While on the balance the IPO market for this year will still show marked improvement over 2017, even when accounting for recent troubles, a sense of "what could have been" may linger over the scene as the market looks to complete the final stretch toward the finish line at a limp, bereft of previous energy.
On that sour note, this morning, China-based MOGU (MOGU) saw its IPO deal price at $14, the low end of the $14-$16 expected price range. In total, the 4.75 mln ADS deal generates $66.5 mln in total gross proceeds. The lead underwriters were Morgan Stanley, Credit Suisse, and China Renaissance Capital.
The stock is opened for trading this morning on the NYSE at $12.
MOGU is an owner and operator of a leading online fashion and lifestyle platform based in China. Its content is produced mostly by its user base, which includes a community of fashion influencers, as well as its in-house editorial team. MOGU's platform provides its fashion influencers with access to actual products from its brand and merchant partners with which they can create content.
Content hosted on its platform includes live video broadcasts, short-form videos, photographs, and articles covering topics such as product reviews, fashion tips, brand fitting room, celebrity on-screen, and street runway. Its platform also features an extensive portfolio of live video broadcasts, where fashion influencers promote and review products for users and interact with their audience.
MOGU also places links to products within its content to encourage and facilitate purchases. For example, when a user sees a certain item featured in a live video broadcast or a short-form video, or sees it recommended by a friend or fashion influencer through a like or share, the user can directly purchase that item.
Users access the company’s platform primarily through mobile methods, including via its flagship Mogujie app, as well as through its Mini Programs -- essentially sub-applications within another application ecosystem -- on Weixin. Through its partnership with Tencent, one of MOGU's principal shareholders and the owner of Weixin and QQ, MOGU also has one of the few dedicated Weixin Pay and QQ Wallet entryways, which helps direct Tencent’s massive base of users to its platform.
Taking a look at its user base and demographics, its base primarily consists of young females between the ages of 15 and 30. For the twelve months ended September 30, 2018, MOGU had an average of 62.6 mln mobile MAUs on its platform. In September 2018, on average, users who clicked the live video broadcasts on its platform spent over 35 minutes per day watching the company’s live video broadcasts.
For the six months ended September 30, 2018, revenues increased by 1.9% to RMB489.5 mln (US$71.3 mln). This increase was primarily attributable to increases in commission revenues and other revenues, which were partially offset by a decrease in revenues from marketing services. Revenues from marketing services decreased by 24.2% to RMB193.1 mln (US$28.1 mln), primarily due to the company’s decision to increase its focus on live video broadcasts as an effective and efficient content format to improve user engagement and experience, which affected the amount of marketing service properties available on its platform and its number of marketing services customers.
Sales and marketing expenses decreased by 10.9% to RMB360.8 mln (US$52.5 mln), primarily due to the decrease in its branding and marketing expenses by RMB32.8 mln. Total operating expenses decreased by 18.5% to RMB797.9 mln (US$116.2 mln) mainly due to the cost savings realized following its business combination with Meilishuo.
As a result of the foregoing, MOGU incurred loss from operations of RMB308.4 mln (US$44.9 mln), compared to loss from operations of RMB498.9 mln in the six months ended September 30, 2017.