Guvera's IPO Raises More Questions Than It Answers

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by Mark Mulligan

Australian streaming music service Guvera has announced its long-anticipated IPO on Australia’s ASX exchange in July. Guvera has always been an intriguing component of the digital music landscape. On the surface it has been pioneering music streaming in emerging markets where the big western services have failed to make inroads. But beneath the surface it is also riddled with controversy and the IPO filing does not exactly assuage doubts:

  • Confused data: Back in November 2015, Guvera announced via a news article that it had the following KPIs: 15 million users globally, 6.5 million users in India and 560,000 active users in Australia (40% of 1.4 million registered users). Now in the IPO document Guvera states it has 14 million users (which means it has lost a million users over the last 7 months). That in itself would simply suggest a struggling service, but the other disclosed numbers are, at best, confusing. According to the filing, the number of users in India was 7 million in May 15. Which would mean a 500k decline to the previously reported October number. Except the filing also has a chart showing monthly ‘user increases’ percentages for India which would mean that by October the total user number was either 31 million (if the % is growth since May) or 88 million if the growth is monthly. Either way, both numbers are MUCH bigger than the total user number of 14 million. Also, the active user number for Australia for October 2015 is reported in the filing as 250k not the 500k reported previously. The most generous interpretation of the numbers is that there are major inconsistencies. A more cynical interpretation could be…well, I’ll leave that for you to contemplate…

Taken as a whole, the evidence points to a struggling company desperately trying to raise more capital and to realize value for its investors. The risk for Spotify is that a dud IPO from Guvera could negatively impact investor sentiment ahead of its own IPO. But perhaps the single biggest challenge Guvera faces is that it is an ad supported streaming music business trying to raise money at exactly the time that the music industry is getting cold feet about ad supported music.

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