Earnings Transcript for JG - Q1 Fiscal Year 2024

Operator: Ladies and gentlemen, thank you for standing by. And welcome to Aurora Mobile First Quarter 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [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.

Rene Vanguestaine: Thank you, Amber. Hello, everyone and thank you for joining us today. Aurora Mobile'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. Following their prepared remarks, they will be available to answer your questions during the Q&A session that follows. 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 will turn the conference over to Mr. Bong. Please go ahead.

Shan-Nen Bong: Thanks, Rene. Greetings to all. Welcome to Aurora's Mobile 2024 first quarter earnings call. And for our callers that listen here today, I'd like to know that our CEO, Chris is on business trip. Thus he is not able to attend the call today. And today, in Chris absence, I shall have the privilege to share with you all on the great quarter we have. Before I comment on our Q1 results, I would like to remind everyone that -- the quarterly earnings deck is available on our website. You may refer to the deck as we proceed with the call today. Similar to the prior quarter on what Chris has done, based on the Q1 numbers, I shall give an appropriate description for the performance of this quarter and it will be a great start to 2024. And the reasons are as follows

Operator: [Operator Instructions] Our first question comes from the line of Calvin Wong from Spica Capital.

Calvin Wong: And congratulations again for another quarter of great results. I would like to have two, if I may. Firstly, as we understand, Q1 is a relatively quiet quarter but you still managed to deliver another quarter of positive adjusted EBITDA. So I would like to hear from the management how this was possible. And are we now expecting another positive adjusted EBITDA in Q2, that's my first question. And second question is, I would like to circle back on the EngageLab business again. Based on the Q1 deck, you have upload in the earlier management call EngageLab had another great growth quarter. I would appreciate if management could shed more lights on this business segment. So again, two questions. One, on the adjusted EBITDA outlook and, two about the outlook of the EngageLab business.

Shan-Nen Bong: Sure, Calvin, let me recap. One is the question on the adjusted EBITDA number and second is the EngageLab. Yes, I think I -- honestly, we are truly happy that we have done a great job to deliver another quarter of adjusted EBITDA positive numbers in Q1. As you rightly mentioned, the Q1 is typically a slow quarter because of the Chinese New Year, along with the February shorter month. Of course, this Q1 positive adjusted EBITDA number did not come easy. As I just mentioned earlier, we have made a lot of adjustments. We made tweaks large or small, try to be nimble, try to be adjourn, try to be fast enough to react to the market over the past 2 years. I believe right now, we are in a very good position with the right product and that we do with great potential and especially our overseas expansion being executed according to what we have set out to do and with the low level of operating expenses. And I guess, let me just recap what we have done with the things that we have done, we have recorded the subscription revenue grew that grew 13% and our EngageLab business has grown -- the revenue has grown 10x year-over-year and we recorded the highest gross margin that grew year-end quarter-over-quarter and our operating assets were record low since IPO. And most importantly, a lot of investors and shareholders are looking for this 3 consecutive quarters of positive adjusted EBITDA. I guess one may conclude that things are falling into the right places, where they belong. And as well question on whether we are expecting another quarter of positive adjusted EBITDA number, I think we shall not get ahead of ourselves. I think what we need to do is the management team will continue to focus on what we have done right. Namely to scale our business domestically and overseas. And at the same time, we just need to closely monitor our operating expense. And if we do this right, I think the results will reflect itself. So this is my response to your first question. And on the EngageLab, if I may use 1 word to discuss EngageLab, it will be growth. Probably, you have seen, since we started sharing the quarterly EngageLab business numbers in Q3 of 2023. The number has been growing ever since every single quarter, we recorded good numbers growth and customer number has grown impressively and a cumulative contract value has grown significantly every quarter. Therefore, we say, we are very pleased with how the business has tracked so far. And also I can give an insight in terms of what we have seen recently. Just last week, we had approved it in Singapore for the Asia tech export and both Chris and myself attended the event in person. So we went there in Singapore. And during the 3 day course -- during the course of 3 days and we received more than, I would say, more than 100 lease, more than 100 sales lease -- and Chris and myself spoke to many potential customers, be it from Singapore, from Malaysia, my home town in Indonesia, Philippines even from as far as Romania. So personally, I think I'm truly impressed with the interest we have received from customers on our EngageLab product in Asia. Doing the visit. And from -- I guess from the technical standpoint, I think I just give a brief on what we have done. And what we have done is we have incorporated our notification channel for all different phone operating system, whether you use iOS or you use Android or others. We are making this very easy for our customers to send their notification to their customer, regardless of what phone they are using. So that is the business update on the EngageLab. I hope this answers your question, Calvin.

Calvin Wong: Very clear. Thanks.

Operator: Thank you, Calvin. [Operator Instructions] I'm showing no further questions. I'll now turn the conference back to Rene for closing commence. Rene, you may wish to do the closing comments?

Rene Vanguestaine: 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 night. Thank you, all.

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