1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
YALA
Event Date
2020-09-30
Sector
Information Technology
Subsector
IT Services
Offer Range
$7.50-$7.50
Shares Offered
18.6M
24.73M
$948.0M
75.2%
Implied Upside vs Midpoint
Description
Mission We aspire to build the most popular destination for online social networking and entertainment activities in MENA. A Community Built on Voice Voice connects us to our fellow humans. Voice is unique, like a person’s signature, instantly recognizable by friends. Voice is fun, stories, songs, jokes and gossips are among the oldest, as well as the most popular, forms of entertainment. Voice is spontaneous, no need to look for a pen or a keyboard, just open the mouth. Voice is powerful, it is an effective medium to convey ideas and emotions. Voice is charming, few things are as beautiful as a loved one’s voice. Social gatherings for group chatting and other casual entertainment have been a long-standing tradition in MENA. A common example is majlis, a gathering event of friends and neighbors to socialize, exchange gifts and play casual games. Majlis is deeply ingrained in the cultures of many countries in MENA and has remained popular for centuries. Since the founding of our business, we have been helping the local people in MENA to bring their traditions online and continue their social enjoyment in the mobile Internet era. Our products mirror what people enjoy doing in majlis, cafes and other offline leisure and entertainment settings and make social interactions more convenient. Leveraging our cultural insights, we identified voice chats to be uniquely suitable for online social networking and entertainment in MENA and pioneered the development of a voice-centric mobile social networking and entertainment platform in the region. Today, we are the largest voice-centric social networking and entertainment platform in MENA as measured by revenue in 2019, according to the Frost & Sullivan Report. We have built a large and vibrant Yalla community. In the second quarter of 2020, approximately 12.5 million users visited our platform on average each month; they spent a total of 309.5 million hours in our live voice chat rooms, or Yalla rooms, and played a total of 407.2 million rounds of casual games on Yalla Ludo. The number of paying users on our platform was 5.4 million in the second quarter of 2020. On average, active users of Yalla and Yalla Ludo spent approximately 4.5 hours and 1.4 hours on our platform every day in the second quarter of 2020, respectively. A Market Full of Opportunities Comprised of 10 countries and with a total population of 247.0 million as of December 31, 2019, MENA is a predominantly Arabic-speaking region with a very unique culture. The region encompasses some of the more affluent countries in the world in terms of nominal GDP per capita, including Qatar, the UAE, Kuwait and Saudi Arabia, with nominal GDP per capita in 2019 at US$66,060, US$39,806, US$28,664 and US$23,187, respectively, compared to the global average at US$11,319 in 2019, according to the Frost & Sullivan Report. Given MENA’s stable economic development with relatively high nominal GDP per capita, high mobile Internet penetration rate and high standard of social welfare, especially in the Gulf countries, people in MENA generally favor a more balanced lifestyle, thus creating a positive environment for online social networking and entertainment market. The MENA online social networking and entertainment landscape is characterized by favorable macroeconomic and demographic conditions, as illustrated by the following figures: High Mobile Stable Population Internet Stable Economic Development Young Population Growth Penetration 3.3% 29.8 2.0% 104.8%(1) Expected Nominal GDP Median Age (years) in Expected Mobile Internet CAGR from 2019 to 2024 2019 Population CAGR Penetration from 2019 to 2024 Rate Expected by 2024 (1) Mobile Internet penetrate rate in MENA was 83.6% in 2019. There also exists a significant imbalance between the supply of, and demand for, online social networking and entertainment options in MENA. In 2019, there were 137.0 million active online social networking and entertainment users in MENA with an average daily time spent of 230 minutes per user, substantially longer than many other countries and regions. However, the availability of Arabic online social networking and entertainment applications is limited, according to the Frost & Sullivan Report. In addition, very few online social networking and entertainment platforms have localized their Arabic user interfaces based on MENA culture. As such, the demand for online social networking and entertainment services from MENA is significantly underserved. Active online social networking and entertainment users in MENA only downloaded social networking and entertainment applications 3.4 times in 2019, below the numbers in the United States, Europe, Southeast Asia and China at 6.2, 4.0, 4.3 and 13.8 times, respectively. There is significant growth potential for the online social networking and entertainment market in MENA, as more online social networking and entertainment applications become available to users in the region. The opportunity in online social networking and entertainment is further amplified by the relatively limited offline social networking and entertainment options in MENA as a result of local cultures and customs. Leisurely social gatherings among family members and friends are the main traditional social networking and entertainment activities in this region. By bringing such offline social interactions online, social networking and entertainment applications have made it easier for users to continue their social networking and entertainment activities anywhere and anytime. As MENA becomes more affluent and experiences further mobile Internet penetration, and the size of the tech-savvy young generation grows, we believe the demand for online social networking and entertainment will continue to increase in this region. Moreover, as options for both online and offline social networking and entertainment are limited in MENA, its mobile users’ desire for online social networking and entertainment is still relatively overlooked compared to other countries and regions. As a result, we believe MENA is an attractive market for online social networking and entertainment, as the market is currently underserved and has not reached its full potential. Why Users Love Us We believe “Yalla” has become synonymous with fun and enjoyable mobile social experience in MENA. Users love our platform for the following reasons: • Superior Social Experience We provide a mobile platform for users to enjoy superior social experience online. Our mobile applications were inspired by offline social leisure activities in MENA. We bring such activities to the mobile Internet to make them more convenient. Our flagship mobile application, Yalla, primarily features Yalla rooms, which may be viewed as the online version of majlis or cafés, where people spend their leisure time in casual chats. On the other hand, Yalla Ludo resembles a family living room where family members and friends play simple board games that are highly popular in MENA, such as Ludo and Domino. We carefully preserve the traditional features and tastes of these popular games so that our users can easily apply their offline experience to our mobile platform. Leisure is a mentally beneficial experience, and we believe that leisure activities should be done for their own sake. Our users gather on our platform for a relaxing social leisure experience. Whether their time is spent on an hour of casual chatting or a few rounds of casual games, social interactions and companionships are what our users cherish. We aim to provide our users with a pure social leisure experience. While our users may receive virtual gifts and accumulate virtual currencies on our platform, none of the virtual gifts and virtual currencies are convertible into real money under any circumstance and our users are unable to sell such virtual items to other users through our platform. Instead, users send virtual gifts to express their appreciation of contributions by other users or gain recognition within the community. • Localized Appeal We have developed the leading social networking and entertainment platform tailored for the local cultures of our target markets, particularly MENA. We believe localizing is much more than using the local language in user interfaces. Leveraging our insights into MENA culture and local user preferences, we infuse our user interfaces with local cultural elements. For non-English versions of Yalla, we update the user interface with color themes and logos related to specific local holidays to celebrate with our users, and virtual gifts are typically designed based on local customs. As a result of our close attention to detail, our mobile applications deliver a seamless user experience and foster a strong sense of belonging among users. Such localized appeal resonates with users and allows us to build a highly loyal and engaging user community. Our ability to faithfully preserve the traditional flavors of local offline social life also differentiates us from other platforms. • Voice-Centric Interaction Preferred by Users Our users mainly interact through real-time voice chats on our platform. Compared to other forms of online communication such as texts, graphics or video, users are able to communicate more comfortably and effortlessly by voice. Moreover, voice chats are more suitable to the cultural norms in MENA compared to video chats. We believe our voice-centric approach has been one of the key reasons for our success in MENA. • Highly Interactive User Community Our platform is designed to maintain users’ equal status, thereby encouraging all of them to freely communicate and interact with each other. There are no differences of influencers and followers, or gurus and newbies. Instead of passively consuming content, users come to our platform in order to actively participate in the social leisure activities we offer. We believe these social interactions foster a sense of community among users and enable our platform to attract and retain users more effectively compared to other platforms. --- Our principal executive offices are located at #238, Building 16, Dubai Internet City, Dubai, United Arab Emirates. Our telephone number at this address is +971-4-587-7388. Our registered office in the Cayman Islands is located at the offices of Vistra (Cayman) Limited, P. O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KYl -1205 Cayman Islands. Our main website is yallatech.ae. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, N.Y. 10168.
Yalla Group Limited annual income statement and balance sheet, FY 2021 to FY 2025, as reported in SEC filings.
| Metric | FY 2021 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Revenue | $273M | $319M | $340M | $342M |
| Gross profit | $178M | $204M | $219M | $230M |
| Operating income | $83.0M | $96.4M | $121M | $122M |
| Net income | $82.6M | $113M | $134M | $148M |
| Metric | FY 2021 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Total assets | $381M | — | $802M | $896M |
| Total liabilities | $44.9M | — | $104M | $94.2M |
| Total equity | $336M | $563M | $698M | $802M |
| Cash & equivalents | $351M | $312M | $488M | $527M |