According to eMarketer, the number of mobile Internet users in China is expected to grow 28% annually to 712.4 million over the period 2013 through 2017 . Researcher Analysys expects the mobile game market in China to grow 40% annually from $2.3 billion in 2013 to $8.7 billion in 2017. They also estimate that the mobile marketing market in the country will grow 70% annually from $2.2 billion in 2013 to $18.3 billion in 2017. No wonder Chinese mobile app makers are seeing a strong growth.
Beijing, China-based Momo was founded in 2011 as an instant messaging app that combined location-based capabilities with social networking skills. The app enables smartphone users to chat with people in the same location and share multiple media including texts, voice notes, and images over the Internet. It is a people discovery app that lets people find like-minded people close to them. They claim to leverage their social interest graph engine that analyses user behavior data and is able to deliver a customized experience to users based on their social preferences and needs. Besides message sharing, the app also encourages user engagement through offline social activities that are promoted on their platform.
Within two years of the launch of the app, Momo had amassed over 80 million users of which 13 million were daily active users and 39 million were monthly active users. Their subscribers were averaging 500 million messages daily as part of either one-on-one conversations or group chats.
Momo is a Chinese language only app as their English version closed down earlier this year. As of September 2014, they were the third largest mobile social IM app in China with over 180.3 million registered users, 60.2 million monthly average users, 25.5 million daily active users, and 4.5 million groups on their platform.
While the app is available for free, Momo earns revenues through a premium subscription and sale of digital content such as in-app purchases in third party games, stickers, emoticons, and mobile marketing services. They began selling digital content services during the second half of the previous year. For the first half of the current year, membership revenues still accounted for 63% of total revenues. Over the same period, total revenues have quadrupled from $3.1 million to $13.9 million. Losses have increased significantly for these six months from $8.4 million a year ago to $48.6 million. The increase was attributed to investments in R&D and sales and marketing expenses.
Momo has been venture funded so far with $42.5 million in funding from Matrix Partners, Alibaba, and other unidentified investors. Last month, Momo went public and listed on the Nasdaq under the ticker MOMO. The company raised $216 million in an IPO last week selling 16 million shares at a price of $13.50 each. Momo plans to invest these funds in R&D efforts.
Their stock is trading at $14.46 with a market capitalization of $474.8 million. It touched a high of $17.50 soon after listing last week.