Hello, ladies and gentlemen. Thank you for standing by for iClick Interactive Asia Group Limited's Second Quarter 2018 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. I would now like to turn the call over to your host, Mr. Terence Li, SVP of Finance for the Company. Mr. Terence, please go ahead.

Hello, everyone, and welcome to the second quarter 2018 earnings conference call for iClick Interactive Asia Group Limited. The Company's results were issued via newswire services earlier today and a post online. You can download the earning press release and sign up for the Company's distribution list by visiting the IR section of our website at IR.i-click.com. Mr. Sammy Hsieh, our Chief Executive Officer and Co-Founder, and Ms. Jie Jiao, our Chief Financial Officer, will start the call with their prepared remarks. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the Company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the Company's prospective as filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note that iClick's earnings press release and this conference call include discussions of unaudited GAAP financial information, as well as audited non-GAAP financial measures. iClick's press release contain a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to our CEO and Co-Founder, Mr. Sammy Hsieh. Please go ahead.

Thank you, Terence. Hello, everyone, and thank you for joining our second quarter 2018 earnings conference call. We are pleased to report a strong second quarter of 2018 with historical record highs in many key financial and operational matrix. Specifically, our total gross billing and revenue increased by 86.4% to $105 million and 43% to $42.7 million year-over-year respectively, both reaching new heights. With the strong top line growth, we are also free to deliver the highest gross profit of $9.9 million during the quarter. Benefiting from the growth and economic upscale and proper operating expenses control, we see the operating loss margin considerably narrow from 7.5% in the second quarter of 2017 to 2.7% in the second quarter of 2018. And as a result of the above, we achieved $0.9 million in adjusted EBITDA, reaching a new historical high and we believe that our operational profitability will keep on building up in the future. Overall, these results demonstrate the health of our business and we are very pleased with the continued strong growth momentum in our business. These strong results for the quarter were driven again by the outstanding performances of our mobile solution. As our core business line continued to fight in this expanding market compared with the second quarter of 2017, gross billing and revenue from mobile solution increased by 133.7% and 56.9% respectively. The robust increased not only respected the rewarding market trend from PC end to mobile and marketing audience solutions, but will also reinforce our willingness efforts to strategically shift our business focus to align with the trend and capture the rising and tremendous demand in the mobile solution space. Leveraging our early mover advantages, advances data capabilities and strong brand reputation, we have maintained our number one position in this highly fragmented market.…

Thank you, Sammy, and hello, everyone. First, I'd like to touch base on a couple financial highlights of the quarter. We are pleased to announce that for the second quarter of 2018 we achieved strong gross billings and revenue increases, as well as a record setting performance in areas such as gross profit and adjusted EBITDA. These encouraging results was achieved through a combination of confident execution of our growth strategy and a prudent cost management practices with a keen focus on the bottom line. We are executing the right strategy for our corporate development and we are confident that we will continue our strong financial performance in future quarters. Now, I'd like to walk you through our detailed financial results for the second quarter of 2018. Gross billing reached 105.4 million during the second quarter of 2018, up 86.4% from the second quarter of 2017 primarily as a result of significant growth in mobile audience solutions. Gross billing from mobile audience solutions was 88.9 million during the second quarter of 2018, up 133.7% from the second quarter of 2017 as a result of clients generating larger mobile marketing spend. Gross billing from other solutions was 16.5 million during the second quarter of 2018, down 10.9% from the second quarter of 2017 primarily as a result of the Company's strategic focus shifting to mobile audience solutions. Net revenues for the second quarter of 2018 increased by 43% to 42.7 million from 29.9 million in the second quarter of 2017 primarily as a result of an increase in net revenues from the Company's mobile audience solutions and partially offset by a decrease in net revenues from other solutions. Net revenues from mobile audience solutions for the second quarter of 2018 increased by 56.9% to $37.8 million from $24.1 million in the…

Thank you, Ma'am. Ladies and gentlemen we will now begin the question-and-answer session [Operator Instructions]. We have the first question from the line of Darren Aftahi. Please ask your question.

There's just a few if I may. Are you guys -- have you seen any change in the advertiser landscape from brands just given what's going on in the backdrop of the tariff issue between the U.S. and China?

So far we talked - I talked with the operational team. We didn't see that there's any significant change in terms of the momentum in the China market and we do see that a lot about the branding advertisers, they started to pick up the mobile advertising solution in China market instead.

And then moving on to your Business Intelligence, can you talk about how much contribution that was in the current quarter? I know probably small. And then kind of what your expectations are for contribution in the second half of the year, kind of as percentage of revenue. And then where are you seeing kind of the most activity in terms of traction with your clients?

Hello, Darren. This is Terence, SVP of Finance in the Company and I suppose you're asking the questions about our BI and our new no media related solutions. So we are currently building that and probably we may not be able to discuss exactly the sum in each transaction because we have some confidentiality requirements with our clients. But I could tell you is [indiscernible] you for a little bit, a tiny amount contribution income statement and it's not significant, but we target and our target is still at a 3% contribution to the gross product. And we may not be able to share the number at this moment, but we believe that fairly to state in the next couple of quarters, we'll see that numbers. And as probably Sammy also highlight, we are working on the new retail sector, education and also the real estate sector. So these would be the initiatives that we are building at the moment.

And then just two more if I may. I saw that you opened a Korean office with the MezzoMedia partnership. I'm just kind of curious, high-level, strategically, what other parts of Asia PAC or perhaps outside of Asia PAC can we kind of think about you strategically pursuing in the future? And then my last question is sort of two parts. One, there was a little bit of a sequential step-up in your G&A line. I'm curious what that was about and then if you have the cash flow from operations number in the quarter, it'd be helpful. Thank you.

So this is Sammy. So let me answer the first part. So yes, we just opened up our Korean office and also due to the demand, the growing needs of the international customers and international brands. They want to target precisely the Chinese outbound travelers. So I think that from the international expansion perspective, it's always our priority and we have seen that we have very successful cases in some of the sectors. For example, the duty-free industry and also the retail and also the travel industry. So I think that apart from the Korean office, we are also targeting to open up other offices. Let's say in Japan and also in Southeast Asia because those countries are the top destinations for the Chinese travelers at the moment. So I will let Terence to answer the G&A questions, right?

Darren, can you repeat, again, the questions just so that I can fully understand that?

So your G&A line in the second quarter looked like it went up a fair amount quarter-to-quarter from the first quarter. I'm curious what drove that. Was that the opening of the Korean office, expenses around that? And then what was the cash flow from operations in the quarter?

Yes. I think the G&A was growing for few reasons. Of course, like what you said, we have been putting in more resources in some of the new studies in terms of how we work in certain countries and cities. There will be some professional fees on that. And also being now a listed Company, we actually have incurred more like Vigo, audit and also compiling professional fees. And we also studying difference like initiatives. That's what we say and we are also building up some new - hiring some new talents in terms of how to build-out the strategy in terms of some particular verticals or areas that we are interested in.

And then your cash flow from operations in the quarter?

Cash flow? What's that? I can't - sorry. Can you repeat that?

Your cash flow from operations on the cash flow statement. That wasn't on the press release. I'm just curious if you had that number with you.

I don't have the numbers right now, but our cash flow from operations, I think we are in a lack in terms of that.

Thank you, sir. We have the next question from the line of Jay Li. Please ask your question.

This is Jay Li from Benchmark. Yes. First of all, congratulations on your strong quarter and this is my question. What is the take rate trend will be like in the second part of this year?

We expect the take rate will remain stable and the average Q1 and Q2 take rate, I guess, is around just 7 percent. This is on a non-GAAP basis.

Thank you. Do you have any timeline to breakeven?

I think we imagine pretty much stable in terms of gross profits over the past like two, three quarters, as you probably noticed that. We expect that the margin will still be quite stable. So on the basis that we see that our percentage of operating expense is actually dropping quite substantially from 3.8% in 2017 second quarters to right now to second quarter in 2018 to 25.9%. And that we recorded constant adjust EBITDA in two consecutive quarters and assuming that I think this momentum to assist and growth momentum with a stable margin and we can show our operating expenses in this similar lateral. We expect that the operating loss will keep on decreasing. So what I want to say is really on these basis and also on the basis that we have to invest on some new initiatives and some of the vertical solutions and we will still singular like expenses. So we expect that breakeven point will really coming hopefully in some time of next year, not really at the end of the second half.

My third question is can management share some color about the partnership with Tencent on mini apps and what format does the Company want to monetize the mini app? What kind of growth potential and any opportunities does the Company see from mini approximately?

I think regarding the mini apps opportunity, I think they will be huge. So when we analyze this opportunity, it will be coming from three areas. So the first one is right now the inventory of the mini apps have already been added to the overall pool of [Indiscernible] which is the mobile programmatic ad exchange in our Tencent, which allow a Company like us that technology platform. We can fit. There will be more available [inventory] available for a platform like us. And also the second thing, the second area will be we have already started to implement the Tencent mini apps as an important part, like an entry-level for some of the users, for some of the client. As we see that some of the clients, they have adopted the mini apps because it will be like a version of the traditional apps so that the users are more easy to get at us to their store front. And first, the [five] application of the mobile - the mini apps amount to consumer which helps to get the offline data from our clients and further enrich our data capability to realize the true Omni channel marketing in China market.

Also, any color from your newly established partnership with Baidu on new - on face app? Yes.

So the partnership with Baidu on the Native magnificent ad, it was just started early this year. I think it takes time for the operational team to take shape. So I think it just - comparing to the overall revenue of iClick, it's just like picking up slowly as a small portion. But the Native Ad market is big. It is estimated to be around $36 million market this year. I think this is an important part of our product mix and also for every single advertiser that we believe that they will be moving up from it, trends in China market.

My last question is about your overall advertising outlook in the second half. Yes. Do you see any impact on the client budget post the worker]and from the recent slowdown [practice]? Yes.

I think, as I said earlier, from the download from my operational team, we didn't see that there's any slowdown in the advertising segment because I think what we are focusing are the top sectors. For example, consumer products, travel, banking and finance. We didn't see that this kind of the services like our type of the advertisers being impacted by the current situation.

[Operator Instructions] As there are no further questions at this time, I'd like to hand the call back to the speaker for any closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact iClick's investor relations department through the contact information provided on our website.

Thank you, Ma'am. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.