Ladies and gentlemen, thank you for standing by. Welcome to the Aurora Mobile Q3 2018 Earnings Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] I must advise you that is conference is being recorded today Tuesday, 20th of November 2018. This call contains forward-looking statements. These statements are made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as grow, expect, anticipate, future, intense, plan, believe, estimates, confidence and similar statements. Among other things to be such outlook acquisition from management in this announcement as well as Aurora Mobile strategy and operational plans contains forward-looking statements. Aurora Mobile may also -- may return our overall forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Aurora's Mobile beliefs and expectations are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements, including, but not limited to the following, Aurora Mobile's strategies, Aurora Mobile's future business development, financial condition and results of operations. Aurora Mobile's ability to attract and retain customers, its ability to develop and effectively market data solutions and penetrate the existing market for developer services, it's ability to mention or enhance the spread, it's competitions with current or future competitors, it's ability to continue to get access to the mobility in the future, the laws and regulations relating to data piracy and protection, general economy and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these or other risks is included in the company's filing with the Securities and Exchange Commission. Up information is provided on this call is as of today and Aurora Mobile undertakes no duty to update such information except as required under applicable law. Thank you. I'd now like to hand the conference over to your first speaker today Mr. Weidong Luo, Chairman and CEO. Please go ahead, sir.

Thanks, operator. Good morning and evening to everyone on the call and welcome to Aurora Mobile's Q3 2018 earnings call. And we are really pleased to share with you another quarter of very strong financial and operational results. To kick off this call, I would like to take this opportunity to share with you on very few operating data in this quarter. Firstly, the number of the mobile apps utilizing at least one of our key services or accumulated applications increased to approximately 991,000 as of September 30, 2018 from approximately 648,000 year-over-year. Secondly, accumulative SDK installations have increased to 17.4 billion as of September 2018 from 9.9 billion year-over-year. [indiscernible] the number of monthly active unique mobile devices recover has increased to 1.03 billion in September 2018 from 739 million in September 2017. Less rate in the fourth quarter of 2018, we have seen the number of customers increased to 1,877 from 1,311 a year ago. With another quarterly [indiscernible] growth of this operating beta, the total revenue for Q3 2018 were RMB196.9 million, which represents an increase of 116% year-over-year, an increase of 19% quarter-over-quarter. Now, let me show more on each of our business lines. First is [indiscernible] business. We turned [indiscernible] amount end of September 30, 2017 and [indiscernible] amount end of September 30, 2018. Our revenue from developer services increased by 51% from RMB10.4 million to RMB15.7 million, which was mainly due to the growth in a number of customers from 804 to 1,170 year-over-year. Second, on our data solutions business lines, during that same period, our revenue from developer services increased by 124% from RMB80.7 million to RMB181 million. The 124% growth was primary due to the increase in both the number of customers and increase in average spending per customer. For targeted marketing…

Thank you, Chris. For the other vertical data solutions, let me remind you again, which consists of market intelligence, financial risk management and location-based intelligence. The combined revenues have increased by 253% from RMB6.2 million to RMB22 million year-over-year. This was mainly due to the increase in both the number of paying customers and the increase in average spending per paying customer. We see strong growth across all three product lines as we continue to expand our customer base into these industry verticals. For financial risk management, major customer wins during the quarter improved leading consumer financing companies such as 360 finance [indiscernible]. These are all multiple million RMB deals. For market intelligence products, similar to what we have observed in the second quarter, we continue to see strong momentum in the investor community with more than half of the new contracts signed in the quarter are coming from [indiscernible]. We see very strong performance quarter-over-quarter in terms of revenue growth. Within item business, third quarter new business wins are mostly with real estate, automotive, tourism and the retail customer, notable customers include [indiscernible] Tourism Bureau, [indiscernible] as our repeat customer for fifth time. Now Shan-Nen will share with you our highlights.

Thanks Fei. With the revenue growth that Chris and Fei have shared let me further the discussion on the other items on the P&L. Gross margin for the Q3 2018 has increased to 27% from 25.3% a year ago. In terms of your earnings fee, our gross profit has increased by 130% to RMB53 million. Total operating expenses has increased by 76% to RMB78.9 million year-over-year. In particular, R&D expenses has increased by 93% to RMB37.2 million. Selling and marketing expenses has increased by 38% to RMB24.2 million. G&A expense has increased by 113% to RMB17.6 million. And during the third quarter of 2018, we have recorded interest expense of $2.5 million, and this is offset by government grants recognize of $5 million and changes in liability measure at fair value of RMB12 million. And as a result, the year-over-year net loss has decreased by 63% from RMB23.3 million to RMB8.6 million. On the adjusted EBITDA basis, it has decreased from negative RMB18.5 million in Q3 '17, negative RMB11.1 million in Q2 '18 to negative RMB6.9 million in this quarter. On to the balance sheet items, the total assets, the total current assets have increased from RMB293 million as of 12/31/2017 to RMB888 million as of 9/30/2018. The key current asset items as of 9/30/2018 are cash and cash equivalent of RMB681 million [indiscernible] of RMB132 million, prepayments and other assets of RMB73 million. Total current liabilities have increased from RMB117 million as of 12/31/17 to RMB180 million as of 9/30/2018. The key items include accounts payable of RMB25 million, differ revenue of $59 million, accrued liabilities of $92 million. And as of 9/30/2018, we maintain a healthy level of working capital of RMB708 million. And looking forward, we expect the revenues for the Q4 2018 to be in the range of RMB215 million to RMB220 million, representing a year-over-year growth of approximately 92% to 96%. And this concludes the management presentation of the Q3 2018 results. Back to you, operator.

[Operator instructions] Our first question comes from the line of Thomas Chong from Credit Suisse. Please go ahead.

Hi, management, good morning. This is [indiscernible] on for Thomas -- speaking on behalf of Thomas. I have three questions for management. The first question is about the comment the management has already mentioned the macro economic situation doesn’t has a lot of negative impact on the business. Can we get some color for 2019 outlook from the management? The second question is that can we have some color of breakdown on the other vertical data solutions business? We recognized that there are -- our strong growth for three segments, but we just want to know if we have any color on the breakdown for these three segments? My third question would be any new development inside of the data solutions business? If management can share some of the new initiatives, that would be perfect. Thank you.

Yes, I’ll take the first question. So, yes, so far given the macro economic impact, so currently, actually we didn't see any impact to our business because we are basically focused on performance based advertising. So basically at current stage, the customer will like to value our service to reduce their user acquisition costs. So I mean in -- as we have given the guidance in Q4 revenue guidance is within the range of $215 million to $220 million. So currently we don't have exact number of -- I mean, 2019 guidance, but we will still see very strong growth next year.

Yes, regarding the second question, the breakdown of other data solutions, actually we don't really breakdown those three data solutions given the scale of those three add-on together is $22 million, right? It's not building now for us to do further breakdown. But what I can tell you is quarter-over-quarter, they have shown very nice growth.

Yes, so for the third question, so with other data solutions -- development of other data solutions, currently we -- yes, currently, we are very pretty much focusing on other verticals in particular in the target marketing services. So we are very good at finance and entertainment and media verticals when we started target marketing business. And as I mentioned, the other verticals, which includes the gaming and e-commerce and education and currently accountable 20% of mix of the targeted marketing revenues. So we are very focusing on develop those verticals. So I give you some color of other verticals, which we are very [indiscernible] in Q3. So for example, the e-commerce verticals, we have new customers like LGG. For the gaming verticals we have our customers like [indiscernible], we have [indiscernible]. For other customers like the [indiscernible] they are all new customers, which are now categorized in other verticals in our targeted marketing data solutions. So we are -- I think, we are doing very good expand to other verticals.

Thank you. Thank you management. This is very helpful.

Thank you for your question. [Operator Instructions] Your next question comes from the line of Piyush Mubayi from Goldman Sachs. Please go ahead.

Thank you for taking the call and congratulations on good numbers. I know in the past we talked about supply side platform and how that was going to progress through the rest of the year and into next year, as well as the plan that you have for micro loans and credit businesses that you were proposing. Could you just run through those and tell us where we stand and what the timeline could be for revenue contribution to materialize from those two lines of businesses? That's the first question. The second is just going through your cost lines. And just -- if you could just share some color on your proposed spending on R&D, which is one of the factors you can control? And second, how do you plan to run sales and marketing as a percentage of revenue through the cost of the rest of the year? And potentially any lies on a path to profitability? Those are my three questions. Thank you.

Yes, I'll -- like to take the first question. So data progress of our target marketing, the SSP are related to -- by the SSP platform. So in the Q3, actually the infantry contribution for our own SSP now accounting from 1% to 2% right now. So we see the [indiscernible] is currently very separating to our new platform, but we are still training the systems, training the economic model. So we will see strong growth in the coming several quarters, I think, yes.

Piyush, the second question, are you asking about our consumer products for the micro lending? For that business, actually the revenue contribution is very stable. It's still about 10% of our total advertising revenue.

Yes, so for the R&D spending, actually the fourth quarter, we are going to be have a slight increase from the third quarter. It's not going to be a significant increase because basically it was at year end, as you know, actually it's very difficult to hire talent, so most of the hiring will probably concentrated on the first quarter, next year, after Chinese New Year. So you will see more R&D increase in the first quarter, it was the end of first quarter and the second quarter next year. Yes, this is a very difficult in China. And in terms of the profitability, actually, we are still looking at next year's second quarter or the third quarter, I think, in the mid next year, we look to non-GAAP EBITDA basis, we are looking to be profitable or breakeven.

[Operator instructions] We have a new question from the line of [indiscernible] from Goldman Sachs. Please go ahead.

Hello management, thanks very much for taking my questions, it's Windy from Goldman. Two questions from me, one is follow-up from what Piyush asked about the sales and marketing spending budgeting. So just want to clarify what is our, probably, the long-term how we think about budgeting sales and marketing as a percentage of revenue going forward. And third question is about share repurchase plan. We announced today up to $110 million. So just like to probably, can you share more color on the share repurchase plan and whether this plan is get back to carry forward or recur in the future? Thanks

Yes, so actually, why don't I give you the guidance for the entire operating expense. We are looking to pretty much go into next year, I think, we are looking at about 28%, 29% of the total revenue, okay. So that's actually the number we are currently calculating from our own internal model, how I look at it. And so if you have to -- the historical number for the 2018, I think, you can pretty much follow, if you want to do the modern and you have followed the historical number, and that is quarter-over-quarter growth number to run the model to do the forecast. You can breakdown it in each quarter.

Yes, I guess what the share buyback we announced to date is for six months. And I guess this is up to total of $10 million. And with your question, whether we'll do it again, I guess, you will see how we go in the first six months. And yes, I guess, we will not have any decision right now in terms of where we will be whether we will be recurring. I guess you'll just see how we go for next six months.

Thank you for the questions. [Operator Instructions] We appear to have no more questions from the phone line. I would like to thank all participants for joining. That does conclude the conference for today. Thank you, and goodbye.