China's Gen Z social app Soul drops IPO plan- PingWest

China's Gen Z social app Soul drops IPO plan

Soulgate, the company behind social networking app Soul, today dropped its IPO plan only 44 days after it filed to list on NASDAQ.

Details: The decision of suspending the IPO process comes because Soulgate Inc "received other capital operation possibilities" after it wrote in a revised F-1 filing with the US Securities and Exchange Commission that it plans to offer 13.2M American Depositary Shares (or "ADSs") at an expected $13 to $15 apiece.

According to its announcement, Tencent, which currently owns 49.9% of the company, also supports its IPO suspension.

May 11, the social app for Chinese Gen Z had filed to list on NASDAQ under the trading symbol SSR, with Morgan Stanley, Jefferies, Bank of America Securities, and CICC as co-underwriters. The value of the company could reach up to $1.4B.

Context: Launched in 2016 in Shanghai, Soul is a social app that connects strangers who share similar hobbies or interests with AI-driven features like quick matching, virtual community, etc.

The app also has set foot in South Korea, Japan, and North America. The Chinese version has also established a large user base in Southeast Asia.

The prospectus shows that the company's revenue for 2020 is 498 million RMB, up 604.3% year-on-year; revenue for the first quarter of 2021 is 238 million RMB, up 260% year-on-year, and the overall gross margin for that quarter is 86%. Soul's current main monetizations are value-added services (virtual gifts and membership services), advertising, and Giftmoji social e-commerce, which just went live in the first quarter of this year.

In addition, Soul's DAUs have reached 10 million, up 94.4% year-over-year, with 73.9% of the DAUs being Generation Z. Since July 2020, Soul's monthly MAU user growth rate, on average, has remained above 105%. The average daily DAU usage time was in the range of 40-50 minutes.

What the company has said

[Our translation] "Thank you for your continuing support of Soul. As you know, we are filing for an IPO in the US, and the process is going very well. We have met very loving strategic partners, investors and received support from multiple parties during the process. We are delighted with the hot market feedback we have received after updating our pricing range. During the process, the company also received other capital possibilities, and after careful consideration, our board decided to suspend the pricing process for the IPO. Our major shareholder, Tencent, also supported this decision.

Soul is now operating as usual and will see the expected growth as we make our products available to more people and spread goodwill, warmth, and authenticity to more Soulers.

Thanks again, everyone!"