Hi,
This is the first company I bring to the board, as I haven’t seen it mentioned here before.
Ticker: YALA
Name: Yalla Group Ltd
HQ: Dubai, UAE
MKT Cap: US$5Bn
** Intro:
Yalla Group Limited operate a voice-centric social networking and entertainment platform under the Yalla name primarily in the Middle East and North Africa region. The company was formerly known as FYXTech Corporation. Yalla Group Limited was incorporated in 2018 and is headquartered in Dubai, the United Arab Emirates.
Two key components to their business: Yalla, the voice social network, and Yalla Ludo, a gaming platform with mobile games where users can chat while playing, and where they’re seeing the most interesting growth.
Self-described on their Q3 presentation as “the first UAE-based tech unicorn to be listed on the NYSE”.
** Notes on ownership, from an article linked on Yahoo Finance:
The company’s CEO Yang Tao is the largest shareholder with 43% of shares outstanding. For context, the second largest shareholder holds about 21% of the shares outstanding, followed by an ownership of 8.5% by the third-largest shareholder. The third-largest shareholder, Jianfeng Xu is also a Member of the Board of Directors, indicating strong insider ownership amongst the company’s top shareholders.
** From Yalla Group’s Q3 report, for Third Quarter ended Sept 30, 2020:
(can be found here: http://ir.yallatech.ae/download/YALA+Reports+Third+Quarter+2… )
Q3 revenue US$33.8 M (+90.4% yoy)
Revenues generated from chatting services = $30.3M
Revenues generated from gaming services = $3.8M
Net loss was US$31 M , net loss margin 91.6%
** Nervokid: Loss justification seems to revolve around stock based compensation once the IPO was confirmed, and heavy marketing campaigns for launch of Yalla Ludo. From their Q3 press release:
Our total costs and expenses were US$64.7 million in the third quarter of 2020, compared with US$8.6 million in the same period last year. The increase was primarily due to the recognition of share-based compensation of US$46.5 million upon our listing on the New York Stock Exchange on September 30, 2020. We granted substantial amount of share options before the IPO but did not recognize any share-based compensation in prior periods because exercisability of the options granted was conditional upon the completion of our IPO. Upon our listing on the NYSE, we immediately recognized a substantial amount of share-based compensation expenses associated with all outstanding options that were vested as of September 30, 2020.
Our cost of revenues was US$25.6 million in the third quarter of 2020, compared with US$5.4 million in the same period last year. The increase was mainly driven by (i) share-based compensation expenses of US$14.1 million recognized on September 30, 2020, and (ii) other components of cost of revenues of US$11.5 million for the third quarter of 2020, a 112.6% increase from US$5.4 million for the same quarter last year, which was in line with our revenue growth and primarily due to our expanding business scale. Other components of cost of revenues as a percentage of our total revenues increased from 30.6% in the third quarter of 2019 to 34.1% in the same period in 2020, primarily due to an increase in commission rate for third-party payment platforms.
Our selling and marketing expenses were US$8.5 million in the third quarter of 2020, compared with US$1.7 million in the same period last year. The increase was mainly driven by (i) share-based compensation expenses of US$4.5 million recognized on September 30, 2020, and (ii) other components of selling and marketing expenses of US$4.0 million for the third quarter of 2020, a 131.4% increase from US$1.7 million for the same quarter last year, which was primarily due to higher advertising and market promotion expenses as a result of our continued user acquisition efforts. Other components of selling and marketing expenses as a percentage of our total revenues increased from 9.9% in the third quarter of 2019 to 12.0% in the same period in 2020, primarily due to higher spending in marketing activities related to Yalla Ludo, which experienced substantial growth in
year 2020.
Our general and administrative expenses were US$28.9 million in the third quarter of 2020, compared with US$1.0 million in the same period last year. The increase was mainly driven by (i) share-based compensation expenses of US$27.1 million recognized on September 30, 2020, and (ii) other components of general and administrative expenses of US$1.8 million for the third quarter of 2020, a 78.4% increase from US$1.0 million for the same quarter last year, which was primarily due to (i) an increase in salaries and other benefits for our general and administrative staff, which was in turn driven by an expansion of our general and administrative staff, and (ii) an increase in professional service fees. Other components of general and administrative expenses as a percentage of our total revenues remained stable at 5.3% in the third quarter of 2020.
Our technology and product development expenses were US$1.7 million in the third quarter of 2020, compared with US$0.4 million in the same period last year. The increase was mainly driven by (i) share-based compensation expenses of US$0.8 million recognized on September 30, 2020, and (ii) other components of technology and product development expenses of US$0.9 million for the third quarter of 2020, a 105.6% increase from US$0.4 million for the same quarter last year, which was primarily due to an increase in salaries and benefits for our technology and product development staff. Other components of technology and product development expenses as a percentage of our total revenues slightly increased from 2.4% in the third quarter of 2019 to 2.6% in the same period of 2020.
Non-GAAP Net income was US$15.5M, increase of 68.3% yoy.
Non-GAAP net margin 45.8%
Average MAUs increased 358,9% , from 3.1M in Q3-19 to 14.3M Q3-20.
Number of paying users on the platform increased 894.9% from 0.5M Q3-19 to 5.1M Q3-20.
**Q319 Q320 %**
**Average MAUs (thousands) 3,109 14,267 359%**
Yalla (thousands) 2,716 5,500 103%
Yalla Ludo (thousands) 393 8,767 2131%
**Paying users (thousands) 510 5,074 895%**
Yalla (thousands) 493 1,035 110%
Yalla Ludo (thousands) 17 4,039 23659%
Cash and cash equivalents
Q3-20 US$75.7M
Q3-19 US$58.5M
Outlook Q4-20
Management expects revenue between US$35 - 36M, approx 81.6% to 86.8% from US$19.3M from Q4-20.
“In the third quarter of 2020, we delivered robust group performance, further strengthening our position as the pioneering voice-centric mobile social networking and entertainment platform in MENA,” said Mr.Yang Tao, Founder, Chairman and Chief Executive Officer of Yalla. “Our revenue and non-GAAP net income increased, 90.4% and 68.3% year-over-year respectively, which was driven by strong growth of Yalla and Yalla Ludo and the proliferation of our highly engaged and interactive community.”
“In the third quarter, Yalla Ludo’s average MAUs and paying users increased significantly by over 20 and 200 times year-over-year, respectively. The rapidly growing popularity of Yalla Ludo, which was selected by numerous app stores to be displayed on their respective home pages, is a testament to its superior social features, which are grounded in the cultural norms of the region and enable users to enjoy real-time voice interactions while playing board games. For Yalla, our flagship mobile application, we maintained a sharp focus on building a tight-knit and high-quality user community. In the third quarter, Yalla’s average MAUs and paying users both more than doubled year-over-year. Moving forward, we will remain dedicated to strengthening our vibrant voicecentric online community and localizing our product offerings to further optimize the user experience,” concluded Mr.Yang.
TAM - Just for quick comparison, Facebook, the world’s largest social network, has approx 187M users in the MENA region.
“Yalla - Group Voice Chat Rooms” app has a rating of 4.3 stars on the App store, from 7k ratings.
https://apps.apple.com/us/app/yalla-group-voice-chat-rooms/i…
Nervokid:
What I like about it:
Young company, big TAM, seems to have State blessing (important for the region), recent gaming product being very well received.
What I don’t like about it:
Couldn’t find much independent info/reports on it, aside from the odd article on Seeking Alpha and the Fool piece below.
Action I took:
I bought a micro position in Yalla Group at the start of February. I first read about them prior to their IPO late last year, and wanted to buy in on the groundfloor. My broker let me down by only adding them weeks after the IPO, and I ended up forgetting about it until recently.
My micro position is currently up 24%. YALA stock price is up over 5x since IPO in September, 157% YTD. Waiting for Q4 results (hopefully no more SBC and things will be clearer) before taking any additional action.
Finally, just realised the company was mentioned on the Fool here:
https://www.fool.com/investing/2021/02/07/why-yalla-stock-sk…
Thanks