China Stocks: Mobile Content Aggregation Platform-Qutoutiao Inc. (QTT)

Qutoutiao Inc. (NASDAQ: QTT) was founded in 2016 and is headquartered in Shanghai, China, with 1,302 full-time employees (6/30/2018). It is a mobile content aggregation platform.


Qutoutiao Inc. (QTT):

“Qutoutiao” is a new generation of content information APP developed by Shanghai Jifen Cultural Communication Co., Ltd. The team is committed to making users’ reading more valuable, and providing users with interesting and valuable personalized content and services through big data algorithms and cloud computing technologies.

Qu Toutiao is committed to creating a new form of information reading software, using platforms, media and a win-win approach. Use mobile applications as the carrier for content creation and information reading, and provide more useful, interesting and beneficial content for everyone. Through cooperation with the media and PGC, Qu Toutiao has obtained original content. Domestic experts and Silicon Valley scientists have joined forces to recommend special reading content for users, supported by big data.

The founding team of Qu Toutiao is from leading Internet companies such as Shanda and Baidu . Among them, the company’s chairman Tan Siliang is a serial entrepreneur, and co-founder and CEO Li Lei is responsible for the company’s daily management. At present, the company’s technical team has more than 200 people, most of the core members are from well-known Internet companies such as BAT, and many algorithm experts with overseas backgrounds have been introduced. The content richness and recommendation satisfaction have been greatly improved.

Since its launch in June 2016, Qu Toutiao has been loved by users in third- and fourth-tier cities with light reading content and innovative reading experience, and its user scale has shown rapid growth. As of the end of 2017, Qutoutiao had accumulated more than 70 million registered users, nearly 30 million monthly active users, and more than 10 million daily active users.

According to the 2017 China APP Ranking by Cheetah Big Data, Qutoutiao ranks 41st in the entire network of apps, second only to Tencent and Today’s Toutiao in information products, and is the third vendor, surpassing many traditional news apps.

Qutoutiao Inc. (QTT) financing experience:

  • Qu Toutiao was led by capital in the second half of 2017, followed by Huaren Culture and Red Dot Ventures in a US$42 million Series A financing.
  • In March 2018, Qu Toutiao announced the completion of more than $200 million in Series B financing. This round of financing was led by Tencent, followed by Shanghui Capital, Shunwei Capital, Xiaomi, Huaxin Zhiyuan, Chuangban, and Light Source Capital. The overall post-investment valuation exceeded $1.6 billion. Light Source Capital acted as the exclusive financial advisor for this round of financing.
  • On August 18, 2018 (Beijing time), Qu Toutiao submitted a US IPO application.

Qutoutiao Inc. (QTT) development track:

  • 1. On June 8, 2016, Qu Toutiao 1.0 was officially launched, with entertainment and life information as the main content, providing accurate content distribution services for audiences in the sinking market (third- and fourth-tier cities).
  • 2. In March 2017, after Qu Toutiao version 2.0 was launched, Qu Toutiao ranked 11th on the Cheeth Lab information application rankings during the same period.
  • 3. On June 8, 2017, Qu Toutiao was launched on the first anniversary, ranking 4th in the OPPO App Store and 5th in the Vivo App Store. App Store ranked No. 4 among free apps in the information category.
  • 4. On March 16, 2018, Qu Toutiao announced the completion of more than 200 million U.S. dollars in Series B financing, led by Tencent, with Shanghui Capital, Shunwei Capital, Xiaomi, Huaxin Zhiyuan, Chuangban Investment, Light Source Capital, etc. The round of investors followed suit, and the overall post-investment valuation exceeded $1.6 billion.
  • 5. On August 18, 2018, Qu Toutiao submitted a U.S. IPO application, intending to list on NASDAQ under the code “QTT”. Citigroup , Deutsche Bank , China Merchants Securities (Hong Kong) and UBS are the underwriters, and plans to The maximum financing is 300 million US dollars.

Qutoutiao Inc. (QTT) prospectus:

According to the updated prospectus of Qu Toutiao, every 4 shares of ADS of the company are equal to 1 share of Class A common stock, each Class A common stock represents 1 vote, and Class B common stock represents 10 votes, and can be converted to A Class of ordinary shares. Qutoutiao’s lead underwriters for this IPO are Citibank, Deutsche Bank, China Merchants International, and UBS. Based on the highest issue price of $9, Qutoutiao will raise $144 million through an IPO.

If the underwriter executes the over-allotment right of 2.4 million American depositary receipts, Qu Toutiao will raise up to 166 million US dollars. According to the prospectus, Qu Toutiao has received a subscription intention of US$40 million from Jingdong Group .

According to the prospectus, as of July 2018, the Qutoutiao APP had a cumulative installed capacity of 154 million and monthly active users of 48.8 million, ranking second in the field of mobile content aggregation in more than two years, second only to Toutiao today. With the continuous increase in user volume and user stickiness, Qu Toutiao has achieved growth in its main business revenue. The prospectus data shows that the revenue in the year of establishment in 2016 was 57.95 million yuan; in 2017 it reached 520 million yuan, an increase of nearly nine times; the revenue in the first half of 2018 was 720 million yuan, compared with 110 million yuan in the first half of 2017 Achieve a growth of more than five times.

Qutoutiao Inc. (QTT) investment:

Qutoutiao Inc. (NASDAQ:QTT) submitted its IPO prospectus on 8/17/2018 and listed on NASDAQ on 9/14/2018 with an issue price of US$7.00. 12 million shares were issued and US$84 million was raised. Joint underwriting by China Merchants Securities (HK)/ UBS Investment Ban/ KeyBanc Capital Markets.

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