Qutoutiao’s IPO financing downsized again | Digital Asia

Chinese content aggregator Qutoutiao (趣头条), or “Fun Headlines,” is expected to raise even less in its IPO than its recently adjusted total of $165 million, according to local media.

The company initially hoped to raise $300 million when listing on the Nasdaq. However, late last week it updated its filing to reflect a 45% decline in its expected IPO financing. Now, according to individuals familiar with the matter, that figure has dropped to $84 million, marking a 72% decrease compared to the amount proposed in August.

While the company has set its initial offer price per share at between $7 to $9, the figure is expected to sit at the lower end. Its IPO prospectus shows the company plans to offer 16 million American Depository Shares (ADS), while it is being underwritten by  Citigroup, Deutsche Bank Securities, China Merchants Securities [HK], UBS Investment Bank, and KeyBanc Capital Markets.

Qutoutiao is the biggest rival of Jinri Toutiao. It has 62 million monthly active users (MAUs), and 21 million daily active users who spend more than 55 minutes on the platform every day, according to its prospectus.

Despite the competition, Qutoutiao and Jinri Toutiao have different target markets. While the latter focuses on higher-tier cities, the former has directed its attention to smaller cities. Qutoutiao was founded in 2016 when it drew users by awarding coins for using the app and inviting friends. These coins could be later exchanged to real RMB.

The company has seen rapid revenue growth since its founding. In the second-quarter of 2018, its revenue exceeded $108 million, 570% higher than the same period in 2017. The same is true of its 2017 revenue, which grew by 788% compared to 2016.

Qutoutiao has close ties to Tencent, which was a lead investor in its Series A in January 2017 and Series B in March. The financing valued the company at more than $1.6 billion, raising it to the status of a unicorn.