Billion Dollar Unicorns: Yello Mobile Delays IPO

South Korean Billion Dollar Unicorn club member Yello Mobile had been planning to go public this year. But recent financial results suggest that those plans may have been delayed by a year.

Yello Mobile’s Offerings

Sanghyuk Lee, a former executive at South Korean Internet company Daum Communications Corp founded Yello Mobile in 2013 to set up a company that could integrate several small local mobile commerce companies under one umbrella. Since the company’s first service was that of providing hotel and restaurant recommendations, it took on the name Yello Mobile – a take on “yellow pages”. Since then, Yello Mobile has grown into several other business offerings. It now provides a platform for its five key operations – SMATO – Shopping, Media, Advertising, Travel and Online-to-Offline businesses.

Within shopping, Yello Mobile operates a hot deals app called Coocha, K-Style for fashion e-commerce, a fashion brand called Michyeora and PriceArea – an Indonesia-based service to help compare prices across the Internet.

In the media segment, it operates Pikicast, a content creation and distribution service that has more than 2.7 million monthly active users. It has also launched Jihachul to provide latest information on the subway service, Alarmmon as an alarm app that uses fun sounds and games to wake people up and 1KM to help people connect with friends based on their location.

For organizations, Yello Mobile has digital advertising solutions along with a cloud-based travel management service Zari. It has other travel services like Tour Baksa and Hannintel that are focused on individual travelers. Within the O2O segment, the company offers consulting, CRM, and B2B infrastructure for small businesses with focus on the healthcare and the hotel industry.

Since inception, the company has added more than 80 companies in its portfolio. The acquisitions have helped the company grow to more than 25 million monthly users and has seen its apps register more than 70 million downloads.

Yello Mobile’s Financials

Analysts estimate that Yello Mobile recorded revenues of 442.7 billion won (~$385 million) in 2016. Revenues are estimated to have grown 41% over the year. While Yello Mobile had been profitable for a few quarters, things went the other way last year. Net losses widened by 68% from 84.8 billion won (~73.7million) to 142.4 billion won (~123.7 million) due to goodwill amortization.

It has been venture funded so far with nearly $200 million from Q Capital Partners, Macquarie Capital, Formation 8, and SBI Holdings. Its last round of funding was held in December 2016 when it raised $21 million from Q Capital Partners at an undisclosed valuation. An earlier round held in February 2016 had pegged the company’s valuation at $4 billion. The recent funding is estimated to have been made at a similar valuation.

Yello Mobile had been planning to list for a while. But recently, it has come under severe criticism for operating a very complicated shareholding structure among affiliates. In response to the criticism, Yello Mobile has announced plans to merge entities and reduce its number of subsidiaries from 85 to nearly 20.

But a bigger blow to the IPO plans came in the recently recorded financials when Yello Mobile had to take a big hit on account of goodwill impairment. Yello Mobile recorded nearly $55 million worth of goodwill impairment in the last quarter of the year. Due to the increase in the net losses, Yello Mobile does not think it will get the required approvals and confidence from the investors for a listing. Yello Mobile is still planning to go public, but IPO plans have been delayed by a year, at least.