Social App Soul, which is popular with Generation Z, filed its prospectus on May 10, opening the way to IPO in the United States under the stock symbol "SSR". According to the prospectus, Morgan Stanley, Jeffery, Bank of America Securities and CICC will arrange IPO for it.

Soul recently updated its prospectus to issue 13.2 million shares of ADS, with a price range of $13-15 / ADS. At the midpoint of the offering price range, it raised about $274 million (in front of the green shoes). After the offering, Soul has a market capitalization range of $17 to $2 billion.

The updated prospectus showsThe IPO offering received a $89 million private placement of Mihayou. Prospective investors Janus Henderson and Boyu Capital are interested in subscribing to ADS with a total value of $80 million.

First, Tencent owns 49.9% of the social racetrack dark horse.

Soul App officially launched in 2016, creating a social model based on interest graphs and gameplay, and exploring new ways for young people to socialize. Since its launch, Soul has achieved rapid growth in the Red Sea market in the social circuit, and the DAU in March 2021 has reached the level of nearly 10 million, making it a shining dark horse.

The birth of Soul stems from the personal perception of founder Zhang Lu: there is a lack of a product on the market that allows users to express and publish their daily life and feelings freely without pressure, and receive immediate and quality resonance.

After years of development, Soul App has become a social platform with rich forms of social interaction and booming user ecology.It has become one of the App with the highest average daily DAU startup times, daily release rate and generation Z user penetration in the same category in the industry.

Before IPO, Soul has gone through several rounds of financing, the most eye-catching of which is Tencent's strong support for Soul.

According to the prospectus, Tencent has the highest proportion of pre-IPO Soul shareholders. Image Frame Investment (HK), a wholly owned subsidiary of Tencent, is the largest outside shareholder, with a 49.9% stake and 25.7% of the voting rights.

Founder Zhang Lu holds 32% of the shares and holds 65% of the voting rights. In addition, the company's CTO Tao Ming holds 1.2% of the shares, while the management holds a total of 33.2%.

Second, to build a "meta-universe", with diversified scenes contributing to high growth.

In the prospectusSoul has positioned itself as a social meta-universe (To Build a "Soul" cial Metaverse for Young Generation) linked by Soul for a new generation of young people.。

"Social meta-universe" was born in the real world, and parallel to the real world, and a strong sense of immersion, always online, people can not only entertainment, but also social, consumption and so on. These behaviors do not require personal participation, but they can interact with reality. It has a fully operational economy, data, digital goods, content and IP.

At present, Soul has not only created a variety of ways of user interaction, but also built a rich community platform to form the basis of meta-universe.

Soul does not support the use of real-life avatars, users need to use the "super cute pinch face" function to create cartoon characters for themselves and build virtual identities. Users are free to show their personality and talent without being hampered by their real identity or limited by physical characteristics.

And when registering for use, Soul provides users with a series of personality tests (MBTI), to get user behavior characteristics, social portraits and other data, through the AI algorithm to optimize the efficiency of user connection.

In addition, Soul also provides a variety of interactive ways, such as group chat parties, voice, video, and so on, so that users can have an immersive experience and enjoy low-stress social interaction in Soul.

Soul also provides users with a content distribution platform in the form of pictures, text, voice, video, etc., in order to enrich their virtual identity on the platform. At the same time, the Soul platform also has "Soul werewolf" game rooms, electronic pets and other rich forms of interaction.

Thanks to these product features and a good platform atmosphere, Soul is very beautiful in terms of user growth data.

The number of monthly active users of 21Q1PersonSoul increased by 109% to 33.2 million compared with the same period last year, and the number of daily active users increased by 94% year-on-year to 9.1 million. The average number of daily active users opened Soul24 times per day, and the average daily use time reached 40 minutes. The characteristics of high viscosity and high duration of use are obvious.

It is worth pointing out,73.9% of the daily active users of Soul were born after 1990, and the user base is mainly the younger generation.。

Third, there is a broad space for the industry, and Soul is still in the early exploration stage of commercialization.

According to the prospectus, China has the largest mobile social market in the world, with 890 million users and is expected to grow to 1.06 billion in 2024. The market size will grow from 116.2 billion yuan in 2020 to 232.2 billion yuan in 2024, with an annual compound growth rate of 18.9 percent.

The mobile social market of Generation Z is growing faster than the whole, and is expected to reach 144.4 billion yuan in 2024, with 329 million users and an overall penetration rate of 99.8%.

Soul is still in the early stage of commercial exploration. In 2019, Soul launched Soul coins, and users can use virtual coins to buy virtual gifts to give each other or increase exposure, get more opportunities for interaction, and so on. At the same time, Soul also provides membership services.

In 2020, Soul began to realize through advertising, "good things (Giftmoji)" and other ways to send in-kind gifts. However, according to the media survey of users, at present Soul is more cautious in the realization of advertising.

From a financial point of view, after the start of commercializationSoul achieved rapid revenue growth, reaching 498 million yuan in 2020, an increase of 601% over the same period last year. 21Q1 realized revenue of 238 million yuan, an increase of 260% over the same period last year.。

The main contributors to revenue are platform value-added services, that is, Soul coins and membership services mentioned above. The number of monthly fee-paying households in 21Q1MagneSoul reached 1.5 million, an increase of 114% over the same period last year. The contribution income of monthly paying users was 48.6 yuan, an increase of 58% over the same period last year, showing a double-high growth trend, jointly promoting revenue growth.

At the gross margin level, the gross profit margins of Soul and 21Q1 in 2020 are 81% and 86% respectively, achieving a gross profit of 4.03 yuan and 204 million yuan respectively. At the cost level, as it is still in the stage of pursuing high growth in user scale, the sales expenses of 21Q1 in 2020 and 2020 are 6.21 yuan and 471 million yuan respectively.

According to the prospectus, the funds raised by Soul in this IPO will be used separately:

1) 40%: continue to invest in artificial intelligence, big data and other technologies to enhance product research and development

2) 40%: marketing activities to promote brands and user growth

3) 20%: other general corporate uses, including potential investments and mergers and acquisitions.

In just a few years, Soul has created a unique product tone, achieved rapid user growth, and reaped a large investment from Tencent. The social universe, which has gathered 100 million users, is about to open the door to the US stock market.