[Post-IPO]⑮ Mediazen Continues Deficit After Listing, Can It Escape Losses Through New Business?

[Asia Economy Reporter Yoo Hyun-seok] MediaZen, a company specializing in voice recognition solutions, has continued to post losses since its listing. This is due to delays in overseas business caused by the novel coronavirus disease (COVID-19). The company plans to improve its performance by expanding its business areas to call centers and kiosks.

MediaZen was established in 2000. It possesses voice recognition and speech synthesis (converting voice to text) technologies. The company grew in the vehicle voice recognition sector by forming partnerships with Ssangyong Motor in 2005 and Hyundai·Kia Motors in 2007. Since 2014, voice recognition solutions have been installed in Hyundai·Kia vehicles sold domestically and internationally.

At the time of its 2019 listing, the lead underwriter Kyobo Securities explained that MediaZen aimed to turn a profit that year by increasing sales and profitability through contract orders with overseas automakers and companies. The expected sales and operating profit for 2019 were 16.1 billion KRW and 700 million KRW, respectively, with projections of 18.8 billion KRW and 2.1 billion KRW for 2020, and 22.1 billion KRW and 3.9 billion KRW for 2021.

Kyobo Securities evaluated that since Hyundai·Kia Motors continues ongoing research and development, technical service requests to MediaZen occur steadily. Due to the nature of the industry, once development service contracts are secured, they tend to expand company-wide, resulting in a rapid increase in sales growth in the short term, followed by a transition to a stable growth trend after a certain period. They also explained that for overseas automakers, "in the early stages of sales, growth is expected to be significant, similar to past experiences with Hyundai·Kia Motors," forecasting the possibility of MediaZen’s performance growth.

Based on this, MediaZen proposed a public offering price range of 9,400 to 10,600 KRW. Subsequently, in the demand forecast conducted in October last year, the company achieved relatively successful results with a competition rate of 576.27, and the public offering price was set at the top end of the range, 10,600 KRW.

MediaZen entered the KOSDAQ market on November 5, 2019. In its first year after listing, MediaZen recorded actual sales of 13.8 billion KRW and an operating loss of 700 million KRW. The performance was 14.1% below expectations, and instead of operating profit, it posted a loss. The first half of this year showed a similar trend. MediaZen recorded sales of 5.1 billion KRW and an operating loss of 700 million KRW in the first half. Simple calculations suggest that if the second half’s performance is similar, there could be a decline compared to the previous year.

The reason for the poor performance is attributed to COVID-19. Overseas business has been delayed due to the pandemic. A company official said, "We wanted to see results overseas, but due to COVID-19, the performance was below expectations. In Japan, work is still ongoing, but since it involves direct reporting, it has been delayed." He added, "Assuming COVID-19 is somewhat controlled by the fourth quarter of this year, we expect visible results in the first half of next year."

MediaZen is expanding its business areas. It continues its existing vehicle voice recognition business. Alongside this, the company is newly pursuing businesses such as smart call centers, artificial intelligence (AI) language tutors, and AI kiosks based on its voice recognition technology. Regarding AI kiosks, it is conducting a pilot project for voice AI technology on airport railroad ticket vending machines and is developing a contactless automatic ticket purchase service using voice.

For language tutors, the company is supplying pronunciation education solutions for Korean and English and aims to create synergy through partnerships with high-quality English education solution companies. It also plans to fully enter the education business using AI language tutors. A company official emphasized, "Although MediaZen is a latecomer in the voice recognition field outside of automobiles, it is entering new markets based on the research conducted so far," and added, "We expect visible results next year."