China's Tuya completes $915m IPO, gains on debut

The company sold 43.6 million American Depository Shares (ADS) for $21 apiece, according to a statement. The projected pricing was $17-19 per share. The stock opened at $27 on March 18 before falling back to close at $25.

New Enterprise Associates (NEA) is the largest external shareholder post-IPO with 22%. The venture capital firm first backed Tuya in 2015, AVCJ Research’s records show. It subsequently brought one of its LPs – Australia’s Future Fund – into a $200 million Series C round in 2018. Other participants included CICC Capital, China Broadband Capital, Quadrille Capital, and CM Capital Corporation, which is controlled by the family office of Hong Kong’s Cha Group.

The prospectus also refers to a Series D round in 2019, which comprised $169.9 million from Tencent Holdings plus smaller contributions from NEA and China Broadband Capital. Tencent owns 10% of Tuya. No other external investor holds more than 5%. Founders Xueji Wang and Liaohan Chen together own 25.4% and have a majority voting interest by virtue of the dual-class share structure.

Founded in 2014, Tuya has built a internet-of-things (IoT) cloud platform that incorporates PaaS and software-as-a-service (SaaS). The PaaS element is intended to give businesses a cost-effective to launch, manage and monetize software-enabled devices and services. Meanwhile, the SaaS offering enables businesses to reach and deliver services to many devices.

Services are categorized under different verticals aimed at consumer and business users. For example, in the smart home space, TVs, lights and other appliances under different brands can be controlled through Tuya. Meanwhile, the smart hotel service allows managers to monitor functions like housekeeping, guest traffic control, property surveillance and maintenance from a single point.

Tuya had over 5,000 customers in 2020 including brands, original equipment manufacturers, industry operators and system integrators. Its IoT PaaS platform was used by 2,700 brands to develop their smart devices, including Calex, Philips and Schneider Electric.

The company claims that its IoT PaaS covers smart devices across more than 1,100 categories sold in 220 countries and regions. There were 204.3 million devices in its network as of year-end 2020. On the SaaS side, Tuya had 262,000 IoT device and software developers. Its IoT platform is capable of
processing more than 84 billion cloud requests and over 122 million AI voice interactions daily.

IoT PaaS is the main source of income, representing 84.3% of revenue in 2020. Within this segment, 188 premium customers – defined as those whose annual individual contributions exceeds $100,000 – were responsible for 87% of revenue. Tuya’s overall revenue came to $179.9 million in 2020, up 70% year-on-year. Its net loss narrowed from $70.5 million to $66.9 million.

The global total addressable market for IoT PaaS is forecast grow from $72.2 billion in 2019 to $171.7 billion by 2024. Over the same period, China’s share of this market is expected to rise from 26.2% to 28.9%.

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• Topics
• Greater China
• IPO
• Technology
• China
• enterprise software
• TMT
• New Enterprise Associates
• Future Fund
• China Broadband Capital
• Tencent
• CICC