Aurora Mobile Limited

Ladies and gentlemen, thank you for standing by and welcome to the Aurora Mobile First Quarter 2020 Earnings Conference Talk. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Kristen Ernell. Thank you. Please go ahead, sir.

Thank you. Hello, everyone, and thank you for joining us today. Aurora's earnings release was distributed earlier today and is available on the IR website at ir.jiguang.ca. On the call today are Mr. Weidong Luo, Chairman and Chief Executive Officer, Mr. Fei Chen, President, and Mr. Shan-Nen Bong, Chief Financial Officer. Following their prepared remarks, all three 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. SEC. 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'd now like to turn the conference over to Mr. Luo. Please go ahead.

Thanks, Overager. Good morning and good evening to everyone on the call and welcome to Aurora Mobile's first quarter 2020 earnings call. This first quarter of 2020 has proven to be a challenging one for many companies including us. Firstly, the quarter is typically a seasonally weak one due to the Chinese New Year holiday. This year, the COVID-19 outbreak adversely impacts its seasonally slow period even further across China. Many businesses were temporarily shut down or delayed restarting their operations for many weeks as the pandemic unfolded. Despite the slower than expected period, we ran fast up to 100% capacity by the middle of March, in line with most of our customers, who resumed normal operations in mid to late March. During this period of temporary disruption, We took the initiative to further strengthen our core competencies. This includes narrowing our focus on developer services, improving operational and technical efficiency, streamlining internal procedures, and reinforcing our commitment to delivering exceptional customer service. With this initiative now in place, we believe we will emerge brought this pandemic stronger than ever and ideally positioned to be better adapted to the current uncertainties that can over the market. This same month is beginning our review on our key operating and financial performance for the first quarter of 2020. First, the number of mobile apps utilizing and is one of our developer's successes of the cumulative app installations, reached the 1.49 million as of March, from approximately 1.1 million last March. This represents an average of 16,000 new apps coming on board every month during the quarter. This was an impressive achievement considering the difficult and challenging operating environment during the first quarter. Second, cumulative SDK installations increased by 64% to 37.2 billion as of March 2020, from 22.7 billion in March 2019. Third, the number of monthly acu-unit mobile device recover continue to increase, reaching 1.36 billion in March 2020, from 1.07 billion in March 2019. This was fueled by the increasing number of apps they use on SDK, particularly as jail verification SDK becomes more widely adopted across the market. Lastly, in the first quarter of 2020, we saw the number of paying customers increase to 2,211 from 1,961 a year ago. Now, before I go over our financial performance, let me quickly provide an update on our developer services revenue classification. Beginning from this quarter, the revenues from advertisements are and LightPush Services, which help developers grow and monetize their user base, will be separately classified as Value Added Services under Developer Services. No changes are made to other revenue classifications. Our strategy focus remains to drive the growth of Developer Services and SaaS products. Over time, we expect the revenue and gross profit contribution from target marketing to be less and less significant. On to the financial numbers. Our core businesses, including developer services and sub-products, continued to see healthy 15% year-over-year revenue growth and 20% year-over-year gross profit growth despite the impact from the pandemic and lower seasonality. Our strategic transition away from the low-margin and high-risk target marketing business that we started in the third quarter 2019 has done very well with target marketing now only contributing about 12% of our total gross profit. Such transition has reflected in our revenue decline by 45% from Renminbi 230 million in first quarter 2019 to Renminbi 26 million in the current quarter. Our growth of revenue and profitability is no longer dependent upon this legacy target marketing business. Developer services, once again, was the highlight of the quarter with an impressive performance. Developer services, which includes both the subscription and value added services, recorded a solid 72% revenue growth year-over-year are at the back of increase in both album and customers. For subscription services, we continue to see more customers signing up to our suite of developer services. New customers in Kuribama are not limited to China Pacific Insurance, Home Credit, IKEA, China, and Shanghai Pupa Bank. We also launched a live version of private cloud service catering to customers who need a private cloud setup but are cost-sensitive. Subscription revenue grew by 37% year-over-year, primarily driven by an increase in the number of customers by 41%. In Q1 2020, we saw more customers signing up to our feedback jam verification services. They include but are not limited to Jiaxiaoyi Diantong, YY, Shouyou Yuying, Mogujie, Gangdang, Cumulatively, we now have more than 2,000 apps using these services with aggregate DAU exceeding 130 million. The growing demand by app developers to use our J-Push product along with J-Push have contributed to the continued growth in this segment. Value-added services, which include revenue from advertisement SaaS and like-pushed services, which we did not offer during the same period last year grew strongly. Market adoption for our value-added services has exceeded our expectations. The average monthly revenue from value-added services was approximately 2.1 million in the first quarter of 2020. This has since doubled in April, and we expect the strong revenue growth momentum to continue into Q2. Key customers of online push services in the quarter include Weibo, Pinduoduo, and Alipay. Next, as we transition away from target marketing business, revenue from this segment was down 59% year-over-year and now account for only 61% of total revenue, compared with 81% a year ago. Despite accounting for 61% of revenue, margin contribution from this business line account for only about 12% of our total gross profit. As we mentioned in previous quarter's earnings call, this is a business we want to transition away from. This coronavirus outbreak exacerbated this transition. We expect both the revenue and margin contribution from the target marketing business to further decline in coming quarters. Now I will turn the call to Fei, who will discuss the Q1 performance of the three business lines within such products in more detail. Thank you, Chris.