Category Archives: NYSE

Roblox IPO – Prospectus Peek

Roblox Corporation will list on the New York Stock Exchange as RBLX.

How much do we know about Roblox? Kids spend hours on it every day, but do they how Roblox works and the numbers behind it? Take a peek into the IPO prospectus for Roblox. 

About Roblox:

  • Founded in 2004 by David Baszucki and Erik Cassel. Today, Baszucki is the CEO and second-largest shareholder with 12% behind Altos Ventures that has 21%.
  • The company has eight classes of stock some preferred, some convertible and more restricted share units have been granted to employees in the IPO. 

Numbers:

  • The company had $489 million revenue in 2019 and $589 million in the first nine-months of 2020. $409 million (70%) of its revenue is from US/Canada, 17% from Europe, with Asia-Pacific adding 8% and the rest of the world is 5% (28.2 million).
  • The company has $1.49 billion assets, 801 million of which is in cash.
  • It lost $86 million in 2019 and $205 million in the first nine-months of 2020. It has carried forward accumulated tax loss credits with the US government of $162 million and $54 million in the state of California.

Users & Experiences:

  • Key attractions that draw users to Roblox are unique identities, interaction with their friends, low friction (easy to join) and the variety of 3D experiences easily accessible on most devices whether they run on iOS, Android, PC, Mac, Xbox, Oculus Rift etc.
  • Most experiences are free and users can then purchase others such as clothing and avatars.  Users do this using ‘Robux’ which they purchase with a credit card, subscriptions or one-time mobile payment (such as with M-Pesa), and use the Robux is to access digital items such as avatar and features.
  • The user base is currently 51% male and 44% female, with 72% of uses using mobile devices. Geographically, 33% of users are in the US /Canada, 29% in Europe 15% in Asia and 22% in the rest of the world. The Roblox business case going forward depends on growing internationally, particularly in Europe (Germany & France), and Asia (South Korea). Also, in February 2019 they entered a joint venture with Tencent to use the Roblox platform in China and Roblox owns 51% of the JV.
  • Users aged 9-12 years are 29%, under-9s are 25% and 13-16 are 13%, while 14% of Roblox users are over 25 years. They hope to grow the over-13 crowd as they have a higher propensity to spend on content.
  • During Covid-hit in 2020, active users have gone up from 18 million in 2019 to 31 million by September 2020 from 180 countries. On average, people spend 2.6 hours per day on Roblox.

Operations:

  • Roblox has 18,000 servers in the US, Europe and Asia that handle 10 million requests per second.
  • Users are able to draw from a library that has 18 million experiences and the company uses machines and 1,700 humans to moderate this content.

Developer Program:

  • It has 7 million developers and 960,000 of them earn on the platform. Developers can build in their native languages and machines translate the content into 11 languages including English, Japanese, Korean, Spanish, Chinese, German and French.
  • Creators receive 30 % of revenue from the creations while developers receive 70% of Robux spent on their experiences. In the nine months to September 2020, developers earned $209 million up from 72 million in the same period last year. 1,050 developers earned $10,000 or more and 250 earned more than $100,000 in Robux.
  • If they want to cash out of the developer exchange program, the rate is one Robux is equivalent to $0.0035.

Advisors:

  • Underwriters of the IPO are Goldman Sachs, Morgan Stanley, J.P. Morgan, Allen & Co, Bank of America, and RBC.
  • The auditor is Deloitte while the firm of Wilson Sonsini is the legal counsel.

To be continued.

Jumia IPO – Prospectus Peek

Edit April 12: Jumia lists on the NYSE

EDIT March 29 2019:  Mastercard Europe SA has agreed to purchase 128;50.0 million of our ordinary shares in a concurrent private placement at a price per share equal to the euro equivalent of the IPO offering price per ordinary share. Based on an assumed IPO offering price of $14.50 per ADS, which is the midpoint of the price range set and an assumed exchange rate of $1.1325 per 128;1.00, this would be 7,810,364 ordinary shares (corresponding to 3,905,182 ADSs). We will receive the net proceeds from this Concurrent Private Placement.

  • Mastercard Europe SA has agreed to purchase €50 million of our ordinary shares in a concurrent private placement at a price per share equal to the euro equivalent of the initial public offering price per ordinary share.
  • Certain of our existing shareholders have the right to subscribe for additional ordinary shares at nominal value depending upon the initial public offering price and the number of shares placed in this offering. Assuming a placement of all offered ADSs at the midpoint of the price range, these existing shareholders may subscribe for 18,157,245 ordinary shares against payment of €18.2 million.
  • The chairperson of our supervisory board, Jonathan Klein, has indicated an interest in purchasing an aggregate of up to $1.0 million in ADSs in this offering at the IPO price.

Posted March 15 Reading the F-1 filing for Africa Internet Holding GmbH, the Africa e-commerce company that will now be known as Jumia Technologies AG after it applied to list its shares on the New York Stock Exchange (NYSE) under the symbol “JMIA”.

Not much about the management at Jumia has been shared since Rocket Internet was dissected in Bloomberg story on their formula for Africa.  “Rocket sends three people to a different country to start a business: a CEO, a CFO, and a COO. The CEO builds the team, does the marketing, and drives sales. The CFO manages the revenue growth and cash burn. The COO makes sure we have a big enough warehouse and that the packages get delivered… and .. (the brothers) didn’t feel bad about copying. They had this feeling like they have to make Germany great again, so they only care about building big companies.

Why Africa?: The company (Jumia) is Africa Internet Holdings, registered in Germany. Jumia sees Africa as a market with 1.2 billion people (Jumia is in countries with 55% of this population), GDP of $2 trillion and 453 million internet users (Jumia is in countries with 77% of these internet users) and (they) believe that this younger generation, born into an “online” world, is increasingly seeking access to a wider choice of food, consumer goods and entertainment options as it becomes increasingly connected to, and aware of, global consumer trends.

They now have 4 million active customers, 81,000 active sellers, handled 13 million packages in 2018 and had 54% of transactions done on Jumia Pay which they introduced in Nigeria in 2016 and Egypt in 2018.

Ownership: The company was incorporated in June 2012. Shareholders in December 2018 were Mobile Telephone Networks Holdings – MTN (31.28%), Rocket Internet (21.74%), Millicom (10.15%), AEH New Africa eCommerce I (8.86%), 6.06% each for Atlas Countries Support and AXA Africa Holding, Chelsea Wharf Holdings (5.51%), CDC Group (4.04%), Rocket Investment Funds (3.48%) and Goldman Sachs (2.83%). A new shareholder, Pernod Ricard, came on board investing €75 million cash in January for 7,105 shares which became 5.1 million shares in a capital increase in February 2019 and they are entitled to more shares if an IPO happens within 18 months of their investment.

Governance: Jumia has 2 Co-CEO’s – Jeremy Hodara and Sacha Poignonnec who are both co-founders of the Company. There is also Antoine Maillet-Mezeray, the CFO – and the three, who all reside in Germany, comprise the management board of the company.

As part of the IPO, a supervisory board has been formed and it includes Gilles Bogaert (CEO Pernod Ricard SA), and Andre Iguodala, an NBA player with the Golden State Warriors. Other are Blaise Judja-Sato Jonathan D. Klein, Angela Kaya Mwanza (UBS Private Wealth), Alioune Ndiaye  (CEO Orange Middle East and Africa), Matthew Odgers (MTN Group) and John Rittenhouse.

Employees: The Company has a total of 5,128 staff including 1,213 in Nigeria, 572 in Egypt, 686 in East Africa and 183 in South Africa. Also, an ESOP (stock option plan) was set up in 2019 that will award options to key management of Jumia. The three members of the management board had total compensation of €1.04 million in 2018, and the two co-CEO’s each have 2.2 million shares as underlying options that were granted in 2016.

Assets: The Company has no real estate. It is headquartered in Berlin where they lease office space along with other spaces in Dubai and Portugal. They also have leased warehouses in Lagos, Cairo, Nairobi, Casablanca, Abidjan, and Cape Town.

Significant subsidiaries are CART (Nigeria), ECART Ivory Coast, ECART Kenya, ECART Morocco and Jumia Egypt.

Financials: For 2018 they had revenue of €130 million. Of the revenue, €66 million from West Africa, €37.8 million from North Africa, €15 million from South Africa and €10.8 million from East Africa (Kenya, Uganda, Tanzania, Rwanda – up from €4.6 million in 2017. In February 2016, they had exited Tanzania and sold their four Tanzania subsidiaries to co-CEO Hodara who wanted to run them himself.

In 2018, the goods they sold cost €84 million and Jumia also spent €94 million on administrative expenses (including €48 million on staff), €50 million logistics, €47 million on selling and advertising, and €22 million on IT expenses (including 12 million staff)

As a result, in the year 2018, they lost €169 million, compared to a loss in 2017 of €153 million. As at December 2018, the company had cash of €100 million and accumulated losses of €862 million.

Taxation: There are potential tax liabilities that have not been assessed over and above the €30 million in pending and resolved matters.  Their effective tax rate was 0.5% in 2018 and 7.4% in 2017.

The company has accumulated tax losses of €358 million including €145 million in Nigeria, €61 million in Egypt, €39 million in Kenya (~Kshs 4.5 billion), €28 million in South Africa and €25 million in Morocco.

Jumia Filing Matters: 

  • Filing costs about not confirmed but there will be a $12,120 SEC registration fee and an estimated $15,500 FINRA filing fee.
  • The public offer price is not known, but the maximum value after the listing is estimated to be $100 million.
  • Underwriters are Morgan Stanley, Citigroup Global and Berenberg
  • Ernst & Young auditors since 2014 and have provided two years of audited results.

Growth Strategies: 

  • Leverage their e-commerce platform to grow the consumer base in each market.
  • Drive consumer adoption and usage through increased consumer education as they continue to strive to deliver a positive online shopping experience
  • Increase the number of sellers and level of seller engagement
  • Develop Jumia Logistics in to better serve consumers and drive economies of scale.
  • Increase the adoption of JumiaPay.  They have agreements, through partners, in Nigeria, Egypt, Ghana, and Ivory Coast to offer JumiaPay, but they don’t offer the full JumiaPay wallet range of services possible, which would require additional eMoney permissions in every country (e.g. Morocco would require €1 million in core capital and €450,000 for Ivory Coast). In Kenya, where they currently operate as a direct lender, they are preparing a new licensing application for JumiaPay.

Risks cited in the Jumia offer:

  • One caution cited is that (US) investors may have difficulty enforcing civil liabilities against us or the members of our management and supervisory board – (as) we are incorporated in Germany and conduct substantially all of our operations in Africa through our subsidiaries.
  • We do not expect to pay any dividends in the foreseeable future.
  • We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.
  • We face competition, which may intensify.  Current competitors include Souq.com in Egypt (affiliated with Amazon), Konga in Nigeria and Takealot, Superbalist and Spree, which are all part of the Naspers group, in South Africa. Also .. some of our competitors currently copy our marketing campaigns, and such competitors may undertake more far-reaching marketing events or adopt more aggressive pricing policies.

€1 = Kshs 115 (Kenya shillings)

EDIT
Nov 19, 2019; Jumia shuts down in Cameroon

Nov 28, 2019; Jumia closed in Tanzania: Regarding Tanzania, Jumia had ceased operations in 2016 and sold four subsidiaries – AIH General Merchandise Tanzania, Juwel 193, ECart Services Tanzania and Juwel E-Services Tanzania to Jeremy Hodara, their co-CEO for €1 each. Later in 2018, he decided to sell the Tanzanian entities, which had revenues of €238,000 thousand and net losses of €3,088,000, and Jumia Facilities (Dubai) bought a 51%, leaving Hodara with 49%.

December 9, 2019: Jumia Food to close Rwanda operations. Jumia will no longer be able to accept cash on delivery and can only process pre-paid orders and no orders will be processed after 9th January 2020 at which point all customer accounts will be closed. (via New Times Rwanda)

December 9, 2019: Jumia Travel to be taken over by Travelstart, part of drastic company changes. (via TechCabal)