Travel app’s first annual profit in cloud biz fuels expectations for IPO

By Anna J. Park

Yanolja is raising market expectations over its potential initial public offering (IPO) on the U.S. stock market at some point this year, as the travel tech firm achieved its first profit in its global cloud business last year. The company had previously stated that the stable growth of its cloud business would be an important precondition for it going public.

In addition, the opening of the travel app company’s Manhattan office — its 50th overseas branch — last month, as well as the firm’s appointment of Alexandre Ibrahim as its CFO, who has extensive industry experience including working for the New York Stock Exchange (NYSE) and Endeavour Catalyst Fund, have all fueled market anticipation that Yanolja will carry out an IPO on the U.S. stock market.

As Ibrahim is said to be actively conducting company work at the Manhattan office, investment banking sources say that it appears Yanolja is expected to file preliminary documents to the U.S. Securities and Exchange Commission (SEC) for the listing sometime during the first half of this year. The company’s founder and CEO Lee Su-jin has also reportedly discussed the firm’s IPO goal to pursue a U.S. stock market debut by the end of this year with its financial investors.

Cloud business leads Yanolja’s revenue growth

According to the electronic disclosure system operated by the Financial Supervisory Service (FSS), Yanolja’s cloud division recorded an annual revenue of 173.3 billion won ($128 million) last year, a 60 percent rise compared to 2022. During the same period, the cloud division achieved a turnaround of 8.3 billion won in profit from the previous year’s operating loss of 17.1 billion won.

Yanolja Founder & CEO Lee Su-jin / Courtesy of Yanolja

This turnaround was largely attributed to significant sales growth in the third and fourth quarters of last year, both recording year-on-year growth of over 80 percent.

The acquisition of Go Global Travel (GGT) in July last year has also been credited as the key factor in leading growth in Yanolja’s cloud solutions business. GGT is a company that operates in 206 countries worldwide, providing a wide range of services, such as hotel and resort room distribution rights, airline ticket sales and vehicle rental services.

“The cloud division has been a key player in Yanolja’s latest global business expansion, securing high revenue growth rates and profitability in the global solutions business. With the global network linking our 50 overseas branches in 27 countries to 1.3 million travel service providers in 206 countries, Yanolja aims to strengthen its robust global position,” the company said.

Market analysts point out that Yanolja’s impressive growth in cloud services is expected to drive the future revenue growth of the firm.

“Given the digital transformation trend in the global travel industry, the growth of the cloud division is expected to be a key source of Yanolja’s overall earning growth,” KB Securities analyst Lee Soo-kyung said.

Samsung Securities’ stock analyst Choi Ji-ho said that for Yanolja to justify its high corporate valuation, “it is both necessary to solidify fundamentals in its business-to-customer (B2C) online travel agency (OTA), while also expanding its market share in business-to-business (B2B) travel tech solution services in the global market.”

Corporate valuation

The key question remaining is whether Yanolja can achieve its target corporate value of over 10 trillion won that SoftBank Vision Fund — the largest shareholder of Yanolja, holding a 24.93 percent stake — is aiming for.

Since the fund injected some 2 trillion won to Yanolja at the corporate valuation of about 8 trillion won in 2021, the venture capital firm has been expecting a minimum of 10 trillion won as the desired valuation to garner a meaningful return on the investment.

However, the firm’s unlisted stocks are traded at about six trillion won corporate valuation level at over-the-counter platforms, drawing concerns about whether the firm can further convince the market of a higher valuation.