Dubai social media company Yalla is bringing an online version of the Arab world’s majlis to Wall Street with its initial public offering.
The company, which was valued at $1.1 billion at the time of its listing under the ticker YALA on Thursday, makes it the first UAE-based unicorn to go public. It is underpinned by voice chat and online gaming technology that the company has monetised, and is taking up a position in one of the fastest-growing markets for social media.
Nine out of ten young Arabs use social media on a daily basis, according to a 2019 analysis by researchers at the University of Oregon.
One analyst said the company's financial position and potential addressable market makes it “worthy of a closer look” by investors.
“YALA has performed well financially and is operating in a region where social networking usage is growing quickly, so the IPO is worthy of a closer look,” Donovan Jones, a researcher for Seeking Alpha, found in an analysis of the firm’s prospectus.
Yalla reported 5.4 million paying customers and said revenue virtually doubled year-on-year in the first six months of 2020, when it made a net profit of $25.2 million on revenue of $52.8m.
The technology that underpins its offerings is basic, but the data generated by the platform, given the amount of user-generated content that is produced, is immense.
Yalla offers voice chat, social networking, online games and digital gift exchanges all meant to replicate the casual convenings of friends and family as in a majlis or coffee shop in the Middle East.
"Time and time again we have seen that localising tried-and-tested ideas works in the market, with Arab apps often overtaking more established players from the US and UK in local markets," Areije Al Shakar, director at Al Waha Fund of Funds, told The National.
"Whether it's Careem to Uber, Talabat to Deliveroo or Anghami to Spotify, consumers are increasingly turning to home-grown technologies that are in tune with local norms and values. The question now is whether Yalla can achieve the same widespread recognition within the region."
According to the prospectus for Yalla's public offering, the company is seeking to address a "significant imbalance between the supply of, and demand for, online social networking and entertainment options in Mena".
“Leisurely social gatherings among family members and friends are the main traditional social networking and entertainment activities in this region. By bringing such offline social interactions online, social networking and entertainment applications have made it easier for users to continue their social networking and entertainment activities anywhere and anytime.”
Leah Realon, a communications and marketing consultant to start-ups based in Dubai, said this isn’t “some copycat”.
“It has similar features like chat and voice, but it's not trying to be the Whatsapp of Dubai, the Facebook of UAE, or the TikTok of the Middle East.”
She added that the platform reflects the offline culture here.
“It is ‘the more, the merrier’. There’s always room for one more person to join the gathering.”
On Yalla, this is certainly the case.
The user experience is akin to the chaotic, clip art-happy chat rooms of the late 90s.
With hundreds of these “rooms” themed around affinity groups like anime, the natural world or learning English, one can pop in and out, hearing snippets of conversation, singing or - if the room is empty - silence.
The currency in the Yalla app are "gold" and "crystal" tokens which can be used to buy people virtual gifts or to customise the app experience with different background images or a custom user ID. Gold and crystals can be won or purchased in-app. One hundred coins costs $1. One thousand coins cost $8.99 or – to buy the maximum denomination – 50,000 gold coins is $399.99.
For a cost, users can also host chat rooms, setting membership rates and a maximum number of participants or the number of people who can speak at any one time.
The open-ended nature of the platform makes it feel like a listening device with a seemingly endless number of corners to find different conversations. For the security-minded, this may be off-putting.
Yalla declined to comment on its stock market listing, citing a post-IPO quiet period.
The company, which is based in Dubai Internet City, is owned by a Cayman Islands holding company with an operational base in China, where its founder and initial investors are based.
The Dubai office houses sales, marketing and other operations, while product development and technology work is carried out in Hangzhou, and financial reporting and other functions take place in Shenzhen, the company said in its prospectus.
"This IPO shows that China is paying close attention to start-up developments in the GCC, too," Ms Al Shakar said.
"The region has acted as a bridge between East and West for thousands of years, but in today’s increasingly digital world the synergies and opportunities for apps like Yalla are greater than ever before."