Hello, ladies and gentlemen. Thank you for standing by for iClick Interactive Asia Group Limited's Third 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 Third 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 will provide an overview of the third quarter of 2019, and we will also introduce Dr. Jian Tang, one of our Co-Founders, who has the dual role of Chief Operating Officer and Chief Technology Officer to give more highlights on our business and operational planning as we begin to focus on 2020, followed by our Chief Financial Officer, Terence Li, to give more highlights on the financial results and guidance. Then, we will open the call for 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 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 Chief Executive Officer and Co-Founder, Sammy Hsieh.

Thank you, Lisa. Hello, everyone.We are delighted to have you on our call today. I am happy to report that for the third quarter of 2019, our total revenue grew 27% year-on-year to a record $54.2 million. Our revenue growth came despite a 4% depreciation of the RMB against the U.S. dollars compared to the same period last year. On a currency neutral basis, the revenue would have increased 32% to $56.4 million for the third quarter of 2019, compared with the same period last year.I just want to take a moment to mention that we are still operating in a challenging environment. Yet we continue to grow our business. We still believe that the negative influences that may impact us from outside our normal operations still persist in the near-term. But I'm optimistic about the long-term growth prospects of our enterprise and in the strength and stability of our business model. We are extremely confident in our ability to execute at a high level.I would like to begin the call by conveying my excitement about our recently announced financing from Marine Central Limited and welcome Mr. T.C. Yam, the majority shareholder of Forbes Media LLC as one of our key investors. Forbes Media is one of the most iconic media companies in the world. They command a global presence on every platform, with digital content reaching 94 million unique visitors monthly, 6.4 million readers to their print publications, and an expansive social following of over 40 million touch points.We are excited about the potential strategic value and possible partnership opportunities that this relationship might afford. We anticipate potential synergies that iClick’s big data capability may be able to realize to support Forbes’ ongoing efforts to maintain its status as a leading global media company, and expand its digital footprint…

Thank you Sammy for having me on the call today. Wearing two hats at our organization affords me the opportunity to be strategic and focused on operational details as a COO while crafting and owning a product vision as a CTO. As Sammy talked about earlier, we are very optimistic that future growth is eminent and my role is to help the Company deal with the current macroeconomic environment by controlling OpEx, keeping our businesses running efficiently and maintaining our performance at a high level while also preparing the Company for future success. Our strategy is to migrate to enterprise and marking cloud platform. Ultimately, the success of the cloud migration isn't in the technical functionality, rather it’s how the client organization is able to realize the vast benefits it provides.We mainly talk about the digital transformation of various enterprises, especially as part of their smart retail strategies. The ultimate goal here is for us to provide our branded clients and partners the tools to reach and engage with the customers in a low cost, highly efficient and a personalized manner, helping them realize higher sales and profit growth. Furthermore, this transformation will help our bottom line as the higher margin enterprise solutions unit grows rapidly into our higher percentage of our overall revenue, while we continue to see organic growth from marketing solutions.Turning now to our operational execution. For 2020, we are reviewing our business in an effort to create more efficiencies by aiming toward higher margins with the goal of attending better profitability. To accomplish this, we are focusing on streamlining and exercising very stringent OpEx control. Also, we want to explore better ways to manage our cash flow. For example, we are continually working with our suppliers to obtain better credit terms as our spending increases.On our accounts receivable side, we are shortening up our days outstanding and being more selective, choosing clients with solid credit histories, just to name a few.Finally, I would like to announce that in the second half of 2019, we have established a product and innovation center to ensure our continued technology advancement and the competitiveness in the long-term. Coupled with our constant goal to reach a high level operational execution, we feel these initiatives will give us competitive advantages moving forward. And I believe that 2020 will be a fruitful year.I'm thankful for the opportunity to talk with you and to share some of my thoughts here. And I look forward to communicating further with the investment community in the future.With that, I would now like to turn the call over to our CFO, Terence Li, to review the third quarter financials.

Thank you, TJ.Despite a challenging macro environment for the third quarter, we increased revenues year-over-year to another record, while we secure financing from an investor that shares our long-term vision for success. The convertible note funding will serve to support our business and our new initiatives and we are also excited about possible synergies we can realize beyond it. We are still extremely diligent in controlling costs and achieving the best possible operating efficiencies and are always examining ways to better manage our cash flow, make our process better and focus on higher margin business, products and clients. Also, we are wholly committed and continue to execute our enterprise solutions business.The revenue from our enterprise solutions in the first quarter was relatively stable sequentially due to certain delay in the revenue recognition, but we expect a solid increase for the rest of the year. Therefore, we are confident in our ability to meet our 2019 revenue target in this area. I want to note that as evidenced by the overall results we achieved this quarter, we have substantial tailwinds driving our business and expect a strong fourth quarter.Now, I will provide the key financial highlights for the third quarter. Please note that all figures given are in U.S. dollars unless otherwise noted. Our total revenue for the third quarter of 2019 grew 27% to $54.2 million from $42.6 million for the same period last year. The increase was partially offset by negative foreign exchange impact as the renminbi depreciated 4% against the U.S. dollar compared to the third quarter of 2018.On a currency-neutral basis, the revenue would have increased 32% to $56.4 million for the third quarter of 2019, compared with the same period last year. Our revenue from the marketing solutions business also grew to $51.6 million for the…

Thank you, Terence. The long-term strength of our business is compelling and the market dynamics are exciting. Despite a current challenging macro environment, there is still significant value to be unlocked and much more potential growth.China is digital first, mobile and ecommerce first market, much of the population has never had a landline. The internet is their gateway to the wider world for content, collaboration, entertainment and commerce. As such, we continue to execute on our business model and are developing more ways to help our clients. We are also exploring other revenue opportunities through burgeoning technology and through the development of new business partnership, and will keep you appraised as they progress.Our business has sound financial metrics and a stable business model that will continue to provide steady and consistent top line growth while we continue to build out our enterprise solutions business. In the fourth quarter, we anticipate seeing a pickup in this unit as we close more business in our pipeline. Looking into next year, we project that we may be able to double our current client base, given the strength here, while we project a possible doubling of our existing revenues in this area. We look forward to 2020 as it will be a critical year as our company transitions into a platform with two unique growth business models, and our core focus will be on profitability improvement.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.

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator instructions] Your first question comes from the Long Lin of The Benchmark of The Benchmark. Please ask your question.

Hi. Good evening. This is Long on behalf of Fawne Jiang. So, congratulations on the solid results. My first question is on the marketing solutions. And so, the growth of marketing solutions reaccelerated this quarter. Can management share some color on the drivers behind it? Also, if management can talk about the macro impact on advertising environment in general and on iClick in specific going forward, and also what does the management think about the advertising outlook in 2020? That's my first question.

Hey, Long. This is Sammy. Thanks for the question. So, let me address you on the second part on the question on the macro environment first and then my team will address you on the enterprise solutions, what are the key drivers of the solution. Okay? So, for the macro environment, we have seen an improvement in spending sentiment from our marketing solutions clients, which was reflected on the acceleration on the year-on-year growth rate of our growth of our gross billing and revenue in the third quarter. Our gross billing has grown over 70% during the quarter and we also expect that the growth will continue in the fourth quarter.Looking into the fourth quarter, we project the revenue to hit $54 million to $60 million, representing 40% to 50% year-on-year growth, respectively, and we believe that also driven in part by the improved unit sentiment. In addition, we also started to see pricing stabilization and we believe that bodes well for the ad industry and of course our marketing solutions business.I would like to reiterate the healthy growth of our marketing solution remain intact as we see several factors continue to drive including the sheer size of the advertising market in China. The shift from the traditional marketing to digital advertising and the ever increased penetration rate of marketing automation, we believe there will be a large runway for us to grow, given our leading position in market and our demonstrated beta and technology capabilities, we remain very optimistic about our full year 2020.

Thank you, Sammy. This is Terence. I think, Long’s second question is just asking about our driver on our growth in the marketing solutions. So, I think as Sammy already addressed it, we see that advertising spending and the sentiment improving in the third quarter, which is really the reason why we see the year-over-year growth accelerate in both the gross billing and the revenue. And some of our biggest clients are actually choosing partners with stronger financial profiles, given the macro headwinds. We believe as a U.S. listed company and one of the largest advertising spenders in the region and also on the Tencent platform as well as others, we are receiving a lot of recognitions in the industry. So, taking advantages of current situation, and we capture more clients, especially in some of the e-commerce sectors in this quarter. So, that's why we drive our marketing solutions billing and also the revenues growing a lot. For the enterprise solutions, we look at -- basically we’re still keeping -- maintaining our $2.6 million revenue in the quarter. There is some spillover to the next quarters due to the revenue recognition, but the pipeline overall is still very strong.

Okay. Thank you. So, just a follow-up basically for the -- you said advertising spending is improving, the sentiment is recovering. So, just wondering if you see this trend to maintain -- to continue in the next year?

So, I would say that because on our revenue mix, over 90% of business are already coming from mobile advertising. And also, when our customers, they’re using our advertising platform, they are -- the performance solution, which means that every dollar unit they spend in advertising, we can help them to measure and provide them with our optimization technology. When we look at this space, on the mobile advertising and the performance advertising, we see that -- we don't have -- we are kind of like resilient to the current economy situation. So, we think that this continue will continue in 2020.

Okay. Thank you for the insight. So, also on the -- just another follow-up on the advertising outlook. So, on the demand side, you said on the supply side the pricing is stable I think. Just on the demand side, just wondering, does management expect any changing dynamics in terms of budget allocation going forward. So, I guess in the past, our clients’ budgets were mainly allocated to Tencent, Baidu. Just wondering, if management expects more budget to be shifted to other channels such as [indiscernible] kind of platforms? How would that impact iClick?

Okay. So, in terms of the sectors, I have already mentioned that we have seen that in some of the sectors have started to pick up. For example, the gaming sectors and also the ecommerce sectors, and also, in terms of the budget allocation. So, we see that iClick is platform agnostic. So, as long as we can find some advertising spaces that can deliver the KPI, the ROI to our client, we could allocate the budget to any of the publishers, the partners, connecting to our system. So, there's always like a mission for our platform to locate those inventories, the efficient -- that can deliver efficient and also results to our advertisers.

My second question is still on the enterprise solutions. I think, you said you have the companies having very strong pipeline for going forward and expect the revenue to pick up. So, just wondering, if you can give more details regarding some of the progress of the current projects as well as for the upcoming pipeline. Can you share some, like basically what are the -- how many number of projects in the pipeline right now?

Hi, Long. This is Terence. I think, in terms of the number of clients, I think we're still very confident to reach our target, on 50 by the end of this year. As for the industry focus, we are still very focused across the general retail, food and beverage and skin and beauty industry which already accumulate up to like 40 times for us during up to the third quarters right now. So, we believe that this business will be scaling up further when we go into the 2020.

Okay. Do you have any outlook for the 2020 for the enterprise solutions?

As Sammy already mentioned, we are targeting a doubling of our 2019 numbers into the 2020 on this particular enterprise solutions business.

My last question is on the international expansion. Just wondering, what's the progress in general and also the progress with the VGI. And also, if the Company can share the revenue contribution from international expansion as well as some outlook for 2020?

We are continuing to move forward with the expansion of our international footprint, as it’s almost the end of the year. So, let me do a recap on the progress of our international business. First, we announced the setup of our joint venture, V-Click, with the leading online to offline solution provider in Thailand and Southeast Asia, VGI to leverage the respective strengths of VGI's local networking strengths and iClick’s in-depth understanding of the Chinese outbound travelers. It was up and running in the third quarter, and we expect some revenue contribution, starting with the fourth quarter of 2019.Secondly, we also form a strategic partnership with Vector Group, the leading PR firm in Japan. This is a partnership with both our enterprise solutions and marketing solutions. Once again, this partnership is focused on the significant number of Chinese outbound travelers to Japan. The business consists of providing the local Japanese brands with an integrated enterprise and marketing solution. As this partnership initiated in the second half of this year, we are still working to complete the process and estimate revenue contribution to begin in 2020. I would like to point out that both the JV and partnership remain in the infancy stage, but we believe that regional diversification is the right strategic move that will significantly drive iClick's performances over the long term. In terms of the overall international numbers, so international revenue account for around like 30% of our overall revenue mix.

Your next question comes from the line as Darren Aftahi of Roth Capital Partners. Please ask your question.

Good evening. Thanks for taking my questions. So, a few if I may. Terence, back to your comments about revenue recognition on enterprise solutions. Can you just maybe clarify two things? I think I heard you on the prior call -- prior participant’s answer, you said that you ended the third quarter with 40 enterprise solution clients. One, is that correct? And then, two, on the enterprise solutions kind of delay with revenue recognition. Can you just talk through that and then maybe quantify what that impact was and kind of what gives you confidence, are you still on track to hit that $10 million number for 2019?

So, Darren, I think yes, you heard it correct. We are approaching the 40 in the quarter. So, we are relatively confident to achieve the 50 by the end of the year. And the revenue recognition basically, we will recognize the revenue when we could complete the project with our clients. So, when some of the clients are delaying some of the recognitions, then we have to follow their recognition as well. So, that's why we have some spillover to the fourth quarter. And in terms of the numbers, probably there's around like $1 million to like $2 million revenue that will basically be recognized in the next quarter according to the project completion status. So, that's why right now we have $6.8 million for the first three quarters. So, we are relatively confident to get into the 10 by the end of the year.

Maybe, then I can just kind of follow up on that, maybe for Sammy, on enterprise solutions -- and maybe for TJ as well. So, when you think about -- two things, it's early on, you’re sort of nine months in. Can you talk about customer retention or churn? And then, as you think about, I think you had said doubling clients and potentially revenue in 2020, how do we think about the enterprise solutions business as a platform with potential new modules that you may add? And anything that you've kind of or either maybe developing or you're getting inbound requests from existing clients or potential clients that you could add that could be ARPU accretive going forward?

So to answer your question, so I think so far, this is our first year of our launching the enterprise solutions. Our primary focus in terms of our strategy is as customer acquisition. So, currently, we have like 40 to 50 clients in our pipeline. So, we think that so far, our retention rate is over 100%. So, we see that in this year -- so we have to have our clients to set up the platform. So, in the next year, we will go into the maintenance stage. So, ongoing -- we are going to add more modules. For example, the CRM modules, the loyalty program modules and also some of the HR modules, which will be in synchronization with our sales and marketing modules. We are helping clients develop so far.

That's great. And then, maybe one more, on your marketing solutions, so you said growth is accelerating. When I look at the kind of year-over-year conversion of bookings to revenue, it seems like that number is declining. Could you just kind of comment on, I think the math of sort of 41% in third quarter, down to 29%, 30% in Q3 ‘19. I'm just kind of curious what's driving that and where you see that kind of stabilizing long-term?

Sorry. This is Terence. Darren, can you repeat your second part of the question?

Yes. So, when you look at sort of the bookings conversion to revenue, it looks like that percentage is declining year-over-year on market solutions. I'm just kind of curious, what's driving that. Are you guys giving bigger discounts to your customers and then maybe where does that stabilize longer term? Thanks.

Okay. I guess, you are talking about gross billing and towards the revenue ratio are basically dropping. Particularly in this quarter, you probably look at, it has some drops. I think, first of all, given the macro headwinds, we are trying to capture some of the bigger clients. And these clients are usually picking stronger partners like us. But at the same time, some of these clients, we could only recognize the revenue on a net basis. And they provide certainly lower margins to us. But, from our perspective, we still want to capture these clients. First, we want to capture the market share. Second, when we have the biggest billing and also more bargaining power in a sense that we will be able to discuss with our suppliers, ultimately will benefit the Company that we’ll able to achieve better credit terms and also be able to develop some other solutions with these clients. So, it’s more in a sense that in this headwind, we’re trying to capture more clients. At the same time, we are trying to capture bigger market share at this moment. So, that's why you noticed that there will be some drop as times goes. When we are capturing more gross billing, basically this may be happening. But, if you look at our overall gross profit actually at the end of the day, we only focus on the absolute gross profit number. So, we will hit at historical high on the gross profit total absolute number. So, that's more important for our operational standpoint.

Great. That's helpful. And if I could just squeeze one more in, I think Sammy, you said you guys or maybe TJ was that you'd launch an innovation center in second half of '19, and I know you had mentioned blockchain and AI as opportunities. I just guess, when you look at the company and the resources, you obviously have your core marketing solutions, you're stabilizing -- you're ramping up your enterprise solutions business? Do you have the bandwidth to add new products and businesses, or is this something that's more of a longer term objective that may not be impactful near term? Thank you.

I think that in our iClick lab, the research and development center, we have pretty good resources there. So, we started to develop the new enterprise solutions platform. We are trying to modulize some of our product, for example, as I said, the sales and marketing, the HR and loyalty systems. So, we're in the beginning of exploring and adopting the other blockchain technology into some of the marketing automation our platform.So, we think that blockchain technology can help to improve our platform transparency and also the data security. So, we think that our current like R&D resources will be good enough for us to explore further -- next station of the product development.

This is Terence. Also to add on Sammy's remarks. Basically, the new innovation center from TJ’s standpoint, right now, it’s more first on organization structure changes that we’re trying to consolidate more of our tech team and also resources into a single interface, and at the same time to do more R&D in different new products and new solutions. At the same time, we’re also sourcing and trying to find some good partners. For example, in the blockchain and some technology sectors, we’re trying to partner with some of these innovative companies and then to launch certain solutions that would fit to our client base. So, that's more the objective and the organization structure right now. So, it's not like that we are building a whole brand new R&D center. So, I think, it probably may adjust some of the issue in terms of resources questions.

Your next question comes from the line of Bo Pei of Oppenheimer. Please ask your question.

So, for the marketing solutions part, we mentioned trending environment and then we also mentioned we saw strength in the games and ecommerce verticals. So, other than games and ecommerce, do we see strength in other verticals? And is there any other verticals that you’re kind of lagging behind? And that's my first question. And then, the second question is about our enterprise solutions. So, for the enterprise solutions, can you just comment on the competitive landscape on this business? So, when our sales go out and try to get business, what are the big competitors out there, and then, what is our strength there? And then my third question is, we mentioned something around the initiative around blockchain. Can we also comment on the opportunity we see there? Thank you very much.

Hi, Bo Pei. This is Terence. And on your first question, just judging from some of the numbers that I have on the vertical, basically, overall in this quarters, most of our verticals are growing because you look at our gross billing number and growth in terms of revenue. But, in terms of some of the sectors that are little bit lagging behind, like auto and petroleum a little bit lagging behind and some of the logistic companies used to work with us are also a bit lagging behind. So, for other sectors, like the ecommerce, food and beverage because are highly related to the smart retail and basically they are growing quite well and also the gaming, entertainment as Sammy also just addressed in his remarks that basically are recovering quite substantially in this quarter. So, then I will pass the questions to Sammy for questions two and three.

So, in terms of the competitive landscape, so what we are working on with our clients will be coming from two parts. One will be some of those multinational clients. So, for those multinational clients, we are just building layers on top of the existing enterprise solution, so that they can build software and mini programs and also the communication connection with WeChat. And also we provide a data and also analytics layer. So, those customers can access some of the market sales and marketing data through our system. And then, the second part of our customers are those like start-up and also new type of companies. For this type of customers, it will be much more easier because those customers, they don't have the legacy our systems. So, which means that we are building everything from scratch to build up the mobile commerce platform for them. And also on your third question on the blockchain technology. So, I think right now we're still in the very early stage on like exploring the adoption of the blockchain technology in the advertising and marketing and automation. So, we see that the blockchain technology can help us in like many funds. For example, they can help us to improve our data transparency in our platform and also they can help create confidence to our customers that the data will be more secure transferring to our platform.

Your next question comes from Nelson Cheung of Citi. Please ask your question.

I have a question regarding your investment strategy going into 2020. Given there are a number of initiatives including internationalization, innovation technology and growing customer base, can management share its thoughts on how would you rank or prioritize your investment priority of these initiatives going into 2020? And I have a follow-up question regarding your resource allocation. So, how would your investment affect your resource allocation that is going to be translated in OpEx such as R&D and S&M that would impact your margin trend going into next year?

So, in terms of the investment strategy and resources allocations, I think first and foremost, actually the international expansion would be some of the low hanging fruit for us because we already established some of the really good partners and also established some of them are really good locations in Southeast Asia. So, we believe that all these investments would be able to turn into certain revenue and also contribution to business quite eminent immediately. And in terms of innovation center, as I also addressed it to Darren basically, right now is more on organizational structure changes, and that we’re trying to consolidate more resources into the R&D with the team together. So, it’s not like that we are taking a lot of extra resources to build a new R&D center. So, in terms of the overall investment strategy, I think we always look into some innovative and new products that would be meeting our customers’ need in terms of all the marketing and enterprise solutions. So, we will also be looking, from time-to-time, the right targets that will be able to help us to reinforce the new enterprise and also marketing solutions business.

And there are no further questions. I'd like to turn the call over to Lisa for closing remarks.

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

This concludes this conference call. You may now disconnect your lines. Thank you.