Aurora Mobile Ltd. Q1 FY2025 earnings call

• Q1 was a quarter of accelerated growth driven by globalization. EngageLab closed out more than CNY 63 million worth of contract value in Q1, with total cumulative contract value exceeding CNY 110 million by March 31, 2025.
• Group revenue grew 38% year-over-year to CNY 89 million, which was the highest Q1 quarterly revenue since transition to pure SaaS. EngageLab's recognized revenue grew by 127% year-over-year. Gross profit grew strongly by 27% year-over-year, achieving the highest gross profit for the past 9 quarters, and gross margin improved 520 basis points quarter-over-quarter. Recorded a seventh consecutive quarterly positive adjusted EBITDA.
• Developer Services revenues (Subscription Services and Value-Added Services) increased by 39% year-over-year. Subscription revenue increased by 26% year-over-year and decreased 2% quarter-over-quarter. Value-Added Services revenue grew by 269% year-over-year but decreased 46% quarter-over-quarter. EngageLab revenue grew by 127% year-over-year, with customer number increasing by 25% to 848 and products sold to more than 40 different countries and regions globally.
• Financial Risk Management revenue was CNY 22.2 million, up 64% year-over-year, mainly due to 19% growth in customer numbers and 38% growth in ARPU. Market Intelligence revenue decreased by 26% year-over-year due to continued weakness in market demand for Chinese APP data.
• Operating expenses in Q1 were CNY 60.6 million, a 14% increase year-over-year. R&D expenses increased 8% year-over-year to CNY 24.6 million. Selling and marketing expenses increased by 34% year-over-year to CNY 23.3 million. G&A expenses decreased by 2% year-over-year to CNY 12.7 million.
• Net dollar retention rate for core Developer Subscription business was 96% for the trailing 12 months ended March 31, 2025. Total deferred revenue was a record high of CNY 156.9 million. AR turnover days were 53 days.

Total Q1 group revenue was CNY 89 million, achieving a 38% year-over-year growth, which was the highest Q1 quarterly revenue since transition to pure SaaS. Developer Services (including Subscription Services and Value-Added Services) increased by 39% year-over-year. Subscription Services revenue was CNY 53.5 million, recording a 26% year-over-year growth and marking the third consecutive quarter of CNY 50 million plus revenue. EngageLab revenue grew by 127% year-over-year, with total cumulative contract value exceeding CNY 110 million by March 31, 2025. Value-Added Services revenue was CNY 8.9 million, up 269% year-over-year but down 46% quarter-over-quarter. Financial Risk Management had its best quarter ever, with revenue of CNY 22.2 million, a 64% year-over-year growth. Market Intelligence revenue decreased by 26% year-over-year but had a modest 4% quarter-over-quarter growth. In terms of revenue contribution, total group revenue is the overall base, with Developer Services, Subscription Services, EngageLab, Value-Added Services, Financial Risk Management, and Market Intelligence each contributing proportionally to the total.

• Q2 2025 revenue guidance is in the range of CNY 87.5 million to CNY 90.5 million, representing a solid 10% to 14% year-over-year compared to the same quarter of 2024.
• In the quarter ended March 31, 2025, repurchased 16,000 ADS. Cumulatively, repurchased a total of 295,000 ADS since the start of the repurchase program.

• Forward-looking statements are based on management's current expectations and current market and operating conditions, which are difficult to predict and may cause actual results to differ materially from forward-looking statements. Further information regarding 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 to update forward-looking statements except as required by law.

Q: Please provide guidance outlook of the EngageLab business going forward?

A: Shan-Nen Bong said that while unlikely to get another CNY 60 million new signed contract in Q2 at this stage, the CNY 60 million a quarter taught useful lessons for making significant wins going forward, showing the technical capability and know-how to win big contracts and that products are superior to competitors, with the potential for future growth as the brand becomes known globally.

Q: When do you think we can expect your quarterly net profit?

A: Shan-Nen Bong said that there are expenses needed to be spent now to maintain continuous growth trajectory, such as R&D for product evolution and marketing expenses for global reach. While net profit could be achieved by freezing R&D and marketing expenses, it would hurt future revenue growth, and as long as the business continues to scale, net profit will come eventually as a balance is struck between spending for growth and achieving profitability.