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SUMMARY
Renren Inc. (formerly Oak Pacific Interactive)
includes the following properties:
Renren (formerly Xiaonei): a real-name social
network (SNS) with 31 million monthly active
users and similar to Facebook in features. Renren
initially launched at China‘s top universities, but
has since expanded to all, though its core
audience remains students.
Renren Games: a producer of both casual and
serious (MMORPG) games across Renren and
other platforms.
Nuomi: a group-buying site, launched in 32
cities across China.
Intended IPO valuation: approximately $4.3 billion.
NYSE: RENN.
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SIMPLIFIED STRUCTURE
Softbank
35% stake
Renren Inc.
Earlier investors: General Atlantic
(formerly Oak Pacific Interactive)
(lead), Doll Capital, Technology
Crossover Ventures, Legend Capital
Nuomi
Renren
Renren Games
Group-buying site
Real-name social network
Casual and serious games
traffic
traffic
Additional properties:
• Jingwei, business social network
Note: Renren Inc. sold off portal Mop.com for approximately $18 million in December 2010
to Oak Pacific Holdings. It will not be part of the IPO.
Disclaimer: This is not the firm’s official structure, but rather iChinaStock’s representation of the firm’s key properties
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TIMELINE
Launches open platform for 3rd
party developers
Xiaonei relaunches as Renren
(meaning people’s web) to Launches Jingwei,
Xiaonei founded by Wang Xing,
expand beyond the student business social network
Wang Huiwen, Lai Binqiang and
Tang Yang. It launches at China’s demographic with a major
top universities, Tsinghua and Xiaonei opens to non- advertising campaign. Launches Renren expected to seek
Peking
students
domain renren.com
IPO
2005
2007
2009
2011
2006
2008
2010
OPI merges users of Kaixin.com
Oak Pacific Interactive (OPI) receives Launches IM feature and WAP into Renren after losing a copyright
$48 million investment from General mobile version
infringement lawsuit to competitor
Atlantic (lead investor), Doll Capital,
Kaixin001.com
Technology Crossover Ventures, and
Legend Capital
Softbank increases stake in OPI to
35%, totaling $430 million in Launches Nuomi, group-buying site
investment
OPI acquires Xiaonei
OPI renamed Renren Inc.
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Millions
RENREN USERS
“Our user base consists largely of Chinese college students, young urban professionals, and high
school students… We are currently striving to expand our user base among white-collar
workers in their late 20s and early 30s as well as high school students.”
Source: Renren Inc. F-1 SEC Filing
Note: MAU = monthly-active users (unique log-ins) and Registered Users = activated users
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Millions USD
(rounded)
RENREN INC. REVENUES
Note: Adjusted net income accounts for stock-based compensation and certain other non-cash costs. It is the basis upon
which many investors appraise companies filing for listing.
Source: Renren Inc. F-1 SEC Filing
Note: MAU = monthly-active users (unique log-ins) and Registered Users = activated users
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BUSINESS MODEL
The Renren social network (SNS) sells advertising to big brands.
Renren SNS also channels traffic to Renren Inc.’s other properties,
Renren Games and Nuomi. Those sites sell internet value-added
services (IVAS) directly to users rather than rely upon advertisers.
Renren Games generates its revenues via virtual goods sold
primarily in MMORPG games.
“Over 60% of the users of our nuomi.com social commerce website are users
of renren.com. Similarly, revenues from our online games depend on the continued
success of our SNS platform, as many of our game players access our games
from renren.com.”
Source: Renren Inc. F-1 SEC Filing
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2010 REVENUE BREAKDOWN
Internet Value-added Includes Nuomi,
group-buying site
Services (IVAS) accounted
Millions USD
for 58% of total revenues
(rounded)
248 big brands accounted
One MMORPG game, for all advertising in 2010.
Tianshu Qitan, accounted Renren only recently began
for 31% of online game to target small to medium-
revnues or 14% of total sized enterprises.
revenues. It was first
launched in 2008.
Source: Renren Inc. F-1 SEC Filing
Note: MAU = monthly-active users (unique log-ins) and Registered Users = activated users
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ADVERTISING I
Revenues
Renren sells:
Millions USD (rounded)
“Display advertising, social advertisements,
promoted news feed items, fan/brand pages,
in-game advertising… branded virtual gifts
and other formats such as sponsored online
events.”
Renren is more aggressive about advertising than
Facebook. It features big banner ads and branded
mini-site campaigns that Facebook does not enable.
“Our online advertising serves a broad base of advertisers, including leading international
companies, such as Coca-Cola and Nike, and leading companies in China, such as Meng Niu
Dairy and China Merchants Bank, and we recently began serving small- and medium-sized
enterprises.”
Source: Renren Inc. F-1 SEC Filing
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ADVERTISING II
Total Advertisers
Avg. Spend per Advertiser (USD)
Renren currently derives its revenue from 248 major advertisers with high average spend
($129,000)
The majority of Renren’s advertising is primitively targeted or not targeted at all
In 2010, 94% of advertising was sold “by time” rather than by “ad
impressions” (CPM)
Facebook, by contrast, has a far more targeted advertising system that serves the “long
tail” of small to medium-sized enterprises
Renren has recently began to offer more targeted advertising in an effort to reach
small to medium-sized enterprises
Source: Renren Inc. F-1 SEC Filing
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IVAS: GAMES
Millions USD
Renren Games produces both (rounded)
MMORPG games, traditionally one of
the most lucrative channels on the
Chinese internet, and casual games
Games are also licensed from third-
parties
“The substantial majority of our online games revenues are generated from users’ purchases of
in-game virtual items, such as accessories and pets, on game.renren.com, our online games
center”
Source: Renren Inc. F-1 SEC Filing
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IVAS: OTHER
Millions USD
Includes (2010 revenues):
(rounded)
• Open Platform ($3.5 million USD)
• VIP Memberships ($2.1 million USD)
• Other (including web page creation for
customers) ($3.3 million USD)
• Nuomi ($1.2 million USD)
Open Platform
Applications and social games are not as popular or developed on Renren as they are
on Facebook. On the other hand, Renren directs users towards its MMORPG games
which are highly monetizable.
The open platform allows third-party developers to contribute, though Renren still
develops its own social games via Renren Games. Renren generally takes a 52% share
of revenues generated by third parties.
Source: Renren Inc. F-1 SEC Filing
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NUOMI
Group-buying site Nuomi.com launched in June Total units sold
(millions)
2010 (Nuomi means glutinous rice in Chinese)
Generated $1.2 million in revenues in 2010
In 32 cities as of March 31, 2011
Competitors are numerous: meituan.com,
lashou.com, dianping.com, etc.
Total paying users
“Our first social commerce deal, on June 23,
2010, offered a pair of movie tickets at 23% of
face value for Jackie Chan Movie Theatres, a new,
premium movie theater in Beijing. In one day,
Nuomi users purchased over 150,000 pairs of
movie tickets for Jackie Chan Movie Theatres.”
Source: Renren Inc. F-1 SEC Filing
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COMPETITORS
Renren.com is not nearly as dominant in social networking in China as Facebook is in the United States.
It faces strong competition form several mainstream networks as well as many more niche ones.
Qzone is a nickname social network with a younger and more rural userbase than
Renren. It claims to have 481 million active users, though in reality many of its users
likely use the service infrequently. Qzone is operated by Tencent (0700.HK), so can
both draw from and direct traffic to other Tencent properties.
Pengyou is Tencent’s real-name social network, its answer to Renren (or Facebook).
It aims to attract an older and more urban userbase than Qzone. It claims to have
131 million active users, though “active” is not well defined.
Kaixin001is a social network with a user base of white-collar workers in China’s
top-tier cities. It rose to prominence on the popularity of its social games and post-
forwarding feature. It claims 95 million registered users.
Sina Weibo is a popular microblog by Sina (NASDAQ: SINA). Sina Weibo has
considerably more “social networking” features that other microblogs like Twitter. It
competes Renren for user attention on the Chinese internet. Sina Weibo claims to
have surpassed 100 million registered users.
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FINANCING
• In 2006, General Atlantic led an investment of $48 million in OPI. Other
investors included Doll Capital Management, Technology Crossover
Ventures, and Legend Capital.
• In May 2008, Softbank increased its investment in OPI to $430 million, in
exchange for a 35% stake in the group.
Source: Renren Inc. F-1 SEC Filing
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LISTING STATUS
• On April 15, 2011 Renren Inc. filed for IPO on the NYSE under the ticker
RENN with an approximate valuation of $4.3 billion. Underwriters are
Morgan Stanley, Deutsche Bank, and Credit Suisse.
• Renren Inc. intends to raise $508 to $580 million for:
1. $180 million for technology and research
2. $180 million for sales and marketing
3. “The balance for general corporate purposes, including strategic
acquisitions and investments”
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OFFICIAL STRUCTURE
CEO
Softbank
Renren + Renren Games
Renren Advertising
Nuomi
Source: Renren Inc. F-1 SEC Filing
= iChina Stock notes
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PLANNED POST-IPO VOTING RIGHTS
CEO
Softbank
Due to a special class of super-voting shares, CEO Joseph Chen will retain
55.9% voting power
Note: SB Pan Pacific Corporation is a wholly-owned subsidiary of Softbank
Source: Renren Inc. F-1 SEC Filing
= iChina Stock notes
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RENREN HOMEPAGE
Link to game.renren.com
Game mechanics encourage
users to log-in more
frequently to “level-up”
System notices
Status update
Footprints
Friend suggestions
Newsfeed
Applications
Birthdays
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RENREN GAME CENTER
Featured games
New games
Tianshu Qitan MMORPG
Popular games
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Tianshu Qitan (天书奇谈), an
MMORPG popular with
females that accounts for 14%
TIANSHU QITAN (MMORPG)
of Renren’s net revenues
Game is a flash-based, in-
browser game. Originally
developed in 2008.
Users can log-in directly
with their Renren account
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RENREN DIARY
Diary entries by friends
Advertisement for a
current Nuomi deal in
your city
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NUOMI HOMEPAGE (SHANGHAI)
Each city features multiple
deals simultaneously
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NUOMI DEAL
Nuomi has launched a “no questions
asked” 7-day return policy
95% off on a coupon booklet
for the premium Shanghai
Xintiandi shopping center
Deal prices tend to be lower
for Chinese group-buying sites
than US ones (¥5 = $0.76)
Additional deals
Share to Renren
“Likes” on Renren
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ADDITIONAL SOURCES
• Renren Company Profile Of Renren by iChinastock:
http://www.ichinastock.com/RENREN
• Renren Inc. Corporate Site:
http://renren-inc.com/en
• Renren Games Slideshare Presentation:
http://www.Slideshare.Net/Chendi1986/Renren-games-feb-2011-7187941
• What Makes China’s Top Social Networks Tick?
http://mashable.com/2011/03/18/china-top-social-network
• Renren Setting The Standard for China’s Social Networks:
http://techrice.com/2010/12/21/renren-setting-the-standard-for-chinas-social-networks
• Renren Inc. F-1 SEC Filing
http://www.sec.gov/Archives/edgar/data/1509223/000119312511099693/df1.htm