Shake-up at Migme after $1.5m fundraise

Steven Goh of Migme speaks at TIA Singapore 2016 about IPOs in Asia.

Digital media company Migme has cut jobs and shuffled its staff as part of efforts to bring down costs.

Migme CEO Steven Goh confirms to Tech in Asia that the company has laid off in the past weeks some 36 people in Asia, most of whom were based in Singapore. Along with the layoffs, the firm transferred its product development and engineering staff to Taipei in Taiwan, and finance and admin teams to Malaysia – all from its headquarter Singapore.

“Two months ago, we had 257 people, now we have 221. In Singapore, we had 43 people, now we have 17, and this will be 15 shortly as we make [more] changes,” he tells us in an email.

“Singapore is really expensive,” he explains. “We note as well that the business environment has changed and whilst we have cash and are solvent, we are taking the precautionary measure of lowering our cost profile further, simplifying some jobs.”

The moves follow Migme’s US$1.5 million share sale to Meitu on July 7, which gave the Chinese mobile app developer over 5 percent of the company.

But Steven notes the shifts are more of a “rebalancing” act since Migme continues to hire for posts.

“[Taiwan] is closer to our strategic shareholder who does help us hire people there. We’ve got an awesome new COO, some new hires in Taiwan, and we have some people being hired in other countries. It’s not a one-way thing… [but] it does have the net effect of lowering our operating costs,” he says.

Migme, which is listed on the Australian Securities Exchange (ASX), owns a social entertainment platform where users can chat, post bite-sized blogs, play games, and exchange virtual gifts with each other. It generates revenue from gifts, emoticons, stickers, avatar items, and games. Lately, it’s been experimenting with ecommerce following its acquisition of penny auction site Sold and Indonesian fashion estore Shopdeca.

Funding squeeze

For the June quarter, Migme recorded 43 million monthly active users, up over 10 percent from 39 million the previous quarter. Its cash receipts rose 7 percent in the same period, while its cash outflows went down 10 percent, it says. A report it filed with the ASX shows that in January to June, it had US$3.5 million cash after a net operating cash flow of -US$8 million and a decrease in cash held of US$2.8 million.

Migme says it’s hard to raise money so it must be prudent with its cash.

The company points out that the reduction in outflows “will continue as it looks to improve its operating margins” and move to a positive cash flow position in 2017.

The cost-cutting measures will not only help the company achieve this, it’s also just “prudent” especially in the current market environment, Steven asserts.

“The reality is the private market for financing has softened. It’s harder to raise money now than nine months ago.”

Singapore labor market ‘small, expensive’