Aurora Mobile Limited

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

RENE VENKATESEN Thank you, Amber. 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.juguang.cn. On the call today are Mr. Wei Dong Luo, Chairman and Chief Executive Officer, Mr. Fei Chen, President, and Mr. Shannon 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 US 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. Future 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'd now like to turn the conference over to Mr. Wu. Please go ahead.

Thanks, operator. Good morning and good evening to everyone on the call. Welcome to Aurora Mobile's fourth quarter and full year 2020 earnings call. The year 2021 marks the 10th anniversary of Aurora Mobile. Looking back, we are extremely proud of what we have achieved in the past decade in helping all our mobile app customers in China to improve their optional efficiency helping each and every one of them improve their options, grow, and now monetize. I still vividly remember the very first JFoosh product we developed for mobile app developers way back in 2011, and we have come a long way since. Over these past decade, through in-house innovation, technical progress, and relentless pursuit of excellence, we have reached many milestones. We started with one J-Push product in 2011, and over the years, we developed seven additional products for mobile app developers, meeting their different and evolving optional needs. Cumulatively, as of December 31, 2020, we have worked with more than 591,000 app developers, representing more than 1.7 million apps in total. Our developer service SDKs have been installed more than 46.7 billion times. In the fourth quarter of 2020, on average, every month there were more than 17,000 new mobile apps joining and using one or more of our eight developer services. I would like to use this opportunity to thank all the mobile app developers who have been alongside us. trusted us and cooperated with us over these 10 years. I believe the next 10 years will be even greater for our customers thanks to the new exciting and innovative product and service offering from Aurora Mobile. The year 2020 was a very extraordinary year in which an unexpected pandemic reshaped the world and changed how people live their lives and how companies conduct their business in so many ways. During the crisis, we persistently carried out our core strategy to serve our developer customers by helping them with their business operations, user growth, and the monetization of their user base. Based on the solid business foundation built with our developer subscription services, we ventured into new business territory by innovatively creating our JG Alliance business business alliance to help our developer customers better monetize their user traffic. The JG alliance became a great success as we achieved a phenomenal 15 times growth year-over-year in revenue and DAUs grew rapidly from 0 to 130 million in merely five quarters. Meanwhile, we completed the wind down of our target marketing business. Despite being the largest revenue contributor in 2019, we felt the target marketing business did not fit with our company's long-term direction. I am proud to announce that by the end of the fourth quarter, 2020, our business transition was 100% complete and we have successfully transitioned our company to a pure SaaS-based business model. During the year, we also put great emphasis on product development and innovation. We successfully launched three new heavyweight products. First, we enhanced our JJ Alliance product portfolio by adding a new in-app message product. And in our developer subscription basis, we launched a unification messaging service, OU Math, and video as a service, or VAS, product to address new critical needs for developers. On the customer front, We have formed partnerships with numerous well-known and key customers across almost every industry vertical, as you have seen from the price releases we issued from time to time. Cooperation with these KA customers has helped us better penetrate into different industries. Take the new energy vehicle sector, for example, after our cooperation with the rewarding the world's leading new energy vehicle manufacturer and BYD. As of this week, we now have 39 customers within the auto industry, of which 19 are free paying. We are replicating the success of the EV market expansion model in other industries, such as short video, education, gaming, finance, telecom, e-commerce, and blockchain. Through this domino effect, where we leverage our existing corporation relations with the market leaders of each industry, we believe we can and we will quickly sign up more customers to ramp up or increase our market share. Throughout the year, we also upgraded our talent pool by hiring a number of senior executives across R&D, sales, operations, and HR. who have rich management experience accumulated from Tencent, BaBa, ByteDance, and Huawei. We optimize our business operations so we can run the business more efficiently and create education certainty. Continue the talent acquisition with target with wide performance-based incentive scheme put in place and fine-tuning the way we manage our organizations will lay a solid foundation for our future business growth and success. Before I comment on our 4Q results, I would like to take this opportunity to remind everyone that we have uploaded a quarterly earnings deck on our IR webpage for your reference. You may refer to the deck as we proceed with the quarter date. Let me continue with our key operating highlights for the fourth quarter of 2020 other than those I have mentioned earlier. First, the number of monthly active unit mobile devices we covered continue to grow. reached $1.395 billion in December 2020 from $1.36 billion in December 2019. Over 90% of mobile devices in China have at least one or more Qigong SDK installed. Second, during the quarter, we saw the number of paying customers grow to 2,420 from 2,131 a year ago. I would like to focus the discussion on our SaaS business, which includes only the developer services and vertical application business as we have officially accepted the traditional talking marketing business on December 2020. Therefore, starting from January 1st, 2021, all our revenue will be contributed by this SaaS business. Our SaaS business continues to record impressive results this quarter with revenue of revenue 76.6 million, which was at the higher end of our guidance range, representing 17% growth year-over-year and 18% growth quarter-of-quarter, and gross profit of revenue be 58.5 million, growing 29% year-over-year and 20% quarter-of-quarter. On a SaaS business basis, the total revenue grow 70% year-over-year, mainly due to the strong 46% growth in developer services. partially offset by the decline in vertical applications, which have been impacted by the COVID-19. Nevertheless, revenue from vertical applications have seen solid sequential growth for three consecutive quarters, as customers' demand in this segment continue to recover. On a quarter-of-quarter basis, SaaS business revenue records joint sequential growth of 18% to revenue In Q4 2020, our SaaS business contributed 72% of total revenue, up from 60% in Q3 2020. Going forward, SaaS business will contribute 100% of our revenue. On a business basis, gross profit has also shown strong growth of 28% year-over-year to revenue 58.7 million for the quarter end of 2020. Due to both the revenue growth of 70% year-over-year and margin expansion from 70% to 76% year-over-year, we expect our gross margin in 2021 to remain above 70% throughout the year. For Q4 2020, SaaS business can contribute 98% of the gross profit, up from 96% in Q3 2020. Going forward, SaaS business will contribute 100% of our gross profit. Here, I would also like to take a moment and share with you our new product initiatives. We have recently launched both the JGUMS and JGVAS products after conducting follow-up market analysis with our app developers and customers to understand their needs and plan points. In brief, JGUMS, which stands for Unification Message System, enables businesses to engage with their target customers more efficiently and cost-effectively through one integrated message management platform, therefore improving optional simplicity while reducing cost with flexible routing strategy management. In the past two years, with the proliferation of many user engagement channels, such as mini programs, WeChat public accounts, DingDing, etc., user engagement has become much more complex than ever before. UMS therefore comes to the market as the right product at the right time to address such pain points. UMS is not only suitable for app developers, but also suitable for businesses that do not even have a mobile app. Pretty much all the businesses in China will need this product, as long as they have a site for customer base and utilize multiple channels to reach their customer base. JGVAS, which stands for Video Azure Surface, on the other hand, enables mobile app developers to provide relevant user-friendly short video content in their apps, therefore improving their user experience, increasing user engagement and speediness, and enhancing monetization capability. It is a distributive way for users to consume short videos anytime and anywhere, rather than having to go to a dedicated short video app to view short videos in a centralized fashion. Both UMS and Vaas are operated in a subscription-free based model, where our customers pay us a new fee based on the features they like to enjoy. We believe both products can greatly expand our paying customer base and output for our developer subscription business over time. We anticipate that these two products will start generating revenues in the second quarter of 2021. Now, I will turn it over to Fei, who will discuss the Q4 performance in greater detail.