Aurora Mobile Ltd. Q4 FY2024 earnings call

• Full year 2024 calendar year recorded full year adjusted EBITDA positive, first full year profitability since inception. Sixth consecutive quarterly positive adjusted EBITDA in Q4. • Q4 group revenue RMB 93.2 million, 20% year-over-year growth, driven by all business lines. • EngageLab overseas business had 20% revenue growth year-over-year, new signed contract value grew by RMB 10 million in Q4. • Net operating cash inflow RMB 19.5 million, highest quarterly number in past 17 quarters, cash balance close to RMB 120 million as of 12/31/2024. • AI First strategy: deeply integrating AI into workflows and using as KPI, core products integrated with advanced AI capabilities, invested in GPTBots.ai enterprise-level AI agent platform. • Vertical Application: financial risk management had 34% year-over-year revenue growth due to customer number and ARPU growth; market intelligence revenue affected by weak market demand. • OpEx: Q4 OpEx RMB 16.3 million, slight 1% year-over-year decrease and 6% quarter-over-quarter increase. R&D expenses decreased 10% year-over-year; selling and marketing expenses increased 11% year-over-year; G&A expenses decreased 6% year-over-year. • Key KPIs: net dollar retention rate 95% for core developer subscription business, total deferred revenue at record high RMB 147.1 million, AR turnover days at 44 days.

For Segment Performance: Developer Services revenue, consisting of subscription services and value-added services, increased by a strong 28% year-over-year and 24% quarter-over-quarter. Subscription revenue increased by 12% year-over-year and 6% quarter-over-quarter. Value-added services revenue grew by 142% year-over-year and 180% quarter-over-quarter. Core business subscription services revenue was RMB 54.7 million, recording 12% year-over-year and 6% quarter-over-quarter growth. Vertical Application had revenue up 3% quarter-over-quarter and 1% year-over-year. Within Vertical Application, financial risk management recorded 34% year-over-year revenue growth and 4% quarter-over-quarter growth. Market intelligence revenue decreased by 36% year-over-year and was flat quarter-over-quarter.

• Company sees Q1 2025 revenue guidance in the range of RMB 74 million to RMB 77.5 million, representing 15% to 20% year-over-year growth compared to same quarter in 2024. The growth outlook is based on current market condition and preliminary estimate of market, operating conditions and customer demands.

Q: To achieve such a good result, what measures or actions were taken by the management?

A: Thanks, William. Chris has reiterated that in Q4, it was an incredible year - incredible quarter for us that closed out the 2024 for a couple of reasons. Let me just recap. First, our revenue has grown strongly 20% year-over-year, and our core developer service has broke through the RMB 50 million mark revenue in 2 consecutive quarters. And of course, our overseas business continued its great momentum, and revenue increased by close to 200% year-over-year, and we signed more than RMB 10 million or close to RMB 10 million new contract value in a single quarter. And of course, we have been very diligent in our spending our money, so that's why the optimal level of OpEx. And lastly, we have 6 consecutive quarters of adjusted EBITDA, bringing the full year positive adjusted EBITDA for 2024. And probably you appreciate there are many pieces to the puzzle in order for us to have the great numbers. And one important thing that I'd like to bring out is the fact that this good result has been in the making. And we have been consistently delivering good results since Q3 of 2023 when we had our first of the 6 consecutive quarters of positive adjusted EBITDA. Therefore, I would say this is not a one-off event or by any luck. And this was purely due to hard work, dedication and commitment from our team. And also, we have also restructured the group in terms of our strategy and our execution plan by more than 2 years ago. And during the time, I think we have bit the bullet by doing a few things. One is we streamlined the product and services that we offer in the market. We made tough decisions to cut the low-margin business and cut the department and headcount, and we redirect our resources and effort to serving global customers in the global market and also make some resources allocation to our overseas expansion plan. So looking back, under Chris' leadership and the management made the right decision. With a more focused service offering and serving global customers, we found the next growth driver in the business. And not only the global customers are bringing more revenue, their contracts are providing a healthy cash flow into the group. And as we are still at the very beginning stage of overseas expansion, we truly believe the market is huge, and we are able to continue the growth trajectory in the many years to come. And back to the question you have, I guess the short answer is we have taken many steps and measures over the past 12 to 18 months in order to achieve these great results. Any single one of them will not have the same impact. So it was a collective effort as a whole. And we believe we are ready for the next phase of growth in the business. And all the market signals we have received are also very promising in terms of future growth. I hope this answers your question, William.

Q: I'd like to hear the management's point of view on how we should look at the trend of developer subscription revenue going forward.

A: Jack, thanks for the question. You're right, subscription business has been the star of the business unit where it crosses RMB 50 million mark in 2 consecutive quarters. And let me share with you why is that so, and there are a couple of reasons. One, our customers - the developer service or the developer or the enterprise are in need of this service to help them to engage their users in an effective and cost-efficient manner. So this demand has not changed. And the next is we have a suite of products that cater to their needs. And besides the traditional AppPush we offer, we now offer WebPush, we offer e-mail, WhatsApp, OTP and other communication channel. And we are seeing more and more customers are switching from their incumbent service provider to us. So if you look deeper and the growth of this business came from both the growth in the customers numbers and ARPU. And this is very important, and this is exactly what we are looking for because we want to grow the customers number while also growing the ARPU. And this is a very healthy trend to sustain the long streak of growth in the future. So in a nutshell, we see the developer service revenue, no doubt, will be very important to us and the growth trajectory will help to drive the overall group business. And with a strong demand that I talked about and a huge addressable market, we are very hopeful of the good results in the future. I hope this answers your question, Jack.