China-based Renren Inc. includes the real-name social network Renren, the games producer Renren Games, and the group-buying site Nuomi. Renren Inc. filed for IPO on the NYSE on April 15, 2011 under ...
China-based Renren Inc. includes the real-name social network Renren, the games producer Renren Games, and the group-buying site Nuomi. Renren Inc. filed for IPO on the NYSE on April 15, 2011 under the ticker RENN. Report by iChinaStock.com
INSIDE SUMMARY Renren Inc. (formerly Oak Pacific Interactive)includes the following properties: Renren (formerly Xiaonei): a real-name social network (SNS) with 31 million monthly active users and similar to Facebook in features. Renren initially launched at China‘s top universities, but has since expanded to all, though its core audience remains students. Renren Games: a producer of both casual and serious (MMORPG) games across Renren and other platforms. Nuomi: a group-buying site, launched in 32 cities across China. Intended IPO valuation: approximately $4.3 billion.NYSE: RENN.
INSIDE SIMPLIFIED STRUCTURE Softbank 35% stake Renren Inc. Earlier investors: General Atlantic (formerly Oak Pacific Interactive) (lead), Doll Capital, Technology Crossover Ventures, Legend Capital Nuomi Renren Renren Games Group-buying site Real-name social network Casual and serious games traffic traffic Additional properties: • Jingwei, business social network Note: Renren Inc. sold off portal Mop.com for approximately $18 million in December 2010 to Oak Pacific Holdings. It will not be part of the IPO. Disclaimer: This is not the firm’s official structure, but rather iChinaStock’s representation of the firm’s key properties
INSIDE TIMELINE Launches open platform for 3rd party developers Xiaonei relaunches as Renren (meaning people’s web) to Launches Jingwei,Xiaonei founded by Wang Xing, expand beyond the student business social network Wang Huiwen, Lai Binqiang andTang Yang. It launches at China’s demographic with a major top universities, Tsinghua and Xiaonei opens to non- advertising campaign. Launches Renren expected to seek Peking students domain renren.com IPO 2005 2007 2009 2011 2006 2008 2010 OPI merges users of Kaixin.com Oak Pacific Interactive (OPI) receives Launches IM feature and WAP into Renren after losing a copyright $48 million investment from General mobile version infringement lawsuit to competitor Atlantic (lead investor), Doll Capital, Kaixin001.com Technology Crossover Ventures, and Legend Capital Softbank increases stake in OPI to 35%, totaling $430 million in Launches Nuomi, group-buying site investment OPI acquires Xiaonei OPI renamed Renren Inc.
INSIDE Millions RENREN USERS “Our user base consists largely of Chinese college students, young urban professionals, and high school students… We are currently striving to expand our user base among white-collar workers in their late 20s and early 30s as well as high school students.” Source: Renren Inc. F-1 SEC Filing Note: MAU = monthly-active users (unique log-ins) and Registered Users = activated users
INSIDE Millions USD (rounded) RENREN INC. REVENUES Note: Adjusted net income accounts for stock-based compensation and certain other non-cash costs. It is the basis upon which many investors appraise companies filing for listing. Source: Renren Inc. F-1 SEC Filing Note: MAU = monthly-active users (unique log-ins) and Registered Users = activated users
INSIDE BUSINESS MODEL The Renren social network (SNS) sells advertising to big brands. Renren SNS also channels traffic to Renren Inc.’s other properties, Renren Games and Nuomi. Those sites sell internet value-added services (IVAS) directly to users rather than rely upon advertisers. Renren Games generates its revenues via virtual goods sold primarily in MMORPG games. “Over 60% of the users of our nuomi.com social commerce website are users of renren.com. Similarly, revenues from our online games depend on the continued success of our SNS platform, as many of our game players access our games from renren.com.” Source: Renren Inc. F-1 SEC Filing
INSIDE 2010 REVENUE BREAKDOWN Internet Value-added Includes Nuomi, group-buying site Services (IVAS) accounted Millions USD for 58% of total revenues (rounded) 248 big brands accounted One MMORPG game, for all advertising in 2010. Tianshu Qitan, accounted Renren only recently began for 31% of online game to target small to medium- revnues or 14% of total sized enterprises. revenues. It was first launched in 2008. Source: Renren Inc. F-1 SEC Filing Note: MAU = monthly-active users (unique log-ins) and Registered Users = activated users
INSIDE ADVERTISING I Revenues Renren sells: Millions USD (rounded) “Display advertising, social advertisements, promoted news feed items, fan/brand pages, in-game advertising… branded virtual gifts and other formats such as sponsored online events.” Renren is more aggressive about advertising than Facebook. It features big banner ads and branded mini-site campaigns that Facebook does not enable. “Our online advertising serves a broad base of advertisers, including leading international companies, such as Coca-Cola and Nike, and leading companies in China, such as Meng Niu Dairy and China Merchants Bank, and we recently began serving small- and medium-sized enterprises.” Source: Renren Inc. F-1 SEC Filing
INSIDE ADVERTISING II Total Advertisers Avg. Spend per Advertiser (USD) Renren currently derives its revenue from 248 major advertisers with high average spend ($129,000) The majority of Renren’s advertising is primitively targeted or not targeted at all In 2010, 94% of advertising was sold “by time” rather than by “ad impressions” (CPM) Facebook, by contrast, has a far more targeted advertising system that serves the “long tail” of small to medium-sized enterprises Renren has recently began to offer more targeted advertising in an effort to reach small to medium-sized enterprises Source: Renren Inc. F-1 SEC Filing
INSIDE IVAS: GAMES Millions USD Renren Games produces both (rounded) MMORPG games, traditionally one of the most lucrative channels on the Chinese internet, and casual games Games are also licensed from third- parties “The substantial majority of our online games revenues are generated from users’ purchases of in-game virtual items, such as accessories and pets, on game.renren.com, our online games center” Source: Renren Inc. F-1 SEC Filing
INSIDE IVAS: OTHER Millions USD Includes (2010 revenues): (rounded) • Open Platform ($3.5 million USD) • VIP Memberships ($2.1 million USD) • Other (including web page creation for customers) ($3.3 million USD) • Nuomi ($1.2 million USD) Open Platform Applications and social games are not as popular or developed on Renren as they are on Facebook. On the other hand, Renren directs users towards its MMORPG games which are highly monetizable. The open platform allows third-party developers to contribute, though Renren still develops its own social games via Renren Games. Renren generally takes a 52% share of revenues generated by third parties. Source: Renren Inc. F-1 SEC Filing
INSIDE NUOMI Group-buying site Nuomi.com launched in June Total units sold (millions) 2010 (Nuomi means glutinous rice in Chinese) Generated $1.2 million in revenues in 2010 In 32 cities as of March 31, 2011 Competitors are numerous: meituan.com, lashou.com, dianping.com, etc. Total paying users “Our first social commerce deal, on June 23, 2010, offered a pair of movie tickets at 23% of face value for Jackie Chan Movie Theatres, a new, premium movie theater in Beijing. In one day, Nuomi users purchased over 150,000 pairs of movie tickets for Jackie Chan Movie Theatres.” Source: Renren Inc. F-1 SEC Filing
INSIDE COMPETITORS Renren.com is not nearly as dominant in social networking in China as Facebook is in the United States. It faces strong competition form several mainstream networks as well as many more niche ones. Qzone is a nickname social network with a younger and more rural userbase than Renren. It claims to have 481 million active users, though in reality many of its users likely use the service infrequently. Qzone is operated by Tencent (0700.HK), so can both draw from and direct traffic to other Tencent properties. Pengyou is Tencent’s real-name social network, its answer to Renren (or Facebook). It aims to attract an older and more urban userbase than Qzone. It claims to have 131 million active users, though “active” is not well defined. Kaixin001is a social network with a user base of white-collar workers in China’s top-tier cities. It rose to prominence on the popularity of its social games and post- forwarding feature. It claims 95 million registered users. Sina Weibo is a popular microblog by Sina (NASDAQ: SINA). Sina Weibo has considerably more “social networking” features that other microblogs like Twitter. It competes Renren for user attention on the Chinese internet. Sina Weibo claims to have surpassed 100 million registered users.
INSIDE FINANCING • In 2006, General Atlantic led an investment of $48 million in OPI. Other investors included Doll Capital Management, Technology Crossover Ventures, and Legend Capital. • In May 2008, Softbank increased its investment in OPI to $430 million, in exchange for a 35% stake in the group. Source: Renren Inc. F-1 SEC Filing
INSIDE LISTING STATUS • On April 15, 2011 Renren Inc. filed for IPO on the NYSE under the ticker RENN with an approximate valuation of $4.3 billion. Underwriters are Morgan Stanley, Deutsche Bank, and Credit Suisse. • Renren Inc. intends to raise $508 to $580 million for: 1. $180 million for technology and research 2. $180 million for sales and marketing 3. “The balance for general corporate purposes, including strategic acquisitions and investments”
INSIDE OFFICIAL STRUCTURE CEO Softbank Renren + Renren Games Renren Advertising Nuomi Source: Renren Inc. F-1 SEC Filing = iChina Stock notes
INSIDE PLANNED POST-IPO VOTING RIGHTS CEO Softbank Due to a special class of super-voting shares, CEO Joseph Chen will retain 55.9% voting power Note: SB Pan Pacific Corporation is a wholly-owned subsidiary of Softbank Source: Renren Inc. F-1 SEC Filing = iChina Stock notes
INSIDE RENREN HOMEPAGE Link to game.renren.com Game mechanics encourage users to log-in more frequently to “level-up” System notices Status update Footprints Friend suggestions Newsfeed Applications Birthdays
INSIDE RENREN GAME CENTER Featured games New games Tianshu Qitan MMORPG Popular games
INSIDE Tianshu Qitan ( 书 谈), an MMORPG popular withfemales that accounts for 14% TIANSHU QITAN (MMORPG) of Renren’s net revenues Game is a flash-based, in- browser game. Originally developed in 2008. Users can log-in directly with their Renren account
INSIDE RENREN DIARY Diary entries by friends Advertisement for a current Nuomi deal in your city
INSIDE NUOMI HOMEPAGE (SHANGHAI) Each city features multiple deals simultaneously
INSIDE NUOMI DEAL Nuomi has launched a “no questions asked” 7-day return policy 95% off on a coupon booklet for the premium Shanghai Xintiandi shopping center Deal prices tend to be lower for Chinese group-buying sites than US ones (¥5 = $0.76) Additional deals Share to Renren “Likes” on Renren
INSIDE ADDITIONAL SOURCES • Renren Company Profile Of Renren by iChinastock: http://www.ichinastock.com/RENREN • Renren Inc. Corporate Site: http://renren-inc.com/en • Renren Games Slideshare Presentation: http://www.Slideshare.Net/Chendi1986/Renren-games-feb-2011-7187941 • What Makes China’s Top Social Networks Tick? http://mashable.com/2011/03/18/china-top-social-network • Renren Setting The Standard for China’s Social Networks: http://techrice.com/2010/12/21/renren-setting-the-standard-for-chinas-social-networks • Renren Inc. F-1 SEC Filing http://www.sec.gov/Archives/edgar/data/1509223/000119312511099693/df1.htm
David Kim
2 1 year ago