LINE’s IPO is slated to take place in July this year. Touted to be the world’s largest tech IPO in 2016, we at JapaneseUp made an infographic to give you the lowdown on the deal.
First, some background information about LINE. LINE was born in March of 2011 in Japan as a messaging app. Its parent company is the South Korean internet content service conglomerate Naver. As of February of 2015, LINE has 600 million registered users. And as of the last quarter of 2015, it has 215 million monthly active users.
LINE’s key markets are Japan, Thailand, Indonesia and Taiwan. And it is famous for its localized marketing strategy in each country, coming up with localized emoji stickers for each market. Next, let’s take a look at LINE’s financials. Its revenue source is split between advertisers (35%), emoji stickers (22%) and content including mobile games (35%).
LINE’s revenue in 2015 is US$1.12 billion (up 40% from the previous year), which means that its earnings per active user is US$5.1. With a US$ 5 to 6 billion valuation, the price to sales ratio of this IPO deal ranges from 4.5 to 5.4, based on 2015 sales.
This IPO, slated to take place in mid to late July this year, is potentially the largest tech IPO in the world in 2016. LINE is looking at a dual listing in both the Tokyo and New York stock exchanges in order to access the capital markets of both Japan and the US.
The goal of LINE’s CEO, Takeshi Idezawa, during his investor roadshow is to raise US$ 1 to 2 billion, half of which to come from US investors. This would also serve as a springboard to push into North America. This is not LINE’s first attempt at an IPO. Their first IPO attempt was in Tokyo in July of 2014. The deal then was valued at US$9.2 billion but the IPO was not followed through due to various reasons. After the failed IPO attempt, the CEO was replaced.
Unfortunately for LINE, the slowing user growth and cooling in tech valuations and listings resulted in a lower valuation in 2016.
Finally, let’s take a look at LINE’s expansion plans. In January this year, LINE acquired M.T. Burn Inc, a Japanese startup that develops native advertising software, to boost ad revenue.
In April this year, LINE launched a research division focusing on machine learning and big data, in a bid to develop new services and refine content and ads.
After its IPO in July this year, people close to the deal expects LINE to boost its marketing and expand its operations in North America. LINE might also pursue deals for rival messaging apps with the fresh capital injection post-IPO.
Latest update (27 June 2016): LINE has delayed setting a tentative price range for its IPO by one day, until Tuesday 28 June, the company said in a regulatory filing, citing the “market environment”. The IPO price range was originally scheduled to be announced on Monday 27 June. Line still plans to list in New York on July 14 and in Tokyo the following day, the filing showed. The delay will allow the company to assess the market in New York and London on Monday 27 June before setting the tentative price range. Line’s listing will go ahead according to its planned schedule, the company said.
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