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spk02: Ladies and gentlemen, thank you for standing by and welcome to the Aurora Mobile Second Quarter 2021 Earnings Conference Call. At this time, all participants are in 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. If you require any further assistance, please press star 0. Please be advised that today's conference is being recorded. I would now like to hand the contents over to your host today, Mr. René van Gisteyn. Thank you. Please go ahead, sir.
spk06: Thank you, Rohit. 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.cn. On the call today are Mr. Wei-Dong Wu, 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 will follow. 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'd now like to turn the conference over to Mr. Lewald. Please go ahead.
spk00: Thanks, Rene. Good morning and good evening to everyone on the call. Welcome to Aurora Mobile's second quarter 2021 earnings call. This is the second quarter where we have been operating under the pure SaaS business model since the beginning of 2021. We deliver strong results and I am pleased to kick off this call now to share with you our business progress and key business metrics achieved in the second quarter of 2021. Before I comment on our Q2 results, I would like to remind everyone that the quarterly earnings deck is available on our IR website for your reference. You may refer to the deck as we proceed with the call today. Let's begin our review with highlights of our key operating and financial performance for the second quarter of 2021. As a reminder, we completely accepted target marketing at the end of 2020, and our business is now 100% focused on the SaaS business, which includes developer service and vertical applications. For effort-to-effort comparison, numbers presented exclude contribution from the legacy target marketing in the previous year. In the second quarter, We continue to apply our company-wide focus and concert efforts to grow our SaaS business, and it has paid off. Here is a summary of the strong results for Q2 2021. The number of paying customers increased to 2,634 from 2,281 a year ago, up 1.5% year-over-year. Revenue will remain be $89 million. up 34% year-over-year. Group gross margin was 75.7%, which is more than 1.8 times compared with 41% from a year ago. Gross profit was remain be 67.4 million, up 43% year-over-year. And adjust EBITDA was negative remain be 13.3 million, a substantial improvement of 27% from a year ago. demonstrating our strong operating leverage. Revenues from our SaaS business continue their strong growth momentum this quarter, mainly due to the 34% growth in both the developer services and vertical applications. The successful transition into the pure SaaS business model since the beginning of 2021 has helped us to deliver two consecutive quarters with growth margin above 75%, a significant improvement from 41% a year ago. The strong growth of our SaaS business was mainly driven by revenue growth of 44% year-over-year. Here, I would like to take a moment to give an update on our latest product, JG Unification Messaging System, JG UMS, and JG Video as a Service, which is JG VAS. We continue to see strong market demand for our new products, namely JG-UMS and JG-VAAS, since their respective launches. The total signed contract value for UMS and VAAS has crossed over maybe 3 million. The current and potential customers for these products come from a wide and diversified number of industries, including finance, medical and healthcare, media, short video content provider, social networks, e-commerce platforms, and more. For example, we recently partnered with UU PowerTrain, an online consumer events and delivery platform. They start implementing our AI-powered JGUMS to optimize their smart operations and drive intelligent solutions to expand user reach. Through this partnership, UU PowerTrain was able to replace manual operations, such as sending messages on different platforms via different channels, with JGUMS integrated messaging platform to reduce cost and increase operational efficiency with flexible routing management. Going forward, we will continue to help our customers jointly build an extensive value chain of their existing services. When we provide better and more customized solutions, we are able to create deeper and closer connection with our customers. We recently can also launch a new public call version of UMS, which provides free basic UMS services for mobile developers. Mobile developers can use this free version as a quick access and meaningful trial of JGUMS integrated multi-channel messaging services upon registering for an account without additional cost. In turn, this will help us to convert these mobile developers into fee-paying VIP customers. For customers with higher requirements for multi-channel push notification and user management, they can upgrade to the VIP versions of JGUMS and enjoy unlimited channel management, higher API call frequency limits, and other exclusive VIP services. As we discussed before, we need to continue to push innovation in our R&D efforts in order meet the evolving customer needs and new requirements, which in turn will continue to drive our business growth. Our motto is to continuously promote innovations for our R&D organizations, which remains at the top of our priority. I would like to take a few minutes to share with you the progress of some of our product innovations during the quarter as a result of our relentless efforts and focus to stay ahead of the game. Besides continuous iteration developed for UMS and last product, we recently introduced a smart push version for our J-Push surfaces, which add your new post-push analytical functionalities to the integrated platform. App developers are now equipped with multi-channel analysis of the push message cycle. For example, developers are given message delivery data, including total number of message sends total messages reached to end users and click-through rates with the ability to visualize the data from different levels. This statistic helps developers identify key issues more accurately and efficiently in real time. For push message delivery that fails, developers can also utilize all deterioration analysis functions to detect the data from the full message delivery cycle and from there, they can uncover the root cause of any and deliver the messages. With the help of these post-push functionalities and the push strategy recommendations, this feature can help developers effectively increase the delivery rates and create full rates of the push message by providing a much more accurate push strategy based on learning from the past results. We believe that this new functionality will help developers create more reliable, comprehensive, and intelligent toolkits. and these two keys will in turn greatly assist developers in improving delivery rates of notifications and query rates of the push message. Now, I will turn the call to Fei, who will discuss the Q2 performance in greater detail.
spk01: Thank you, Chris. Let me start the discussion on different revenue streams within the SaaS businesses. In the second quarter, 21st, Revenues from developer services reached RMB 61.2 million, a robust 34% and a 17% growth on a year-over-year and a quarter-over-quarter basis, respectively. The year-over-year revenue growth was fueled by a strong growth of 22% in subscription services and a 57% growth in value-added services. Subscription services revenue were RMB 37.5 million, an increase of 22% year-over-year, primarily driven by new customer acquisition. In addition, we continue cross-selling various non-push subscription products, such as J-Verification, J-SMS, J-Analytics, etc., to our customers in efforts to increase our subscription uptake. via multiple product lines. This effort has delivered solid results as the revenue contribution of non-push notification products increased to 38% from 32% a year ago. And the non-push notification products achieved a higher R pool of RMB 38.1 thousand, resulting in the overall R pool for subscription services increasing by 5%. to RMB 16.2 thousand compared with RMB 15.5 thousand a year ago. New and renewed contracts of notable customers in the quarter include China Everbright Bank, YuYu Paotui, Soyang International, Yonghui Superstores, and so on. In this quarter, value-added services within developer services, which includes revenues from JG Alliance services and advertisement SaaS, once again delivered a set of impressive results where revenues grew by 57% year-over-year to RMB 23.6 million from RMB 15.1 million in second quarter 2020 and by 26% quarter-over-quarter from RMB 18.8 million in first quarter 2021. We continue to see very strong and solid demand for our JG Alliance products. On the supply side of the JG Alliance, during the quarter, we continue to apply our resources to sign up more mobile apps in order to grow this traffic pool. The total number of apps within our network exceeded 340 apps compared to 280 in the first quarter of 2021, representing a 23% growth quarter over quarter. As a result of apps growth within this traffic pool, the DAU within our network has increased by 20% to 180 million from 150 million in first quarter 2021. On the demand side, we continue to see strong demand from many program developers who contributed close to 40% of JG Alliance revenue. To further expand the market reach and shorten the go-to-market process, We have used ad agencies to help us cover a broader customer base, while our direct sales team focused on serving large KA customers. In second quarter, ad agencies contributed more than 50% of JG Alliance revenue stream, while the rest came from direct customers. Major customers of JG Alliance in the quarter consisted of repeat customers, the market leaders across many industry verticals. They include but are now limited to Weibo, Meituan, WeSing, Alipay, Taobao, Du Xiaomai, Travel Go, etc. Now let's move on to the discussion of vertical applications. Vertical applications revenue, which include financial risk management, market intelligence, and iZone, grew by 34% year-over-year as demand continued to recover from the impact of the pandemic. with the majority of the revenue growth coming from the financial risk management business. In the financial risk management segment, revenues increased significantly by 42% year-over-year with the help of the 55% growth in APU. This quarter, we recorded the highest quarterly revenues compared with the results since the beginning of COVID-19 in first quarter of 2020. We continue to see huge demand for this product from KA customers, such as banks and licensed financial institutions. New and renewed customers include Ma Shan Consumer Finance, Du Xiaoman Financial, and 360 Digitech. Revenues from our market intelligence product increased by single digits year over year. The lack of meaningful growth was due to a few customers delaying customized projects with us. due to recent macro environment. However, we continue to see strong renewal with many large corporate customers, including Travel Go, NetEase Media, ITE, and so on. And lastly, while the new product transition is still underway, our iZone business delivered a solid result during the quarter with significant double-digit revenue growth. This was mainly due to the completion of a few large-scale one-time contracts. With that, I will now pass the call over to Shannon.
spk07: Thanks, Vick. I'll go through some of the key expenses and balance sheet items. On to the operating expenses, total operating expenses increased by 7% year-over-year to RMB 105.3 million. In particular, R&D expenses increased by 16% to RMB 54.3 million. mainly due to the increase in staff costs as we continue to invest in our R&D department. Higher bandwidth and cloud expenses to support the SaaS business expansion. Selling and marketing expenses increased by 1% to RM27 million, mainly due to the increased customer visits and offline marketing promotion activities. G&A expenses decreased by 4% to RM23.9 million. mainly due to year-over-year reduction of $1.2 million in bad debt provision, which was the result of our company-wide focus on strict financial control measures. Adjusted EBITDA, calculated as EBITDA excluding share-based compensation and change in fair value of foreign currency swap contract, improved 27% year-over-year to negative RMB 13.3 million from negative RMB 18.3 million in Q2 2020. and this was the best adjusted EBITDA performance since Q1 of 2020. For the second quarter of 2021, we delivered another set of solid financial results. For the year-over-year comparison, the key highlights for this quarter include our SaaS business revenue increased significantly by 34%, group gross margin improved from 41% to 75.7%, a direct result of Q2 2021 Gross margin being 100% contributed by high margin SaaS businesses. OPEX, however, increased by only 7%. As a result, our adjusted EBITDA improved by 27%, which continues to demonstrate the scalability of our business model. And this is the second quarter where we have delivered SaaS business-only results, and we are very pleased with the results we have achieved. And we believe that the growth momentum from Q1 and Q2 2021 will continue to bring more sound results in the coming quarters. Onto the balance sheet. I'll start with two key, very important KPIs that we closely monitor. Firstly, the AR turnover days decreased significantly from 59 days in Q2 2020 to 38 days this quarter. This was similar to the trend seen last quarter due to both the shift away from the legacy targeted marketing to focus on SaaS business and the company-wide focus on improving collection. Secondly, the total deferred revenue balance, which represents cash collected in advance from customers, for the fifth consecutive quarter has exceeded RM100 million at quarter end. As of June 30, 2021, the balance was at RM111.5 million. Next, total assets were at 642.7 million RMB as of June 30th, 2021. This includes cash and cash equivalent of 297.2 million. The reduction in cash balances over the quarters was mainly due to the redemption of the convertible notes of 35 million US dollars in April 2021. Accounts receivable of RMB 38.1 million, prepayments of RMB 8.4 million, fixed assets of RMB 75.5 million, and long-term investment of RMB 168 million. Total current liabilities were at RMB 360.5 million as of June 30, 2021, and these include short-term loan of RMB 150 million, accounts payable of RMB 13.7 million, deferred revenue of RMB 106.3 million, accrued liabilities of $90.6 million. And on to business outlook. Our new full-year 2021 revenue guidance is now in the range of RMB342 million to RMB360 million, representing growth of 33% to 40% year-over-year compared with last year. And the guidance for our full-year gross margin remains above 70%. The update is primarily due to the revised outlook for our JG Alliance business. The use of third party agents for developer service value added service business has caused a change in accounting method for our revenue from gross revenue to net revenue, net of any agent rebates under US GAAP. In addition, due to the recent macro environment uncertainties, some of our potential JG Alliance partners have temporarily delayed joining and integrating with our traffic supply network. However, the long-term outlook for the JG Alliance remains unchanged, and we still expect it to be our main growth driver going forward. Please note that for meaningful comparison purposes, the prior year revenue numbers used to calculate the revenue growth percentage exclude revenue from targeted marketing business. The above outlook is based on the current market condition and reflects the company's current and preliminary estimate of the market and operating conditions and customers' demand, which are all subject to change. And lastly, before I conclude, I'll give a quick update on the share repurchase plan. In the quarter ended June 30th, 2021, we did not repurchase any shares. As of June 30th, 2021, cumulatively, we have repurchased a total of 921,000 ADS since the start of our repurchase program. And this concludes management prepared remarks. We are happy to take any questions now. Operator, please proceed.
spk02: As a reminder, ladies and gentlemen, it is star followed by the number one on your telephone keypad if you wish to ask a question. Once again, it is star one on your telephone keypad if you wish to ask a question. If you wish to cancel your request, you can press the pound or hash key. We have the first question. This is coming from the line of Jacob Silverman from Alliance Global. Please go ahead.
spk03: Hi, everyone. Thanks for taking my questions. Are there any additional details you can give us on why partners are delaying joining and maybe when can we expect customers to stop delaying decisions? Also, around the accounting methodology, for reported gross margin, will that have any impact on reported gross margin for JG Alliance?
spk01: Hey, Jacob. This is Fei. I will answer the first question and Shannon will answer your second question. So, as you know, you know, recent the macro regulatory environment has changed, right? And because of this, it has resulted a temporary delay in integration for some of our potential GG Alliance partners to join our traffic supply pool. Because many of the app developers... Hello? many of the app developers in the pipeline are now focusing on getting compliant for their own mobile apps in terms of the privacy issue, the data collection issue, which is required by the government to rectify these issues. So they will slow down the cooperation with the third-party partners, including us. So however, once their compliance work is finished, they will renew the collaboration process. So that's why we say the longer term, the outlook for this business, we remain unchanged. And we still expect the JG Alliance to be the growth driver for our business going forward. Despite the revision, actually for this business, JG Alliance, we still expect this year to have a growth close to 100%, which is already very high, which is a great achievement we are going to have. And Shannon will answer the second question.
spk07: Jacob, on the gross versus net accounting and the impact on the gross margin, yes, it will impact some of the margin downward adjustment, but it's not expected to be major. Because if I look at the example that we used before, $100 versus $106 gross revenue, The impact is only 2%. So answer your question is, yes, there will be some deterioration in gross margin, but we do not expect it to be material.
spk03: Okay. And then the delays, they're mostly on customers' ends. Are there any delays on your ends for getting customers on JG lines?
spk07: No, there's no delay from our side, yeah. It's all from the other side, from the customer side.
spk03: Okay, so it sounds like also... Yeah, go ahead.
spk07: No, no, I'm done.
spk03: Okay, so it sounds like your relationships with publishers are improving. You know, after 6-18, should we expect that success to continue for maybe Singles Day? Or, you know, given the recent regulatory changes, environment, maybe your relationship with publishers will improve maybe more in the next year, in 2022?
spk01: I think we'll start to see the improvement starting from the fourth quarter, right? Because the regulatory, the rectification for these apps is an ongoing process. So some of the partners, they are close to the end of doing the. With the revised guidance, right, so actually we are going to expect a flattish quarter-over-quarter growth for the third quarter. So actually this is normal, in a normal situation. If you look at our past year in 2020, actually, we are seeing a flattish seasonality from the third quarter to second quarter. Because of the slowdown, we are seeing the similar flattish trend, but if there's no slowdown, actually, we were expecting a higher quarter-over-quarter growth. since some of the suppliers in the pipeline, they finished their work, their regulatory work, and they will start collaboration with us. So we do expect the traffic to continue to grow in the fourth quarter, and also we do expect the single-stay W11 will have a positive impact to this JG Alliance business from the demand side. So that's why our four-year guidance actually already reflected the quarter-over-quarter growth from the fourth quarter to third quarter.
spk03: Okay, and then switching gears, how has Video as a Service and UMS been progressing in recent months, such as the pace of new sign-ups?
spk01: Yeah, so actually for the VAS and the UMS, basically these two products, when I look at the number, the contract signing progress, actually the recent data shows it's close to 4 million contract value has already been signed up, which is actually last quarter. when we were having the call, it was like two million. So actually already doubled, already doubled. So we are continuing to make progress in these two products. And actually for the contracts we just signed up actually with very famous, actually meaningful big customers such as China Merchant Security, right? So with these household names as our new customer, we can use this as a case study to continue to push to the similar customers in the same industry. So we do expect these two businesses to continue to gain momentum in the following quarter before the end.
spk03: And one last one for me. Maybe to further monetize Video as a Service, are you considering offering maybe any ad placements, ad sharing capabilities in combination with the subscription that you're already offering?
spk01: Yeah, actually we thought about this, right? I think that's like the two very different business models. Currently, what we are offering is a pure SaaS model, right? We actually, it's a subscription fee. We charge a subscription fee, which is pretty much a pure margin, right? You know, it's a software type of margin. But once we offer, you know, like as a kind of like, you know, similar to JJ Alliance business model, which will, you know, certainly, we will need to pay the media fee and also as well as actually we need to pay the bandwidth cost, right? So the margin will be dramatically lower than current JG Alliance business model. So for the time being, we actually opt not to choose this way of monetizing and we want to continue to focus on the subscription-based model first. before once we have gained a good size of this subscription model, then we can think about it later on. Chris, do you have anything to add?
spk00: Also, this is actually two different directions. First of all, we want to focus on some vertical industry For example, financial industries, the bank, those apps, they have a huge budget to invest in this vast content, but they are not willing to add any advertisement within their apps. In this case, they are willing to pay in a SaaS business model. But for some like two key, like internet companies, those companies, they monetize by the advertisement. So in that case, they will probably like to do the traffic revenue share model. But in the first case, in current stage, we want to focus on the SaaS business model. And because the bank and the financial industry, they have huge budgets, and we are very familiar to work with them in past push services.
spk03: All right. Thanks so much, everyone.
spk02: Thank you. We have the next question. This is coming from Ryan Roberts from Davis. Please go ahead.
spk04: Hi. Good evening, management. Thanks for the update. A couple of questions kind of from my side. Kind of the first one is really you talked a bit about the supply side from JG Alliance. I guess some of the apps are undergoing rectification and so on and so forth. and are kind of slowing down their integration with you guys. What about demand? What are you seeing there? It sounds like your current DAUs are about 180, which is a nice step up from last quarter, or from Q1, rather. And your target for the year end, I thought, was around 160. So it seems like you guys are doing well on DAUs, which would make me think that you have some pretty solid revenue generation capability. I just want to hear what's happening on the demand side of that first.
spk01: Hey, Ryan. This is Fei. So actually, from the demand side, it's never an issue, right? Because, you know, there's always customers who want to, you know, acquire new users, more new users. And also, you know, in large Internet companies, they want to wake up their dormant existing older users, right? So our size of this business, you know, for the time being, even with the expectation of the third quarter, fourth quarter revenue, it's going to be close to 100 million revenue. So this is still relatively small versus compared to the huge, huge market size of this for the advertising, mobile advertising industry, right? So that's why, and also for For our JJ Alliance service, actually, this is a completely new media format, which doesn't really compete directly with the existing service providers, which serves to our advantage. We see all these pent-up demands, and the bottleneck has always been, and will be, the supply side. That's why we need to wait a little bit until the macro regulatory process has settled, then we can renew the growth.
spk04: Right, right. And then talk to me a little bit about the ad loads. I think that was one of the things, another little dial you could turn from monetization. What's the current ad load looking like on JG Alliance?
spk01: Yeah, so Adaload is still about 50%, right? Exposure divided by the denominator is basically the DAU, right? So Adaload hasn't really been our focus yet. We want to continue to acquire as much traffic, as much DAU as possible. before we do the fine-tuning of the ad load. And certainly, we are working on it, okay, from the product perspective. You know, we actually launched the SSP 2.0, which will, you know, offer the functionality that for per DAU, we will be able to offer multiple exposures, right? And the product got launched in July and has been... actually has been in trial process with a few apps, and the result actually is pretty encouraging. For the same DAU, we are able to increase the ad load basically by 25%. So we also have already established a migration plan to migrate our existing apps in our network into this SSP 2.0. with the smaller DAUs first, and when they become stable and achieve the results that we wanted, then we move on to those apps with greater DAUs. So we expect such a migration process to be ongoing and a continuous effort, and we hope to be able to finish the majority of the migration before the end of the fourth quarter. So this, in addition to to the organic traffic acquisition, DAU acquisition, this will help the total exposure so we can leverage in the coming quarter. That's why we already built in the assumption for the traffic to continue to grow in the fourth quarter, because fourth quarter, you will expect seasonal quarter-for-quarter growth of JJ Alliance.
spk04: In kind of blue sky scenario, what's your ad load target in Q4?
spk01: I think it may be increased by, you know, 10%.
spk04: So you're going to increase from 50% to 55%? Yeah, 55% to 60%. Somewhere in that range. Okay, understood.
spk01: Okay, that's helpful. Thanks.
spk04: And then maybe another question is I think you were talking a bit about the kind of cross-selling and progress there. I'm wondering if you guys have any analysis kind of about on a customer cohort kind of basis for kind of your VAS business because that's what we kind of expect to see deliver some explosive growth as we've talked about in the past a lot. Subscription growth is nice, but VAS is really kind of where we think there's a lot more potential there. Do you have any data you can share yet in terms of how many, let's say the average revenue, kind of recurring revenue rate might be, or kind of some of those typical SAS metrics? I think that maybe some other companies that you're aware of are following. Can you share some of those updates or some of those data points if you have them?
spk01: Yeah, yeah, we do. Actually, we do have those metrics, right, the typical SAS kind of like a matrix. So we actually segment our subscription business, subscription-based customers into two buckets. One is the K customers, which is the top 1,500 internet companies based on the DAU. So for these customers, actually when we look at the customer, the retention, actually NDR, Net Dollar Retention. And over the past several years, it's been in the range of 100% to 120%, which is very sticky. And then for the second bucket, basically, are those customers who are more like SMB, smaller type of customer. For these type of customers, as you know, In China, every year, actually every day, the apps come and go, right? For the smaller ones, they tend to, by nature, they cannot survive after a certain time of operation. So for this segment of customers, when we look at the NDR, actually, they are in the range of around 70%. So this is a natural, you know, it's very difficult, you know, to kind of like increase the NDR for this type of customer unless, you know, we do want to deal with these customers, right? So that's sort of, you know, the current situation.
spk04: Understood. That's helpful to hear that the KAs are kind of 100, 120, I hear that's sticky, but that's good. And then maybe kind of adjacent to that, you mentioned kind of a realignment of the sales process a little bit, having internal staff focus on KAs and having agents do everyone else. Where do you kind of draw that line with respect to kind of the WeChat mini programs? Is that going to be agents handling that business for you? Or alternatively, are you going to continue to do that in-house? And is there a potential at some point? where at least the advertising side of it could kind of sell itself. I realize signing JG Alliance customers for supply is maybe a very labor-intensive thing, but eventually, ultimately, there must be kind of a target in sight where an advertising client can kind of purchase exposure themselves, which would make a lot of this much more scalable.
spk01: Yeah, so actually, you know, currently, you know, from the revenue perspective, right, revenue spread, already over 50% of our JG Alliance revenue actually are coming from the ad agencies. So most of these ad agencies, they will do the customer acquisition, you know, basically the ad customer acquisition themselves. And then they will even, you know... A lot of them, they will do the ad placement, actually operation themselves as well. Actually, we only offer the platform for them to work on. For this set of agencies, actually already it's very automatic and it doesn't really require our internal labor or whatever resource. So going forward, we expect that these ad agencies, kind of like the revenue pile, will continue to grow because our direct sales force, their main mission is to serve a few very large customers, such as Weibo, such as WeThink. These are very large customers. These customers, we need to deal with them directly because they have Actually, maybe a more complicated request or demand or need. For the majority of the customers, we will let the agencies to do it. The scalability is not an issue in our opinion. We never budget. We will build a very massive ad operation team. and add a sales force, okay? We don't need to do that. It's not in our strategy.
spk04: So could we potentially see some of the sales and marketing spin kind of come down a bit? Or is that likely not in the cards?
spk01: Yeah, yeah. It's our goal to actually to continue to generate leverage in the expense line items, right? So certainly the sales marketing needs to go down as a percentage of the revenue. I think for this JG Alliance business, we think the leverage is pretty high, but it will continue to go up. And what we need to do is actually work on, is actually to get the leverage for the subscription business. Subscription business actually, per head revenue, is still not in the ideal range yet. Okay, so that's why we, you know, going forward, actually, we are, you know, actually going to, you know, have actually already building sort of the key customer, kind of like a sales team, which does not exist before. And these key customers, they will serve the, you know, the industry, basically vertical, vertical by vertical, and serve companies like China Merchant Security, right? Such kind of customers. And they can generate one million revenue also, right? So this is where the sales efficiency will come from, right? By serving the large customers, right? So this is an ongoing process. And not only on the sales marketing, also our R&D, we will continue to drive the efficiency. We will continue to optimize our resource utilization rate. We will continue to allocate the human resource into new product innovation. And also we will cut back you know, the results in, you know, originally devoted into the older products, right, legacy products, push products, right? So that's sort of an ongoing process we are currently implementing. So I think going forward, yeah, we should continue to see operating leverage.
spk04: Okay. And a couple, two last quick ones, very quick from me on kind of the numbers side of things. Just kind of curious, could you remind us what that other income line is on the P&L? And also for the prior share buybacks, what was the average buyback price? And then I'm done.
spk08: Okay, let me take a look. So the other income is mainly on the government grants that we get, the subsidies we get from the central government.
spk04: Gotcha. Okay. Right. And roughly speaking, what was the prior buybacks? What were those prices per ADS?
spk07: I need to get back to you because we have not been repurchasing that for at least four quarters, so I don't have the numbers readily available.
spk04: Yeah. Okay. Okay. Yeah, if you can follow up offline, that'd be great. Okay. Thanks very much, guys. Appreciate it.
spk02: Thank you. Thank you. Once again, ladies and gentlemen, it is star followed by one on your telephone keypads to ask a question. We have the next question. Once again, ladies and gentlemen, it is star followed by the number one on your telephone keypads if you wish to ask a question. Please note there might be a slight pause as we collect the questions. Once again, it is start followed by 1 to ask a question. We have the next question from Thomas Jia, the personal investor.
spk05: Please go ahead. Hello. I have two questions. The first question is, Are we going to commercialize it when the price is very low? This is the first question. The second question is, because I've used the products of the Illumination Alliance, I found that there are a lot of downloads now. For example, Taobao or Douyin. But Taobao or Douyin, in fact, I already have it on my phone. But it still allows me to download. It's just that we haven't realized the function of personalization. I think this should be our long-term goal, but we haven't used all of them. These are the two questions. Okay, thank you.
spk00: The first question is about the plan that we don't have for the time being. Because we believe that the stock price has been underestimated, we probably won't take this opportunity to make it oil-based. This is the first question. The second question is, you used the products of our Jigwang Alliance, right?
spk05: Yes, that's right. Because I've been an investor of our company for about four years, about three years or four years, when there was no sales volume, I came here. But as long as I see what company we are cooperating with, I will download the products and look at them. For example, like the Wi-Fi medicine, or the health chart, I have downloaded them. But I found that all the ads they posted were all the same type of ads. It will always repeat the ads. For example, my phone has been hit by Taobao. Yes.
spk00: Then, there are two types of ads in it. First, there is one type of ad. We call it a resetting ad. For example, you have Taobao on your phone, but you may still see Taobao ads. This is called a resetting ad. It's because you have Taobao on your phone that it shows you Taobao ads. Because then you don't have to download Taobao anymore. You can go directly to Taobao to buy. Understand? So this is a type of advertisement. So actually, to a certain extent, it is also based on some of your shopping habits or the use of apps and installation habits to recommend this advertisement. Then the other type is another question is that what you mentioned is that there may be a lot of advertisements on these apps that are not what you like. Then these apps are not all advertisements are provided by us. Ah, then they will usually have more of this advertisement of this cooperation partner, for example, they may also cooperate with Tencent's Guanglian Tong Ah, then it may also cooperate with us, then cooperate with us, then see those advertisements this this this this is we are also continuing to optimize this advertisement of this accuracy of ah So you see that there may not necessarily be a problem, this is to clarify a little bit about these two cases
spk05: Okay, so how much is our current DAU? Because our current DAU is about... How much is our current DAU compared to our current DAU? We just said that our current DAU is 180. Our current DAU is 180. 180 billion. OK, thank you.
spk02: Thank you. Once again, ladies and gentlemen, it is star followed by one to ask a question. We have the next question. We have the next question. This is coming from the line of Ryan Roberts from Navis. Please go ahead.
spk04: I actually had a follow-up from the previous caller. Actually had an interesting point about kind of maybe user experience and potential ad overload, you know, if you cooperate with a couple different platforms. Sorry, if an app developer cooperates with multiple platforms, that could lead to kind of a deterioration of experience if you're showing an ad and an intent that shows an ad and so on and so on. Um, is there, is there any, um, you're looking at kind of the ad load and kind of overall performance. Um, I'm just kind of curious, is there any kind of way you can, you can monitor that from a, a, a kind of a user experience perspective, um, kind of the ad developer probably, uh, you know, that's probably more of a concern for them. But then again, if you're, you're kind of providing some of the, uh, the advertising service for them, I would wonder if you have a. maybe an element of concern there because that could impact ROI, I would think, from your advertising clients if the inventory is maybe saturated. I'm just kind of curious how you guys approach that problem.
spk01: Yeah, so actually the beauty of this product is the user experience, you know, is actually not, it's never an issue for customers for us for the time being, right? Because, first of all, you know, for the ad loads, currently it's very low. It's actually per day, only generates, we only show 0.5, the ads, right? So versus the typical, you know, or any, you know, the media, the fees, advertisement, you know, they are going to show like a 10 to 20, right? So this is immaterial compared to the traditional way of showing ads. And even though we increased the ad loads by 100%, which is one exposure per DAU, which is still very limited. And second of all, we actually have done a few analysis with the developer. to analyze whether this new format has any impact to user behavior, such as whether we are called increased number of users to delete the app, right? So we have done all these sorts of analysis. you know, we were never able to find any evidence that links to, you know, users deletion of the app because of the app developer used our JG Alliance, you know, product. And in some cases, Actually, it also improved the user retention, which is very surprising to us as well. So net-net, basically, there's no negative user experience, and we never received any user complaints as well since we launched this product.
spk00: Actually, portal-wise, basically, we will provide the A-B test tools for the app developers. So basically, we can do our A-B test. For a group of users, they will show our advertisement. And another group, they don't show any advertisement. So basically, from the data and the result, those two, they have no difference of these two groups of users.
spk04: Yeah, no statistical difference. Got it. Got it. Okay. Okay. All right. I'm good. Thank you.
spk02: Okay. Once again, ladies and gentlemen, it is star followed by one to ask a question. We have no further questions at this moment. I would like to hand the conference back to our host, Mr. Magnusson. Please take over, sir.
spk06: Thank you, Rohit. 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 IAR team. This concludes the call. Goodbye.
spk02: Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all for your participation. You may disconnect now.
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