Hello, ladies and gentlemen. Thank you for standing by for iClick Interactive Asia Group Limited's First Quarter 2021 Financial Results Conference Call. At this time all participants are in listen-only mode. After management prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. I'll now like to turn the call over to your host, Ms. Lisa Li, Investor Relations Director. Lisa, please go ahead.

Hello, everyone, and welcome to iClick's first quarter 2021 financial results conference call. The company's results were issued earlier today and are posted online. You can download the earnings press release and sign up for our distribution list by visiting the IR section of our website at ir.i-click.com.

Thank you, Lisa, and welcome to the call, everyone. Despite ongoing COVID-19 impact, fiscal 2021 began with a strong performance, as we reported record first quarter revenue, gross profit, adjusted EBITDA and adjusted net income. We are encouraged that revenue in our core Marketing Solutions segment reached record first quarter levels of $54.8 million, up 23% year-over-year, benefiting from continuing ad spending recovery despite some lingering effects of the coronavirus pandemic. Likewise, the momentum in our Enterprise Solutions segment also remains quite strong, as this SaaS-based revenue reached $11.7 million in the first quarter, up 166% year-over-year, and reached another quarterly record for the sixth consecutive quarter. Revenue from our higher margin Enterprise Solutions segment accounted for approximately 18% of total revenue, much higher than 13% in the first quarter of 2020, and 11%, for all of fiscal 2020. These financial accomplishments are excellent indicators that we have the proper data-driven solutions and the business strategy to help our clients benefit from the digital transformation opportunities in China.

Thank you, T.J. Hello, everyone. I'm happy to share with you our strong financial performances in the first quarter of 2021. Despite the ongoing effects of the coronavirus pandemic and an expanding market that has yet to fully recover. The first quarter financials set many with no records, including record first quarter revenues, gross profit, adjusted EBITDA, and adjusted net income. First quarter total revenue increased 36% year-over-year to $66.6 million. This growth was driven by growth in both our Marketing Solutions and Enterprise Solutions status Marketing Solutions set a first quarter revenue record of $54.8 million, up 23% year-over-year, driven by growing market demand from performance marketing campaigns. Enterprise Solutions revenue in the first quarter was $11.7 million, up 166% year-over-year and a new quarterly record, and account for 18% of our total revenue, also a new high. Gross profit grew by 47% year-over-year in the first quarter to $19.5 million, primarily due to continued growth in Marketing Solutions and rising contributions from higher margin Enterprise Solutions. Cash, cash equivalents, time deposits and restricted cash as of March 31, 2021 was $100.2 million compared to $94.5 million as of December 31, 2020. Our balance sheet remained strong to accommodate both our organic growth and M&A opportunities. We have in paid a $15 million ADS repurchase program through December 31, 2021. And as of March 31, 2021, the aggregate value of purchased share was approximately $1.1 million. For the rest of my discussion, I will focus on our non-GAAP results. You can find reconciliations of these non-GAAP results in the press release we post earlier today and which can be accessed at our Investor Relations website. Adjusted EBITDA for the first quarter of 2021 was $3.6 million, up 54% year-over-year. Adjusted net income for the first quarter of 2021 was $647,000 versus $553,000 in the first quarter of 2020 and making the sixth consecutive quarter of positive adjusted net income. Gross billings in the first quarter of 2021 was $200 million, up 27% from the period a year ago and driven by recovery in advertising spend. Overall, we are pleased with the financial performance in the first quarter and optimistic that future quarters will continue along a similar growth trajectory. For further information, please see the detailed recap of other financial measures in the press release we issued today.

Thank you, Terence. We are proud that the financial momentum established in 2020 has carried over into 2021 and expect these growth trends to continue. We are committed to growing the higher margin Enterprise Solutions segment at a rapid pace and continue to view Marketing Solution segments as the essential base revenue and profitability of the company. The online-to-offline digital transformation initiatives for many customers are still in the early stage. And we are steadfast in our result to remain the market leader for brands looking to capitalize to this digital revolution in China. Our data driven solutions can help such brand customers effectively tap into Chinese consumer behavior. We still see significant growth opportunities for both Marketing Solutions and Enterprise Solutions and continue to expect Enterprise Solutions to account for an increasingly larger percentage of total revenue. Our strategic initiatives, I discussed earlier are really focused on making this happen, both in 2021 and beyond.

Thank you. Our first question comes from Brian Kinstlinger, Alliance Global Partners. Please go ahead.

Great. Thanks so much for taking my questions. First, can you update us on the progress you're making with the Oracle and HubSpot partnership's and when you do think those might become more meaningful growth drivers to your business?

Thank you for your question. As our cooperation with Oracle and HubSpot, as I've mentioned last time, we are actively promoting the cooperation with them. And we are actively promoting the private domain solutions to overseas customers. And in Q1 this year, we've launched a specific product targeting Korean brands called our iSmartGo. And this product will help overseas customers going to the Chinese market and became part of our WeChat ecosystem. And in the future, we're going to rely on the iSmartGo to further our cooperation with these two companies. But it will take time, because it will take a rather long time to roll out this tool to more customers and make more customers aware of the functions of this product. But I believe that this tool is a very useful one for our overseas customers.

Great. Thank you.

Thank you. The next question is from Nelson Cheung of Citi. Please go ahead.

So let me translate myself. So thank you management for taking my question and congratulations on the strong solid set of quarterly results. So I've two questions. The first question is regarding your revised guidance annually. Just wonder whether the incremental revenue from the Enterprise Solution will be a driver of your revised guidance? Is it due to the growth of mid-tier clients or higher certainty on the Baozun partnership? And my second question is related to the client mix in your Enterprise Solution. Just wonder management, if you can provide more color on current mix of KA and mid-tier clients and whether you're on track to meet the 3000 mid-tier client target this year? Thank you.

Thank you, Nelson. This is Terence. And for your first question about the guidance, we revised the guidance on enterprise SaaS solutions, mainly because we see general demand is stronger than before in the market. And secondly, we also believe that some of the case that we run right now with Baozun, and some of the standardized products that we are launching to the market, hopefully would start to kick in some numbers, starting from June, so maybe sometimes earlier than our original projects that numbers maybe kicking in from the second half. So that's why we waited a bit and more like a kind of you know, showing to market that we have more confidence right now on that numbers. On the second part of the question, I think I would let T.J. to address the questions.

As to your question about our mid-tier customers, the progress and the outlook for this year? Well, in Q1 this year, we've already done a lot of work. We've been leveraging distributors to reach out to customers. And we've seen very encouraging progress. We've already acquired some early adopters who have bought standard SaaS products from us. And we also provide the operational services to them. So the initial feedback is being - is very positive. As to the revenue recognition, well, as the mid-tier customer base grows, and as these customers purchase our products, we will gradually recognize our revenue. And therefore I think that we'll see the financial contributions from mid-tier customers kicking in since - in the second quarter this year. So I think that it is highly likely that we're going to acquire 3000 to 5000 mid-tier customers this year.

Thanks very much.

Thank you. And our next question comes from Thomas Chong with Jefferies. Please go ahead. Mr. Chong, is your line open or did you mute your line?

Thanks, management for taking my questions. Can management talk about the GP margin trend for the Enterprise Solutions, as well as the merchants in terms of the number of merchants, the size of the merchants, as well as the penetration or the mix across different industry? Thank you.

Thank you for your question about the customer growth, also Enterprise Solutions. Well, this year we were focused on two directions. The first direction is we will continue to expand key accounts client base. By the end of 2020, we had a little bit over 200 key account clients. And in first quarter this year, we added another 40 key account clients. And for the whole year in 2021, we're going to upsell to the merchant to the Marketing Solution customers, as well as further cooperating with Baozun. And in this way, we are going to acquire 200 to 300 new key accounts clients. And the second direction is to sell our standard SaaS products to mid-tier customers. And this year, our target is to acquire 3000 to 5000 of them. And based on the progress we've seen, the target will be - will very likely be achieved.

Hi, Thomas. This is Terence. Let me add on your gross profit margin questions. Firstly, about our key accounts, we are still standing at relatively high margins at 60% to 65% gross profit margin. And on standardized products, we actually believe that, that it will be even better, and it could be at a 75% range. And because that is more standardized and most of R&D expenses have been you know, expense of before. So that's the current kind of a profiles of the two segments that we have. Thank you.

Thank you. Next question of Julian Cheung of ESG Bank Please go ahead, sir. Mr. Cheung, is your line open?

Yes. I'll translate myself. Congratulation to the management for the strong quarter. My question relates to our mobile marketing business. Advertising industry has been recovered from the pandemic in China and with the enlarging budgets from advertisers across verticals and they're saturating revenue growth on the publisher side. What's the management's outlook for the recovery chain and its impact upon our Marketing Solution billing and revenue in upcoming projects? And also, the launch of the deprecations of iOS 14 IDFA, will they impact our targeting accuracy and attribution and what will be our account management? Thank you.

Well, thank you for your question. I will first take the question about the advertising outlook. Yes, we've seen the recovery of advertising industry this year and many industries have seen their advertising budget getting closer to the normal level. This is largely due to the fact that the pandemic is put under well controls in both China and the rest of the world, for some industries, such as travel and hospitality, as they will see retaliatory recovery in 2021. On the other hand, some industries are subjected to adverse impacts from regulations, such as online education, and there are also some one-time events. For example, the BCI St. John cotton incident has negatively affected the advertising spending of apparel industry. But if you look at the Marketing Solution business of iClick, you will see that the revenue contributions from different industrial clients are quite balanced. And therefore, our Marketing Solutions business has been enjoying healthy growth. And this is in line with our strategy this year, that is to focus on steady and healthy growth. And in addition, this year for Marketing Solution business, we're going to focus more on developing the KOL and MCN related business. So in conclusion in 2020, the overall advertising industry will enjoy healthy recovery and our iClick Marketing Solution business will also grow steadily.

Okay. As to the second part of your question about the Apple's IDFA policy, as far as I understand this policy has had a limited impact on the Marketing Solutions business of us and there are several reasons, and also has limited impact on the advertising industry and businesses. There are several reasons. First is the Apple's market share in China is small. And for our Marketing Solution business, our exposure to Apple is around 10%, so very limited. And the second is this policy was newly launched. So it may take some time first to see whether the customers will opt out or not. Because you will require the upgrading of cell phones, upgrading of operating systems and upgrading of app. So they all take time. And this is from hardware perspective. And also from industry perspective, the advertising or marketing industry is also actively exploring alternatives around this policy. So - and as far as we understand, the app placement via IDFA is just around 10%, so very limited. And therefore we think that the IDFA policy of Apple has had limited impact on us. And so when iClick serving our customers at current stage, we rely very heavily on first-party data provided by customers centered on CDP platform, and which actually will depend on the login status of users. So this is my answer to your question.

Thank you. As there are no further questions, I like to turn the call back over to the company for closing remarks. Please go ahead.

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

This concludes the conference call. You may now disconnect your line. Thank you.