Aurora Mobile Limited Price & Performance (JG)

Thank you. Hello, everyone, and thank you for joining us today. [indiscernible] Aurora Mobile's earnings release was distributed earlier today. And is available on the IR website at ir.jiguan.cn. On the call today are Mr. Wei Dong Luo, Chairman and Chief Executive Officer Mr. Shannan Bong, Chief Financial Officer and and Mr. Guang Yang Chen, General Manager. Following their prepared remarks, they will be available to answer your questions during the Q and A session that follows. Before we begin, I'd like to remind you that conference call contains forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended and as defined in The U. S. Private Securities Litigation Reform Act of 1995. These forward looking statements are based upon management's current expectations and current market and operating conditions, which are difficult to predict and may cause the company's actual results performance or achievements to differ materially from those in the forward looking statements. Further information regarding these and other risks uncertainties and other factors are included in the company's filings with the U. S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward looking statement as a result of new information, future events or otherwise, [indiscernible] except as required under applicable law.

With that, I'd like to turn the conference over to Mr. Luo. Please go ahead.

Thanks, Renee.

Greetings to all Welcome to Arun Mobile's twenty twenty four fourth quarter earnings call. Before I comment on our Q4 results, I would like to remind everyone that the quarterly earnings deck is available on our IR website. You may refer to the deck as we proceed with the call today. As we did in the past, based on the Q4 numbers, the appropriate discretion I would describe for the fourth quarter result is an incredible Q4 to close out our perfect 2024 for the following reasons.

Firstly, we recorded full year adjusted EBITDA positive for 2024 ks in the year. This is our very first full year profit stability since the inception of ARRAN Mobile years ago. [indiscernible] In this quarter, we we recorded six consecutive quarterly positive adjusted EBITDA. [indiscernible] Secondly, the gross revenue this quarter of RMB193.2 million achieving a remarkable 20% growth year year over year. This was attributable to solid growth to IN OPC's lines within the group. [indiscernible] [indiscernible] our overseas business engage [indiscernible] [indiscernible] 20% revenue growth on year over year basis. New Nissan contract value grew by RMB10 million in Q4 alone. [indiscernible] Firstly, we recorded net operating cash inflow of RMB19.5 million yet another highest quarterly number. In the past seventeen quarters. Bringing the cash balance close to RMB 120,000,000 as of 10/31/2024. Now let's move to the individual business performance. [indiscernible] Our total Q4 group revenue has grown 20% year over year, fueled by the very strong numbers from developer services. [indiscernible] mainly developer subscription services, value added services and financial risk management all record year over year and quarter over quarter revenue growth. Developer services revenue which consists of subscription services and better ad services, increased by a strong 28% over year and 24% quarter over quarter.

Subscription revenue has been Aurora in great numbers, where it increased by 12% year over year and 6% quarter over quarter. Value added services revenue grew by 142% year over year 180% quarter over quarter. [indiscernible] Oncoc businesses, subscription services revenue of RMB54.7 million record the growth of 12% year over year and 6% quarter over quarter. The year over year and quarter over quarter revenue growth was mainly driven by increase in both ARPU and customer number. Carrying on the great momentum we had in Q3, our subscription revenue broke the history record again well in this quarter. We have the highest quarterly revenue yet at RMB 54,700,000.0. For our subscription services, we can record year over year revenue growth in both the domestic and overseas markets. In particular our engagement revenue grew close to 200% year over year. This was driven by the new customer acquisition in the overseas market. Since we ventured overseas, we get one services contract from both Chinese companies mentioning overseas and overseas companies dominantly in their web [indiscernible] respective countries. With our exemplary suite of Aurora and services, we are gaining more new customers every quarter. However, this is just a tip of iceberg.

The total addressable market for overseas is huge. We will direct more resources in terms of human capital and infrastructure to capture more overseas market share. Market share.

Had I convinced our engagement business will have a very strong and long streak of growth in the future. Next, I shall elaborate more on our EngageLab business this quarter. Firstly, the growth of EngageLab business has been important and instrumental for us to achieve great quarterly revenue number. Secondly, customer momentum has been impressive from day one converted more overseas customers in this quarter. The contracted customer number has reached six seventy eight representing an impressive 32% sequential growth. [indiscernible] Further, the cumulative sum contract value of Engage Lab has into consecutive quarters grown by close to RMB10 million quarter over quarter. As of 12/31/2024, total signed contract value was RMB 48,000,000. Firstly, we continue to expand our footprint globally. By December 2024, our Engagement app products and services are now sold to [indiscernible] In more than 47 different countries and regions globally. Within subscription revenue, some of the notable new and renewable customers in this quarter include, but not limited to China Telecom, Ping An and China Motion and Security, just to name a few. Value added services revenue was RMB16.3 million increased by 10880% to quarter over quarter and increased by 142% year over year. The sequential revenue spike was mainly due to the double 11 and double 12 online shopping faced over in Q4, but was not $0.86 in Q3.

This revenue growth to track in Q4 was within our expectations, but [indiscernible] magnitude of our growth was much better than what we had anticipated. A job well executed by our team to secure more ad spending from advertisers in the last Q of twenty twenty four. Next, let me share with you on my fourth on on how the recent advancements in AI will shift the landscape. The development of AI technology and overseas expansion has been ARO Mobile's cost strategy over the past two years. These strategies have already led to strong revenue growth at Inghis Labs and even accelerated the overall revenue growth of our entire group. We believe this momentum will continue and set the stage for new growth trajectory. In the past, we can primarily provide the updates on our overseas expansion. Now we would like to reiterate our AI strategy to the market. Aramco remains committed to our AI first strategy and views AI as the most critical business driver for the future. We are now not only deeply integrated AI into the workflows of various departments, but also using e as a KPI in the BSC assessments for both the company and each employee.

This ensures that technology implementation is closely aligned with the performance results. Our core products are fully integrated with Avao's AI capabilities that enable various applications such as email editing, push notification, copywriting and data analytics. This AI driven enhancement enable our customer to drive business innovations. And improve operational efficiency. Over the past two years, we have continuously invested in the development of GbVie POSSIBLE AI enterprise level AI agent platform By seamlessly embedding native AI agent technology into workflows, we are helping companies accelerating their transformation to an AI first strategy. Over the past few quarters, we have seen rapid growth in subscription revenue for JPGPOSS.ai. The new era of industrial [indiscernible] revolution is just beginning. The enterprise application of AI is still in its early stage. And we remain committed to increasing our investment in enterprise AI. We believe that our master enterprise customer base diverse business scenarios and rich data resources will be invaluable assets in this AI era. Let me pass the call over to Shenay who will share more about the virtual application and other aspects of our financial performance for this quarter. Thanks, Chris. Next, I'll go over the revenue for vertical application that includes financial risk management and market intelligence.

Overall, vertical application had a good quarter where revenue increased by 3% quarter over quarter and 1% year over year. And within vertical application, financial risk management recorded a 34% growth in revenue year over year and 4% growth quarter over quarter. The 34% year over year revenue growth was mainly due to a strong 24% growth in We are very pleased with the progress made by this business. Over the past few quarters, the team has fine tuned and upgraded the service end products. They are very well received by the market. Plus the revenue growth have seen. The customers that we have signed up or renewed in Q4 include but not limited to Weizong Minghang, Feng Chele, Zhong Bang Nyingang and many other licensed credit and financial institutions throughout China. And Market Intelligence revenue, on the other hand, decreased by 36% year over year and stayed flat quarter over quarter due to the continued weak market demand for Chinese APP data. And this result is within our expectation. [indiscernible] let me go through some of the key expenses and balance sheet items. Onto operating expenses. The Q4 OpEx was RMB16.3 million. Representing a slight 1% decrease year over year and a 6% increase quarter over quarter.

The majority of the increase was attributable to our sales and marketing department, The continued increases in revenue and cash collection in this quarter resulted in additional commission and expenses These are all within our expectation. Overall, we are very pleased to see how OpEx has been trending in view of the revenue growth we have achieved. I will now go through the individual OpEx category. For R and D expenses, it decreased 10% year over year to RMB24.3 million, mainly due to [indiscernible] both the salary and share based compensation as we continue to optimize expenses that improve operational efficiency. Selling and marketing expenses increased by 11% to year over year to RMB24.6 million, mainly due to the increase in [indiscernible] In line with the revenue growth and cash collection recorded in this quarter. G and A expenses decreased by 6% year over year to RMB11.4 million mainly due to reduction in personnel costs, both the salary and share based compensation as a result of continued effort to manage costs. Next, I'll share three very important KPI that we closely monitor. For net dollar retention rate, a commonly used KPI for SaaS companies, is stood at 95% for our core developer subscription business for the trailing twelve months period ended 12/31/2024.

And it was a good growth compared to 92% for the period ended 09/30/2024. Secondly, another financial KPI for tracking the performance of SaaS companies is the total deferred revenue, which represent cash collected in advance from customers for future contract performance. Which was at record high of RMB147.1 million. And this is the twelfth consecutive quarter where our deferred revenue balance has exceeded RMB130 million. Thirdly, we continue to maintain a healthy AR turnover days at forty four days We continue to work hard to secure more cash from our customers and at the same time mitigating the risk of bad and doubtful debts. And carry on the great momentum we have from Q3, we achieved great results on the cash flow in this quarter Our team has done a great job in cash management in operating activities this quarter. For the quarter ended 12/31/2024, we recorded net operating activities cash inflow of RMB19.5 million which was the highest level in the past seventeen quarters. Onto the balance sheet. Total assets were RMB377 million as of 12/31/2024, And this includes cash and cash equivalent of RMB119.5 million accounts receivable of RMB50.8 million, dollars Group prepayments and other current assets of 14,300,000.0 Operating right of use assets of $17,100,000 dollars fixed assets of $4,600,000 long term assets of $113,500,000 goodwill of $37,800,000 intangible assets of $13,800,000 resulting from the SandCloud acquisition in March 2022.

The total current liabilities were at RMB261.6 million dollars This includes short term loan of $3,000,000 accounts receivable of $32,700,000 current operating liabilities of $4,500,000 deferred revenue of $147,100,000 accrued liabilities of $74,400,000 dollars Actually, I would like to echo what Chris has said at the beginning of this call. Let me recap the description that he made. An incredible Q4 quarter to close out a perfect 2024. In this quarter, the total revenue grew strongly by 20%, reaching RMB93.2 million. This is a set of remarkable results when we compare to our peers and other listed company in the SaaS space. Our core developer subscription services had a $54,700,000 revenue another first in history. Second, our Engage Lab product continued its great momentum Revenue grew by close to 200% on a year over year basis. And cumulative contract value increased by more than $10,000,000 in Q4 alone. [indiscernible] And third, we have a sixth consecutive quarter of positive adjusted EBITDA. And more importantly, we achieved Aurora the first time in history full year adjusted EBITDA profit double year. And fourth, we have a net operating cash inflow of RMB19.5 million. And with these impressive numbers that we have delivered across all financial [indiscernible] metrics, It was a great quarters that we had.

And it has been a great year of growth in our core business. I believe we have delivered a set of financials that current shareholders and investors will be pleased Now let's turn to the business outlook. Starting from this quarter, we'll start to provide revenue guidance on a quarterly basis. Based on the current available information, the company sees the Q1 twenty twenty five revenue guidance to be in the range of RMB74 million to RMB77.5 million, representing a strong 15% to 20% year over year growth compared to the same quarter in 2024. [indiscernible] The growth outlook is based on the current market condition and reflects the company's current and preliminary estimate of the market. And operating conditions and customer demands. Are all subject to change. And lastly, before I conclude, I'll give a quick update on the share repurchase plan. The quarter ended 12/31/2024, we repurchased 33,000 ADS Cumulatively, we have repurchased a total of 279,000 ADS since the start of our repurchase program. And this concludes our prepared remarks. We are happy to take the question now. Operator, please proceed.

Thank you.

We will now begin the question and answer session. We will now take our first question from the line of William Chan from Hello, management. Thank you for taking my questions. First, I want to congratulate you to the management to deliver such a strong quarterly results. I think an incredible Q4 to close out perfect 2024 is perfect description for this quarter and the full year 2024 as a whole. So my question for the management is to achieve such a good result what measures or actions were taken by the management? Thank you.

Thanks, William. Let me take the call. Yes, you're right. To point out that Chris has reiterated in Q4, it was an incredible year incredible quarter for us that closed out the 2024. For a couple of reasons. Let me just recap. First, our revenue has grown strongly 20% year over year. And our core developer service has broke through the 50,000,000 mark revenue in two consecutive quarters And of course, our overseas business continue its great momentum. And revenue increased by close to 200% year over year and we signed more than 10,000,000 or close to 10,000,000 new contract value in a single quarter. Of course, we have been very diligent in spending our money. So that's why the optimal level of OpEx And lastly, we have six consecutive quarters of adjusted EBITDA bringing the full year positive adjusted EBITDA for 2024.

And probably you'll appreciate there are many pieces to the puzzle in order for us to have the great numbers. And one important thing that I'd like to bring out is the fact that this good result has been in the making. We have been consistently delivering good results since Q3 of twenty twenty three. When we had our first of the six consecutive quarters of positive adjusted EBITDA [indiscernible] Therefore, I will say this is not a one off event or flu Aurora by any luck. And it was purely due to hard work, dedication and commitment from our team. And also we have also restructured the group in terms of our strategy and our execution plan by more than two years ago. And during the time, I think we have beat the bullet by doing a few things. One is we streamline the product and services that we offer in the market. We made tough decision to cut the low margin business and cut the department at the headcount. And we redirect our resources and effort to serving global customers in a global market. Also make some resources allocation to our overseas expansion plan. So looking back, under Chris' leadership and the management made the right decision, with a more focused service offering and serving global customers, we found the next growth driver in the business.

And not only the global customers are bringing more revenue, their contracts are providing a healthy cash flow into the group. As we are still at the very beginning stage of overseas expansion, we truly believe the market is huge and we are able to continue the growth trajectory in the many years to come. And back to the question you have, I guess the short answer is we have taken many steps and measure over the past twelve to eighteen months in order to achieve this great results. Any single one of them will not have the same impact. So it was a collective effort as a whole. And we believe we are ready for the next phase growth in the business And all the market signals we have received are also very promising in terms of future growth. I hope this answers your question, William.

Thank you. Thank you for your answer.

Thank you. We will now take our next question from the line of Jack Ssun from Galenquay Research. Please ask your question, Jack.

Okay, thanks. I got a question for management.

Congratulations to management on achieving another very good quarter.

What particular trend that I would like to do in the future is the growth of subscription revenues.

It has a past RMB million revenue mark in two consecutive quarters. Like to hear the manager's point of view on how we should look at the trend going forward Thanks.

Hi, Jack. Thanks for the question. You're right. Subscription business has been the star of the of a business unit where it crosses 15,000,000 mark in two consecutive quarters let me share a view why is that so. In there are a couple of reasons. One, our customers the developer service or the developer or the enterprise are in need of this service to help them to engage their users in an effective and cost efficient manner. So this demand has not changed. And the next is we have a suite of products that cater to their needs. And besides the traditional app push we offer, we now offer web push, we offer email, WhatsApp, OTP and other communication channels. And we are seeing more and more customers are switching from their incumbent service provider to us. So if you look deeper, and the growth of this business came from both the growth in the customers' numbers and ARPU. And this is very important and this is exactly what we are looking for. Because we want to grow the customers number while also growing the ARPU. And this is very healthy trend to sustain the long streak of growth in the future.

So in a nutshell, we see the developer service revenue no doubt, will be very important to us. And the growth trajectory will help to drive overall group business And with a strong demand that I talked about and a huge addressable market, we are very hopeful of the good results in the future. I hope this answers your question [indiscernible] That's very great. Thanks a lot.

Thank you. I'm showing no further questions. I'll now turn the conference back to Renee for closing comments.

Thank you, everyone, for joining our call tonight. If you have any further questions or comments, please don't hesitate to reach out to the IR team. This concludes the call. Have a good night.

Thank you.