WiMi priced its IPO of 4,750,000 American depositary shares (ADSs) at US$5.5 per ADS for a total of US$26.1 million dollars.

WiMi offers AR-based holographic services and products to cater to the customers’ needs. Currently, its offerings consist primarily of holographic AR advertising services (80.3% of total revenues in Q1 2020; 80.5% in 2018; and, 69.3% in 2017) and holographic AR entertainment products.

WiMi is the largest holographic AR application platform in China, in terms of the total revenue in 2018, according to Frost & Sullivan. It has built the most comprehensive and diversified holographic AR content library among all holographic AR solution providers in China.

It has developed the professional media player in China specifically designed for holographic AR contents. It has built in a comprehensive set of setting parameters and editing tools used for holographic AR content playback and allows end-users to playback complex high-fidelity simulations quickly and cost-effectively. End-users are able to adjust the contrast, saturation and vibrancy of the displayed holographic AR content and create their own custom visual effect.

Holographic AR Advertising Services

Currently, advertisement is the biggest vertical of AR. According to Frost & Sullivan, the market size was estimated at RMB1.5 billion in 2016, and is expected to be at RMB7.8 billion by 2020, with a compound annual growth rate (CAGR) of 71.6%, much higher than the growth of total online advertising market, which has a CAGR of 32.4% from 2014 to 2018.

In 2025, the market will be valued at RMB143.9 billion with a CAGR of 79.1%, indicating a larger market share in total online advertising market in the next five years.

WiMi’s holographic AR advertising software enables users to insert into video footages real or animated 3D objects that integrate seamlessly within the scene of such footages. Their online holographic AR advertising solution embeds holographic AR ads into films and shows that are hosted by leading online streaming platforms in China.

During Q1 2019, holographic AR ads produced using WiMi’s software generated a total of approximately 2.3 billion views, as compared to approximately 1.2 billion views during Q1 2018, representing an increase of 91.7%.

During Q1 2019, it had 65 customers, as compared to 49 customers during Q1 2018. The average revenue per customer was approximately RMB 1.0 million during Q1 2019, as compared to RMB 0.7 million during Q1 2018.

In 2018, WiMi had 121 customers, as compared to 97 customers in 2017. The average revenue per customer was approximately RMB 1.5 million in 2018, as compared to approximately RMB 1.4 million in 2017.

Through its proprietary image and video recognition technologies, its software enables users to analyze the underlying video footage at a pixel level to identify ad spaces that can be augmented by 3D objects.

Advertisers and their agencies purchase these ad spaces through application programming interface, or APIs, integrated with our systems, specifying their target audience and budgets and typically providing the 3D models to be embedded in the videos.

When the ad space is detected and 3D objects are generated, the 3D objects are embedded into the underlying streaming videos automatically on a batch-processing basis as determined by its software.

Holographic AR Entertainment Products

Entertainment, including gaming and video, takes a huge share of AR sector as well, and it is expected to have a higher growth rate. In 2016 the market size was estimated at RMB0.6 billion and is expected to be at RMB6.8 billion by 2020, with a CAGR of 83.5%.

WiMi holographic AR entertainment products consist primarily of payment middleware software, game distribution platform, and holographic mixed reality (“MR”) software.

Payment middleware is a software solution that connects mobile apps to payment channels, giving mobile app users convenient access to a wide range of online payment options. WiMi has cooperated with more than 55 app developers and its payment middleware has been embedded to over 1,100 marketed mobile apps of over 300 customers in 2018, most of which were featured by AR functions.

Its mobile payment middleware facilitates app developers to build an in-app payment infrastructure that allows micropayments to be made or received through an efficient, secure system, without any interface redirection.

Such mobile payment middleware enables app developers to store users’ payment credentials in a trusted and safe environment and eases user’s burden of repeatedly entering and authenticating payment information for each transaction.

Its payment middleware can be fully integrated with various types of mobile apps, especially those employing AR technologies, such as live streaming, gaming, selfie, photo editing, and video-sharing apps. Currently, the payment middleware supports substantially all of the major online payment channels in China, and is compatible with the mainstream mobile operating systems.

Content Production

WiMi has built a comprehensive holographic AR content library. The formats of its holographic AR contents range from 3D models to holographic short videos.

As of December 31, 2018, it owned 4,654 ready-to-use AR holographic contents that were available to be adapted to its holographic AR products and solutions covering a wide category, including animals, cartoon characters, vehicles, and foods.

2,961 proprietary and licensed intellectual properties (“IP”) were for education scenarios, 851 for tourism, 739 for arts and entertainment and 103 for popular science.

The number of mobile payment users has reached a saturation point, and the growth is drawing to a close. According to an Ipsos survey, the penetration rate (i.e. ratio of users using the service within the last three months) is 95.1%. Although a relatively high growth rate as compared to the survey result of December 2018 which is the previous period, the rate’s growth is slowing down.

The total transactions of China’s 3rd-party mobile payment reached 55.4 trillion yuan in Q1 2019, with an increase of 24.7% YoY, according to data from iResearch.

Related Dossier: Payment

Data from the Ministry of Industry and Information Technology show that, by the end of February 2019, the total number of mobile internet users in China was about 1.41 billion, and the number of users using mobile phones to surf the internet was 1.27 billion.

Also considering that one person may have more than one mobile phones, it is estimated that the number of mobile payment users is about 1.01 billion, an increase of about 2.0% over the previous survey.

Among consumers aged 16-59 y-o, the scale of mobile payment users is about 810 million, accounting for 80.2% of the total. While the penetration rate remains high, the growth of mobile payment users has become increasingly saturated.

The mostly-stable user base means that mobile payment has entered the competition for wallet shares in the existing market. Therefore, actively integrating internet finance technology and promoting “overseas payment” will become the growth path for all payment brands in the sector.

The overall transaction volume of mobile payment continues to grow, accounting for nearly half of the daily consumption payment. The annual transaction volume of third-party mobile payments reached 183.79 trillion Yuan, an increase of about 20.3% over the previous period. The annual number of transactions reached 1.17 trillion, an increase of about 12.8%.

The growth rate of mobile payment transaction volume seems to have slowed down (the annual transaction volume in the previous survey increased by about 25.7% and the annual number of transactions increased by about 25.5%).

Allocated to a single transaction, the average amount of the transactions is about 157 Yuan, while the average number of payment made by one person is 4 per day, still featuring small amount and high frequency.

In terms of daily expenses, the proportion of third-party payment accounts for 58%, of which mobile payment accounts for 47% and cash payment accounts for 19%. Mobile payment has been firmly established as the largest payment tool for daily consumption.

China’s top mobile payment apps compared: Alipay, Tenpay, Unionpay

In the first quarter of 2019, Xiaomi recorded RMB43.8 billion in revenue, representing an increase of 27.2% over the corresponding period of 2018. Profit for Q1 2019 grew to RMB3.2 billion and Adjusted Net Profit grew 22.4% year-on-year to RMB2.1 billion.

Xiaomi continued to focus on their “Smartphone + AIoT” dual-engine strategy and greatly expanded the number of devices connected to its platform.

As of March 2019, monthly active users (“MAU”) of MIUI reached 260.9 million, representing a year-on-year increase of 37.3%. The number of connected IoT devices (excluding smartphones and laptops) on Xiaomi IoT platform has reached approximately 171.0 million units, representing year-on-year growth of 70.0%.

Xiaomi AI assistant “Xiao Ai Tongxue” had over 45.5 million MAU in March 2019, representing a year-on-year increase of 247.2%.

Xiaomi Smartphones

Xiaomi smartphone segment recorded approximately RMB27.0 billion in revenue in Q1 2019, representing an increase of 16.2% over the corresponding period of 2018. Its smartphone sales volume in Q1 2019 reached 27.9 million units.

According to Canalys, Xiaomi ranked 4th globally in terms of the volume of smartphone shipments during the Q1 2019.

In Q1 2019, Xiaomi released several smartphone models under each brand, including Mi 9, Mi 9 SE, Redmi Note 7, Redmi Note 7 Pro and Redmi 7. The market response was positive with regard to the respective product launches.

In particular, Redmi Note 7, which was released on January 10, 2019, and launched in overseas markets on February 28, 2019, was in high demand. The shipments of its Redmi Note 7 series exceeded 4 million units in Q1 2019.

In addition, its new flagship model Mi 9 series, which was released on February 20, 2019, and launched in overseas markets shortly thereafter, has also been very popular to date. The Mi 9 is powered by the Snapdragon 855 processor, equipped with an ultra-wide-angle AI triple camera with the main camera using a 48-megapixel Sony sensor, and has an all-curved holographic back design.

The Mi 9 is also the world’s first smartphone to feature 20W wireless quick charging. As of March 31, 2019, the supply of Mi 9 series smartphones surpassed 1.5 million units while the sales volume of Mi 9 series smartphones exceeded 1.5 million shortly thereafter in early April 2019.

Xiaomi’s smartphone market share in mainland China increased for three consecutive months throughout the first quarter of 2019, from 9.5% in January 2019 to 11.8% in March 2019.

Moreover, due to the continuous optimization of Xiaomi’s product portfolio, the average sales price (“ASP”) of its smartphones in mainland China and in overseas markets achieved year-on-year growth of 29.9% and 12.1%, respectively, in Q1 2019.

Xiaomi IoT and lifestyle products

During Q1 2019, the revenue of the IoT and lifestyle products segment rose by 56.5% to RMB12.0 billion over Q1 2018, maintaining a rapid growth rate.

Xiaomi’s smart TVs continued to lead the way, ranking 1st in terms of shipments for two consecutive quarters in mainland China. As of March 31, 2019, global shipments of Xiaomi’s smart TVs reached 2.6 million units, representing a nearly two-fold year-on-year growth of 99.8%.

Xiaomi has also recently launched a variety of large home appliances. In April 2019, it released Mi Mural TV, Mi LED TV 4 Pro and Mi Internet Vertical Air Conditioner C1, all of which have been perceived positively by the market.

Mi Mural TV is its first smart TV that uses far-field microphone technology, enabling users to activate voice control features even at a distance. Users can switch on their smart TVs, search for movies, check the weather, and control other smart home products without the need of a mic-enabled remote control.

Xiaomi’s smart TVs can also display smart device notifications and act as control hubs for compatible smart home products.

During Q1 2019, Xiaomi’s ecosystem products, such as Mi Band, Mi Air Purifier and Mi Electric Scooter, continued to enjoy wide popularity and achieved robust sales growth.

Xiaomi also launched a variety of other popular products this year, such as Mi Smart Door Lock, Mi Wireless Power Bank, Mi Photo Printer, Mi Wireless Car Charger, and Mi AirDots.

Xiaomi’s Redmi brand also launched various IoT and lifestyle products, such as Redmi AirDots. The designs of Xiaomi’s IoT products have continued to receive significant market recognition.

In Q1 2019, Xiaomi won 25 international design awards. For example, Xiaomi’s Mi Washing Machine was awarded the iF Design Award and Xiaomi’s Mi Smart Door Lock was awarded the Red Dot Award.

Xiaomi Internet Services

Revenue from Xiaomi’s internet services segment grew 31.8% year-on-year to RMB4.3 billion in Q1 2019. Advertising revenue grew 21.8% year-on-year to RMB2.3 billion.

Revenue from gaming grew 6.8% year-on-year to RMB823.1 million. Xiaomi’s other internet value-added services grew 96.4% year-on-year to RMB1.2 billion, primarily due to the rapid growth in revenue from Xiaomi’s internet finance business and Youpin e-commerce platform.

The MAU of MIUI rose 37.3% from 190.0 million in March 2018 to 260.9 million in March 2019. The MAU of MIUI in mainland China also achieved quarter-on-quarter growth. The MAU of Xiaomi’s smart TVs and Mi Boxes achieved 55.1% year-on-year growth, reaching 20.7 million in March 2019.

Xiaomi has continued to diversify Xiaomi’s internet services revenue. Internet services revenue outside of advertising and gaming from China smartphones, including those generated from TV internet services, overseas internet services, Youpin e-commerce, and internet finance business, accounted for 31.8% of the total internet services revenue in Q1 2019, representing year-on-year growth of 167.3%.

Xiaomi’s overseas internet services revenue grew rapidly as they continued to strengthen Xiaomi’s internet services in key markets. For example, we have been actively developing Xiaomi’s internet finance business in India and launched Mi Pay, a payment product, in India in March 2019.

Pinduoduo’s GMV in the twelve-month period ended March 31, 2019 was RMB557.4 billion (US$2 83.1 billion), an increase of 181% from RMB 198.7 billion in the twelve-month period ended March 31, 2018 according to its unaudited financial results.

Pinduoduo’s revenue growth was driven by the rapid growth in its annual active buyer base and annual spending per active buyer.

Total revenues in Q1 2019 were RMB4,545.2 million (US$677.3 million), an increase of 228% from RMB1,384.6 million in Q1 2018.

• Revenues from online marketing services were RMB3,948.4 million (US$588.3 million), an increase of 256% from RMB1,108.1 million in Q1 2018.
• Revenues from transaction services were RMB596.8 million (US$88.9 million), an increase of 116% from RMB276.5 million in Q1 2018.

Average monthly active users in the quarter were 289.7 million, an increase of 74% from 166.2 million in Q1 2018.

Active buyers in the twelve-month period ended March 31, 2019 were 443.3 million, an increase of 50% from 294.9 million in the twelve-month period ended March 31, 2018.

Annual spending per active buyer in the twelve-month period ended March 31, 2019 was RMB1,257.3 (US$187.3), an increase of 87% from RMB673.9 in the twelve-month period ended March 31, 2018.

Pinduoduo’s mobile app is among the top 30 mobile apps by UVs in March 2019 according to data from iResearch.

Total costs of revenues were RMB873.3 million (US$130.1 million), an increase of 174% from RMB318.7 million in the same quarter of 2018.

Pinduoduo’s operating loss increased to RMB2,120.5 million (US$316.0 million), compared with operating loss of RMB253.1 million in Q1 2018. Non-GAAP operating loss was RMB1,621.9million (US$241.7 million), compared with RMB239.5 million in the same quarter of 2018.

Net loss attributable to ordinary shareholders was RMB1,877.7 million (US$279.8 million), compared with a net loss of RMB281.5 million in Q1 2018. Non-GAAP net loss attributable to ordinary shareholders was RMB1,379.1 million (US$205.5 million), compared with Non-GAAP net loss attributable to ordinary shareholders of RMB267.9 million in Q1 2018.

The number of iQiyi’s total subscribing members reached 96.8 million as of March 31, 2019, 98.6% of whom were paying subscribing members. This compares to 61.3 million of total subscribing members as of March 31, 2018, up 58% year over year.

iQiyi’s revenues in Q1 2019 were RMB7.0 billion (US$1.0 billion), representing a 43% increase from the same period in 2018.

• Membership services revenue was RMB3.4 billion (US$513.4 million), representing a 64% increase from the same period in 2018.
• Online advertising services revenue was RMB2.1 billion (US$315.8 million), flat compared to the same period in 2018
• Content distribution revenue was RMB442.6 million (US$66.0 million), representing a 66% increase from the same period in 2018

Its operating loss was RMB2.0 billion (US$301.9 million) and operating loss margin was 29%, compared to operating loss of RMB1.1 billion and operating loss margin of 22% in the same period in 2018.

Net loss attributable to iQIYI was RMB1.8 billion (US$270.3 million), compared to net loss attributable to iQiyi of RMB395.7 million in the same period in 2018. Diluted net loss attributable to iQIYI per ADS was RMB2.52(US$0.35).

iQiyi mobile app ranks the fourth by total unique visitors in March 2019 according to data from iResearch. It’s the top video app based on the same data with about 578 million UVs, followed by Tencent Video.

For the second quarter of 2019, iQiyi expects total net revenues to be between RMB6.91 billion (US$1.0 billion) and RMB7.29 billion (US$1.1 billion), representing a 12% to 18% increase YoY.

Tencent’s total revenues in Q1 2019 were RMB85,465 million (USD12,693 million), an increase of 16% over the first quarter of 2018 according to Tencent’s announced financial results.

Its revenues from VAS increased by 4% to RMB48,974 million for the first quarter of 2019 on a year-on-year basis. Online games revenues were RMB28,513 million, broadly stable compared to the first quarter of 2018. Social networks revenues grew by 13% to RMB20,461 million.

Revenues from FinTech and Business Services increased by 44% to RMB21,789 million for Q1 2019 on a year-on-year basis. The increase was mainly driven by greater revenues from its commercial payment and cloud services.

Revenues from online advertising increased by 25% to RMB13,377 million for the first quarter of 2019 on a year-on-year basis. Social and other advertising revenues increased by 34% to RMB9,898 million, mainly due to the increase in advertising revenues derived from WeChat Moments, Mini-Programs and QQ KanDian.

Mr. Ma Huateng, Chairman and CEO of Tencent, said,

In the first quarter of 2019, we sustained healthy user engagement across our key platforms, with notable growth in the number of short videos uploaded and shared by users on QQ and WeChat.

We are invigorating our game business with popular releases such as Perfect World Mobile in China, while PUBG MOBILE is growing internationally.

Our payment, other FinTech services and cloud business, while still at an early stage of expansion, are now generating substantial revenues, and we are consequently disclosing their results in our new FinTech and Business Services segment, demonstrating our success in organically incubating services with long-term growth potential.

Its operating profit was RMB36,742 million (USD5,457 million), an increase of 20% YoY. Operating margin increased to 43% from 42% last year. Profit for the period was RMB27,856 million (USD4,137 million), an increase of 16% YoY. Net margin was flat at 33%.

Profit attributable to equity holders of the Company for the quarter was RMB27,210 million (USD4,041 million), an increase of 17% YoY.

Basic earnings per share were RMB2.877. Diluted earnings per share were RMB2.844. On a non-GAAP2 basis, which excludes certain non-cash items and certain impact of M&A transactions:

• Operating profit was RMB28,470 million (USD4,228 million), an increase of 13% YoY. Operating margin decreased to 33% from 34% last year.
• Profit for the period was RMB21,673 million (USD3,219 million), an increase of 13% YoY. Net margin decreased to 25% from 26% last year.
• Profit attributable to equity holders of the Company for the period was RMB20,930 million (USD3,108 million), an increase of 14% YoY.
• Basic earnings per share were RMB2.213. Diluted earnings per share were RMB2.187.

Social Media

During the first quarter of 2019, combined MAU of Weixin and WeChat was 1,112 million, up 6.9% year-on-year.

Smart device MAU of QQ slightly increased year-on-year and exceeded 700 million in the first quarter. Young users became more engaged on the QQ platform and their MAU grew by a double-digit rate year-on-year.

China Internet users are increasingly utilizing WeChat and QQ’s in-app camera functions to record short videos, which they then share in one-to-one chats, group chats, and timeline formats. Users now upload hundreds of millions of videos each day to Tencent’s communications and social platforms, which Tencent believe are the leading venues in China for uploading and viewing such user-created videos.

Tencent launched Mobile QQ Version 8.0 with engaging features such as QQ Mini Programs and KuoLie, which recommends new friends to young QQ users based on similar interests.

In WeChat, Tencent enabled users to share information, products and services for different vertical categories of Mini Programs within their chat groups, facilitating activities such as group buying for local communities, and the active user base for non-game Mini-Programs continued to grow at a healthy rate.

Online Video

Tencent Video subscriptions increased 43% year-on-year to 89.0 million, driven by popular self-commissioned IP content, such as Candle in the Tomb Season 3; Heaven Sword, Dragon Sabre (based on the popular martial arts novel by Louis Cha); and The Land of Warriors Season 2.

Tencent Video subscription counts were broadly stable sequentially due to delays in airing certain drama series, which might otherwise have contributed more to subscriber growth.

To further engage with video viewers, WeiShi launched a new feature for Produce 101 Season 2, enabling users to vote for contestants and share related short videos with their WeChat and QQ friends.

Continue to read Q1 summary on JD and Alibaba.