WiMi, Provider of AR Services, Sets Price Range for U.S. Public Offering
WiMi expects to raise up to $38 million in its initial public offering on Wall Street for 4 million of its shares.
China's AR services provider WiMi Hologram Cloud, seeking an initial public offering on the Nasdaq Global Market, has set an expected price range at between $7.50 and $9.50 per American depositary share.
The Beijing-based company expects to sell 4 million ADSs, or 4.6 million if the underwriters exercise the over-allotment option in full, according to its amended prospectus filed with the U.S. Securities and Exchange Commission this week. Each ADS represents two of its Class B ordinary shares.
The float would raise WiMi up to $38 million, it said, slightly lower than the $50 million it targeted in a June filing.
WiMi provides augmented reality-based holographic advertising and entertainment services to Chinese clients, each contributing 80 and 20 percent of its revenue, respectively. Specifically, the core business of WiMi Hologram Cloud has been applied in software engineering, media manufacturing services, cloud and big data with holographic AR technology.
"Holographic AR utilizes digital holography technology to record a digital hologram of objects and then transfer the recorded information to a computer to analyze and form 3D images, which are subsequently displayed in a two-dimensional, 2D, surface or three-dimensional, 3D, space," the company said in its prospectus.
The company said its revenue in the first quarter reached $11.7 million, up 59 percent from the corresponding period in 2018. Revenue from AR advertising was $9.35 million in the first quarter, while AR entertainment brought in $2.3 million.
To further diversify revenue streams, WiMi said it plans to increase revenue contribution from other hologram-related monetization methods, including holographic AR IP licensing.
WiMi's income was $5.8 million, or 5 cents per ADS, in the three months through March, up 62 percent from a year ago. Gross margin increased from 65 percent in 2018 to 71 percent in 2019, among which the ratio for AR entertainment reached as much as 98 percent, the company reported.
According to research by Frost & Sullivan, WiMi Hologram Cloud was the largest holographic AR application platform in China last year in terms of gross revenue.
Despite intense competition in the market, WiMi ranked first in the number of clients and holographic AR content, as well as the number of holographic AR patents and software copyrights in the Chinese holographic AR industry last year.
According to the prospectus, as of Dec. 31 the company had approximately 4,654 AR holographic contents, 106 software copyrights and 180 registered patents, which provides a basis for longer-lived competitive advantage for WiMi in the marketplace.
Equipped with advanced AR3D scanning capabilities and simulation solutions, WiMi is able to scan objects from more angles and capture more details of image than most peer companies. As a result, the company said it can identify and capture up to 550 blocks of images data per unit, significantly outstripping the average market level of 40 to 50 blocks, according to Frost & Sullivan.
The holographic AR application platform that WiMi currently operates, according to Frost & Sullivan, covers the broadest types of holographic AR offerings in China. As the holography and AR industry continues to proliferate, WiMi could potentially attract investors and develop more revenue streams in the future.
WiMi said it intends to use 40 percent of the proceeds from its IPO for research and development. The scope of holography-based research includes facial recognition, artificial intelligence facial change, digital life system, education intellectual properties, navigation system for cars, shopping systems and tourism navigation system.
Another 40 percent will be distributed for acquisitions and investments, while the rest of the proceeds will be used for general corporate purposes, the company said.
Listed underwriters on the deal are Benchmark Company LLC, Maxim Group LLC, China Merchants Securities (HK) Co. Ltd., AMTD Global Markets Ltd., BOCI Securities Ltd., Everbright Sun Hung Kai Company Ltd., GF Securities (Hong Kong) Brokerage Ltd. and Axiom Capital Management Inc.
The company has applied to trade under the symbol "WIMI" on the Nasdaq Global Market.