Earnings Labs

Aurora Mobile Limited (JG)

Q3 2023 Earnings Call· Thu, Nov 16, 2023

$6.89

-2.68%

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Same-Day

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1 Week

+7.41%

1 Month

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Transcript

Operator

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Aurora Mobile Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instruction will be given at that time. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Rene Vanguestaine. Thank you. Please go ahead, sir.

Rene Vanguestaine

Operator

Thank you, Michel. Hello, everyone, and thank you for joining us today. Aurora's earnings release was distributed earlier today and is available on the IR website at ir.jiguang.cn. On the call today are Mr. Shan-Nen Bong, Chief Financial Officer; and Mr. Guangyan Chen, General Manager. [Operator Instructions]. 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 statement 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. Bong. Please go ahead.

Shan-Nen Bong

Analyst

Thanks, Rene. Good morning, and good evening, everyone. Welcome to Aurora Mobile's 2023 Third Quarter Earnings Release Call. And for all our callers and listeners today, I wanted to let you know that our CEO, Chris, is on business trip at different time zone, plus is not available to attend the call today. And we -- in Chris absence, I should have the privilege to share with you all on the great quarter that we have this quarter. And before I comment on our Q2 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. I refer to this quarter to be a great quarter for a number of reasons. And here, I would like to categorically go through the great things that we have achieved this quarter. Firstly, 2 of our business lines recorded sequential revenue growth in each of the 3 quarters of 2023, where developer subscription revenue grew 15% quarter-over-quarter. Vertical Applications revenue grew 6% quarter-over-quarter driven by Financial Risk Management revenue, which grew 11% quarter-over-quarter. Secondly, our gross profit in absolute dollar terms also grew in each of the 3 quarters in 2023. Thirdly, we achieved yet another lowest OpEx in history in this quarter. Last but not least, we achieved adjusted EBITDA positive in this quarter. Therefore, this quarter has been great operationally and financially. And next, I'll spend more time to share with you on various aspects of the business. For our total group revenue, we achieved positive growth of 1% quarter-over-quarter. Now let me go through our different revenue stream. Developer Service revenue decreased 10% year-over-year, mainly due to the weakness seen in the value-added service, offset by the 12% growth in…

Operator

Operator

[Operator Instructions] Our first question comes from Calvin Wong with Spica Capital.

Calvin Wong

Analyst

I would like to ask few, if I may. First of all, congrats on your great Q3 results, it seems that the positive adjusted EBITDA has come earlier than we have discussed last quarter. So appreciate the management can share more how this is achieved and whether we will continue to see positive adjusted EBITDA going forward. And second question is about EngageLab business. It is great to see that you have signed up more than 100 overseas customers with more than CNY 10 million contract value within the year. So with this, I would like to hear from the management how do you go about expanding this EngageLab business outside of China? And how you managed to make such enroll in overseas markets. So two questions. One on adjusted EBITDA and, two, EngageLab business.

Shan-Nen Bong

Analyst

Sure. Calvin, thanks for your question. Okay. Yes, you are right. We are very pleased to turn adjusted EBITDA positive in this quarter earlier than we have expected. In a very high summary level, it's a combination of where we drive the high-margin revenue business. We grew the gross profit and we tightly control the OpEx. I can elaborate more. So on the revenue front, as I touched on earlier in the ER call, both our Developer Subscription business and Vertical Application business recorded consecutive revenue growth in each quarter of 2023. And these are the high-margin business with gross margin in the range of 75% to 80%. And the Developer Service Subscription business are doing well, where we recorded both ARPU and customers growth quarter-over-quarter. And in particular, in this quarter, we completed a number of private cloud projects, which helped on the revenue growth. And similarly, for Financial Risk Management, we also had ARPU and revenue growth sequentially. And with the growth of this high-margin business, as a result, our gross profit grew as a result. So as for OpEx, we have another historical low OpEx at $60 million in Q3. So with the growth in revenue, and we managed to reduce the OpEx and eventually, the number just turned out to be a positive adjusted EBITA. And on the question for Q4 and beyond, I guess, typically, we don't give any guidance on adjusted EBITDA. At this stage, all I can say is we are working hard on growing our high-margin revenue and continue to control our OpEx. So this will answer to the first question. And the second question is EngageLab. Yes, it seems like EngageLab has attracted our attention. If I remember correctly, you asked this question last quarter as well. Again, we are very…

Operator

Operator

[Operator Instructions] There are no further questions at this time. I'd like to turn the call back over to Rene for any closing remarks.

Rene Vanguestaine

Operator

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. Have a good day. Thank you.

Operator

Operator

Thank you for participating. This does conclude the program, and you may now disconnect. Everyone, have a great day.