For the first time since 1998, a Taiwanese company has gone public on the Tokyo Stock Exchange (TSE). The start-up Appier, which distributes artificial intelligence (AI) marketing solutions, raised $271 million in its initial public offering (IPO) on March 30. On its listing day, Appier shares surged as much as 37% on TSE as compared to the offering price of 1,600 yen per share and later settled 19% higher.
The Appier IPO a serious boost for Japan’s TSE, which has been on an ambitious path of luring in more Asian IPOs. The successful IPO story of Appier Group also portrays the confidence in the TSE’s Mothers board listing by investors, despite the pandemic.
Explaining why the firm chose Japan for listing, Chih-Han Yu, Appier’s chief executive officer said, “Japanese investors have a high acceptance of the artificial intelligence theme and the market accounts for a large part of our revenue.”
Appier offers an AI-based platform for businesses to increase customer engagement. Given the group’s strong roots in AI and focus on sales and marketing analysts expect a strong growth potential long-term.
Why have an eye on Appier?
Established in June 2012, the Taiwanese company has a number of well-known customers including Google, Toyota Motor Corp. and Estee Lauder. Appier has also acquired several tech companies to expand its product portfolio over the past few years.
Appier has a strong customer acquisition and loyalty base. 80% of its revenue comes from foreign markets, with Japan and Korea contributing 67.7% and the Chinese market (including Taiwan) contributing 22.4% of revenue.
With over 400 employees, Appier has 17 locations around the world, including Taipei, Hong Kong, Japan, Korea, Singapore, and Malaysia.
Despite being at top of the ecosystem of Taiwanese start-ups, the firm is yet to make a profit by 2020, as it spends a lot of its operating budget on research and development. As per the company’s report, Appier’s reported revenue of $84 million in 2020, a 27% increase over the previous year. However, subtracting expenses and taxes will result in a net loss of 13 million USD, down 38% year-over-year.
Analysts suggest that the company’s gross margins show a stellar future, with annual recurring revenue (ARR) rising 36.6% yearly and a whopping 95.8% in the period of six months ending on December 31 of 2020. The reason is said to be the software-as-a-service (SaaS) business model, which relies on strong customer loyalty.
Analyst Mio Kato from LightStream Research called Appier “one of the most attractive IPOs in Japan this year” and added that the firm could surprise investors with upside revenue growth.
TSE up for more Tech IPO?
TSE, with nearly $30 billion in average daily trading volume, has been pitching to Asian start-ups for listing in Japan amid a broader push to become a financial hub. Appier’s IPO raises hope that more tech start-ups from Asia will follow, bringing in more capital from both domestic and overseas investors.
Appier heading to Japan was also led by growing numbers of tech start-ups that went public on the TSE’s Mothers board, which has become a magnet for Asian technology companies in recent years. Created in 1999, TSE’s start-up-focused Mothers board is filled with tech companies with a total value of 81 billion USD.
The total market capitalization of the Mothers board is more than three times larger than Hong Kong Exchange’s equivalent-GEM board, despite the latter being larger in size. With 352 listing, TSE’s Mothers board is already bigger than Shanghai Stock Exchange STAR Market, holding 230 listings. The composite index of the Mothers board has risen 33% in 2020, performing better than the broader Japanese market.
As per Richard Watanabe, PwC’s head of operations for financial services, the Japanese capital market has expressed a great deal of interest in Taiwan in recent years and that many trading companies and venture capital firms have had their eye on Taiwan for a long time.