Aurora Mobile Limited

Ladies and gentlemen, thank you for standing by and welcome to the Aurora Mobile third quarter of 2021 earnings conference call. And at this time, all participants are in listen-only mode. And after the speaker's presentation, there will be a question and answer session. And to ask a question during the session, you will need to press the star and the number one 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, Mr. Rene van der Steen. Thank you. Please go ahead, sir.

Thank you, Annie. 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. Weidong Luo, Chairman and Chief Executive Officer, Mr. Fei Chen, President, and Mr. Shanlen 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 findings 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 now turn the conference over to Mr. Luo. Please go ahead.

Thanks, René. Good morning and good evening to everyone on the call. Welcome to Aurora Mobile's first quarter 2021 earnings call. This is the first quarter where we have been operating under the pure SaaS business model since the beginning of 2021. We continue to see great business growth in the SaaS business, and I will go straight into our quarter results and share with you our business progress and key business metrics in the third quarter of 2021. Before I comment on our Q3 results, I would like to remind everyone that the quarterly earnings debt is available on our IR website for your reference. You may refer to the debt as we proceed with the quarter date. Let's begin our review with highlights of our key operating and financial performance for the third 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-based model, which includes developer service and vertical applications. For an effort-to-effort comparison, numbers present here exclude contribution from the legacy target marketing in the pre-year. In the first quarter, we have seen a steady and solid upward trend in our stock business, which is a result of our dedicated effort in building and growing them. Here is a summary of the solid results for Q3 2021. The number of paying customers increased to 2,729 from 2,320 a year ago, up 18% year-over-year. Revenues were maybe 19.5 million, up 38% year-over-year. Group gross margin was 74.4%, which is more than 1.5 times compared with 47% from a year ago. Gross profit was revenue being $167.4 million, up 48% year-over-year, and adjusted EBITDA was negative revenue being $16.1 million, a substantial improvement of 27% from a year ago, demonstrating a strong operating leverage. Total deferred revenue was about $100 million for six consecutive quarters, indicating strength in SaaS business growth. AR days continued to decrease to 39 days, indicating our disciplined credit granting and brought the majority of quality customers paying on time. Revenues from our SaaS business set another quarterly record high with 48% growth in developer services and 18% in vertical applications on a year-over-year basis. Our group margin has greatly improved from 47% a year ago to 74.4%, which was the result of our successful transition into the pure SaaS business model since the beginning of 2021. The strong gross profit growth of our SaaS business was mainly driven by revenue growth of 48% year-over-year. The backbone of our continuous revenue growth has been our relentless team effort and prioritization of innovation in developer services products. We always strive to provide solutions that exceed our customers' needs and requirements for continuous developer feedback and iterations. In this quarter, we are proud to share recent updates with you and innovations across various product lines. Our product development philosophy has always been to introduce widely applicable products and tools that are scalable and suitable for all industries. Then based on the needs and feedback from each specific industry vertical, we move on to address and offer solutions and services that can meet specific requirements of each user base in our target market. For example, how do we go deeper to raise customer satisfaction and fulfill their needs? Many of our development efforts in recent quarters have been focused on creating deeper customer engagement. In Q3, we launched a free version of our Core J Push product, featuring a brand new upgrade to the Hub function, whereby mobile app developers can easily integrate seven major mobile phone manufacturers and operating systems push channels into the app. including but not limited to channels such as Huawei, Xiaomi, Oppo, Vivo, and Meizu. Through this hub function, we are able to help mobile app developers significantly increase the overall notification delivery rate by 80% compared to those mobile apps who do not use this hub function, which sequentially improves the click-through rate of their apps. Mobile app developers no longer have to integrate each manufacturer's and operating system's channel on their own. By using our Hub function, they can easily integrate all of these seven major notification channels and manage all of the push messages on our G1 platform in one go. As of today, over 7,000 apps have already started using this new function. Over 45% of the new apps that use our JPush SDK have already integrated this function into their apps. This hot function marks a new milestone, helping developers greatly improve their push results with very simple and efficient integration steps, and cements our position as the leading push notification provider in China. As one of several newly introduced products in 2021, our vast products have generated much customer interest. With the booming demand in the short video industry, we have noticed that some industry verticals have evolved over the past few years and become even more dependent on the product range and scope of our vast service. During the quarter, one of the most renowned manufacturers in the smartphone industry started testing our vast products on their smartphone appliance intended for a wider role in the near future. As more and more screen displays become integrated into the smartphone of the appliance and devices, bringing out the right content on these screens has quickly become a vital way of keeping users engaged and in turn create better user experience. By providing short videos that are tailored, customized, and geared towards different user groups and displayed on different appliances, our Vaas product continues to satisfy customers' requirements and increase users' thickness and user retention time. We believe our Vaas product has Vaas market potential and applications going forward. In addition, we have recently launched our on-demand video cloud, Dianbo Yun, surface under the Vaas product lines. This new service provides app developers an opportunity to quickly integrate their app with video function. Once they have implemented our on-demand video cloud service into their apps, developers can enjoy the freedom and convenience to perform a streamline of actions, including upload, review, and create, manage, and play the videos on their own apps. This service fundamentally eliminates tedious and laborious process for those developers who want to manage their own videos on their apps. Within the short release period in Q3, we have already seen great customer interest and received many inquiries about this product. We have observed that this on-demand video cloud service has added great value to app developers and is part of our product development strategy to go deeper and to satisfy customers' specialty requirements and needs. By doing so, we can develop closer deals with our customers and become their long-term trust partners. Last but not least, another very exciting news that I want to share with you is that on November 17, our JValuefication and other customized services were officially launched on Huawei Cloud. The cooperation with Huawei Cloud demonstrates the industry-wide clients and trust we command for our robust technical capabilities and services. Currently, developers can easily purchase and experience our JValuefication service by simply logging into our Huawei Cloud account. In addition to jail verification, developers can also gain access to Jigwang's customized surface package on Huawei Cloud, which includes push notifications, instant messaging, traffic monetization, Jigwang Alliance, Jigwang VAS, and UMS, and the other products that help developers operate, grow, and monetize their applications. We believe that this cooperation with Huawei Cloud can benefit us by reaching out to more potential fee-paying customers. and will bring positive results in the near future. In fact, we have already signed a number of paying customers since this alliance started. Now I will turn the call to Fei, who will discuss the QoP performance in greater detail.