For mothers, the name Babybus may not be unfamiliar. At the stage of baby babbling, the enlightenment video of Babybus begins to accompany them. The content includes not only nursery rhymes, behavior habits, etc. Early education content for children aged 3 to 6, such as French, English enlightenment, and Chinese character learning.
Because of this, under the curtain of "double reduction", there is great uncertainty in the IPO process of Babybus.
At the end of June last year, Babybus' IPO application on the Growth Enterprise Market was accepted by the Shenzhen Stock Exchange. After updating a version of the prospectus at the end of the year, it is currently in the inquiry stage.
The prospectus shows that: Babybus “coached” a group of little babies and mothers and fathers with content, but it was not these content that really brought revenue to Babybus, but the massive Internet user resources obtained through free content, and then the Traffic is monetized in the form of advertisements. Under this model, user stickiness becomes the key to Baby Bus's revenue.
How to continuously attract small users and the big users behind the small users is related to the sustainable profitability of Babybus.
"Double subtraction" affects geometry?
The baby bus, which claims to serve 500 million household users worldwide, mainly targets children aged 0-8 and their parents, and has created "Qiqi", "Miaomiao", "Super Baby JoJo" and "Monkey Sheriff" etc. IP image.
The prospectus shows: Babybus plans to issue no more than 41 million shares this time, with an estimated financing amount of 1.84805 billion yuan, which will be used for animation product development projects, APP product development and upgrading projects, children’s story development and upgrading projects, and preschool shell research and development projects. , Derivatives industrialization and its supporting projects, operation system upgrade project, big data analysis system upgrade project, Fuzhou R&D center project, the sponsor is China Securities.
At present, the Babybus APP has achieved multi-scene coverage on smart terminals such as mobile phones, PADs, smart cars, and smart speakers. The global average MAU (monthly active users) from January to June 2021 was 93.5927 million.
Baby Bus was established on June 5, 2009, funded by Tang Guangyu, and its legal representative is Tang Guangyu. However, at the time of its initial establishment, considering the restrictions on one-person limited companies continuing to set up subsidiaries, Tang Guangyu entrusted Lu Xueming to act as a representative of the company. Holding a 5% stake, he built a red-chip structure after 2012, and issued preferred shares overseas. Before changing the joint-stock company, he dismantled the red-chip structure.
In December 2020, Baby Bus was changed to a joint-stock company. It is worth noting that from 2018 to before the change of shareholders, the shareholding of Baby Bus changed frequently. In three years, the issuer’s share capital and shareholders changed as many as 12 times. For this reason, the interests held by the previous foreign shareholders should be mirrored to the domestic market.
On the road to IPO of Babybus, the biggest uncertainty faced is the depth of the "double reduction".
Last year, Babybus registered 6 educational apps with the Fujian Provincial Department of Education, involving mathematics, English and other educational fields, and then voluntarily applied for the removal of related products.
According to relevant policies and regulations: It is necessary to coordinate the management of off-campus training for preschool children aged 3 to 6 years old and ordinary high school students. Online training for preschool children shall not be carried out. Offline subject (including foreign language) training for preschool children.
On February 16, the Beijing Municipal Education Commission issued the "Notice on Further Doing a Good Job in the Filing and Management of Educational Mobile Internet Applications" (Draft for Comments) (hereinafter referred to as the "Draft for Comments"). Educational mobile apps for preschool training are all discontinued.
In order to avoid the suspicion of "education", Babybus also positioned it as children's enlightenment in the prospectus.
Traffic anxiety behind the revenue model
From the perspective of revenue model, Babybus mainly provides users with enlightening audio, video and APP in a free way, and the Internet user resources formed thereby, and then cooperate with the promotion by connecting the APP to advertising alliance customers (Baidu, Google, etc.) , Authorize audio and video to third-party network audio and video media to obtain authorization and share to realize traffic monetization.
During the reporting period (from 2018 to the first half of 2021, the same below), the operating income was 254 million yuan, 526 million yuan, 649 million yuan, 395 million yuan, and the net profit was 111 million yuan, 268 million yuan, 261 million yuan, 133 million yuan.
The main business income of Baby Bus is mainly divided into three categories: APP cooperative promotion income, audio and video licensing revenue, and other income. Among them, APP cooperative promotion income accounts for about 60-70%.
During the reporting period, Baby Bus’s operating income from the top five customers accounted for about 90%, and the customer concentration was high. The main customers include Baidu, Google and other advertising alliances. In 2019 and 2020, Baby Bus’s operating income from Baidu The proportions are 57.12% and 50.74% respectively, and in 2018 it was close to 50%.
During the reporting period, the period expenses (sales expenses, management expenses, R&D expenses and financial expenses) of Baby Bus were 122 million yuan, 212 million yuan, 350 million yuan and 223 million yuan respectively, accounting for 48.03% of the operating income, 40.28%, 53.89%, 56.57%, and the amount of expenses in each period increases year by year.
Among the expenses during the period, sales expenses account for the "largest portion". With the expansion of the business scale, the proportion of sales expenses is also increasing. Among the sales expenses, mainly business promotion expenses, that is, advertising in the APP application market. expenditure.
In this regard, Babybus said that the rapid increase in business promotion fees is mainly due to the continuous expansion of the business scale and the continuous increase in the number of products, the company's advertising in the APP application market has increased; In 2020, the promotion efforts in application markets such as Huawei, vivo and OPPO will be increased.
In addition, the gross profit rate of Baby Bus is extremely high, comparable to that of Moutai in Guizhou. The prospectus shows that during the reporting period, the gross profit rate of the company's main business was 94.76%, 96.55%, 95.24%, and 92.71%, respectively. The stock market squeezed into the top ten (excluding the financial industry).
Babybus said that due to the company's need for continuous research, development, production and promotion of new products, the overall low cost rate and high period expense rate are in line with the company's own business characteristics and business model.
Behind the continuous push of new products is the traffic anxiety of Baby Bus. Traffic is the foundation of its survival. Only by maintaining traffic and always maintaining customer stickiness can there be a foundation for realization.
Therefore, on the one hand, Babybus promotes it by increasing its advertising efforts, and on the other hand, it strengthens the research and development of new products and launches more content.
The prospectus shows that during the reporting period, its R&D investment accounted for more than 20% of its operating income.
There are still overseas lawsuits
In addition, it is worth noting that in August 2021, Babybus Network, a subsidiary of Babybus, was sued by Moonbug Entertainment Limited and Treasure Studio, Inc. in the United States District Court for the Northern District of California, claiming that the "Super JoJo" image and related videos were deliberately infringe its intellectual property rights.
Babybus said that the image and main works of "Super JoJo" were created independently by the company and launched in 2019. Its image can be traced back to the 2D version of the character cartoon image "Doudou", which was created and launched by the company in 2016.
The company's "SuperJoJo" is relatively delicate and small in terms of skeleton and facial features. It is an image of an oriental boy, which is quite different from the European and American style of the plaintiff's "JJ", and the image features claimed by the plaintiff are commonly used in children's cartoon images. It has appeared in large numbers before.
At present, the lawsuit is still in the trial stage, and Babybus has submitted a statement of defense and filed a counterclaim; but if it loses the case, Babybus may no longer be able to use the "Super JoJo" image, and will face compensation to the plaintiff, which may give the issuer bring certain adverse effects.
Babybus also stated in the prospectus that in a small part of the research and development process, it is necessary to use the copyrights of others.
The company has taken a series of measures to avoid infringing on the rights and interests of copyright owners, but it does not rule out the possibility that a third party may accuse the company of infringing its intellectual property rights, which will adversely affect the company.