Original Content by New Position Pro

The capital narrative of social networking apps has turned a new page.

Recently, Soulgate Inc., the parent company of the social platform Soul, officially submitted an application to list on the main board of the Hong Kong Stock Exchange. Tencent, as a strategic investor not involved in daily operations, holds a 49.9% stake, with CITIC Securities serving as the sole sponsor for this IPO.

This marks Soul's fourth attempt at an IPO. In May 2021, Soul filed with the U.S. Securities and Exchange Commission, planning to list on NASDAQ, but voluntarily paused a month later. Subsequently, it shifted focus to the Hong Kong stock market, submitting its first application in June 2022, followed by a second attempt in March 2023 after the initial one lapsed, both without success.

Of course, perseverance through repeated failures is itself a narrative. From being a trendsetter chasing the 'metaverse' craze to now positioning itself as a pragmatic 'AI + emotional oasis,' the evolution of Soul's prospectus nearly mirrors a condensed history of China's internet trend shifts.

However, the most crucial bargaining chip it brings this time is no longer a grandiose vision of the future but a tangible profit trajectory. Turning a profit in 2023 and reporting an adjusted net profit exceeding RMB 300 million in 2024. Does the arrival of profitability mean a safe landing? Especially amid stagnant growth among predecessors like Momo Group and widespread user fatigue and regulatory scrutiny across the open social networking sector, is Soul's profitability model, built on 'emotional value,' a unique breakthrough or another form of 'robbing Peter to pay Paul?'

Therefore, after dissecting Soul's prospectus, rather than focusing on its financial data, New Position is more interested in discussing: Beyond the traditional social networking paths driven by 'appearance' and 'hormones,' how high is the commercial ceiling for a social empire built on 'soul' and 'emotion?' Has its moat widened or become more fragile?

01. Leveraging the Emotional Economy, Soul Generates RMB 2.2 Billion in Annual Revenue

Looking back at Soul's development, its core stems from founder Zhang Lu's philosophy that 'values matter more than appearance.' Under this principle, the platform has constructed a semi-anonymous virtual identity system aimed at creating a stress-free environment for expression and communication.

Unlike traditional social platforms that rely on real-world identities or appearances, Soul encourages users to project themselves through avatars in the digital realm, enabling more authentic social interactions.

Based on dynamic interest graphs, Soul continuously connects and generates diverse interactive scenarios, providing users with immersive experiences rich in emotional value, thereby gradually evolving into a self-sustaining digital world. This world not only accommodates rich user diversity but also forms an ecological community where diverse social needs naturally emerge and resonate with each other.

This differentiated positioning precisely meets the psychological needs of Generation Z, who are unwilling to be constrained by acquaintance relationships and reject appearance anxiety. In 2018, with the launch of voice matching, Soul successfully tapped into the rising trend of the voice economy, achieving a critical milestone of surpassing 10 million monthly active users.

However, early Soul resembled an idealistic 'Utopian Laboratory.' Its pure 'soul' matching and decentralized distribution created a unique community atmosphere but failed to address the most practical challenge in the internet world: how to generate revenue?

Before 2021, Soul faced the common dilemma of all social platforms in their early stages: high marketing investments for growth but vague monetization paths. Its revenue primarily came from meager advertising and value-added services, which paled in comparison to its massive burning rate.

The good news is that 'spending little for emotional value' is becoming a mainstream consumption trend among Generation Z, leading to an explosion in the emotional economy. It is predicted that the market size of China's emotional economy is expected to swell to RMB 80.69 trillion by 2030, with the immersive emotional economy reaching RMB 11.91 trillion, growing at a compound annual rate of 22.2%.

Soul has also ridden this wave of emotional trends, experiencing revenue growth and successfully turning a profit.

From 2022 to 2024, Soul's revenue reached RMB 1.667 billion, RMB 1.846 billion, and RMB 2.211 billion, respectively. For the eight months ending August 31, 2025, revenue was RMB 1.683 billion. Soul achieved a profitability turning point in 2023, with an adjusted net profit of RMB 337 million in 2024. For the eight months ending August 31, 2025, the adjusted net profit was RMB 286 million.

The core of revenue comes from Soul's emotional value-based services, namely virtual goods and membership privileges. For example, users can purchase 'Soul Coins' to redeem avatar virtual images, dynamic gifts, recommendation privileges, and AI-related products. Revenue from emotional value-based services increased by 18.2% from approximately RMB 1.667 billion in 2023 to around RMB 1.969 billion in 2024.

Whether in previous periods or the first eight months of 2025, revenue from such services accounted for over 90% of total revenue. Meanwhile, the average spending per user has been rising, with the average monthly revenue per paying user (ARPPU) increasing from RMB 75.3 in 2022 to RMB 104.4 in August 2025, a 38.6% increase in less than three years.

This highly concentrated revenue structure also brings impressive gross margins. From 2022 to 2024, Soul's gross margins were 86.3%, 85.5%, and 83.7%, respectively, supporting its profitability.

However, like two sides of a coin, a single revenue source also poses potential risks. As of the first eight months of 2025, revenue from emotional value-based services accounted for a staggering 90.8%, while advertising revenue only made up 9.1%. This heavy reliance on users' willingness to pay, rather than expanding the non-paying user base, poses a hidden danger (hidden risk) for future development. As seen in Soul's prospectus, the company's payment ratio has remained low, hovering around 6% from 2022 to 2024, and only reaching 6.5% in the first eight months of 2025.

This indicates that Soul no longer relies on a Crazy expansion (frenzied expansion) of user numbers (with MAU peaking) but instead on deep value extraction from existing core users (with ARPPU rising). This is a typical 'intensive cultivation' model, with benefits such as a healthy financial model and impressive profits. However, the hidden danger (hidden risks) are equally apparent, as it heavily relies on the stability of core users' willingness and ability to pay. Once economic fluctuations affect young people's disposable income or ecological changes within the platform lead to emotional migration of core users, this impressive profit report could quickly fade.

Another set of noteworthy data is that Soul's monthly active users peaked at 29.4 million in 2022, declined to 26.2 million in 2023, remained at 26.2 million in 2024, and grew to 28 million in the first eight months of 2025, a 5% decrease from the 2022 peak.

This also indirectly confirms that Soul's past growth heavily relied on Generation Z, and as this demographic grows, its size is declining. User structure will also become one of the risks to Soul's profitability.

02. Can AI + Immersive Social Networking Build Soul's Moat?

Staying in sync with young people has become Soul's main task for commercialization.

Opening the prospectus, Soul defines itself as a leading domestic 'AI + immersive social networking platform,' built on users' interests and personalities and relying on advanced AI models and algorithms to create an AI-driven, warm emotional oasis. This replaces its previous positioning as a builder of the 'social metaverse.'

The use of proceeds has also shifted from metaverse-related extended reality (XR), virtual spaces, and AI-driven image generation, voice recognition, and synthesis to Soul X large model iteration, GPU computing power enhancement, data analysis capability building, and IP and virtual service creation.

Behind the change from 'metaverse' to 'AI' lies a pragmatic retreat and focus in strategic priorities. The metaverse vision is grand but requires massive infrastructure investment with distant returns, clearly not a good story for a company awaiting listing. AI, especially when combined with social scenarios, is a tool that can immediately enhance efficiency and create new monetization points.

To put it more bluntly, Soul needs to tell a story about 'how to make more money now' rather than 'how to change the world in the future.'

This time, Soul aims to stay in the game with AI. In the first eight months of 2025, technology and development expenditures reached RMB 407 million, accounting for 24% of revenue, with a focus on AI models and security mechanisms.

Based on social data accumulation, Soul has developed its proprietary Soul X large model tailored for social scenarios, supporting various types such as text, voice, images, and videos, capable of accurately understanding users' genuine emotional needs and conversational intentions.

To make chatting more interesting, Soul has introduced the AI Booster feature, where AI acts as a 'social brain,' remembering users' chat styles, topics of interest, and even generating interesting opening lines for socially anxious users, offering multiple style options based on chat replies. Using AI Booster allows you to become the person you want to be.

This can be considered one of the 'ultimate dreams' of social products, using technology to bridge the gap between the 'authentic self' and the 'ideal social persona.' For users who are not good with words, AI becomes their 'social hack'; for those seeking efficiency, AI becomes an 'intelligent filter' for ineffective information.

Of course, all these AI features unsurprisingly require users to pay. The prospectus shows that the AI Booster feature has increased user interaction frequency by 32% and payment conversion rates by 18 percentage points.

Additionally, Soul has launched the 'AI Companion' feature. Users can search the platform to find virtual accounts with independent personas, continuously updated content, and even millions of followers, all with a 100% match rate with each user, meaning every AI companion is your 'soulmate.'

This feature further expands AI's application in emotional companionship and interactive scenarios but also places the emotional business of AI companions in a dilemma.

After the launch of AI companions, questions like 'Is Soul AI a real person?' have gradually emerged. Some users have reported being told they are 'staff members' during conversations with virtual companions, while others have encountered requests for photos, resembling real-person interactions. Although Soul officially responded that all virtual companions are genuinely AI-driven without real-person intervention in operations.

Meanwhile, as Soul fully invests in AI development, its compliance faces significant challenges. The training of the Soul X large model heavily relies on user interaction data. If data collection, processing, or usage fails to fully comply with regulations like the Personal Information Protection Law, the platform may face new regulatory scrutiny. In fact, in 2023, Soul was ordered to rectify issues regarding personal information collection and usage by the Shanghai Cyberspace Administration.

Whether in operations or regulation, Soul seems to exist in a paradox. That is, AI provides relatively equal communication opportunities for each user, making the distribution of content and resources more reasonable and efficient, but all these require payment. Meanwhile, enhancing AI capabilities relies on massive user social content for training, continuously pushing the boundaries of data compliance and further deepening the misalignment between 'technological ideals' and 'commercial realities,' as well as 'innovation advancement' and 'regulatory compliance.'

Therefore, for Soul, AI on one hand cuts out higher payment conversion rates and user stickiness, adding luster to financial data; on the other hand, it may erode the foundation of user trust in the platform and operate in a regulatory gray area.

03. Conclusion

Of course, behind Soul's current IPO lies a 'counter-guarantee' pressure of up to RMB 12.4 billion.

According to its balance sheet, as of August 31, 2025, Soul's 'financial liabilities for redeemable shares and redemption obligations' have accumulated to RMB 12.4 billion. This liability usually stems from redemption clauses attached to early financing rounds. If the company fails to complete listing within the agreed timeframe, it will face massive cash redemption obligations.

Once the IPO is completed, the relevant shares will automatically convert to ordinary shares, and the corresponding liabilities will be reclassified as equity, terminating the changes in book value and preventing further losses.

However, in the business of 'emotions,' the sustainability of profitability is far more complex than just turning numbers positive. Soul has skillfully encapsulated abstract emotional needs into purchasable, quantifiable virtual goods and privileges, achieving an impressive 'emotional alchemy.' But the paradox of alchemy lies in its inability to turn stone into gold, only transforming one form of value into another. What Soul transforms is essentially the loneliness, expressive desires, and longing for resonance prevalent among contemporary young people, especially Generation Z, in an atomized society. The foundation of this business is not a technological moat.

The problem precisely lies here. Emotions are fluid, changeable, easily shaped, and quickly fatigued. Today's young people's enthusiasm for 'soul matching' and 'virtual companionship' may be replaced by new interactive forms or offline experiences tomorrow. Soul does not rely on rigid demands like communication tools but on highly culture-driven and group psychology-dependent 'soft demands.' This forces its growth narrative to shift from 'broad expansion' of user numbers to 'deep excavation' of existing users.

Furthermore, as Soul evolves with AI, the platform may become more 'user-friendly' but also more like a meticulously designed 'emotional amusement park,' where all experiences are priced, and all paths are predicted. Is this a victory for technology, or is it not also a form of 'discipline' imposed by commercial logic on the product's original intent?

*The featured image and illustrations in the text are sourced from the internet.