Participants

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

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

William Chen; Analyst; Speaker Capital

Jack Sun; Analyst; Gelonghui Research

Presentation

Operator

Ladies and gentlemen, thank you for standing by and welcome to Aurora Mobile fourth quarter and fiscal year 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. (Operator Instructions) Please be advised that today's conference is being recorded. I now like to hand the conference over to your host today, [Renee Regenstein]. Thank you. Please go ahead, sir.

Thank you, Amber. Thank you. 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.jiguang.cn .
On the call today are Mr. Weidong Luo, Chairman and Chief Executive Officer; Mr. Shan-Nen Bong, Chief Financial Officer; and Mr. Guan-yang Chen, General Manager.
Following the 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 meaning of Section 21E of the Securities Exchange Act of 1934, as amended and is defined in the US Private Securities Litigation Reform Act of 1995.
The 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 US 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 except as required under applicable law.
With that, I'd like to turn the conference over to Mr. Luo, please go ahead.

Luo Weidong

Thanks, Renee. Greeting to all. Welcome to Aurora's 2024 fourth quarter earnings call. Before I comment on our Q4 results, I would like to remind everyone that the quarterly earnings that 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 description I would describe for the fourth quarter result is an incredible Q4 to close out a perfect 2024 for the following reasons.
Firstly, we record the full year adjusted EBITDA positive for 2024 calendar year. This is our very first full year profitability since the inception of Aurora Mobile 14 years ago. In this quarter, we recorded the six consecutive quarterly perceive EBITDA. Secondly, the gross revenue this quarter of RMB193.2 million, achieving a remarkable 20% growth year over year. This was attributable to solid growth to in all business lines within the group. Furtherly, our overseas engage that continue its great growth momentum.
Record of whopping 20% revenue growth on year-over-year basis and newly signed contract value go by RMB10 million in Q4 alone. Fourthly, we record the net operating cash inflow of RMB19.5 million. Yeah, another highest quarterly number in the past 17 quarters. Bringing the cash balance close to RMB120 million as of 12/31 2024.
Now, let's move to the individual business performance. Our total Q4 growth revenue has grown 20% year over year filled by the very strong numbers from developers services. We think the good revenue, or revenues, many developers subscription services, value add their services and financial risk management or record year over year and quarter of quarter revenue growth.
Development services revenue, which consists of subscription services and value added services, increased by a strong 28% year after year and 24% quarter of quarter. Subscription revenue has been recording great numbers will increase by 12% year over year and 6% quarter over quarter. Value-added services revenue grow by 142% year over year and 180% quarter over quarter.
Our core businesses subscription services revenue of RMB54.7 million, recorded growth of 12% year after year and 6% quarter of quarter. The year after year and quarter revenue growth was mainly driven by increase in both (inaudible) and customer number, carrying on the great momentum we get in Q3, our subscription revenue broke the history record again well in this quarter, we have the highest quarterly revenue yet at RMB54.7 million.
For subscription services, we can record year over year revenue growth in both the domestic and overseas markets. In particular, our engaged that revenue grow close to 200% year over year. This was driven by the new customer acquisition in the overseas market. Since we venture overseas, we get one services contract from both Chinese companies venturing overseas and overseas companies dominate in their respective countries.
With our exemplary of products and services, we are getting more new customers every quarter. However, this is just a tip of iceberg. The total adjustable market for overseas is huge. We will direct more resources in terms of human capital and infrastructure to capture more overseas market share based on the historical track record we have had. I am convinced our engagement business will have a very strong and long streak of growth in the future.
Next, I shall elaborate more on our engage that business this quarter. Firstly, the growth of engaged that business has been important and instrumental for us to achieve great quarterly revenue number. Secondly, customer momentum has been impressive from day one. We converted more overseas customers in this quarter. The contracted customer number has reached 678, representing an impressive 32% growth.
Furtherly, the cumulative some contract value of engaged lab has in consecutive quarters grown by close to RMB10 million quarter of quarter. As of December 31 of 2024, the total contract value was RMB48 million.
Fourthly, we continue to expand our footprint globally. By December 2024, our engage that products and services are now sold to customers in more than 37 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, [PingA] and China Merchant Security just to name a few.
When you add your services revenue will be RMB16.3 million increased by 180% of quarter of quarter and increase by 142% year over year.
The sequential revenue spike was mainly due to the double 11 and double 11 online shopping festival in Q4. But was no existence in Q3. This revenue growth trend in Q4 was within our expectations. But the magnetic 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 of 2024. Next, let me share with you on my thoughts on how the recent advancement in AI will shape the landscape. The development of AI technology and overseas expansion has been Aurora Mobile's core strategy over the past two years.
These strategies have already led to strong revenue growth at each lab and even accelerated the overall revenue growth of our entire group. We believe that 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.
A mobile remains committed to our AI for strategy and we use 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 it 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 portals are fully integrated with advanced AI capabilities that enable various applications such as email editing, push notification, copywriting, and data analytics.
This AI-driven enhancement enable our customers to drive innovations and improve operational efficiency.
Over the past two years, we have continuously invested in the development of GPT AI and enterprise level AI agent platform.
By simply investing native AI agent technology into workflows, we are helping companies accessorizing their transformation to an AI first strategy. Over the past few quarters, we have seen rapid growth in subscription revenue for [GPT Postcar AI].
The new era of industry 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 Shan-Nen, who will share more about the vertical application and other aspects of our financial performance for this quarter.

Bong Shan-Nen

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 customers number and 8% up growth.
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 and products. They are very well received by the market plus the revenue growth we have seen. The customers that we have signed up or renew in Q4 include, but not limited to, [Wei Chong Yinghang], [Fenya Chong Bang Yinghang], and many other license, 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 continuing market demand for Chinese APP data. And this result is within our expectation.
Now, let me go through some of the key expenses and balance sheet items. Onto operating expenses, the Q4 OpEx was at 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 not go through the individual OpEx category.
For R&D expenses, it decreased 10% year over year to RMB24.3 million, mainly due to reduction in personnel costs. Both the salary and share-based compensation as we continue to optimize expenses that improve operational efficiency.
Selling our marketing expenses increased by 11% to year over year to RMB24.6 million, mainly due to the increase in sales commission and traveling expenses in line with the revenue growth and cash collection recorded in this quarter.
G&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 efforts to manage costs.
Next, I'll share three very important KPIs that we closely monitor. For net dollar retention rate, the company used KPI for SAAS company is stood at 95% for core developer subscription business for the trading 12 month period ended December 31, 2024. And it was a good growth compared to 92% for the period ended September 30, 2024.
Secondly, another financial KPI for tracking the performance of SAAS companies is the total deferred revenue, which represents cash collected in advance from customers for future contract performance, which was at a 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 44 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 December 31, 2024, we recorded net operating activities cash inflow of RMB19.5 million, which was the highest level in the past 17 quarters.
Onto the balance sheet. Total assets were at RMB378 million as of December 31, 2024. And this includes cash and cash equivalent of RMB119.5 million. Accounts receivable of RMB50.8 million. Repayments and other current assets of RMB14.3 million, operating list right of use assets of RMB17.1 million fixed assets of RMB4.6 million, long term assets of RMB113.5 million, goodwill of RMB37.8 million, intangible assets of RMB13.8 million resulting from the same cloud acquisition in March 2022. The total current liabilities were at RMB261.6 million. This includes short-term loan of RMB3 million, accounts receivable of RMB32.7 million.
Current operating liabilities of RMB4.5 million, deferred revenue of RMB147.1 million. Accrued liabilities of RMB74.4 million. 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 companies in the SAAS space.
Our core developers subscription services had a RMB54.7 million revenue, another first in history. Second, our engage lab product continue its great momentum. Revenue grew by close to 2200% on a year over year basis and cumulative contract value increased by more than RMB10 million in Q4 alone. And third, we have the 6th consecutive quarter of positive adjusted EBITDA and more importantly, we achieved for the first time in history, full year adjusted EBITDA profitable year. And fourth, we have a net operating cash inflow of RMB19.5 million. And with this impressive numbers that we have delivered across all financial matrix, 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 will start to provide revenue guidance on a quarterly basis.
Based on the current available information, the company sees the Q1 2025 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.
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, which are all subject to change. And lastly, before I conclude, I'll give you a quick update on the share repurchase plan.
In the quarter ended December 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.

Question and Answer Session

Operator

(Operator Instructions)
William Chen, Speaker Capital.

William Chen

Hello, management. Thank you for taking my question. First, I want to congratulate to the management to deliver such a strong quarter results. I think an incredible Q4 to close out perfect 2024 is a perfect description for this quarter and for 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.

Bong Shan-Nen

Thanks, William, let me take a call. Yes, you're right to point out that Chris has reiterated that in Q4, it was an incredible year, incredible quarter for us that closed out in 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 RMB50 million mark revenue in two consecutive quarters. And of course, our overseas business continue it great momentum and revenue increased by close to 200% year over year and we signed more than RMB10 million or close to RMB10 million new contract value in a single quarter. And 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 will appreciate there are many pieces to the puzzle in order for us to have the great numbers. And one important thing that I would like to bring out is the fact that this good result has been in the making. And we have been consistently delivering good results since Q3 of 2023, when we had our first of the six consecutive quarters of positive adjusted EBITDA.
Therefore, I would say this is not a one-off event or by any luck. And this is purely due to hard work, dedication and commitment from our team. And also we have also rest 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 bit the bullet by doing a few things. One is to streamline the product and services that we offer in the market. We make tough decisions to cut the low margin business and cut the department and the headcount. And we redirect our resources and effort to serving global customers in the global market and also make some resources allocation to our overseas expansion plan.
So looking back under Chris's 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.
And as we are still at the very beginning stage of overseas suspension, 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 measures over the past 12 to 18 months in order to achieve these 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 answer your question, William.

William Chen

Thank you. Thank you for your answer.

Operator

[Jack Sun], Gelonghui Research.

Jack Sun

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 developer subscription revenue. It has a past RMB150 million.
Revenue mark in two consecutive quarters. I'd like to hear the manager's point of view on how we should look at the trend going forward? Thanks.

Bong Shan-Nen

Hey, hi Jack. Thanks for your question. You're right, subscription business has been the start of the business unit where it crosses RMB150 million mark in two consecutive quarters. And let me share with you why is that so. And 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 customer's numbers and [app pool].
And this is very important and this is exactly what we are looking for because we want to grow the customer's number while also growing the [app pool] 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 the overall growth 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, Jack.

Jack Sun

Yeah, that's -- yes, that's very great. Thanks a lot.

Operator

(Operator Instructions) I'm showing no further questions. I'll now turn the conference back to Renee for closing commands.

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.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.