Aurora Mobile (NASDAQ:JG) (TICKER: N/A) has reported a strong start to 2024 with positive financial results in the first quarter. The company announced a 13% increase in developer subscription revenue year-over-year and a significant rise in gross margin. Aurora Mobile has also achieved a third consecutive quarter of positive adjusted EBITDA. Growth was particularly notable in their EngageLab product, which saw a substantial increase in customer numbers and contract value. Additionally, the company has successfully executed its strategy to expand overseas and streamline operations, resulting in the lowest quarterly operating expenses since their IPO.
Key Takeaways
- Aurora Mobile achieved a 13% year-over-year growth in developer subscription revenue.
- Gross margin increased both year-over-year and quarter-over-quarter.
- EngageLab customer numbers and cumulative contract value experienced significant growth.
- Operating expenses were reported at the lowest level since the company's IPO.
- The company has bought back 17,000 ADS in Q1 2024, with a total of 205,000 ADS repurchased since the start of the share repurchase program.
Company Outlook
- Aurora Mobile is focused on building momentum and scaling the business both domestically and overseas.
- The company plans to continue monitoring operating expenses closely.
Bearish Highlights
- The company did not provide specific details on any challenges or risks it may be facing in the current market.
Bullish Highlights
- EngageLab's revenue grew 10x year-over-year.
- Positive financial performance with three consecutive quarters of positive adjusted EBITDA.
- Successful expansion into overseas markets, with significant interest shown at an event in Singapore.
Misses
- There were no reported misses in the financial results for Q1 2024.
Q&A Highlights
- Management discussed the positive adjusted EBITDA outlook and the growth of EngageLab.
- The earnings call concluded with a reminder for further inquiries to be directed to the Investor Relations team.
In summary, Aurora Mobile has maintained a trajectory of growth in the first quarter of 2024, underpinned by strong subscription revenue and the success of its EngageLab product. The company's strategy to refocus and restructure has led to reduced operating expenses and an increase in gross margin. With a share repurchase plan underway and a positive outlook for EngageLab, Aurora Mobile appears to be in a strong position as it continues to expand its reach in the global market.
InvestingPro Insights
Aurora Mobile's impressive start to 2024 is further illuminated by key financial metrics and strategic movements highlighted by InvestingPro. The company's commitment to shareholder value is evident, as management has been aggressively buying back shares, a strategy that can often indicate confidence in the company's future prospects and a commitment to delivering value to shareholders. This aligns with the company's reported repurchase of 205,000 ADS since the start of the share repurchase program.
InvestingPro Data reveals a strong gross profit margin of 68.66% for the last twelve months as of Q4 2023, underscoring the company's efficiency and ability to control costs relative to revenue—a positive sign for investors looking at the fundamentals. However, the same period has seen a revenue decline of 11.74%, which investors should watch closely in the context of the company's expansion efforts and EngageLab's revenue growth.
In terms of market valuation, the company's stock is trading at a low revenue valuation multiple, according to an InvestingPro Tip. This could suggest that the stock is undervalued compared to its revenue, potentially providing an attractive entry point for investors who believe in the company's growth story.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available, offering a comprehensive view of Aurora Mobile's financial health and market position. Discover more expert insights and get an additional 10% off a yearly or biyearly Pro and Pro+ subscription with the coupon code PRONEWS24.
Full transcript - Aurora Mobile (JG) Q1 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: firstly, as far as managing the business win, I think we have done a great job. In this quarter, we have recorded a third consecutive quarter of positive adjusted EBITDA. Secondly, developer subscription revenue recorded a 13% revenue growth year-over-year, showing great growth momentum over the years. Thirdly, our gross margin grew both year-over-year and quarter-over-quarter. Fourthly, we are continuing to operate at a low level of OpEx, leveraging on our operational efficiency improvement over the filing [ph]. Our OpEx in this quarter is at historic low since our IPO. Last but not least, our star overseas product, EngageLab recorded excellent customer number and contract value growth this quarter again. I believe all of you would agree that we have a great Q1 for 2024. We are truly looking forward to building up the momentum for the next few quarters with even more exciting numbers. Next, let me share with you more. For total group revenue, it remained consisted at RMB65 million, in particular, Developer Service revenue recorded a 2% year-over-year slide and vertical application revenue decreased by 1% year-over-year. Developer Service revenue which consisted of subscription service and value-added service decreased by 2% year-over-year. And we did developer service, subscription revenue increased 13% year-over-year but was offset by a 70% decrease in the value-added service. Next, I shall dive deeper into each business line. And for some business, revenue were at RMB42.4 million, up 13% year-over-year but declined 13% quarter-over-quarter as Q4 is usually high year-end quarter for each year. The 13% year-over-year growth was mainly driven by a 12% increase in ARPU. For year-over-year comparison, the higher ARPU was mainly contributed by completion of more private cloud projects in 2024. Another key factor for this 13% revenue year-over-year growth was due to the revenue originated from EngageLab. The EngageLab recognized revenue has increased 10x year-over-year. And I shall elaborate more on EngageLab business later. And with this subscription revenue, some of the multiple new and renewal customer in this quarter include but not limited to Volkswagen (ETR:VOWG_p) China, Shunfeng Express, Huawei, Coticoffe [ph] and Mihayu, just to name a few. Value-added service revenue were at $2.4 million, decreased 70% year-over-year and decreased 64% quarter-over-quarter which was due to lack of the major online shopping event in Q1. And this lower revenue in Q1 is within our expectation. However, we do foresee this business to bounce back in Q2 in anticipation of the 618 online shopping event. Next, let me share with you on the great numbers we have recorded in our business in first quarter of 2024. Firstly, by March 31, 2024, our EngageLab customer number has grown again from 170 to more than 220. We continue to make great progress in new customer acquisition in the overseas market. More and more new customers have signed up with us as they are seeking a reliable push and e-mail service provider, who can help them to improve message delivery rate and user engagement. Secondly, the cumulative side contract value of EngageLab has another 60% quarter-over-quarter growth, bringing the total cumulative contract value to more than RMB24 million by Q1 of 2024 representing a RMB9 million growth quarter-over-quarter. Our EngageLab overseas customer bought both our public and private cloud version of our push service. And thirdly, our EngageLab product has sold to customers in more than 20 countries around the world. It has proven that our EngageLab products are truly global and catering to businesses and enter products around with our borders. With that, I shall go over the revenue for vertical application, where it is made up of financial risk management and market intelligence. Vertical Applications had a stable quarter where revenue remained relatively consistent year-over-year but declined 9% quarter-over-quarter from the usual high Q4 quarter. For financial risk management, we saw our revenue grew 14% year-over-year and 2% quarter-over-quarter. The 14% year-over-year revenue growth was positively impacted by a 41% customer number growth. And this is hot on the heels of a 26% year-over-year growth in Q4 of 2023. We did see a pickup in demand for our financial risk management products year-over-year as lending activities in China has been on the rise. And looking back the quarterly revenue has been growing consecutively in each quarter since Q1 of 2023 to the current quarter. And the Q1 customers that we have signed up or renew include but not limited to Kundu Minhang, Suzhou Minhang, Mai Jingrong and many Maisons [ph] credit and financial institution throughout China. As for Market Intelligence, the revenue decreased by 21% year-over-year and decreased 9% quarter-over-quarter due to the continued weak market demand for Chinese APP data. In Q1 of 2024, we signed up some of the well-known and large customers, such as [indiscernible] and many top-tier global hedge fund and investment funds. And next, I'll go over some of the key expenses and balance sheet items. On to operating expenses; the Q1 operating expenses was at $53 million, representing an 18% decrease year-over-year and 13% decrease quarter-over-quarter. And this $53 million OpEx was the lowest quarterly OpEx we have recorded since IPO in July 2018. As shown on the financial statement, we are and have been making all the necessary steps and initiatives to maintain optimal level of operating expenses and we are very pleased with the current OpEx level. And next I'll go to the individual OpEx category. In particular, R&D expenses decreased by 28% year-over-year to RMB32.7 million mainly due to the lower headcount at reduced salary costs and associated [ph] share-based compensation and a decrease in [indiscernible] expenses due to the growing cloud initiatives we have undertaken. Selling and marketing expenses decreased by 8% year-over-year to CNY17.4 million, mainly due to the decrease in salary costs resulted from the head count reduction as we made appropriate adjustment to operate at the optimal level. And G&A expenses decreased by 9% year-over-year to RMB12.9 million, mainly due to the lower head count that reduced salary costs and associated share-based compensation. And for the quarter ended March 31, 2024, we recorded yet another positive adjusted EBITDA. And this is a historical event where we have 3 consecutive quarters of positive adjusted EBITDA. As mentioned above, we have tightly managed and control our OpEx over the years. We believe so long as we continue to grow our top line in the future, you will see more good quarterly results sooner rather than later. On to the balance sheet. Again, we shared 2 very important KPI that we closely monitor. We continue to monitor to maintain a healthy AR turnover days level at 47 days. And this is still a low number and is peer leading in this market space. We are working hard to ensure that we actively collect cash from customers and ensure we have low turnover days. At the same time, mitigating the risk of bad and doubtful debt. Secondly, one of the key financial KPI for tracking and the performance of SaaS company is the total deferred revenue which represents cash collected in advance from customers for future contract performance which continue to be a high balance of RMB135.2 million; and this is the ninth consecutive quarters that we have deferred revenue balance above RMB130 million. Next, total assets were RMB334 million as of March 31, 2024 which includes cash and cash equivalent of RMB99 million, accounts receivable of RMB33 million, prepayments and other current assets at RMB23 million, fixed asset at RMB1.4 million, long-term investment of RMB113 million, goodwill at RMB37.8 million, Intangible assets at RMB16.9 million resulted from the SendCloud acquisition in March 2022. And total liabilities were at RMB227 million as of March 31, 2024. This includes accounts payable of RMB22 million, current operating leasability of RMB3 million, deferred revenue of RMB125 million [ph], and accrued liabilities of RMB64 million. At this juncture, let me recap on the great start to 2024 description that I have mentioned at the start of this call. In this quarter, our developer service revenue grew by 13% year-over-year. Number 2, our gross margin at the highest level since Q4 of 2021. Number 3, for the first time in history, we have 3 consecutive quarters of positive adjusted EBITDA. Number 4, quarterly OpEx at RMB53 million which is at the lowest level since IPO. Number 5, our EngageLab product recorded customers grow -- customer number growth of more than 30% quarter-over-quarter and cumulative contract value grew more than 60% between the quarters. And with the above, I believe the management team has done a great job delivering yet another quarter of good financial results. And this set of numbers do not come easy. And we have done a lot of work, since 2 years ago during the pandemic. And let me spend a few minutes here to recap on the work we have done to get to where we are now. Number 1, we have refocused our strategy during which we gather all the heads of products; we challenge them on their niche to maintain and sell each product in the view of market potential. The end result was we streamlined the number of product offerings we cut down the products; they are not bringing positive contributions to the books and putting all our resources to a handful of key products which are profitable in high demand domestically and overseas and with great potential. Number 2, we have restructured our teams and seriously look at the headcount. With fewer products to be maintained and to improve operational efficiency, our head count has decreased close to 40% from the peak. Thereby helping us to cut down the fixed cost component of our OpEx. And apart from the head count, we have also reviewed all the service contracts with external vendors. And during the process, we have also managed to lower fixed operating expenses year-to-year to an optimal level. Number 4, more importantly, we have chosen the right direction by going overseas through our EngageLab suite of products. And with this combination of right steps that we have taken, we are now seeing the positive impact. Most notably is the 3 consecutive positive adjusted EBITDA that we have managed to deliver. As we continue to scale our business, I believe more good results will come. And I would like to thank the shareholders in the [indiscernible] and the group employees for the support and patients throughout these past few years. And lastly, before I conclude, I'll give a quick update on the share repurchase plan. In the quarter ended March 31, 2024, we have repurchased 17,000 ADS. Cumulatively, we have repurchased a total of 205,000 ADS during the start of our -- since the start of our repurchase program. And with this, it concludes the management's prepared remarks and we will be happy to take your calls now. Operator, please proceed.
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.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.