersonal connections among our users, roll out fun and attractive new features on our Soul app, attract more users through word-of-mouth and advertisement marketing, and improve our user recommendation and content monitoring capabilities to improve user experience.

Our ability to effectively enhance monetization

Currently, our Soul app is offered free-of-charge and users can use most of our functions for free. Our revenues are primarily generated from value-added services including virtual items and membership privileges, which we started offering in 2019. Soul Coins are virtual currency that can be purchased by our users to buy virtual items and privileges including access to enhanced recommendation opportunities, virtual gifts and avatars. Users who subscribe to our membership can enjoy a variety of time-based privileges such as access to members-only virtual items, discounts for virtual items and enhanced social networking functionalities.

Our revenues are driven primarily by the number of average monthly paying users and average monthly revenues generated per paying user. We define the number of monthly paying users in a given month as the number of users who has paid for our value-added service in that month. We define average monthly paying users in a given period by adding the numbers of the monthly paying users for each month in that period and divide sum by the number of months in that period. We define average monthly revenues generated per paying user in a given period as the result of dividing revenues generated from paying users in the period by the sum of the numbers of monthly paying users in each month of the same period. In 2019, 2020 and the three months ended March 31, 2021, our numbers of average monthly paying users were 268.9 thousand, 929.3 thousand and 1,544.5 thousand, respectively, and our average monthly revenues per paying user were RMB21.9, RMB43.5 and RMB48.6, respectively. The increases were primarily driven by increases in our MAUs, as well as increased user engagement on our mobile app and the new and attractive value-added services that we have rolled out. We also use average monthly paying ratio in a given period to measure our effectiveness in converting non-paying users to paying users. Average monthly paying ratio in a given period is defined as the result of dividing the average monthly paying users in the period by the average MAUs in the period. Our average monthly paying ratio was 2.3%, 4.5% and 4.8% for 2019, 2020 and the three months ended March 31, 2021, respectively. Our ability to increase the number of paying users depends on, among other things, our ability to continually roll out more attractive functions and our ability to implement dynamic and precise pricing.

We started generating revenues from advertising services in the third quarter of 2020. Our advertising revenues are driven by our advertiser base, satisfaction level of advertisers and advertising pricing, which in turn largely hinge upon our ability to maintain a growing and engaged user base that is attractive to our advertisers. We plan to actively promote our advertising services. In the future, we plan to expand our monetization models to further enhance our ability to generate revenues.

We started generating revenues from our Giftmoji services in the first quarter of 2021. Giftmojis are virtual presents redeemable for physical gifts that Soulers can send each other. The physical gifts are offered by our vendor partners. We partner with vendors popular among the young generations to provide these virtual presents for sale on our Soul app. Users purchase Giftmojis on our Soul app and send them to other users, who can redeem the merchandises offline from our vendor partners. We negotiate with vendor partners for specific amounts of fees that we pay them when Soulers redeem Giftmojis, and we sell Giftmojis to Soulers for prices set by us. When Soulers redeem Giftmojis with vendors, we pay vendors the pre-negotiated fees and earn the difference in prices.

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Our ability to manage our selling and marketing expenses

Our ability to manage and control our costs and expenses is critical to the performance of our business. Our selling and marketing expenses, which comprise a majority of our cost and expenses, consist primarily of advertising expenses. In 2019 and 2020, our advertising expenses were RMB196.6 million and RMB602.1 million (US$92.3 million), respectively, representing 278.1% and 120.9% of our revenues, respectively. In the three months ended March 31, 2020 and 2021, our advertising expenses were RMB52.4 million and RMB459.7 million (US$70.2 million), respectively, representing 79.1% and 192.9% of our revenues, respectively. We strive to continually improve our sales and marketing efficiency by utilizing emerging and innovative marketing tools. We expect the absolute amount of our advertising expenses to continue to increase as we expand our business.

Effective investment in technology

We have invested substantially in our proprietary recommendation algorithm, content monitoring capabilities and other areas of our technological infrastructure. Technology and development expenses comprise a substantial part of our cost and expenses. In 2019 and 2020, our technology and development expenses were RMB95.8 million and RMB180.6 million (US$27.7 million), respectively, representing 135.5% and 36.3% of our revenues, respectively. In the three months ended March 31, 2020 and March 31, 2021, our technology and development expenses were RMB34.2 million and RMB81.6 million (US$12.5 million), respectively, representing 51.7% and 34.2% of our revenues, respectively. Our technology and development expenses are primarily technology infrastructure costs and salaries to our technology and development staff. As of March 31, 2021, technology and development staff consisted 29.9% of our total headcount. We intend to control our technology infrastructure costs through continued innovation and by increasing our operational efficiency.

Impact of the COVID-19 Pandemic on Our Business

Although the COVID-19 pandemic has caused general business disruption in China and the rest of the world, we have experienced an increase in our operational performance, user base and user engagement in the first half of 2020. In an effort to contain the spread of COVID-19, China took precautionary measures, such as imposing travel restrictions, quarantining individuals infected with or suspected of having COVID-19, encouraging employees of enterprises to work remotely, and cancelling public activities, among others. As people have more disposable time and attention span at home, they are more likely to start using our app, extend their time-spent and cultivate more connections.

We have witnessed growth in our operational performance, user base, user engagement and willingness to pay since the end of the first half of 2020, when the pandemic had been largely contained in China; however, the duration and the development of the pandemic and its impact on our business are difficult to predict. For additional details, see “Risk Factors—Risks Relating to Our Business and Industry—The ongoing outbreak of COVID-19 could adversely affect our business, results of operations and financial condition.”

Key Components of Results of Operations

Revenues

We derive substantially all of our revenues from operating our mobile app and providing value-added services to our users for the years ended December 31, 2019 and 2020, and in the three months ended March 31, 2021. Users can purchase Soul Coins or subscribe to membership to unlock value-added services, including various virtual items and membership privileges on our platform.

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Cost of revenues

Cost of revenues consists primarily of (i) commission fees paid to third-party payment platforms and (ii) personnel salary and welfare related to operation of our mobile app. The following table sets forth the components of our cost of revenues by amounts and percentages of our total revenues for the periods presented:

	For the Year Ended December 31,										For the Three Months Ended March 31,
	2019				2020						2020				2021
	RMB		%		RMB		US$		%		RMB		%		RMB		US$		%
	(in thousands, except for percentage data)
Cost of revenues
Commission fees paid to third-party payment platforms		10,028		14.2		60,114		9,213		12.1		9,785		14.8		19,591		2,990		8.2
Personnel salary and welfare		21,463		30.4		31,829		4,878		6.4		6,624		10.0		13,199		2,015		5.5
Others		4,723		6.7		3,546		543		0.7		739		1.1		1,335		204		0.6
Total		36,214		51.2		95,489		14,634		19.2		17,148		25.9		34,125		5,208		14.3

Selling and marketing expenses

Selling and marketing expenses mainly consist of advertising expenses. Advertising expenses consist primarily of online advertisements to promote our brand and services. The following table sets forth the components of our selling and marketing expenses by amounts and percentages of our total revenues for the periods presented:

	For the Year Ended December 31,										For the Three Months Ended March 31,
	2019				2020						2020				2021
	RMB		%		RMB		US$		%		RMB		%		RMB		US$		%
	(in thousands, except for percentage data)
Selling and marketing expenses
Advertising expenses		196,605		278.1		602,077		92,272		120.9		52,377		79.1		459,680		70,161		192.9
Others		7,911		11.2		19,157		2,936		3.8		2,457		3.7		11,188		1,708		4.7
Total		204,516		289.2		621,234		95,208		124.7		54,835		82.8		470,868		71,868		197.6

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Technology and development expenses

Our technology and development expenses consist primarily of (i) personnel salary and welfare expenses for technology and development staff, and (ii) technology infrastructure expenses, which mainly include servers and cloud infrastructure costs. The following table sets forth the components of our technology and development expenses by amounts and percentages of our total revenues for the periods presented:

	For the Year Ended December 31,										For the Three Months Ended March 31,
	2019				2020						2020				2021
	RMB		%		RMB		US$		%		RMB		%		RMB		US$		%
	(in thousands, except for percentage data)
Technology and development expenses
Personnel salary and welfare		41,045		58.0		90,684		13,898		18.2		16,532		25.0		42,304		6,457		17.8
Technology infrastructure costs		48,476		68.6		83,589		12,811		16.8		17,204		26.0		36,638		5,592		15.4
Others		6,302		8.9		6,282		963		1.3		506		0.8		2,648		404		1.1
Total		95,823		135.5		180,556		27,671		36.3		34,242		51.7		81,590		12,453		34.2

General and administrative expenses

Our general and administrative expenses mainly consist of professional service fees and personnel salaries and welfare.

Taxation

Cayman Islands

Under the current laws of the Cayman Islands, our company is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.

Hong Kong

Our subsidiaries incorporated in Hong Kong are subject to a two-tiered income tax rate for taxable income generated from the operations in Hong Kong since April 1, 2018. For the first HK$2.0 million of assessable profits, we are subject to a profits tax rate of 8.25%, and the subsequent profits are taxed at 16.5%. We are exempted from the Hong Kong income tax on our foreign-derived income and there are no withholding taxes in Hong Kong on the remittance of dividends. No provision for Hong Kong profits tax was made as we had no assessable profit that was subject to Hong Kong profits tax during 2019 and 2020.

PRC

Generally, our PRC subsidiary, VIE and VIE’s subsidiaries are subject to the PRC Corporate Income Tax Law at the statutory income tax rate of 25%. Our services are subject to VAT at the rate of 6% for general-VAT-payer entities in accordance with PRC tax rules. We are applying for our VIE to be qualified as a High and New Technology Enterprise, or HNTE, which would reduce its enterprise income tax rate to 15%.

We had no current income tax expenses in 2019 and 2020, as we had no taxable income in those years. As of December 31, 2020, we had net operating loss carry forwards of RMB326.3 million (US$50.0 million), attributable to our PRC subsidiary, VIE and VIE’s subsidiaries. The losses carried forward by our PRC

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companies will expire during the period from year 2023 to year 2026. We have provided full valuation allowance for the deferred income tax assets as of December 31, 2019 and 2020, as we think that it is more likely than not that the deferred income tax assets will not be utilized in the foreseeable future.

Dividends paid by our wholly foreign-owned subsidiary in mainland China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income. If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%. Such Hong Kong subsidiary shall gather and retain the relevant materials as required for further inspection, and settle the overdue taxes if the preferential 5% tax rate is denied based on the subsequent review of the application package by the relevant tax authority. See “Risk Factors—Risks Relating to Doing Business in China—We may not be able to obtain certain benefits under relevant tax treaty on dividends paid by our PRC subsidiary to us through our Hong Kong subsidiary.”

If our holding company in the Cayman Islands were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Risk Factors—Risks Relating to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.”

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Results of Operations

The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amount and as a percentage of our revenues for the periods presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

	For the Year Ended December 31,															For the Three Months Ended March 31,
	2019						2020									2020						2021
	RMB			%			RMB			US$			%			RMB			%			RMB			US$			%
	(in thousands, except for percentages)
Revenues		70,707			100.0			498,013			76,324			100.0			66,211			100.0			238,246			36,363			100.0
Cost and expenses
Cost of revenues		(36,214	)		(51.2	)		(95,489	)		(14,634	)		(19.2	)		(17,148	)		(25.9	)		(34,125	)		(5,208	)		(14.3	)
Selling and marketing expenses		(204,516	)		(289.2	)		(621,234	)		(95,208	)		(124.7	)		(54,835	)		(82.8	)		(470,868	)		(71,868	)		(197.6	)
Technology and development expenses		(95,823	)		(135.5	)		(180,556	)		(27,671	)		(36.3	)		(34,242	)		(51.7	)		(81,590	)		(12,453	)		(34.2	)
General and administrative expenses		(35,727	)		(50.5	)		(89,625	)		(13,736	)		(18.0	)		(13,165	)		(19.9	)		(34,225	)		(5,224	)		(14.4	)
Total cost and expenses(1)		(372,280	)		(526.5	)		(986,904	)		(151,250	)		(198.2	)		(119,390	)		(180.3	)		(620,808	)		(94,754	)		(260.6	)
Operating loss		(301,573	)		(426.5	)		(488,891	)		(74,926	)		(98.2	)		(53,179	)		(80.3	)		(382,561	)		(58,390	)		(160.6	)
Gains on sales of short-term investments		1,074			1.5			180			28			0.0			180			0.3			—			—			—
Interest income		953			1.3			570			87			0.1			218			0.3			51			8			0.0
Loss before income tax expenses		(299,546	)		(423.6	)		(488,141	)		(74,811	)		(98.0	)		(52,781	)		(79.7	)		(382,511	)		(58,383	)		(160.6	)
Income tax expenses		—			—			—			—			—			—			—			—			—			—
Net loss		(299,546	)		(423.6	)		(488,141	)		(74,811	)		(98.0	)		(52,781	)		(79.7	)		(382,511	)		(58,383	)		(160.6	)

Notes:

(1) Share-based compensation expenses were allocated as follows during the indicated periods:

	For the Year Ended December 31,						For the Three Months Ended March 31,
	2019		2020				2020		2021
	RMB		RMB		US$		RMB		RMB		US$
	(in thousands)
Share-based compensation expenses:
Cost of revenues		1,342		3,003		460		893		1,164		178
Selling and marketing expenses		170		519		80		168		319		49
Technology and development expenses		4,186		11,020		1,689		2,567		4,046		618
General and administrative expenses		731		6,604		1,012		1,039		2,057		314
Total		6,429		21,146		3,241		4,668		7,586		1,158

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Three months ended March 31, 2021 compared to three months ended March 31, 2020

Revenues

Our revenues increased by 259.8% from RMB66.2 million in the three months ended March 31, 2020 to RMB238.2 million (US$36.4 million) in the three months ended March 31, 2021. This increase was primarily due to the increase of revenues from value-added services, driven by an increase in the number of average monthly paying users as well as average monthly revenues per paying user. Our average monthly paying users increased by 114.2% from 0.7 million in the three months ended March 31, 2020 to 1.5 million in the three months ended March 31, 2021. Our average monthly revenues per paying user increased by 58.7% from RMB30.6 in the three months ended March 31, 2020 to RMB48.6 in the three months ended March 31, 2021. These increases were in turn mainly driven by an increase in our user base and paying ratio as well as our effort in enriching the offerings of our value-added services, which stimulated more spending of our users. In the three months ended March 31, 2020 and 2021, we had average MAUs of 15.6 million and 32.3 million, respectively, representing a growth rate of 106.3%. Increases in our average MAUs were primarily driven by continued product improvements and our increased recognition among the young generations in China. We started generating revenues from advertising services since the third quarter of 2020, which has also led to the increase of revenues in the three month ended March 31, 2021.

Cost of revenues

Our cost of revenues increased by 99.0% from RMB17.1 million in the three months ended March 31, 2020 to RMB34.1 million (US$5.2 million) in the three months ended March 31, 2021, representing 25.9% and 14.3% of our revenues in the corresponding periods, respectively. The increase was primarily due to an increase in commission fees paid to third-party payment platforms, as well as an increase in personnel salary and welfare cost.

Commission fees paid to third-party payment platforms increased by 100.2% from RMB9.8 million in the three months ended March 31, 2020 to RMB19.6 million (US$3.0 million) in the three months ended March 31, 2021. Our commission fees grew at a lower rate compared with that of our revenues, mainly because of the change in the payment channel mix, which led to a lower average commission fee rate. Our personnel salary and welfare cost increased by 99.3% from RMB6.6 million in the three months ended March 31, 2020 to RMB13.2 million (US$2.0 million) in the three months ended March 31, 2021, which is primarily a result of increased salary and compensation cost due to an increase in the number of employees related to the operation of our mobile app. The number of employees related to mobile app operations and maintenance increased from 91 as of March 31, 2020 to 144 as of March 31, 2021.

Selling and marketing expenses

Our selling and marketing expenses increased by 758.7% from RMB54.8 million in the three months ended March 31, 2020 to RMB470.9 million (US$71.9 million) in the three months ended March 31, 2021. This increase was primarily due to an increase in our advertising expenses.

Our advertising expenses increased from RMB52.4 million in the three months ended March 31, 2020 to RMB459.7 million (US$70.2 million) in the three months ended March 31, 2021. This increase was primarily due to our increased level of advertising activities as well as innovative promotion initiatives. We expect the absolute amounts of our selling and marketing expenses to increase in the foreseeable future as we continue to promote our brand and services.

Technology and development expenses

Our technology and development expenses increased by 138.3% from RMB34.2 million in the three months ended March 31, 2020 to RMB81.6 million (US$12.5 million) in the three months ended March 31, 2021. The increase was primarily due to increases in personnel salary and welfare expense and technology infrastructure costs.

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Our personnel salary and welfare expense related to technology and development staff increased by 155.9% from RMB16.5 million in the three months ended March 31, 2020 to RMB42.3 million (US$6.5 million) in the three months ended March 31, 2021. This increase was primarily due to an increase in the number of technology and development employees from 107 as of March 31, 2020 to 264 as of March 31, 2021. Our technology infrastructure costs increased by 113.0% from RMB17.2 million in the three months ended March 31, 2020 to RMB36.6 million (US$5.6 million) in the three months ended March 31, 2021, primarily due to an increase in our usage of cloud storage space.

General and administrative expenses

Our general and administrative expenses increased by 160.0% from RMB13.2 million in the three months ended March 31, 2020 to RMB34.2 million (US$5.2 million) in the three months ended March 31, 2021. The increase is primarily due to increases in personnel salary and welfare related to general and administrative staff and in professional service fees.

Operating loss

As a result of the foregoing, we recorded an operating loss of RMB53.2 million in the three months ended March 31, 2020 and an operating loss of RMB382.6 million (US$58.4 million) in the three months ended March 31, 2021.

Net loss

We recorded a net loss of RMB382.5 million (US$58.4 million) for the three months ended March 31, 2021, compared to a net loss of RMB52.8 million for the three months ended March 31, 2020.

Year ended December 31, 2020 compared to year ended December 31, 2019

Revenues

Our revenues increased by 604.3% from RMB70.7 million in 2019 to RMB498.0 million (US$76.3 million) in 2020. This increase was primarily due to the increase of revenues from value-added services, driven by an increase in the number of average monthly paying users as well as average monthly revenues per paying user. Our average monthly paying users increased by 245.6% from 268.9 thousand in 2019 to 929.3 thousand in 2020. Our average monthly revenues per paying user increased by 98.6% from RMB21.9 in 2019 to RMB43.5 in 2020. These increases were in turn mainly driven by an increase in our user base and paying ratio as well as our effort in enriching the offerings of our value-added services, which stimulated more spending of our users. In 2019 and 2020, we had average MAUs of 11.5 million and 20.8 million, respectively, representing a growth rate of 80.7%. Increases in our average MAUs were primarily driven by continued product improvements and our increased recognition among the young generations in China. Our average monthly paying ratio was 2.3% and 4.5% for 2019 and 2020, respectively. We started generating revenues from advertising services since the third quarter of 2020, which has also led to the increase of revenues in 2020.

Cost of revenues

Our cost of revenues increased by 163.7% from RMB36.2 million in 2019 to RMB95.5 million (US$14.6 million) in 2020. The increase was primarily due to an increase in commission fees paid to third-party payment platforms, as well as an increase in personnel salary and welfare cost.

Commission fees paid to third-party payment platforms increased by 499.5% from RMB10.0 million in 2019 to RMB60.1 million (US$9.2 million) in 2020. Our commission fees grew at a lower rate compared with that of our revenues did, mainly because of the change in the payment channel mix, which led to a lower average

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commission fee rate. Our personnel salary and welfare cost increased by 48.3% from RMB21.5 million in 2019 to RMB31.8 million (US$4.9 million) in 2020, which is primarily a result of higher salary levels and an increase in the number of employees related to the operation of our mobile app. The number of employees related to mobile app operations and maintenance increased from 95 as of December 31, 2019 to 111 as of December 31, 2020.

Selling and marketing expenses

Our selling and marketing expenses increased by 203.8% from RMB204.5 million in 2019 to RMB621.2 million (US$95.2 million) in 2020. This increase was primarily due to an increase in our advertising expenses.

Our advertising expenses increased from RMB196.6 million in 2019 to RMB602.1 million (US$92.3 million) in 2020. This increase was primarily due to our increased level of advertising activities as well as innovative promotion initiatives.

Technology and development expenses

Our technology and development expenses increased by 88.4% from RMB95.8 million in 2019 to RMB180.6 million (US$27.7 million) in 2020. The increase was primarily due to an increase in personnel salary and welfare expense and technology infrastructure costs.

Our personnel salary and welfare expense related to technology and development staff increased by 120.9% from RMB41.0 million in 2019 to RMB90.7 million (US$13.9 million) in 2020. This increase was primarily due to an increase in the number of technology and development employees from 108 as of December 31, 2019 to 219 as of December 31, 2020. Our technology infrastructure costs increased by 72.4% from RMB48.5 million in 2019 to RMB83.6 million (US$12.8 million) in 2020, primarily due to an increase in our usage of cloud storage space.

General and administrative expenses

Our general and administrative expenses increased by 150.9% from RMB35.7 million in 2019 to RMB89.6 million (US$13.7 million) in 2020. The increase is primarily due to increases in personnel salary and welfare related to general and administrative staff and in professional service fees.

Operating loss

As a result of the foregoing, we recorded an operating loss of RMB301.6 million in 2019 and an operating loss of RMB488.9 million (US$74.9 million) in 2020.

Net loss

We recorded a net loss of RMB488.1 million (US$74.8 million) in 2020, compared to a net loss of RMB299.5 million in 2019.

Selected Quarterly Results of Operation

The following table sets forth our unaudited consolidated quarterly results of operations for each of the nine quarters from January 1, 2019 to March 31, 2021. You should read the following table in conjunction with our consolidated financial statements and the related notes included elsewhere in this prospectus. We have prepared this unaudited condensed consolidated quarterly financial data on the same basis as we have prepared our audited consolidated financial statements. The unaudited condensed consolidated financial data include all adjustments,

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consisting only of normal and recurring adjustments, that our management considered necessary for a fair statement of our financial position and results of operations for the quarters presented.

	For the Three Months Ended
	March 31, 2019			June 30, 2019			September 30, 2019			December 31, 2019			March 31, 2020			June 30, 2020			September 30, 2020			December 31, 2020			March 31, 2021
	(RMB in thousands)
Revenues		5,333			8,419			14,613			42,341			66,211			99,134			148,685			183,982			238,246
Cost and expenses
Cost of revenues		(7,217	)		(7,982	)		(7,650	)		(13,364	)		(17,148	)		(23,130	)		(27,399	)		(27,813	)		(34,125	)
Selling and marketing expenses		(105,766	)		(55,982	)		(7,000	)		(35,768	)		(54,835	)		(62,692	)		(212,650	)		(291,058	)		(470,868	)
Technology and development expenses		(19,341	)		(24,494	)		(23,267	)		(28,720	)		(34,242	)		(35,410	)		(47,985	)		(62,918	)		(81,590	)
General and administrative expenses		(9,492	)		(5,953	)		(8,870	)		(11,412	)		(13,165	)		(18,313	)		(24,229	)		(33,919	)		(34,225	)
Total costs and expenses		(141,816	)		(94,412	)		(46,788	)		(89,264	)		(119,390	)		(139,544	)		(312,262	)		(415,707	)		(620,808	)
Operating loss		(136,483	)		(85,993	)		(32,174	)		(46,923	)		(53,179	)		(40,410	)		(163,577	)		(231,725	)		(382,561	)
Gains on sales of short-term investments		—			195			580			299			180			—			—			—			—
Interest income		277			109			271			295			218			217			78			57			51
Loss before income tax		(136,206	)		(85,688	)		(31,324	)		(46,329	)		(52,781	)		(40,194	)		(163,499	)		(231,668	)		(382,511	)
Income tax expense		—			—			—			—			—			—			—			—			—
Net loss		(136,206	)		(85,688	)		(31,324	)		(46,329	)		(52,781	)		(40,194	)		(163,499	)		(231,668	)		(382,511	)

Our revenues increased steadily in these periods, in each quarter of 2020 compared with the same quarter in 2019, as well as the first quarter of 2021 compared to that of 2020, primarily because of a general trend of significant growth in our key operating metrics, as well as diversification in our monetization avenues. We had not experienced any significant seasonality in 2019, 2020 and the first quarter of 2021 in general. Since we started offering value-added services in 2019, our revenues increased significantly every quarter. Our revenues increased during the third quarter of 2019, when our app was temporarily suspended from being downloaded from all app stores, as existing users could still access our app during the period and paying users continued to increase their spending. Despite the decrease in average MAUs and DAUs between the second and third quarters of 2019, we witnessed growth in the number of paying users, paying ratio and average revenue per paying user, partly because of the new value-added services launched in the third quarter of 2019. By the time our app became available to be downloaded from the app stores in September 2019, we had enhanced our value-added services to offer more use cases, which caused a significant increase in our revenues in the fourth quarter of 2019.

Our cost of revenue generally increased during these periods, primarily attributable to increases in commission fees paid to third-party payment platforms as our revenues increased. Our cost of revenues stayed stable from the second to the third quarter of 2019 while our revenues increased, primarily because of a decrease in our staff costs related to our value-added services due to a decrease in headcount, offset by an increase in commission fees paid to third-party payment platforms. Our cost of revenues stayed stable from the third to the fourth quarter of 2020 while our revenues increased, primarily because of the change in the payment channel mix in the fourth quarter of 2020, which resulted in a decrease in our average commission fee rate. The selling and marketing expenses fluctuated in 2019, especially in the third quarter, primarily because we decreased our marketing efforts during the suspension period discussed above and later resumed them after our app was back on. Our selling and marketing expenses increased significantly in the third and fourth quarters of 2020, as we

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engaged in a series of marketing campaigns to raise the brand awareness and brand image of our app. Our technology and development expense also increased steadily with minor fluctuation as we continue to invest in the development of new features on our mobile app and our technology infrastructure. Our general and administrative expenses increased steadily in 2020 due to an increase of our general and administrative personnel related costs as well as professional services fees.

Liquidity and Capital Resources

Cash flows and working capital

The following table sets forth a summary of our cash flows for the periods presented:

	For the Year Ended December 31,									For the Three Months Ended March 31,
	2019			2020						2020			2021
	RMB			RMB			US$			RMB			RMB			US$
	(in thousands)
Net cash used in operating activities		(284,262	)		(244,788	)		(37,515	)		(24,991	)		(152,567	)		(23,286	)
Net cash (used in)/provided by investing activities		(51,410	)		42,143			6,459			50,098			1,288			197
Net cash (used in)/provided by financing activities		(8,711	)		848,910			130,101			—			(1,042	)		(159	)
Effect of exchange rate changes on cash and cash equivalents		(8,725	)		(61,440	)		(9,416	)		46			1,682			257
Net (decrease)/increase in cash and cash equivalents		(353,108	)		584,826			89,628			25,153			(150,639	)		(22,992	)
Cash and cash equivalents at the beginning of the year/period		394,314			41,205			6,315			41,205			626,031			95,551
Cash and cash equivalents at the end of the year/period		41,205			626,031			95,943			66,358			475,392			72,559

To date, we have financed our operating and investing activities mainly through cash from historical equity financing activities. As of December 31, 2019, 2020 and March 31, 2021, our cash and cash equivalents were RMB41.2 million, RMB626.0 million (US$95.9 million) and RMB475.4 million (US$72.6 million), respectively. Our cash and cash equivalents generally consist of cash at bank and term deposits, which have original maturities of three months or less and are readily converted to known amounts of cash. As of December 31, 2019 and 2020 and March 31, 2021, our short-term investments were RMB50.0 million, nil and nil, respectively. Our short-term investments generally consist of financial products issued by financial institutions.

We believe our existing cash and cash equivalents balance as of March 31, 2021 is sufficient to fund our ongoing working capital, investing, and financing requirements for at least the next 12 months. Our future capital requirements will depend on many factors including our growth rate, headcount, sales and marketing activities, technology and development efforts, and the introduction of new features, services, acquisitions, and continued user engagement.

As of March 31, 2021, 17.6% of our cash and cash equivalents were held in mainland China, 39.3% of which were denominated in Renminbi and 60.7% of which were denominated in US$; 0.1% of our cash were held in Hong Kong S.A.R, substantially all of which was denominated in US$. As of the same date, 82.3% of our cash and cash equivalents were held in bank accounts in the United States and denominated in US$.

The COVID-19 pandemic did not result in any impairments, allowances, charges or changes in accounting judgments on our balance sheet in the year ended December 31, 2020.

Although we consolidate the results of our VIE, we only control our VIE through our contractual arrangements with our VIE and its shareholders. See “Corporate History and Structure—Contractual Arrangements with Our VIE and Its Shareholders.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.”

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In utilizing the proceeds we expect to receive from this offering, we may make additional capital contributions to our PRC subsidiary and VIE, establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, make loans to our PRC subsidiaries, or acquire offshore entities with operations in China in offshore transactions. However, most of these uses are subject to PRC regulations. See “Risk Factors—Risks Relating to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiary, our VIE and its subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”

Operating Activities

Net cash used in operating activities in the three months ended March 31, 2021 was RMB152.6 million (US$23.3 million). The difference between net cash used in operating activities and net loss of RMB382.5 million (US$58.4 million) in the same period was primarily the result of (i) noncash items that primarily include share-based compensation of RMB7.6 million (US$1.2 million), and (ii) a decrease in working capital that mainly resulted from an increase in accrued expenses and other current liabilities of RMB245.2 million (US$37.4 million) and an increase in deferred revenue of RMB7.6 million (US$1.2 million), partially offset by an increase in prepayments and other current assets of RMB25.3 million (US$3.9 million) and an increase in accounts receivable of RMB5.5 million (US$0.8 million). The increase in accrued expenses and other current liabilities was primarily the result of an increase in advertising expenses payable of RMB216.9 million (US$33.1 million) as a result of our business expansion. The increase in prepayments and other current assets was primarily due to an increase in receivable from third-party payment platforms.

Net cash used in operating activities in 2020 was RMB244.8 million (US$37.5 million). The difference between net cash used in operating activities and net loss of RMB488.1 million (US$74.8 million) in the same period was primarily the result of (i) noncash items that primarily include share-based compensation of RMB21.1 million (US$3.2 million) and depreciation of RMB2.2 million (US$0.3 million), and (ii) a decrease in working capital that mainly resulted from an increase in accrued expenses and other current liabilities of RMB230.4 million (US$35.3 million) and an increase in deferred revenue of RMB22.2 million (US$3.4 million), partially offset by an increase in prepayments and other current assets of RMB16.6 million (US$2.5 million) and an increase in accounts receivable of RMB11.8 million (US$1.8 million). The increase in accrued expenses and other current liabilities was primarily the result of an increase in advertising expenses payable of RMB187.8 million (US$28.8 million) as a result of our business expansion. The increase in prepayments and other current assets was primarily due to an increase in receivable from third-party payment platforms and increase in prepaid advertising expenses.

Net cash used in operating activities in 2019 was RMB284.3 million. The difference between net cash used in operating activities and net loss of RMB299.5 million in the same period was primarily the result of (i) noncash items that primarily include share-based compensation of RMB6.4 million and depreciation of RMB1.6 million, partially offset by gains on sales of short-term investments of RMB1.1 million, and (ii) a decrease in working capital that mainly resulted from an increase in accrued expenses and other current liabilities of RMB23.9 million and an increase in deferred revenue of RMB12.3 million, partially offset by an increase in prepayments and other current assets of RMB27.7 million. The increase in prepayments and other current assets was primarily due to increases in our deductible input VAT and receivable from third-party payment platforms.

Investing Activities

Net cash provided by investing activities in the three months ended March 31, 2021 was RMB1.3 million (US$196.6 thousand), consisting of RMB3.3 million (US$503.7 thousand) proceeds from collection of advances to third parties, partially offset by RMB2.0 million (US$307.1 thousand) used to purchase property and equipment.

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Net cash provided by investing activities in 2020 was RMB42.1 million (US$6.5 million), consisting of RMB50.2 million (US$7.7 million) of proceeds from maturity of short-term investments, partially offset by RMB4.7 million (US$0.7 million) used to purchase property and equipment and RMB3.3 million (US$0.5 million) in advances to third parties.

Net cash used in investing activities in 2019 was RMB51.4 million, consisting of (i) RMB402.0 million used to purchase short-term investments, and (ii) RMB2.5 million used to purchase property and equipment, partially offset by RMB353.1 million received from maturity of short-term investments.

Financing Activities

Net cash used in financing activities in the three months ended March 31, 2021 was RMB1.0 million (US$159.0 thousand), which represented payments in relation to this offering.

Net cash provided by financing activities in 2020 was RMB848.9 million (US$130.1 million), consisting of RMB956.7 million (US$146.6 million) proceeds from issuance of Series D-1 and D-2 preferred shares, and partially offset by RMB98.9 million (US$15.2 million) payments for repurchase of ordinary shares and RMB8.6 million (US$1.3 million) payments of issuance costs for Series D-1 and D-2 preferred shares.

Net cash used in financing activities in 2019 was RMB8.7 million, consisting of payments of issuance cost of Series C preferred shares.

Capital Expenditures

Our capital expenditures are primarily related to purchase of computers and other office supplies. Our capital expenditures were RMB2.5 million, RMB4.7 million (US$0.7 million) and RMB2.0 million (US$0.3 million) in 2019 and 2020 and in the three months ended March 31, 2021, respectively. We will continue to make capital expenditures to meet the expected growth of our business.

Contractual Obligations

The following table sets forth our contractual obligations as of March 31, 2021:

			For the nine months ending December 31, 2021		For the year ending December 31,
	Total				2022		2023		2024 and after
Operating lease commitments(1)		33,721		14,859		17,247		1,615		—

Note:

(1) Represents minimum payments under non-cancelable operating leases related to offices, excluding short-term leases.

Except for those disclosed above, we did not have any significant capital or other commitments, long-term obligations, or guarantees as of March 31, 2021.

Off-Balance Sheet Commitments and Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

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Internal Control Over Financial Reporting

Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal control. In the course of auditing our consolidated financial statements included in this prospectus, we and our independent registered public accounting firm identified one material weakness in our internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

The material weakness identified relates to our Company’s lack of sufficient financial reporting and accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements to properly address complex U.S. GAAP accounting issues and related disclosures in accordance with U.S. GAAP and financial reporting requirements set forth by the SEC.

To remedy the identified material weakness, we have established clear roles and responsibilities for accounting and financial reporting staff to address complex accounting and financial reporting issues. We hired a chief financial officer with extensive background in finance. We also hired a financial reporting manager who is AICPA-qualified and has extensive U.S. GAAP financial accounting and reporting experience at a big-four international accounting firm in China. In addition, we have hired two financial reporting staff with Chinese Institute of Certified Public Accountants (CICPA) qualifications, and two with Chartered Tax Adviser (CTA) qualifications.

We intend to hire additional personnel to strengthen the financial reporting function and strengthen our financial and internal control framework. Furthermore, we will continue to enhance our reporting and compliance processes, including fortifying our comprehensive policy and procedure manual, to better allow for early detection, prevention and resolution of potential compliance issues, and enhancing our ongoing program to provide sufficient and appropriate training for financial reporting and accounting personnel, especially training related to U.S. GAAP and SEC reporting requirements. We intend to conduct more regular U.S. GAAP accounting and financial reporting training programs and send our financial staff to attend external U.S. GAAP training courses. We intend to remediate this material weakness in multiple phases and expect that we will incur certain costs for implementing our remediation measures. The implementation of the measures, however, may not fully address the material weakness identified in our internal control over financial reporting, and we may not be able to conclude that it has been fully remedied. See “Risk Factors—Risk Factors Relating to Our Business and Industry—If we fail to develop and maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our ADSs may be adversely impacted.”

As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting.

Inflation

To date, inflation in China has not materially impacted our results of operations. According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2018, 2019 and 2020 were increases of 1.9%, 4.5% and 0.2%, respectively. Although we have not been materially affected by inflation in the past, we can provide no assurance that we will not be affected by higher rates of inflation in China in the future.

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Holding Company Structure

We are a holding company with no material operations of its own. We currently conduct our operations primarily through our PRC subsidiary, our VIE and its subsidiaries in China. As a result, our ability to pay dividends depends upon dividends paid by our PRC subsidiary. If our existing PRC subsidiary or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly foreign-owned subsidiary in China is permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, our PRC subsidiary and our VIE are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of their registered capital. In addition, our wholly foreign-owned subsidiary and our VIE may allocate a portion of their after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary surplus funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. Our PRC subsidiary has not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds.

Quantitative and Qualitative Disclosures about Market Risk

Credit risks

Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and receivables from third-party payment platforms. As of December 31, 2019 and 2020, substantially all of our cash and cash equivalents and short-term investments were held in major financial institutions located in the United States, Hong Kong and PRC, which management considers to be of high credit quality.

Foreign exchange risk

For our PRC entities, the operating transactions and our assets and liabilities are mainly denominated in RMB. RMB is not freely convertible into foreign currencies. The value of RMB is subject to changes influenced by central government policies, and international economic and political developments. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China, or the PBOC. Remittances in currencies other than RMB by us in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

We have not used any derivative financial instruments to hedge exposure to foreign exchange risk. The value of your investment in our ADSs will be affected by the exchange rate between U.S. dollar and Renminbi because substantially all of our results of operations are denominated in RMB, while our ADSs will be traded in U.S. dollars.

To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of Renminbi against the U.S. dollar would reduce the Renminbi amount we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs, servicing our outstanding debt, or for other business purposes, appreciation of the U.S. dollar against the Renminbi would reduce the U.S. dollar amounts available to us.

We estimate that we will receive net proceeds of approximately US$            million from this offering, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, based on the assumed initial offering price of US$            per ADS, assuming the underwriters do not exercise their option to purchase additional ADSs. Assuming that we convert the full amount of the net proceeds from this offering into RMB, a 10% appreciation of the U.S. dollar against RMB, from a rate of RMB            to US$1.00 to a rate of

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RMB            to US$1.00, will result in an increase of RMB            million in our net proceeds from this offering. Conversely, a 10% depreciation of the U.S. dollar against the RMB, from a rate of RMB            to US$1.00 to a rate of RMB                 to US$1.00, will result in a decrease of RMB             million in our net proceeds from this offering.

Interest rate risk

Our exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed to material risks due to changes in market interest rates, and we have not used any derivative financial instruments to manage our interest risk exposure.

After completion of this offering, we may invest the net proceeds that we receive from this offering in interest-earning instruments. Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.

Critical Accounting Policies and Estimates

An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.

We prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.

The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements and accompanying notes and other disclosures included in this prospectus. When reviewing our financial statements, you should consider (i) our selection of critical accounting policies, (ii) the judgments and other uncertainties affecting the application of such policies and (iii) the sensitivity of reported results to changes in conditions and assumptions.

Revenue recognition

We adopted ASC 606, Revenue from Contracts with Customers since January 1, 2018, and recognize revenue as and when control of promised services is transferred to our customers, in an amount that reflects the consideration that the we expect to receive in exchange for those services.

Value-added services

We derive substantially all of our revenues from providing value-added services to our users via operating a social networking platform. Users get free access to basic functionalities on the platform, such as private messaging and content sharing. Users can also, through third-party payment service providers, purchase virtual currency or subscribe to membership to unlock value-added services, including various virtual items and membership privileges on our platform, which are our performance obligations to the paying users of the social networking platform. Revenue derived from the sale of virtual items and memberships are recognized on a gross

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basis as we are the principal with respect to the fulfillment of the associated promises. As such, where we share a fixed percentage of fees we receive from paying users with third-party payment service providers, such fees are presented as cost of revenues.

Virtual items, which can be acquired through virtual currency, provide access to value-added services including access to enhanced recommendation opportunities, enhanced experience such as virtual gifts and avatars for a limited period of time, etc. Virtual items are categorized as either consumable or durable. Consumable virtual items represent items that can be consumed by a specific user action at a point in time. We recognize revenue attributable to consumable virtual items at the point in time when those items are consumed by a specific user action. Substantially all of durable virtual items are made available to the users over a predetermined period of time, over which we recognize revenue on a straight-line basis related to these durable virtual items. To a lesser extent, certain durable virtual items are made available to the user without any time limits. We recognize revenue related to these durable virtual items on a straight-line basis over an estimated period, which is determined based on the expected service period taking into account all known and relevant information at the time of assessment such as historical users’ behavioral pattern. This estimate is re-assessed on a quarterly basis. Adjustments arising from the changes of estimated period of the users resulting from new information are applied prospectively as changes in estimates.

Membership privileges include various time-based privileges during the membership period, such as access to members-only virtual items, discounts for virtual items and enhanced social networking functionalities. Membership privileges are available to users over the membership period ranging from one month to one year. We recognize revenue relating to membership privileges on a straight-line basis over the membership period.

Advertising services

We provide display-based mobile advertising services to our customers, which allow customers to place advertisements on particular areas of the social networking platform in different formats, including but not limited to launch screen advertisements and feed advertisements, over a period of time. We determine each format of advertisements is a distinct performance obligation, and allocate the total consideration to each performance obligation based on its standalone selling price. Revenues for each performance obligation are recognized ratably over the period that format of advertisements is displayed.

Share-based compensation

We periodically grant share-based awards, mainly including share options to eligible employees and directors, which are subject to service conditions.

Share-based compensation expense for share options granted to employees is measured based on their grant date fair values and recognized over the requisite service period, which is generally the vesting period. We record share-based compensation expenses using straight-line method during the requisite service period and recognize the effect of forfeitures in compensation cost when they occur. To the extent the required vesting conditions are not met resulting in the forfeiture of the share-based awards, previously recognized compensation expense relating to those awards is reversed.

Share-based compensation in relation to the share options is estimated using the Binominal Option Pricing Model. The determination of the fair value of share options is affected by the share price of our ordinary shares as well as the assumptions regarding a number of complex and subjective variables, including the expected volatility of share price and exercise multiple.

Fair value of our ordinary shares

Prior to this offering, we have been a private company with no quoted market prices for our ordinary shares. We therefore need to make estimates of the fair value of our ordinary shares at various dates for the purposes of

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(i) at the date of issuance of convertible instruments as one of the inputs in determining the intrinsic value of the beneficial conversion feature, if any; and (ii) at the date of grant of a share-based award to our employees or non-employees as one of the inputs in determining the grant date fair value of the award.

The following table sets forth the fair value of our ordinary shares estimated at different times with the assistance from an independent valuation firm.

Date	Fair Value per Share in US$		Discount Rate			DLOM (Discount for lack of marketability)
2018/12/7		2.00		21.5	%		25	%
2019/6/30		2.11		21.0	%		25	%
2019/12/31		2.23		20.5	%		20	%
2020/3/31		2.32		20.0	%		20	%
2020/5/14		2.55		19.0	%		10	%