Date
14 December 2017
Nexmo’s customers include software providers such as Line that let people message on mobile devices, as well as e-commerce firms such as Alibaba and Airbnb. Photo: Bloomberg
Nexmo’s customers include software providers such as Line that let people message on mobile devices, as well as e-commerce firms such as Alibaba and Airbnb. Photo: Bloomberg

Nexmo targets mid-size OTT service providers in China push

Nexmo Inc., a US firm involved in cloud-based communication services, plans to expand its Chinese business and lure mid-size ‘over-the-top’ service providers in the country after roping in big names such as Alibaba Group, Sina Corp and Tencent Holdings (00700.HK) to its client list.

Nexmo provides application programming interfaces, or APIs, that enable app developers and enterprises to reach customers globally via innovative mobile text-messaging and voice tools.

High-volume communication companies such as Alibaba, Airbnb, Line and Viber send millions of messages per month using Nexmo APIs.

Youku, China’s biggest web streaming service, could be the next target.

“We have the Ebay of China, Whatsapp of China and Twitter of China [as our customers]. How can we miss the YouTube of China?” Brian Johnson, vice president of worldwide sales at Nexmo, told EJ Insight in an interview.

“We are also targeting mid-size over-the-top operators with lots of end-users as we make the expansion,” he said.

Over-the-top service providers refer to those that provide messaging, voice-over-internet-protocol calls and other communication services via smartphone apps or online tools, bypassing the traditional telecom networks. 

Nexmo now handles over 2.5 billion API calls per year. It has seen a 443 percent surge in API traffic in the last 12 months and triple-digit revenue growth, according to a statement released Thursday.

“We should [enter China], we have very great customers there already,” Johnson said. “We want to make a difference and add value to our customers.”

The company plans to invest about US$2 million, including the costs related to a team of 20 people working on technical support and sales and marketing, in China, according to Johnson.

Although there is concrete timetable yet for setting up the China office and expanding the business, Johnson believes the revenue contribution from China can be boosted to 40 percent in two to five years, from the current 10 percent. 

By the time the contribution reaches 40 percent, the company will have established an all-in-one plug – having direct connections with all carriers in all provinces instead of working from Hong Kong as the company is doing now, and domestic partners to look out for Nexmo, as well as investors and distribution partners.

Nexmo has already entered into a partnership with 21Vianet, the largest carrier-neutral data center service provider in China, in May.

In January this year, Nexmo raised US$18 million in a funding round led by Sorenson Capital, with participation from existing investors, Intel Capital and NHN Investment Corp.

Earlier, in February 2013, the San Francisco-based firm raised US$3 million led by Intel Capital and NHN Investment.

Following the two rounds of funding, Nexmo has no plans to raise additional capital in the short term.

Johnson expects Nexmo’s revenue to reach US$65 million this year, doubling from the 2013 figure of US$32 million. In 2015, revenue is expected to double again.

– Contact the reporter at [email protected]

RC

Ayishah Ma is a financial reporter on Greater China issues.

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