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PRESIDENT & CFO INTERVIEW: CooTek to Continue Growing Global User Base, App Portfolio After IPO

CooTek's management said they were “thrilled” about its public float in New York in an interview with CapitalWatch.

Anna Vodopyanova
    Sep 28, 2018 6:00 PM  PT
PRESIDENT & CFO INTERVIEW: CooTek to Continue Growing Global User Base, App Portfolio After IPO
(Source: NYSE Twitter)

CooTek (Cayman) Inc. (NYSE: CTK), the latest in a slew of Chinese companies to complete their initial public offering on Wall Street, took a slide today of more than 21 percent on its debut day.

Priced at $12 per share, the lower end of the expected range, CooTek, a mobile internet company most known for an app called TouchPal Smart Input, raised $52.2 million in its IPO.

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Unlike the other China-based companies listed in the past two weeks, including LAIX Inc. (NYSE: LAIX), Viomi Technology Co. Ltd. (Nasdaq: VIOT), and X Financial (NYSE: XYF), CooTek's debut was neither volatile nor positive. Its stock began to drop right after the chairman, Karl Zhang, rang the opening bell on the New York Stock Exchange, and ended the day down $2.56, at $9.44 per share.

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Shares in CooTek closed at $9.44, down more than 21 percent on its debut day.

(Source: Thomson Reuters Eikon)

The company's management, however, said they were "very happy" and "thrilled" about the listing. In an interview with CapitalWatch, Susan Qiaoling Li, the co-founder and president of CooTek, and its chief financial officer, Jean Liqin Zhang, said the IPO marked another milestone for the company, which has celebrated 10 years in business.

Operating globally, CooTek develops mobile applications using artificial intelligence, interaction data, multilingual content processing, and semantic understanding technologies.

TouchPal was CooTek's first application when the company launched in 2008. Today, this keyboard app for smartphones is used by over 110 million typists daily and features the same number of languages. As of June 30, CooTek had 15 other mobile applications, including two fitness apps, HiFit and ManFIT, as the firm adapted to the health awareness trend. Another of its projects is Talia, a virtual personal assistant similar to iPhone's Siri.

In June, the company's average daily active user (DAU) base reached 132.6 million across multiple countries, representing a year-over-year increase of 75 percent.

During the first six months of 2018, CooTek turned profitable, posting income of $3.5 million in contrast to a $16.2 million loss a year ago. Its revenue for the six months through June was $50.3 million compared with $9.1 million for the same period last year.

The company said it intended to use the proceeds of its stock sale in New York to invest in technology development, in particular, big data analytics and AI.

Today, Li and Zhang told CapitalWatch about CooTek's challenges, fast growth, and founding history.

CapitalWatch: Congratulations on becoming a public company. Are you content with the results of the IPO?

Susan Li: Thank you very much. We are very happy. We are thrilled that after 10 years, we finally come to be listed, so we are very excited.

CW: What was the biggest challenge that the company had to overcome to get to where it is today?

Susan Li:  We started with just one app, TouchPal Smart Input, in 2008, when we first established the company. The most challenging thing was to figure out where we shall go next. We had to make a strategic decision about the company s next step. Luckily, we have made several important strategic decisions along the way and, as of today, we have developed other applications and we have established really good revenue.

We are one of the few mobile companies that already generate profit, so establishing this business model made us sustainable.

Jean Zhang:  Yeah, celebrating this success today, we already forgot all our past difficulties. Let me put it in another way.

From the CFO's perspective, I see that the most difficult thing for a company is the transformation in its first five years from the establishment, because for the first few years the business model was a licensing model for TouchPal. After that, we transformed to a mobile internet, or advertising, company, so this was our challenge in the past 10 years.

We were successful in establishing a new business model and this proved the execution capability of our management team and the whole company, so we are very proud of this transformation and being listed here on the NYSE.

CW: What were some factors that helped the company grow so fast? You have an impressive active user growth in the past few years.

Susan Li: Our growth heavily relies on our big data and AI technology. We have established a systematic approach to grow our user base to grow both offline and online and also grow the mobile advertising revenue, as Jean just mentioned.

CW: Tell us a bit about the founding history of CooTek. The company's chairman and co-founder, Karl Zhang, and Susan both worked at Intel and Microsoft previously. Did that experience affect the creation of CooTek?

Susan Li: Definitely. My past experience in Intel and Microsoft helped me a lot when running my own business. First of all, because both Intel and Microsoft are multinational, both are very large global companies. As you can see, most of our users are located outside of China, though our headquarters is in Shanghai.

We have a large user base of over 133 million daily active users distributed over 240 countries and regions, so we are doing business globally. My previous experience in Intel and Microsoft helped a lot in developing a global business. They also have a very systematic management of the development process so that benefited us as well.

As to the founding history, it goes back to 2007, when iPhone released its first version. We saw that the mobile industry, smartphones especially, will be very promising. We found that there is a lot of space to improve user experience for the smart devices at that time, so that inspired us to start our own business.

So, we quit Microsoft in 2008 and founded our own company by launching TouchPal Smart Input to help improve the user experience on mobile smartphones.

Jean Zhang: We then had four fundraising rounds – Series A through D, with Qiming, SIG, and Sequoia acting as our core investors.

CW: What excites you the most about your roles at CooTek?

Jean Zhang: I am very impressed with the execution of the management team, especially, the founders. They have a lot of expertise in technology and they have their own insight in the mobile internet industry. We have established a strong business model and have become profitable this year. I'm very confident in the future of the company.

Susan Li: I think the most exciting thing is that we have been growing very fast. I am learning new things every day.

CW: You have offices in Shanghai, Beijing, Guangzhou, Shenzhen, Taipei, and Mountain View, California. Being such a global company, have you felt any effect from the cold war attitude between the U.S. and China?

Susan Li: For now, we don't think it affects our business. We have users in more than 240 countries and regions, so we provide applications, and we don't feel that we are affected by the trade war.

CW: So now that the company's IPO is complete, what's the next milestone? Where do you see CooTek five years from now?

Susan Li: We will continue growing our user base and revenue. Our mission is to empower everyone to express themselves and enjoy content seamlessly, so we will continue growing our business strictly aligned with our mission. In five years, we will have more users global-wise and grow our portfolio.

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