Line IPO raises $1.1 billion, the biggest in tech in 2016
Around 40% of revenue comes from games, stickers and comics, and Japanese messaging service is seeking to expand with new content
Update: Line Corp. has raised more than $1.1 billion in a dual IPO on the Tokyo and New York Stock Exchanges, making it the biggest tech IPO of 2016 so far.
The mobile messaging company, which earns a significant proportion of its revenue from games, opened on the NYSE at $42 a share, up 33% on its list price, and closed the day's trading at $41.58. In Tokyo, its stock saw an immediate jump from a ¥3,300 opening price to ¥5,500, but closed the day at ¥4,345.
In total, 22 million shares were released on the NYSE, and a further 13 million were sold in Tokyo.
The NYSE went green today for the @line_global IPO $LN pic.twitter.com/C2Ito1k59C— NYSE 🏛 (@NYSE) July 14, 2016
Speaking to Recode yesterday, Line Corp.'s chief globalisation officer, Jungho Shin, indicated that the company is looking at content as a core part of its strategy going forward. Shin mentioned Pokémon as an example of the kind of marketable IP in which Line is interested, drawing a parallel to its enormously successful collaboration with Disney on Disney Tsum Tsum.
Original Story: Line Corp is heading for an IPO that will value the company at $5.5 billion, according to an official document published last week.
The popular mobile messaging service, which is based in Japan but owned by a Korean parent company, earned ¥120.7 billion ($1.13 billion / £804 million / €1 billion) in revenue in calendar 2015, up from ¥86.3 billion ($814 million / £575 million / €722 million) in 2014, 41% of which came from games, streaming music and comics.
There were 56 games available through the Line messaging service as of March 31, 2016, all but 6 of which were developed by third-party companies. Line has been has been active in bringing new game content to its platform, pledging $100 million to help fund developers' projects in August 2014.
Those games have now amassed a cumulative total of 654 million downloads since Line started distributing the content in 2012. In March this year, around 1.6 million people out of 31 million MAUs actually made a purchase in a Line game, up from 1.5 million in March 2015. However, the number of MAUs for those games is sliding downwards, with the figure for March 2016 the lowest since it first passed 30 million MAUs two years before.
This is important context for understanding Line's current position. Despite its ¥120.7 billion in revenue for calendar 2015, it actually made a loss of ¥7.6 billion ($72 million / £51 million / €63.6 million) in the same period of time. In part, the shortfall was down to rising costs associated with expanding the business, which is still largely reliant on revenue from its native Japanese market.
In March 2016, 152 million of LIne's 218 million MAUs were based in Japan, Taiwan, Thailand and Indonesia. That total MAU figure is far behind the WhatsApp with 1 billion users, Messenger with 900 million users, and WeChat with 697 million users. Overall, Line is the seventh most popular messaging service in the world.
"We intend to invest in our global operations in order to increase monetisation outside of Japan, especially in our three other key countries of Taiwan, Thailand and Indonesia, the company stated in its IPO document. "We generated 84.6%, 73.1%, 67.8% and 68.7% of our LINE business revenues (i.e., our total revenues excluding revenues from portal advertising) from Japan in 2013, 2014, 2015 and the first three months of 2016, respectively, and we expect to continue to derive a significant portion of our revenues from Japan in the near future."
Line intends to sell 13 million new shares in Japan and a further 22 million globally in the offering, priced at ¥2,800 each. The price range will be set on June 27, with the final price arriving on July 11.
According to Bloomberg, it could raise as much as $1 billion, at a market value of ¥588 billion ($5.5 billion / £3.9 billion / €4.9 billion), which is 40 per cent below the company's estimated value when it first considered an IPO in 2014.