LINE, the Japanese mobile messaging app service, filed for an IPO on the NYSE on July 14, followed by an IPO in Tokyo on July 15, making the biggest tech public offering of 2016.
LINE is a communication app that allows user to make free voice/video calls and both one-on-one and group messages over both cellular networks and Wi-Fi. It is available on a variety of devices, from smartphone devices (iPhone, Android, Windows Phone, BlackBerry, and Nokia), as well as most tablets and PCs. It makes money by selling "stickers" (cute, animated emoticons), advertising space, and through video games. Recently, it added a ride-hailing and online payment service to increase its sources of revenue.
The company is owned by Naver, the South Korean online portal giant, who stated that the move will help the mobile messenger better compete against global companies backed by big brand and capital. Major competitors include WeChat, owned by Chinese company Tencent Holdings Ltd., WhatsApp, owned by Facebook
With 215 million active global users, it is already hugely popular in Japan, Taiwan, Thailand and Indonesia. LINE plans to push deeper into Southeast Asia and the Middle East, where its competitors WhatsApp and other rival services are already popular. CEO Takeshi Idezawa stated in a recent interview that for apps like LINE to survive and thrive, they have to expand quickly because people tend to be reluctant to change core applications, especially for messaging platforms, where users build contact lists over time. In emerging markets such as Malaysia and Vietnam where a lot of people are getting smartphones for the first time, or in other words shopping for messaging apps for the first time, there is massive opportunity and the IPO could have a drastic impact on available funds that will be used to capture this market.
LINE stands out among private-startups that have struggled to raise funds in that it already has more than $300 million in revenue and already has the backing of a major South Korean internet company. Just in the last year, LINE's sales grew 40 percent to 121 billion yen, with games, music streaming, and comics accounting for 41 percent of this growth. LINE is taking an approach similar to WeChat's business model, where the messaging service serves as more of a backbone for ecommerce. The Japanese company earned the top spot in global smartphone revenue rankings last year, excluding games.
LINE is making an ambitious step into its path for expansion, with Facebook's WhatsApp and Messenger, and Tencent Holdings Ltd.'s WeChat being far ahead in the US and in China, the world's two largest internet markets. However, LINE does stand out in its creativity and rapid-yet-stable growth demonstrated in the past years, and is likely to continue to innovate to capture new consumers in existing and emerging markets.
