INSUBCONTINENT EXCLUSIVE:
M17 Entertainment, a Taipei-based live streaming and dating app group, priced its IPO this morning on the NYSE and was expected to open
trading today according to their final press release
Originally targeting a fundraise of $115 million of American Depository Receipts (shares of foreign companies listed domestically on the
NYSE), the company concluded its roadshow raising less than half of its target, for a final investment of $60.1 million
It was formed from the merger of dating app company Paktor and live-streaming business 17 Media
Joseph Phua, who was CEO of Paktor, became CEO of the joint M17 company following the merger
Fans can purchase virtual gifts to send to their favorite artists, and those points are proving to be extraordinarily lucrative for the
The company, according to its amended F-1 statement, has seen tremendous revenue growth, netting $37.9 million of revenue in the first three
The company has also been able to attract more live-streaming talent, increasing its contracted artists from 999 at the end of December 2016
Despite that revenue growth, operating losses are torrential, with the company losing $24.8 million in the first three months of this year
The company in its statement says that it has $31.4 million in cash and cash equivalents, giving it limited runway to continue operations
without a strong IPO debut.User growth has been mostly stagnant
Active monthly users has increased from 1.5 million to 1.7 million between March 31 of 2017 and 2018
What the company has succeeded in doing is monetizing those users much better
The percentage of users paying on the platform has more than doubled over the same time period, and the value of those users has increased
more than 40 percent to $355 per user per month.The big challenge for M17 is revenue quality
freakishly high number of virtual gifts
top 500 users accounted for almost a majority of total revenues
That concentration on the demand side is just as heavy on the supply side
But Wall Street investors have learned after Zynga and other whale-based revenue models that the sustainability of these businesses can be
tough.Finally, one complication for many investors wary of the increasing use of dual-class stock issues is the governance of the company
Phua, the CEO, will have 56.3 percent of the voting rights of the company, and M17 will be a controlled company under NYSE rules according
Class B shares vote at a 20:1 ratio with Class A share voting rights.All of this is to say that while the company has had some dizzying
growth in its revenue numbers over the past 24 months, that success is moderated by some significant challenges in revenue concentration
that will have to be a top priority for M17 going forward
