WiMi Hologram Cloud Resumes IPO Countdown, Seeking $38 Million in Capital

The holographic AR services provider in China has updated its financials with the SEC, showing strong growth in income and revenue.

CapitalWatch Staff
    Jan 05, 2020 6:00 AM  PT
WiMi Hologram Cloud Resumes IPO Countdown, Seeking $38 Million in Capital
author: CapitalWatch Staff   

WiMi Hologram Cloud Inc. has picked up its public offering efforts in New York with an updated filing with the U.S. Securities and Exchange Commission.

In an amended prospectus filed on Friday, Beijing-based WiMi said it seeks to sell 4 million American depositary shares priced at between $7.50 and $9.50 apiece. At the top of the range, the AR holographic services provider would raise $38 million.

That's the same target WiMi announced in its previous, July 2019, filings with the SEC before its public debut was placed on hold.

Operating since May 2015, WiMi caters to clients in the advertisement and entertainment fields, delivering "innovative, immersive and interactive holographic augmented reality experience."

For 2018, the company reported operating revenue of $32.8 million, at a 17% increase from the preceding year, on $13 million in profit. For the six months through June 2019, WiMi posted operating revenue of $23.1 million on income of $11.5 million.

Compared with its peers in China, the company said it is able to identify and capture up to 550 blocks of image data per unit, significantly outstripping the average market level of 40 to 50 blocks. Its speed of image processing is 80% faster than the industry average, WiMi stated in its filings, citing independent market analytics firm Frost & Sullivan

In the first half of 2019, the majority of its revenues, at 83.1%, was generated from ads and 16.9% in the entertainment sector, according to the prospectus.

As of June 2019, WiMi said its content library contained 4,654 ready-to-use AR holograms. Among them were 2,961 proprietary and licensed intellectual properties for education scenarios, 851 for tourism, 739 for arts and entertainment and 103 for popular science, the company stated. It also said it uses licensed content provided by third parties.

Its growth strategies are reaching a broader mass market, continuous investment in R&D, growing its content portfolio and exploring acquisition opportunities, WiMi reported.

This year, China's AR advertising market is estimated to reach 7.8 billion yuan, WiMi said, citing research by Frost & Sullivan. The company expects ads to increasingly use augmented reality as the technology continues improving.

WiMi also said, relying on Frost & Sullivan data, that by 2025 the ads market will grow at a compound annual growth rate (CAGR) of 79.1% to 143.9 billion yuan.

In addition, the AR-based entertainment sector is expected to reach 180 billion yuan in the next five years, surpassing the AR ads market, according to the report.

Among the challenges listed in the company's prospectus is operating a business in a fresh, developing market.

WiMi said it intends to use 40% of the proceeds from its IPO for "research and development purposes, including the development of holographic facial recognition system, holographic artificial intelligence facial change, holographic digital life system, holographic education intellectual properties, holographic navigation system for cars, holographic shopping system and holographic tourism navigation system."

Another 40% will be set for strategic acquisitions and investments and about 20% will remain for general corporate purposes, including working capital, operating expenses, and capital expenditures, according to the prospectus.

Securing the deal are The Benchmark Company LLC, Maxim Group LLC, China Merchants Securities (HK) Co. Ltd, AMTD Global Markets Ltd., BOCI Asia Ltd., Valuable Capital Ltd., China Everbright Securities (HK) Ltd. and Axiom Capital Management Inc. Underwriters may acquire an additional 600,000 of WiMi's ADSs to cover over-allotments.

The company expects to list its ADSs on the Nasdaq Global Market under the symbol "WIMI."