Amber International Holding Ltd Q3 FY2022 earnings call

Strategy and Execution

• Improved performance in Q3 with 16% sequential growth in Enterprise Solutions revenue and 3% modest uptick in Marketing Solutions, totaling an 8% quarter-over-quarter increase in total revenues.
• Continued cost optimization across operations, maintaining cash, core teams, and products.
• Notable solution implementations, e.g., collaboration with Jingdong Technology to build a private domain e-commerce solution.

Financial Results

• Q3 2022 revenue was $41 million, down 53% year-over-year.
• Gross profit was $9.2 million, down from $21.7 million in Q3 2021.
• Operating expenses were $20.8 million, down from $24.1 million in Q3 2021.
• Net loss was $19.4 million, vs $2.6 million in Q3 2021.
• Cash and cash equivalents, term deposits, and restricted cash were $99.9 million as of September 30, 2022.

Long-Term Vision

• Confident in digital transformation trend in China, will continue SaaS plus strategy, upgrade Enterprise Solutions product offerings, and enhance client servicing capabilities.

In the 2022 third quarter, revenue from Marketing Solutions was $25 million, a decrease of 62% compared to the third quarter of 2021. Revenue from Enterprise Solutions was $16 million, a decrease of 21% compared to the third quarter of 2021. Enterprise Solutions had a revenue contribution of 39% in the third quarter.

• Cautiously optimistic about economic recovery and digital transformation trends.
• Will continue implementing SaaS plus strategy, upgrading Enterprise Solutions, and enhancing client servicing.
• Cash position strengthened, R&D expenditure maintained, cost optimization ongoing.

• COVID-related lockdowns, supply chain disruptions, and geopolitical conflicts impacting consumer sentiment and business performance.
• Slowdown in advertising industry leading to $3.7 million goodwill impairment in Marketing Solutions business.

Q: Regarding the ES business, what's the impact of COVID on project implementation in Q4 and next year? And about the advertising outlook into Q4 and next year?

A: COVID control measures still unclear, slow recovery. ES has better performance due to digitalization needs. Marketing Solutions still weak as advertising industry is down.

Q: For the Enterprise Solutions business, how about client acquisition strategy and competition landscape?

A: Q3 retention rate was 65% (number) and 95% (dollar). SaaS plus X model is competitive edge.

Q: DSO has improved, what led to this? Can DSO continue to improve? And why was gross margin lower in Q3 despite increasing revenue and better Enterprise Solutions mix?

A: DSO improved due to efforts to collect receivables. Gross margin lower in Q3 due to discounts for retaining valuable customers.