Hello, ladies and gentlemen. Thank you for standing by for iClick Interactive Asia Group Limited's First Quarter 2019 Financial Results Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Lisa Li, Senior Manager of Investor Relations. Lisa, please go ahead.

Hello, everyone, and welcome to iClick's first quarter 2019 financial results conference call. The company's results were issued earlier today and are posted online. You can download the earning press release and sign up for our distribution list by visiting the IR section of our website at ir.i-click.com. Sammy Hsieh, our Chief Executive Officer and Co-Founder, and Jie Jiao, our Chief Financial Officer will provide an overview of the quarter and then we will turn the call over to Q&A. 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 20-F 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 unaudited non-GAAP financial measures. iClick's press release contains a reconciliation of the unaudited non-GAAP measures to the most directly comparable unaudited GAAP measures. I will now turn the call over to our CEO and Co-Founder, Sammy Hsieh. Sammy, please go ahead.

Thank you, Lisa. Hello everyone, and thank you for joining us today. We had a good start to 2019 with strong first quarter results despite a challenging macro environment. In addition to making significant progress with our Enterprise and CRM solutions, we achieved another quarter of record high gross profit and generated substantial growth in adjusted EBITDA. 2019 marks iClick’s 10th anniversary and reflects on all the hard work to get us to this point. I am proud of what we have accomplished and excited about the company’s prospects as a fully integrated CRM and Marketing Cloud Platform. Terence will discuss our financial results in greater detail later in the call, but I would like to point out that generally speaking, our results in the first half of the year are historically, seasonally slower than the second half. This year, this seasonality has been compounded by extraordinary macro forces. That being said, I am very pleased with the robust performances we achieved and the traction we have made with our Enterprise Solutions business which I will now discuss. You may have noticed that in our earnings announcement, we broke out reference for our Enterprise Solutions and Marketing Solutions business for the first time. As you may recall, we launched the strategic growth initiative to provide SaaS-based Enterprise Solutions last year. The change in our reference reporting is reflect our progress in moving beyond the Online Marketing business as we have begun to generate solid contribution from Enterprise Solutions business. We took a big leap forward in Enterprise Solutions earlier this year with the acquisition of a controlling interest in Changyi, a leading independent software vendor that provide smart retail and CRM solutions with the capability of consolidating online and offline customer data. China is an inflection point with more offline…

Thank you, Sammy, and hello everyone. I will start with a few key financial highlights for the first quarter. Please note that all figures given are in U.S. dollars unless otherwise noticed. During the quarter, revenue growth was solid. We generated another gross profit record and adjusted EBITDA improved both year-over-year and on a sequential basis. Importantly, we made significant progress in our Enterprise Solutions business which positions iClick for continued growth this year and into the future. As Sammy mentioned, given the importancy of our Enterprise Solutions business to the company’s future, we are now working out our revenue results between two areas. Marketing Solutions, and Enterprise Solutions is to provide you with a much better indicator of our ongoing evolution and how we are now looking at the business internally. We will no longer be providing revenue result for Mobile Solutions and other solutions in our earnings release, because Mobile Solutions always get a dominant 90% share of our marketing budget now and we expect that we will continue to grow and stay at a very high percentage. Total revenue grew 11% in the first quarter to US$39.2 million, from US$35.2 million last year despite of continued weakening of the Renminbi which negatively impacted the top-line, excluding the foreign exchange impact we could see how we grow trend in our top-line, on a currency neutral basis, total revenue ended increased by 19% to US$41.8 million. Revenue from marketing solutions grew to US$37.8 million for the first quarter of 2019, up 7% from US$35.2 million for the first quarter of 2018. On a currency-neutral basis, revenue increased by 15% to US$40.4 million for the first quarter of 2019, compared with the same period last year. Additionally, we generated US$1.5 million in sales from our new Enterprise Solutions business. As…

Thank you, Terence. We are proud of our accomplishments in the first quarter, especially the progress we have made with our Enterprise Solutions business. In our 10th anniversary year, iClick will continue to move forward to become a fully integrated CRM and marketing cloud platform which has been a long-term goal for the company. There are tremendous opportunities for our company and we are in a solid position to continue to grow our business and take market share. This concludes our prepared remarks. Thank you for joining us on today’s call. We will now open the call to questions. Operator, please go ahead.

[Operator Instructions] Our first question comes from the line of Fawne Jiang from Benchmark. Please ask the question.

Hey, Sammy, Terence. Thanks for taking my questions and congrats on a very solid quarter. My first question is actually regarding the gross margin or gross profit. It has been on a very positive trajectory. Just wonder whether you can elaborate on the drivers behind it as a more, in particular I think the margin, the different margin profile for your Marketing Solutions business and Enterprise Solutions front? And secondly, in relate to that clearly you had made a very solid heavy Enterprise Solutions part. Just wonder whether you can give us with more color on the pipeline in the coming quarters and how should that shape up into the guidance of second quarter and from a second quarter as well as for the full year? That will be helpful.

Okay, thanks for your questions. So I will let Terence to answer the gross margin question first and then I will address the second part on the pipeline and also a number of customers sign up on the Enterprise Solutions so far. Okay, Terence, can you give some color on the margin profile question?

Okay. I think first of all, we do see a better gross profit margin percentage in the first quarter, because we do have a good start of the Enterprise Solutions and also the sales of some high margin marketing products which is a result of our strategy and the effort of teams to really focus on high margin business both in the Marketing side and also the Enterprise Solutions. Right now, the Enterprise Solutions to share around 70% up in terms of the gross margin at the moment and this is basically a really good heads up for us and for the Marketing Solutions, we do improved that to a range of like 26% to 28% and because we are focusing on some proprietary kind of traffic and also some applications that we get from like exclusive right to sell. So basically, that makes up much better in the first quarter of the margin.

Okay. And also in terms of our customers sign up, so as we mentioned in our previous conference calls, so we want to focus on upselling our current like iClick customer database. So, we want to focus on those top-tier multinational customers, those like big names. So far in Q1, we have signed up ten big key customers so far and also we have over like 10 customers in the pipeline.

Got it. In your results about for the each project, I just wanted to get it in more – of the, I guess the nature of the project, like what’s the timeline you normally see from your sending out to customers, versus the development stage as we move into the launch and also how typically these projects are in economics. Currently, whether do you see any opportunities in terms of increase the size of the contract going forward, as well as if you could tackle other richness of the contract going forward?

Okay. Thanks, Fawne for the question. I think at this moment, so we are targeting those multinational customers. We need to do a little bit of the customization at the moment, because every single big customers they have their own internal system. So, but from the signing and from the launch, it would take us around 30 days to 45 days for the launch. In terms of the charging model, we will charge our clients upfront on a seller fee and then we will charge our client on the maintenance fee and then the maintenance fee will be like based on one year contract terms. We do see that all these clients so far we have signed up they are highly recurring, because we are owing the data and also all this software. So which means that, all our clients they have to stay with the system in operating their mobile commerce business.

Hi, this is Terence.

Got it.

And just to add on a bit to what Sammy said and basically, I think on the first couple of contracts or the accounts that we file, right now we do have some initial fee recognition and we also have some remaining completion, development fees and we amortize over the course of the counter filing. So we will be able to recognize substantial or more than 50% of the contract at the beginning and then there would be – some would be like amortized over the course of the year.

Got it. Terence, also a quick follow-up there, for your annual guidance US$200 million to US$220 million, what is the potential breakdown of your Marketing Solutions versus your Enterprise Solutions here? What are you looking for?

We still reiterate the guidance. I think since last quarter, we’ve been like communicating with the market that we will be able to compete like 5% plus revenue of the whole pipe on Enterprise Solutions. So we are still targeting to compete a US$10 million US$15 million up revenue and given the tractions that we have right now, we are still having like a competency to go into that number.

Very helpful. I’ll go back to the queue. Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Darren Aftahi from ROTH Capital Partners. Please ask your question.

Hey, good morning. Could you start with the, just kind of the backdrop on the Marketing Services business. Just how much sort of risk have you factored into your current revenue guidance right now in terms of just kind of what’s going on in the general economic environment?

Thanks, Darren for the questions. So, I think we do see that some impact from the macro environment, especially with uncertainties associated with the U.S. and also the China trade war, I think hurts little bit of our macro sentiment. But we do see that we are in a very good positioning, because what we are offering to our client at a certain level performance space or marketing, which means that while the marketing budget they spend which will be tying in with some kind of results we are bringing to our clients. So in that sense, we think that on the Marketing Solution part that will be kind of resilient to the slow economy.

And just to add on Sammy, Sammy’s statement, I think on our usual experience, we usually see stronger seasonality into the second half of the year and right now, I think we still believe such trends will continue and expect the momentum to gradually improve in the second half with better visibility now that especially from some of our clients that we could see some of them holding off some budgets. But we expect that to see them gradually picking up and also landing in the second half of the year and we also see some new verticals s and verticals that have been less impact from the macro including some of the consumption of products, application, luxury brands that we work with and still we maintain relatively stable growth as of now. And just I want to highlight also that I think we have a very good start or have start on Enterprise Solutions. So we are possible to seeing that there would be also some more ramp into the second half of this new solution and report its contributions. We are still maintaining the full year guidance at the moment based on all the conditions that we could assess.

That’s helpful and just one more if I may. On your Enterprise Solutions business, could you talk about which verticals you are sort of seeing traction with in terms of current business and then, as you kind of look at your pipeline and perhaps a little bit farther down for the year, which verticals are you seeing traction in terms of business today versus kind of business in the next six to 12 months?

Currently, we are focusing a couple of the industries. So the first one is, the cosmetic products, because we see that for the cosmetics products they are kind of like – we do have any of the impact no matter how good or how bad the economy is and the second one is we target at those traditional retail, because given the current situation, so all this traditional retailers, they need some help to transform their offline business into more like a mobile business, so that they can improve the efficiency. And also now we are focusing on those like food and beverages. So we think that this three categories, industries will be our core focus in the upcoming 12 months.

And just last one for me. How much stock did you buy back in the quarter?

Okay. I think, we start some of the buyback programs in the first quarter. But we are very careful always in using our cash. Our power is still on doing our business and funding our new business. So, I would tell as of today, the money that we spend on the buyback is still less than US$1 million in value. So that’s the latest condition. But we view the market conditions and also the regulatory kind of requirements from time to time to decide the execution strategy.

Great. Thank you.

Thank you. Our next question comes from the line of Bo Pei from Oppenheimer. Please ask the question.

Good evening, Sammy, Terence and Lisa. Thanks for taking my question. Just two questions. So the first one is just a bullet on the macro issue. So, you mentioned the macro weakness in 1Q and then in the first half of the year, is there a court auctioner you work with or is it just related to some specific channels, the marketing platforms you work with? And then, you also mentioned you see some customers switching their advertising budget to the second path. How, I mean, your guidance also implies reacceleration in the second half. So, could you just talk more about how, what gives you confidence that revenue growth will accelerate in the second half? And my second question is on the sales and marketing expense. It seems in 1Q actually expenses are little bit more than I thought and then could you just talk a little bit about why you spend in specifically related to Enterprise Solutions business? Thank you very much.

Thanks for the question. So, as I mentioned previously, we do see that there are some slowdown in the macro environment. Some clients maybe more cautious on the new product launch, but some maybe eager for more cost-effective performance marketing solution, the performance marketing. Some of the brand new customers, they are still really expecting to spend their regular budgets. But under such market condition, performance marketing solution as we have seen maybe able to gain more budget from the traditional marketing dollars from certain clients. And also our product position on CRM solutions which focus on helping customers to monetize internal targets is also expected to get more attention. So, I think that iClick is sitting at a relatively very favorable position on all this. But we will try to focus more on those high margin business and existing clients relationships and lower risk. So, therefore, we reiterate our full year guidance at this moment. Also to add a bit color, I think from our experience, close to 20% completion in our first quarter and then add up like a 45% completion in the second quarter would always make up to the 100% numbers that we want. So that’s why we do have some confidence at the moment to give up some of the gap and also because of the ramp up of the Enterprise Solutions that we believe that that we are at a achievable target at the moment. Bo Pei, and on your second question, you basically ask about the increase in the operating expenses, right? So, I think in my remarks, I also explained a little bit that we do invest more in terms of higher sales force and also more marketing dollars and mainly it’s on the new Enterprise Solutions, but also on some of the new Marketing Solutions that we also are growing. For example, like the KOL networks and all these new business and right now, our headcount increases to close to 700 people. We do lead to invest a bit upfront, but I could say that, basically, this is relatively stable from now on from this quarter on this expenses basis. And on the basis that our ramp up of the gross profit, we are still be able to help us to overcome these increasing expenses in the quarters that are coming in.

Got it. Got it. Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Nelson Cheung from Citibank. Please ask your question.

Hi, management, thank you for taking my question and congratulations on the solid results. I have a follow-up question on the overall segments in China markets. So, actually during the first quarter results, we see that many peers are talking about some sentiment going in 2019. So, how the management see the overall sentiment in the entire year? And do you see any specifics for the quotes of your clients that you believe that will continue to be mostly impacted from the current headwinds? And do you expect them to recover in the second half? And one more follow-up question on the Q&A. Just now you mentioned that there are some industry verticals is picking up. Is it from the top five verticals you mentioned last quarter? And my second question is regarding the joint venture with VGI. Can you share or elaborate more about what brand verticals you are actually targeting? And in the long run, how many brands you want to target or address and okay, how can iClick can share its experience in taking into these opportunities in Southeast Asia markets? Thank you.

Thanks, Nelson, for all the questions. So, let me address your questions one-by-one. So, for the first one, about the soft sentiment in 2019, right? So, I think, as I have mentioned that we do see that the macro uncertainty, which impact some of the marketers sentiment. But I think that, iClick we did very good job in working very closely with our existing clients to ensure that healthy growth in the first quarter. And looking ahead, we remain cautiously optimistic by the stable growth from the Marketing Solutions and expecting faster ramp up of our Enterprise Solution into the second half. At the end of our last year and early this year, we have seen the growth rate of spending slowdown from some of our gaming, e-commerce clients. However, we do expect certain level of recovery from this vertical going into the second half especially those industries I mentioned, for example cosmetics, some necessities like consumer products categories. I do see that they could be ramping up fast in the second half of the year. And also regarding your questions on the JV where our partner VGI in pilot. So far, they are more than like 20 brands across different verticals including luxury, fashion, skin care, fast moving consumer goods, which have already expressed strong interest in our cross-border innovative marketing solutions to target the huge number of Chinese outbound travelers. As we have previously addressed, we will leverage our in-depth insights of more than $800 million of the Chinese outbound travelers and our leading marketing technology. Together with VGI’s strong network and resources locally, we help the local brands in Thailand to reach out and unlock the great potential from Chinese travelers. So based on the Chinese government, the one belt one road strategy, we hope to leverage the China’s expertise and also our internet big data capabilities, iClick capabilities which can help – we can work for the neighbors in Asia more closely. Thailand is our first of our Southeast Asia strategy. There are also neighbor countries which are also the top destination of the Chinese travelers and the Thailand experiences should help us to duplicate the business model and expand into other countries quickly in longer term. So I hope, I answered all your questions, Nelson?

Thanks, management. That’s very helpful. Thank you.

Thank you. As there are no further questions, I would like to turn the call back to Lisa Li for 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. This concludes today’s conference call. You may now disconnect your lines. Thank you.