Line is a messaging app that has grown in Japan over the past two and a half years and the company is now bringing in nearly $100 million in revenue per quarter. The app said it brought in 9.9 billion yen ($99.9 million) in net sales for the third fiscal quarter this year. Overall revenues, which includes the development fees paid to app stores and developers, has more than doubled in the past six months to 15.6 billion yen ($157.6 million).
There have been reports in local newspapers about an impending IPO next year but the company remains quiet on the subject. Sources closely connected with the company say that they are considering an offering in mid-2014. “Of course you’re going to ask questions about an IPO…It’s a strategy we’re thinking about, especially looking at services like Twitter. But at the current moment, we don’t believe that it’s something that we have to do right away. We currently have enough cash and we don’t have a pressing need to do an IPO.” said Jun Masuda, who was a chief strategy and marketing officer for Line’s original parent NHN Japan before transferring over to become a full-time executive on the app.
Line has seen a surprising rise for a skunkworks project that came out of NHN. (the company behind South Korea’s search portal Naver). Shortly after the shocking 2011 earthquake that crippled the Fukushima nuclear power plant, Line was created. The app now has accumulated 280 million registered users worldwide. Interesting to note, the company has never publicly shared figures on the amount of monthly active users. Overall, however, the app has completely saturated the Japanese market, with 49 million registered users.
Line is also gathering momentum in the gaming field, with 39 published titles and deals in the pipeline to bring more third-party games from abroad over into the Japanese market. But, before turning into a games platform, Line business model was to aggressively push stickers and sponsored accounts to create revenue. Now though, the key part of Line’s massive revenue growth is in gaming. The games section of Line’s business now makes up 60 percent of their revenue. This is then followed by stickers, which make up another 20 percent of the app’s income. The finally there are merchandising and sponsored accounts. Their game focused strategy closely resembles what Kakao did in their build up to domination of Google Play’s charts. Kakao currently publishes 10 out of 10 of the top grossing titles on Google’s Play chart in the country, according to App Annie.
So what is next for the company? It is considering building a type of e-commerce service to handle both business-to-consumer and consumer-to-consumer transactions. That could create competition for giants like Rakuten and many other small e-commerce startups based out of Japan. After saturating the market in Japan, their next growth markets are in countries such as Thailand and Taiwan. Further down the line, they will be geared towards Latin American markets like Mexico and Brazil for future growth.
[Image via gizmolead]