Ladies and gentlemen, thank you for standing by, and welcome to Aurora Mobile Fourth Quarter and Fiscal Year 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your host today, Rene Vanguestaine. Thank you. Please go ahead, sir.

Thank you, Amber. Hello, everyone, and thank you for joining us today. Aurora's earnings release was distributed earlier today and is available on our IR website, ir.jiguang.cn. On the call today are Mr. Weidong Luo, Chairman and Chief Executive Officer; Mr. Shan-Nen Bong, Chief Financial Officer; and Mr. Guangyan Chen, General Manager. Following their prepared remarks, they will be available to answer your questions during the Q&A session that will follow. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions which are difficult to predict and may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties and/or factors are included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law. With that, I'd now like to turn the conference over to Mr. Luo. Please go ahead.

Thanks, Rene. Good morning, and good evening, everyone. Welcome to Aurora Mobile's 2022 Fourth Quarter Earnings Call. Before I comment on our Q4 results, I would like to remind everyone that the quarterly earnings deck is available on our IR website. You may refer to the deck as we proceed with the call today. Before looking at the fourth quarter, I would like to reflect upon our journey in the past couple of years in a challenging environment caused by pandemic, what we did right, what we learned, how we came from the toughest time, and how much we can grow as an organization. I'm proud to say that we came out of the difficult times and became more resilient and efficient. Along the way, we have been constantly reviewing our overall strategy, not afraid of making necessary decisions no matter how tough to ensure we are always on the right track to long-term growth. Throughout this effort, our revenues and margins remained strong as we improved gross profit, while tightly controlling and lowering or pass. We started a fresh as a pure SAAS business in Q1 2021, a major transition period, we didn't stop innovating and harnessing our core business line, Developer Services. This really is bringing us rewards for the long run. I will give you more details later with economic uncertainty going globally. In mid-2021, we acted quickly and proactively to make our organization stronger and nimbler by enacting restructuring and strict cost management across the company. We're also glad we made these decisions, and our efforts are reflected in our financial results. Let me share some of the key results with you. Second positive adjusted EBITDA since 2021 Q4 at RMB 0.6 million. All business, including Developer Services, Subscription, Value-add Services and Vertical Applications have record…

Thanks, Chris. I would like to echo Chris' comment on our revenue trend. With our relentless effort in developing our core developer service, we see a very promising recovering trend in Q4 and going forward. Not only in Developer services, we've also seen sequential growth in vertical application revenues, especially in Market Intelligence. Vertical applications mainly consists of financial risk management and market intelligence. Vertical application revenue increased by 1% quarter-over-quarter and decreased by 11% year-over-year. In the Financial Risk Management segment, the revenue decreased by 14% Q-over-Q to RMB 12.4 million and decreased 25% year-over-year. The decrease in financial risk management revenue was due to many of our customers' consumption were impacted by COVID outbreak in November to December last year. We are not too worried about financial risk management revenue in 2023 as we believe the decline in Q4 was temporary, and we are already seeing recovery in consumption so far this year. Our Market Intelligence Services delivered strong revenue growth, up 16% quarter-over-quarter and 27% year-over-year to RMB 10.4 million. During this quarter, our revenue increased as a result of recovery in customer spending and the addition of many well-known and sizable new clients. Furthermore, our strategy of focusing on KA customers has helped us gain additional market share. The big and renowned customer that we signed up in this quarter include, among others, Tencent, Baidu, Baba, Zhongxin Securities and Sentosa. I'll now go through some of the key expenses and balance sheet items. On to operating expenses. As Chris mentioned earlier, our strategy of active and stringent cost management proved very wise, and our quick action helped us to maintain as a nimble organization. We have had another historical low quarter in terms of operating expenses. Excluding noncash impairment loss of long-lived assets at RMB 73…

[Operator Instructions] Our first question comes from the line of Brian Kinstlinger from Alliance Global Partners.

Good to see the recovery in your businesses. Can you first talk about the strategic partnership with WhatsApp in your first slide, and maybe I missed it. Can you discuss how and which segments this might drive revenue growth as you see it?

Sure. Brian, this is Shan-Nen. Based on what we have collected from our customers, especially overseas, a lot of our customers are not able to tap on to WhatsApp communication channel. Probably, as you know, outside of China, WhatsApp is huge in Southeast Asia, even the entire Asia, ex-China. So what we are helping the customer to do is they are able to -- as part of the communication channel besides the so-called push notification, they are able to tap on to the channel managed by WhatsApp to reach their users. So this is something that they are able to -- we are able to help them do, ensure that they reach the click-through rate or the usability rate is much higher. So this is something that WhatsApp is happy that we are able to help them as well to reach more customers. So along that, a lot of our customers are waiting for us to launch this new product, which is already in the market. So what we are doing is we will be able to charge our customers for the communication channel done through WhatsApp channel. And of course, with that, we need to pay a expense or cost to WhatsApp, too.

So essentially, you're going to be able to send push notifications through WhatsApp. Is that right?

Correct. So this is something that in the event that the traditional push notification doesn't get to the customers are able to use the WhatsApp channel to reach their customers.

Now for existing customers that are using push, will this drive increases in the rates they pay? Or will it just be part of the service they already get?

Yes, it will be an increase. We will charge every single push notification done through WhatsApp. So there will be additional cost to the customer, additional revenue to us.

Great. And then maybe you can talk about that ChatGPT and with your push and SendCloud, how are the services operated before ChatGPT? Was it not automated or intelligent?

No, what we're seeing is probably, as you know, AIGC is very huge for the past 2 months. So they can come up with really creative answer for whatever question that you ask. So what we are seeing is customers are asking us to see if we are able to tap on to ChatGPT's brain so to speak. Because what they are doing is they are seeing -- they really need some creative content for their push so that to improve the click-through rate. So how do they do that is they are able to use our service to tap on to ChatGPT's content creative side. So which means that for a traditional customer, they used to be having to come up with their own push content themselves, which might not be creative at all. So what they're able to do is through our service, they can ask ChatGPT to create, say, like 5 optionality in terms of content provision so that they can choose the best to suit their case. So they are able to tap on to that. And with that, they are able to send through their message with the hope that there'll be better click-through rates for that. So in a similar fashion,-- yes, for a similar fashion for the e-mail, our customer who uses the SendCloud ChatGPT link, they're able to customize, they use the ChatGPT's AIGC to come up with a template so that they can better customize their e-mail to send to their users, which will be, hopefully, at a better click-through rate and a better result for the customers. So this is something that we are seeing a lot of customers are asking for this service. And probably, as you know, these services are not available in China as yet. So we need to -- so we have a great opportunity here to help our customers to get around this issue.

Great. That's super helpful. Can you talk about the advertising market in China. I know we saw a small recovery in the fourth quarter for revenue sequentially for value-added services. So maybe talk about the trends you're seeing today in advertising and how you see that recovery in 2023.

Yes. As you see, the quarter-over-quarter, we've achieved sequential growth, which is really encouraging. But if you look ahead for the next 12 months, we still see some weakness or headwinds in the advertising space. As it is more so for us because our platform is not as huge as Tencent or the other bigger player. So I think we do not expect it to be back to, say, like 2020 or '21 level, but I'm sure will be better than 2022.

Got it. Outside of that, maybe you did see sequential growth in basically all your business lines. First, we got the holiday in the first quarter. So maybe should we expect seasonality in the first quarter in each segment. And then do you see gradual improvement in each of them. Maybe just touch on the segments. I know you don't give revenue guidance, but maybe from a high level, talk about the segment's outlook for the year.

So the short answer to your both questions is yes, yes. So yes, we do expect to see a seasonality low in Q1 because of the Chinese New Year and the holidays in the shorter month in February. That is what we expected. Going forward, yes, we do anticipate Q2, Q3, Q4 to see uptick. Going forward, as 2023 versus 2022, yes, we do expect all business lines to achieve at least a single-digit growth.

Our next question comes from the line of Kelvin [Indiscernible] capital.

I would like to ask 2 questions, if I may. First of all, of course, we have already seen very encouraging results from many aspects. Maybe the company could share with us how you have achieved these set of good numbers. That's the first question. And the second question is a follow-up on this partnership with WhatsApp and platform that -- will there be any other going overseas initiative which is on the table. And if yes, what's the progress of the other going overseas initiatives.

Okay. If I recap your question -- the first question is you're asking what are the things that...

The drivers for the encouraging numbers for last year and Q4. And the second question is more -- any more color on the going overseas initiatives?

Sure. Okay. Sure. I think if you look at the Q4 numbers, I think there are a lot of things that we have done right. So maybe I can just give you the top 3 that internally as an organization, we talk about it and we reflect it on ourselves and how -- what we have done right. And so these are the 3 things. First, I would say is staying focused so what I meant is doing what the market and customer want and do it well. So probably to note despite a very tough environment for past 2 or 3 years, we have been laser-focused on our subscription business. So we continue to develop new functionality and new features to help our customers to operate at a higher efficiency. And as well as Brian has asked earlier. So as soon as we see the ChatGPT become widely available, so we are the first to incorporate the access of ChatGPT to our customers. So this is very important. So all our customers are appreciative that we have this functionality for them. And secondly, if I think what we did right is making the tough decision at the right time. And probably as you have heard for the past couple of earnings calls, we started to reexamine our cost structure as soon as we see the pandemic is staying here longer than what we expect. So during that time, we restructured many departments internally and regrouped the few departments where possible. So in the process, we have trimmed our headcount significantly from a high of, I think, 620-ish employees in 2021 to 415 last month. So this is a very tough decision that we have to make. But if you look back, it was necessary and it was timely. And…

[Operator Instructions] I'm showing no further questions. I will now turn the conference back to Rene for closing remarks.

Thank you, Amber. Thank you, everyone, for joining our call tonight. If you have any further questions and comments, please don't hesitate to reach out to the IR team. This concludes the call. Thank you.

Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.