On March 29, the Shanghai Stock Exchange accepted 9 more IPO companies on the Science and Technology Innovation Board, and Beijing Papaya Mobile Technology Co., Ltd. (hereinafter referred to as Papaya Mobile) became the fourth Beijing enterprise accepted by the Science and Technology Innovation Board, and Papaya Mobile intends to raise 1.176 billion yuan (RMB, the same below) through the initial public offering, with a valuation of about 4.704 billion yuan.
According to the official website, Papaya Mobile is a technology-based company focusing on the research and development of big data technology, founded in 2008 by the returnee team of Tsinghua, Stanford and Google, and the company's technical personnel account for more than 60%.
Shen Si, CEO of Papaya Mobile.
Interestingly, Shen Si, ceo of Papaya Mobile, once appeared on the marriage and dating TV show "Do Not Disturb", and was named "Beautiful CEO who will market". Shen Si also has the title of "Xueba", in 1997 she won the title of science and engineering in the Shenzhen college entrance examination, and was later admitted to Tsinghua University, and in 2004, she obtained a double master's degree in computer science and management from Stanford University.
The company's main business is to use global big data resources and big data processing and analysis technology to provide overseas marketing services for the majority of domestic enterprises, the company docked with Facebook, Twitter, Youtube, Instagram and Google and other more than 2,000 global media data.
Papaya Mobile said it would use the raised funds for the upgrade project of its Papaya big data intelligent platform, the construction project of the R&D center and the absin-base project, and the remaining supplementary working capital.
From giving up listing in the United States to withdrawing from the New Third Board
According to industrial and commercial information, Papaya Mobile was established (registered) in April 2008, and its main business is the mobile game community. Shen Si, CEO of Papaya Mobile, once said in an interview with the media that in 2011, Papaya Mobile, which was a game community, encountered a development bottleneck, and there was no interaction between users in the game community, and the stickiness was low, so it was difficult for the company to monetize. At that time, the cooperative game manufacturers on the platform hoped that Papaya Mobile could help them exchange users to reverse the flow, so the bottleneck problem had a solution, and Papaya Mobile naturally extended its business to mobile advertising. Since August 2011, Shen Si has participated in 21 consecutive episodes of the "Do Not Disturb" program and become a famous "beauty CEO".
In 2012, Papaya Mobile began to shrink its gaming community business, and its focus shifted to mobile advertising. According to the prospectus, in 2012, Papaya Mobile launched the Internet marketing integrated service platform "AppFlood", "AppFlood" relied on the self-owned platform traffic accumulated by the game community and the third-party traffic introduced later, and contracted a high share of overseas marketing promotion business.
According to the prospectus, in October 2014, Papaya Mobile officially became a core partner of Google; in 2016, Papaya Mobile became an official authorized partner of Facebook worldwide; and then the company docked with top video and social traffic platforms such as Youtube, Instagram, and Snapchat. So far, Papaya Mobile has both the world's top high-quality Internet media traffic resources and first-level technical protocol access points, accumulating more than 2 billion people's target audience data.
Shen Si said in an interview with the Yangtze River Business Daily in 2016 that she had planned to list in the United States, but because the United States underestimated the strength of her company, she eventually gave up listing in the United States and turned to the new third board, for which Papaya Mobile spent 8 months restructuring in China.
According to Papaya Mobile's 2016 Public Transfer Prospectus, on May 20, 2015, Shen Si, Qian Wenjie (co-founder of Papaya Mobile), Papaya Mobile, Mobile Strange, Papaya and overseas investors signed the Restructuring Framework Agreement to reach an agreement on Papaya Mobile's dismantling of the red-chip structure and the restructuring of the equity structure.
On 20 May 2015, Shen Si, Qian Wenjie, Papaya Mobile, Mobile Strange, Papaya and overseas investors signed the Restructuring Framework Agreement to reach an agreement on Papaya Mobile's dismantling of the red-chip structure and restructuring of the equity structure.
On May 25, 2015, Shen Si, Qian Wenjie, Papaya Mobile and Mobile Strange signed a VIE termination agreement to terminate the originally signed control agreement and the control matters of the agreed agreement.
VIE can be changed into an interest entity, also known as "agreement control", the essence of which is a way for domestic entities to achieve overseas listing. VIE refers to the separation of the overseas listed entity from the domestic operating entity, and the overseas listed entity sets up a wholly-owned subsidiary in China, and the wholly-owned subsidiary does not actually carry out the main business, but controls the business and finances of the domestic operating entity through an agreement, so that the operating entity becomes a variable interest entity of the listed entity.
A year after the dismantling of the VIE structure, Papaya Mobile was quickly listed on the New Third Board, with a stock code of 837493. On October 9, 2016, Papaya Mobile issued an announcement that due to the company's operation and development strategy adjustment, the company intends to apply for the termination of listing in the national small and medium-sized enterprise share transfer system.
Papaya Mobile's 2016 (first) half-year performance report shows that the operating income reached 23.2741 million yuan, an increase of 53.12% year-on-year; the net profit was 7.1469 million yuan, an increase of 228.04% year-on-year, and the development trend was good, but since Papaya Mobile released the "stock issuance plan" news until the termination of the listing, Papaya Mobile did not announce the relevant financing progress.
Big data goes to sea and "advertises" on Facebook
Papaya Mobile is a company that relies on independent research and development technology for big data processing and analysis, mainly using global big data resources and big data processing and analysis technology to provide overseas marketing services for domestic enterprises, including search display services and effect services.
Papaya Mobile's business model is to dock global media traffic resources on the one hand, and tens of thousands of new economy enterprises, developers and media in China with overseas demand on the other hand. Papaya Mobile analyzes massive data through core technology to provide advertisers with optimal delivery solutions, and obtains revenue from advertisers under the premise of saving advertisers' delivery expenditure. At present, papaya mobile docking media resources include Facebook, Twitter and Google and other leading Internet platforms.
Statistics from market research firm Pivotal Research Group show that in 2018, Facebook's total revenue from Chinese advertisers is estimated to reach $5 billion, or about 10% of its total sales. China has become one of Facebook's biggest sources of advertising revenue. In 2017, Terence Kawaja, CEO of strategic consulting firm LUMA Partners, said that Chinese money would pour into international online advertising in the coming years, according to the Wall Street Journal.
According to the prospectus, Papaya Mobile's marketing service network covers North America, Southeast Asia, South Asia, the Middle East, Eastern Europe and other regions, covering 65 countries and regions along the Belt and Road, 14 big data centers in the world, with 4500 advanced servers, and the system can conduct real-time transactions 7x24 hours a day. At the same time, the papaya intelligent bidding system can make more than 5 billion auction analysis times a day, bid more than 3 billion transactions per day, and obtain more than 500,000 users for a single customer every day. Not only that, Papaya Mobile has more than 2 billion global user data and more than 1,000 user portrayal dimensions.
The prospectus also shows that in 2018, 2017 and 2016, the revenue of Papaya Technology was 4.33 billion yuan, 2.28 billion yuan and 565 million yuan, and the net profit was 95.3184 million yuan, 66.3077 million yuan and 42.6463 million yuan, respectively. The main business is mainly advertising, including search display, performance and enterprise, of which search display advertising contributed more than 90% of revenue in 2018 and 2016.
iResearch's "2018 China Internet Industry Development Report" predicts that the proportion of mobile advertising business in the total mobile Internet economy will exceed 30% in 2019, and 90% of the revenue of large Internet companies at home and abroad such as Google, Facebook, and Today's Head will come from advertising business.
It is worth noting that Papaya Mobile said that the company has the risk of supplier concentration, although the company docked more than 2,000 global media data such as Facebook and Google, but because Facebook and Google have a share of more than 60% of the global Internet marketing market, and Facebook is in an unshakable position in the short term in mobile social and mobile Internet marketing, resulting in a high concentration of traffic procurement in the reporting period.
Strong search display business No longer operate leisure social products
From 2016 to 2018, benefiting from the development of search display business, Papaya Mobile achieved a main business income of 564.8883 million yuan, 2279.3804 million yuan and 4328.209 million yuan, respectively, with a compound annual growth rate of 176.80% from 2016 to 2018. The operating income in 2017 and 2018 increased by 303.51% and 89.89% respectively over the same period of the previous year.
According to the prospectus, the papaya mobile search display business is oriented to global media resources such as Facebook, Google, and Twitter, reaching more than 2 billion users, which is the mainstream advertising display form for domestic enterprises to go overseas in the mobile Internet era. The largest traffic parties of search display business such as Facebook and Google have formed a very stable business model and billing method, in 2016, 2017 and 2018, the gross profit margin of Papaya Mobile's business was 4.26%, 4.65% and 3.79%, respectively, which was relatively stable, but the comprehensive gross profit margin of Papaya Mobile showed a downward trend, in 2016, 2017 and 2018, the comprehensive gross profit margin of Papaya Mobile was 20.31%, 6.24% and 4.38%, respectively.
In response to the decline in the comprehensive gross profit margin, Papaya Mobile said that due to the rapid increase in the proportion of operating income in the search display business and the shift in the focus of the company's mobile Internet marketing strategy, the gross profit margin declined. Although the leisure social products developed by Papaya Mobile in the early days had a higher gross profit margin, with the adjustment of the strategic direction, the leisure social products were no longer in operation in the second half of 2017.
At the same time, due to the rapid increase in the proportion of search display business revenue from 28.27% in 2016 to 97.05% in 2018, and the strategic shift of Papaya Mobile's mobile Internet business to the sea business, the company's comprehensive gross profit margin decreased from 20.31% in 2016 to 4.38% in 2018.
Although the papaya mobile search display business has accounted for more than 97% of the company's operating income, the possibility of a decline in gross profit margin due to revenue structure adjustment in the future is small, but it is not excluded that the future with the increasingly fierce competition in the Internet marketing business will promote the further improvement of traffic costs and the possibility of a further decline in the company's comprehensive gross profit margin.
Beijing News reporter Bai Jinlei intern Cheng Zijiao Editor Xu Chao Proofreader Li Lijun