In Canada and the U.S., we tend to get a little wrapped-up in our own communication app technologies, failing to recognize that other countries also have their favorites. Sure, WhatsApp and Messenger are juggernauts in the global market, but there is a reason that Japan’s Rakuten shelled out $900 million for Viber in 2016 for its popularity in Eastern Europe. Tencent’s WeChat dominates China. Ever heard of Line? It’s the most popular messaging app in Japan and Thailand. While those are the market leaders, the rest of the international markets are fragmented with many smaller companies continuously winning over consumers and growing their footprint with new technologies, including South Korea’s Hyperconnect and Canada’s Hello Pal International Inc. (CSE: HP) (OTC: HLLPF).
Hyperconnect, which owns a video-based chat application branded “Azar,” in September embarked on an IPO fundraiser seeking to raise 400 billion won (US$337 million) overseas. Since its founding in 2014, the Azar app now reaches users in 230 countries with 19 languages, randomly linking users with others to initiate video chat conversations. The parent company then generates revenue by selling features such as VIP membership inside the app.
The Seoul-based company actually generates nearly all of it sales outside its home country, particularly the Middle East. Sales have been extremely impressive, weighing in as the fourth highest for non-gaming apps through Google Pay in Europe in 2019, trailing only Tinder, Netflix (NASDAQ: NFLX) and Google’s (NASDAQ: GOOGL) YouTube, all of which are international household names.
Riding that success, Hyperconnect, which can trumpet SoftBank (OTC:SFTBY) amongst its investors, subsequently launched a livestreaming service dubbed Hakuna Live that had over 10 million downloads in its first year. Combined, revenue during the first half of 2020 came in at 123.5 billion Korean won (US$113.3 million), up 80% year-over-year, while operating profit vaulted 265% to 17.7 billion Korean won (US$16.2 million).
That goes to show what a popular app that many in North America have never heard of can accomplish, as Hyperconnect vies for “unicorn” status (a valuation in excess of 1 trillion won) ahead of going public.
Hello Pal is a younger upstart getting traction in Asia as it expands into other countries. HP’s international live-streaming, social messaging and language learning mobile apps are unique in that they provide translation tools that allow a user to learn to speak a foreign language either through bi-directional translations or the choice of thousands of common phrases that can be practiced, recorded and played during conversations. Similar to Azar – and clearly differentiated from apps like Facebook (NASDAQ: FB) and Twitter (NYSE: TWTR) – Hello Pal is focused not on only friends communicating, but also on making introductions between people that have never met to strike up a conversation.
What makes Hello Pal unique is that it encompasses a wider scope, with offerings in the social, language learning and travel spaces bringing together people all over the world who have such international-related needs, and doing so in a socially interactive manner. It has only just begun to monetize its user base through last year, and growth so far has been eye-catching.
Leveraging 5G technologies delivering stronger signals and clearer video worldwide, Hello Pal’s primary revenue driver is livestreaming where “hosts” can dialogue with other users and be compensated via in-app currency for their efforts, which are subsequently redeemed by the hosts for real cash. Many hosts make a good living solely through Hello Pal, especially during the current pandemic. Hello Pal realizes revenue through user top-ups from the livestreaming service.
Launched in mid-2019, the livestreaming platform has been growing steadily, and is now topping 5.2 million registered users across more than 200 countries. Since crossing the 5 million benchmark, daily active users (DAU) for just the livestreaming service have been accelerating in recent months to surpass 15,000 DAU, up from 10,000 DAU only three months earlier.
With nearly no marketing, total receipts since launch totaled over C$8.64 million through September. In October and November, the company reported revenues of C$1.5 million and $1.55 million, respectively.
With the livestream function humming along, Hello Pal this week launched a new one-on-one video matching service as well as a VIP membership system. As the name suggests, the video matching service uses advanced technology to quickly and easily match users with similar users for a one-on-one live video chat.
Through a VIP membership, subscribers enjoy a bevy of additional perks and functionality that enhance the one-on-one video matching experience, including unlimited translations in the Hello Pal app. Prices for the VIP subscription range from C$3.35 for a week to C$64 for an entire year. Although still in the early stages of the roll-out, Hello Pal’s management foresees the new feature to be highly used within the app.
“We have just planted a new seed in terms of revenue growth, which we fully expect to blossom and bear fruit for us next year,” said the Hello Pal CEO and Founder, KL Wong, in a news release on the new services. Wong indicated that he sees a benefit to the bottom line also, as the service significantly improves margins.
Investors are apparently catching on to the opportunity, as measured by shares rising from 9 cents in November to as high as 30 cents last Friday. With a market cap of C$27 million, there is still plenty of headroom in the future if the company wants to follow in the footsteps of Hyperconnect to reach a vaunted unicorn milestone.
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