verzuz

Triller, a short-form video app in the style of TikTok, is planning to sell its common stock on the New York Stock Exchange through a direct listing under the ticker “ILLR,” according to the company’s S-1 filing released Wednesday (Aug. 2). The filing did not provide a date of the direct listing.
The direct listing — not an initial public offering, or IPO — will not have an underwriter that assumes the financial risk of selling the listed shares to institutional investors. Popularized by Spotify in 2018, a direct listing avoids the IPO’s road show and book-building process that establishes an initial selling price. Triller will not receive any proceeds from shares offered in the direct listing by its shareholders.

While TikTok had an estimated $9.4 billion in revenue in 2022 and is becoming an important source of royalties for record labels and music publishers, Triller is a far smaller affair. In the first quarter of 2023, the self-described “artificial intelligence powered technology platform” had revenue of $9.1 million and a net loss of $28.8 million. In calendar 2022, Triller had a net loss of $195.6 million on revenue of $47.7 million.

The S-1 paints a picture of a financially troubled company with numerous outstanding issues. Triller had just $2.2 million of cash and cash equivalents as of March 31. The company’s S-1 warns that Triller has incurred losses each year since its inception — not unusual for a high-growth tech startup — and has an accumulated deficit of $1.29 billion. Triller may incur additional costs related to outstanding litigation with Universal Music Publishing Group, as one example, and admits to not being in compliance with the payment obligations of “a significant number” of its music licensing contracts and “overdue on payments” to vendors that provide Triller with engineering, marketing and legal services, among other parties.

The S-1 also reveals that Triller entered into a confidential settlement agreement with Sony Music Entertainment on July 21, 2023, that requires it to make payments to SME for a breach of contract lawsuit brought by SME in 2022. On May 16, Triller was ordered to pay SME nearly $4.6 million. The settlement provided Triller with a payment plan. With 15 days of the direct listing, Triller will be obligated to pay SME under the settlement agreement.

Triller will have two classes of common stock: a Class A common stock with one vote per share and Class B common stock with ten votes per share. Upon completion of the reorganization, Proxima Media and Bobby Sarnevesht, Triller’s founding partners, will own about 15.4% of Triller’s common stock and have 60.6% of the company’s total voting power. In addition to Proxima Media, the other shareholders with greater than a 5% share of outstanding common stock are Paul Posner, CEO of Carnegie Technologies, and Tsai Ming Hsing. As of March 31, Triller had 282,017,038 shares of Class A common stock and 46,651,382 shares of our Class B common stock outstanding.

Triller claims to have over 550 million user accounts and had over 2.4 million creators as of March 31 — almost 100,000 more than it had two years earlier. It built its user base with acquisitions such as its 2021 purchase of Verzuz, the livestream platform created by of Swizz Beats and Timbaland that shot to fame during the pandemic. Swizz Beatz and Timbaland filed a $28 million lawsuit against Triller in August 2022 over unpaid monies promised in the deal. That lawsuit was settled out of court one month later.