Participants

Kristen Arnell; Investor Relation; Aurora Mobile Ltd

Luo Weidong; Chairman of the Board, Chief Executive Officer; Aurora Mobile Ltd

Bong Shan-Nen; Chief Financial Officer; Aurora Mobile Ltd

Calvin Wong; Analyst; Speaker capital

Presentation

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Aurora Mobile third quarter, 2024 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session instructions will be given at that time. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today. Kristen Arnell. Thank you. Please go ahead, sir.

Kristen Arnell

Thank you Michelle. Hello everyone and thank you for joining us today. Aurora Mobile's earnings release was distributed earlier today and is available on the IR website at ir.gwn.cn on the call. Today are Mr Wei Don Luo, Chairman and Chief Executive Officer, Mr Shannon Bong, Chief Financial Officer and Mr Guang JPY Chen General Manager.
Following their prepared remarks. They will be available to answer your questions during the Q&A session that follows before we begin. I'd like to remind you that this conference call contains forward-looking statements within the meeting of section 21 E of the Security Exchange Act of 1934 as amended and as defined in the US 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 factors are included in the company's filings with the US SEC.
The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. With that. I'd now like to turn the conference over conference over to Mr Luo. Please go ahead.

Luo Weidong

Thanks Arnell. Greeting to all. Welcome to our mobiles 2024 for quarter earning call.
Before I comment on our Q3 results, I would like to remind everyone that the quarterly earnings that is available on our website. You may refer to the debt as we proceed with the call today as we did in the past based on the Q3 numbers, the appropriate description I would use for the first quarter result is record breaking for the following reasons.
Firstly, we are writing our own history. We are on the road in this quarter. We record the fifth consecutive quarterly festival adjust EBITA.
Secondly, developer subscription revenue record both 7% growth quarter after quarter and 11% growth year over year. More importantly, the quarterly revenue has maybe 50 million for the first time. In history. Yet another record breaking event in this quarter.
Furtherly, our engagement continue to shine in terms of customer numbers and cumulative contract value where they grew 42% and 23% quarter over quarter respectively.
Firstly, the record net operating cash inflow of RMB to 12.3 million being the highest level in the past 16 quarters. Bringing the cash balance of RMB101 million as of 930 , 2024.
These are the snapshots of the great numbers we have achieved in this quarter. Now let me expand further.
Our total group revenue has grown 7% year over year. Fueled by the strong numbers from developer services within the group revenue, developer subscription service and financial risk management record 11% and 29% year over year revenue growth respectively.
Developer services revenue which consisted of subscription services and value added services increased by 12% year over year and 2% quarter of quarter. Subscription revenue has been recording great numbers where it increased by 11% year over year and 7% quarter of quarter. Value added services revenue grew by 20% a year every year but decreased 30% quarter of quarter.
Our subscription services revenue of RMB51.7 million grew strongly by 11% year over year and 7% quarter of quarter the year over year and quarter of quarter revenue growth was management by increasing AU as I mentioned earlier. We brought our own quarterly revenue record in this quarter where we had for the first time in history.
Subscription revenue is RMB 50 million in a single quarter. This is a remarkable achievement. I would like, I would like to take a moment to thank all our customers in trust in our products and services and our G one team for working hard and deliver great service to our customers.
Another major contributor of this impressive revenue growth was the solid performance of our engage business. The engaged lab business has contributed strong revenue growth in this quarter on a year over year basis. The recognized revenue for engage that has grown close to 100%. I shall share more on that basis shortly within subscription revenue. Some of the notable new and renewable customers in this quarter include but not limited to wass largest every company for their Chinese operations and B ID and Shenu Express, Kimm Moon Shot and Guana credit card. Just to name a few value added services revenue will RMB5.8 million decreased by 30% quarter of quarter by increase by 20% year. Over year. The sequential decrease was due to the new online shopping festival in Q2 but was nonexistent in Q3. This revenue trend in Q3 was within our expectations.
Next is the most exciting part of the business in terms of its growth and future perspective, allow me to spend the next few minutes on our engage business this quarter. Firstly, we continue to acquire more overseas customers in Q3. Then the contracted customer numbers has reached 500 13. We're spending representing a 32% sequential growth. Secondly, the cumulative sign contract value of engagement has grown by RMB6 million quarter of quarter as of December as of September 30 2024 the total sign contract values to add approximately RMB48 million. We are truly pleased with this result. Furtherly, we expand our global reach to additional countries in this quarter. By September 30 2024 our engagement products and services were sold to customers in more than 31 different countries and regions globally.
In summary, since we expanded overseas, more than 513 customers from 3041 country has tested convinced and brought our multichannel digital services to help them improve their user engagement effort and to do it in a more cost efficient manner, meeting and assisting the client's expectations is what we believe to be the key to our success globally. We will certainly not be sitting on our lorries. We will continue to work hard and harder.
We have high hopes to achieve greater things overseas internally. We can properly through and prepare the detailed education plans and allocate our resources accordingly.
And this is an ongoing process where we will make continuous adjustment and to take as when necessary. Yes, the overseas expansion is not easy, but with the track record we have had for the past six quarters, I'm very hopeful yet committed to ensure we can and we will continue to bring in great customers from around the world every quarter as of today. Apart from our Singapore office, we can set up our office in Kuala Lumpur. We now have local sales who have great local knowledge on the ground and can better serve the local markets and the neighboring countries and customers.
As a matter of fact, I was in KPO last week for the, for the short one week business trip there, I was overwhelmed with the great responses from our potential customers in KPO.
They were very impressed with the multichannel engagement services we have and are and to subscribe our services.
Our services are indeed very suited to the local market and customer needs. Therefore, we are building a very strong sales pipeline in Malaysia and we allocate more resources to increase both the market penetration and market share there.
With the success cases we have in both both singapore and Malaysia, we are going to replicate this conversion of new customers acquisition experience to other countries in Asia Pacific region.
I believe there will be more great success story that I am able to share with you in the next call with that. I will now pass the call to Shannin who will share more about the vertical applications and other aspects of our financial performance for this quarter.

Bong Shan-Nen

Thanks Luo.
Next, I'll go over the revenue for vertical application that includes financial risk management and market intelligence.
Overall vertical application had a relatively quiet quarter where revenue decreased by 6% quarter over quarter and 4% year over year. Nevertheless, within a relatively quiet quarter, we still saw great numbers from financial risk management where it recorded a 29% growth in revenue year over year and relatively flat quarter over quarter. They were the star performer within vertical applications.
The 29% year over year revenue growth was mainly due to a strong 28% growth in upro.
The trend we have seen in Q3 was existing. Customers have increased their consumption of our financial risk management product and services. And this is very important and it provided a very solid foundation for the revenue numbers every quarter.
This also demonstrate that our products are widely used and well received by the financial sector customer in their own risk model.
The customers that we sign up or renew in Q3 include but not limited to Ningbo in Chengdu, Yang, Haer Xiaojing, Ping An Xiaojing and many other more licensed credit and financial institutions throughout China.
Market. Intelligence revenue decreased by 41% year over year and 22% quarter over quarter due to the continued weak market demand for Chinese AP data.
This is in line with our expected expectation in Q3 of 2024 we did manage to sign renewal contracts with some well known large customers and within market intelligence. For product perspective, we have recently launched a global ranking of AP P service where customers can have access to multidimensional indicators including app penetration rate, active users and new users of global key AP P across different countries and different regions.
And since its launch in September, we have seen good trial accounts registration rate and we believe it will give a good and new set of independent source of data to enterprises and investment customers for them to make informed investment decision.
Next, I'll go through some of the key expenses and balance sheet items on to operating expenses.
Our Q3 operating expenses was at RMB57.1 million representing a slight 4% increase quarter over quarter and 5% decrease year over year.
The majority of the increase was attributable to our sales and marketing department as we expand overseas. This has no doubt require additional resources allocation.
Also the increase in revenue and cash collection in this quarter also resulted in additional commission and expenses. These are all within our expectations and so long as the revenue and gross profit are growing at a faster pace than OPECS, the end result will be a plus to the financial statement.
I will now go to the individual OPECS category for R&D expenses. It decreased by 26% year over year to RMB24.2 million mainly due to lower head count that reduced salary costs and associated share based compensation and a decrease in data analysis and technical service expense selling and marketing expenses increased by 3% year over year to 22.4 million. Mainly due to the increase in sales commission and travel expenses as we continue to expand overseas G&A expense increased by 92% year over year to RMB10.4 million. Mainly due to the oneoff RMB7.6 million gain from disposal of fixed assets in last year. That was nonexistent in Q3 of this year.
Other G&A expenses movement was within expectation on to the balance sheet.
I will share two very important KPIS that we closely monitor. We continue to maintain a healthy turnover days at 48 days, we will continue to work hard to ensure we actively collect cash from customers. And at the same time mitigating the risk of bad and doubtful death.
Secondly, one of the key KPI for tracking performance of SARS company is a total different revenue which represents cash collected in advance from customers for future contract performance which remain high at RMB134.8 million and this is the 11 quarter consecutive quarter where our revenue balance was, has exceeded 130 million on the on the cash flow. We are very pleased with the team's diligent cash management in the operating activity. This quarter for the quarter ended September 30th. We have recorded net operating activities, cash inflow of RMB12.3 million which is the highest level for the past 16 quarters.
Next total assets were 5,351.7 million as of September 30th.
This includes cash and cash equivalent of 101 million accounts receivable of 40.5 million prepayments and other current assets of 20.2 million operating list, right of use assets of 20.9 million fixed assets of 3.2 million long term investment of 112.5 million goodwill of 37.8 million and intangible assets of 14.7 million resulting from the STLA acquisition in March 2022.
Total. Current liabilities were at 238.3 million. This includes accounts payable of 27.1 million current operating list liability of 5.4 million deferred revenue of 134.8 million accrued liabilities of 68 million.
Now let me take a few minutes here to recap Q3 of 2024 that we just had in this quarter. Our developer subscription services recorded solid and impressive revenue growth year over year. And more importantly, we achieved a 50 million revenue quarter for the first time in history.
Number two, we are making history again in this quarter where we had the fifth consecutive quarters of positive adjusted EBITA number three, our engage business recorded customer number growth of more than 32% quarter over quarter and cumulative contract value increased by more than 7 million between the quarters to more than 38 million.
And we recorded net operating cash inflow of 12.3 million.
And lastly before I conclude, I shall give an update on the share repurchase plan in the quarter ended September 30th 2024. We repurchased 29,000 ads. Cumulatively, we have repurchased a total of 24, 6,000 ads since the start of our repurchase program.
And this concludes our prepared remarks. We are happy to take your question. Now, operator, please proceed.

Question and Answer Session

Operator

Thank you. If you'd like to ask a question, please press star 11. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again.
Our first question comes from Calvin Wong with Speaker capital. Your line is open.

Calvin Wong

Thank you for taking my questions. I really appreciate that the management has delivered another quarter of very impressive results. I'd like to recap what I heard from you a few things. 15 consecutive quarters of positive adjusted EBIDA and do you co developer subscription business revenue of more than RMB15 million and finally engage that business is growing significantly every quarter. So I really appreciate management. Could provide more colors on all of these three great achievements plans.

Luo Weidong

Let me take this question for many including yourself, would appreciate achieving this. Any one of these within a quarter is not an easy task. And for us to do it with three great milestone that you mentioned in one quarter. I think it's remarkable to say the least. And if there's one thing that I can attribute this to, I would say it will be the effective execution that help us bring this numbers.
I mean, you can spend as much time and energy in the planning and preparation stage. But I think the key to any success is how well you execute your plan.
And probably as you know, we started the plan to go overseas about 18 to 20 months ago. And by then, it was a rough road ahead of us and we have to start everything from scratch and we did not just buy an overseas company who has operations overseas.
We did it the hard way, but on the way, we learned a lot, we tackle all the issues ourselves. And for instance, when we venture overseas, we need to sort out where we should store our customers data and which overseas cloud service provider that suit us best and suit our customers best and also which it structure should we have to serve our customers across 31 countries that Chris mentioned.
And the best answer to this can only be had through on field execution.
And also because we executed the going overseas plan really well. And we are able to have a 50 million revenue quarter for developer subscription service. And this is the highest highest single quarter revenue for this segment in our history. And this will not be achieved by simply having really good plans.
And at the same token, having a 50 million revenue quarters for developer subscription revenue itself will not automatically achieve positive adjusted EBITA.
We have to properly execute the business expansion and cost saving plans simultaneously and all these are interrelated.
So therefore, in conclusion, it is clear that we the management has an execution, skill and determination to manage the business and managing it well.

Calvin Wong

So only when we effectively executed this plan that we have, we can achieve a record breaking quarter that Chris mentioned at the beginning of this call and hope this answer your question, Gavin very clear.

Operator

Thank you.
Thank you. Our next question comes from Jackson with Jon Research. Your line is open.

Congratulations on strong quarter. I'm Jack Sun from G Research. I got a question for management.
I heard Chris mention during the call that for the overseas expansion, you have offices and staff in both singapore and Malaysia to support overseas business growth. Are we expecting more offices around the world in the near future? Thanks.

Luo Weidong

Yeah, thanks, Jack. Let me take this question too. Yes, you're right. We now have offices in both singapore and Malaysia in Kuala Lumpur, which is in Malaysia. And we make conscious decisions when selecting these two cities to have our offices for the for the immediate. We believe these two offices are strategically well located to help us expand in the Southeast Asia and beyond. Currently, a good portion of our overseas revenue are derived from customers in the Southeast Asia region. Therefore, having local teams to support this region is key. And also we need to have, we need to be there when customers have issue that needs addressing or when they have plans to buy more of our services.
And we believe there are a lot of opportunities in the Southeast Asia countries that we can harvest in the near future.
And also with teams in Kl and Singapore, it is only a short trip for them if they need to be in say Bangkok, Taipei, Jakarta or even any cities within the Southeast Asia region.
And as a matter of fact, our Singapore team has flown to Taipei this week for meetings with the customers and ISV there and looking ahead, we certainly, we certainly will be considering more offices when there is a good reason to have stick stick, for example, should the business in terms of customers number and revenue in the Gulf region is becoming material. We will certainly be open to having our offices in Doha Dubai or even Abu Dhabi to serve the customer in that region. So if I may the short answer to your question is that the need to have more offices overseas is so dependent on the numbers. So long as the numbers add up, we have ie we have enough customers and enough revenue. We definitely will set up overseas, more overseas offices in the near future. Hope it answer to your question, Jack.

Yeah, that's very clear. Thanks a lot.

Operator

Thank you. There are no further questions at this time. I'd like to turn the call over to Christian Arnell for closing remarks.

Luo Weidong

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

Operator

Thank you for your participation. This does include the program. You may now disconnect. Good day.