Video game live-streaming platform Douyu files for US IPO

Video game live-streaming platform Douyu on Monday filed its initial public offering (IPO) in the US, with plans to raise up to $500 million.

The Wuhan based company will list on the New York Stock Exchange under the symbol “DOYU.” It plans to use proceeds of the offering to provide premium e-sports content and a wider array of other content, research and development, and marketing.

Morgan Stanley, JPMorgan and BofA Merrill Lynch are the underwriters on the deal.

Douyu’s filing follows the steps of its largest Chinese competitor Huya, which listed in May last year. Both companies are backed by Tencent.

According to the filing, Douyu is the largest video game live-streaming platform in China in terms of average total monthly active users (MAUs) and average total daily time spent by active users as of the fourth quarter of 2018.

The platform recorded strong growth in revenue, though it has posted net losses for the past three years. Revenue doubled year-on-year in 2017 and nearly doubled again in 2018 when it reached RMB 3.65 billion (around $531 million). Net losses declined around 22% year-year in 2017 and increased 43% year-on-year in 2018. The company’s gross margin meanwhile swung into the black from -0.2% in 2017 to 4.1% in 2018.

The platform’s paying users also grew significantly, reaching 6 million in the first quarter of 2019, up by 67% from the same period last year. Quarterly average revenue per paying user (ARPPU) also increased 33% year-on-year in 2018 to RMB 208.

China has the world’s largest game-focused live-streaming market in terms of total revenue, according to consulting group iResearch. Total MAUs for the segment are expected to reach 400 million by 2023.