Aurora Mobile Limited

Ladies and gentlemen, thank you for standing by and welcome to Aurora Mobile's second quarter 2022 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 during the session, you will need to press dial 11 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, René Brackenston. Thank you. Please go ahead, sir.

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.jiguang.cn. On the call today are Mr. Weidong Luo, Chairman and Chief Executive Officer, Mr. Shannon Bong, Chief Financial Officer, and Mr. Guangyang Chen, General Manager. Following their prepared remarks, they 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 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 would like to turn the conference over to Mr. Luo. Please go ahead.

Thanks very much. Good morning and good evening to everyone on the call. Welcome to Aurora Mobile's 2022 Second Quarter Earnings Call. Before I comment on our Q2 results, I would like to remind everyone that the quarterly earnings debt is available on our IR website. You may refer to the debt as we proceed with the call today. Our Q2 results were largely conditioned by the turbulence from the impact of the widespread resurgence of COVID-19. Several of our businesses were adversely affected as numerous cities were shut down between April and June. Despite the overall economic slowdown and the resurgence of COVID-19, we have seen some recovery in our business starting in July. As we mentioned on our Q1 earnings call, we have taken the necessary steps and initiative to proactively address upscale and strengthen our management and optional capability to navigate through these tough times. Continuing the efforts started in the past quarter, we shaved off more operating expenses this quarter into main areas. Firstly, we further reduce salary cost as we streamline our workforce. This is important as salary cost is one of our biggest cost components and we need to make sure we are operating at the optimum level with the greatest efficiency. Secondly, we closely and properly look at every single expense, from external technical support to bandwidth for fees. We have made consistent conscious efforts to search for better deals or replace new vendors in order to reduce the expense level where possible. At this juncture, I would like to take a moment to thank everyone in our company for their contribution in these important cost-cutting initiatives. All these efforts have been positively reflected in the Q2 financial performance. Here are the highlights of our important achievements. Lowest operating expenses for the past 14 quarters since Q1 of 2019 at RMB $87.7 million, down 1.7% year-over-year. Lowest net loss since Q3 of 2019 at RMB $24.4 million, narrowed down 1.7% year-over-year. Adjust EBITDA and net development bid 8 million, significantly improved by 40% year-over-year. Highest level of net cash inflow from operating activities since Q4 of 2020. Total customer number up 79% year-over-year to 4,709. AR days remain at a healthy level of around 46 days despite the tough business environment. Total default revenue was about RMB 100 million for the non-conceptive quarters. Let me continue with the different revenue streams within the group. Developer services revenue was down 10% year-over-year to RMB 55.2 million, which was mainly due to the decrease from value-add service, while our subscription service record stable 2% year-over-year growth. Subsequent subscription service revenue will be $48.3 million, up 2% year-over-year. Our subscription service, which includes J-Push, Analytics, UMS, and others, are products and services that help developers and enterprises to improve their operational efficiency. Demand for our subscription service is relatively strong and less impacted by the general sentiment of the macroeconomy. Despite a very tough operating environment during the quarter, we managed to grow our customer base and sign up several well-known and sizable customers, including China Everbright Bank, Hire Qingdao, Tiger Broker, and China Merchant Security, just to name a few. One key milestone in subscription service that I would like to share with you is our overseas business expansion. In Q2, our overseas email deliveries surpass those in mainland China. This is a great testament to the quality of our products and services, along with our ability to expand our business beyond our shores. We do see overseas expansion as one of our next key growth drivers. With our suite of core products, from push notifications to emails, I believe we are ready and will see overseas growth opportunities in the near future. Value-added services revenue decreased by 28% to revenue of $16.9 million, which is in line with what we expected last quarter, as the overall ad market has been relatively weak this quarter. Direct customers contributed more than 60% of JG Alliance's revenue stream, while the rest came from third-party ad agencies. Major customers of JG Alliance consisted of repeat customers and market leaders across many industry verticals, key customers, including BAT, JD, and VIP.com. With all the changes and uncertainty surrounding us, we are not deterred nor are we sitting on our laurels. We are more committed than ever to further emphasize and fine-tune our products and technology as we believe a strong and solid foundation can benefit the company in the long term. Next, I would like to update you on our products, and particularly innovations. Since the launch of our app mediation platform in the beginning of June, over 2 million DAUs and more than 20 apps have joined our platform, with more than 150 apps in the pipeline. We see great potential in our app mediation platform, and as we shared on the last call, overseas players, such as APB Loving, MoPAP and IronSource with the similar and proven business models have thrived in this field by helping app developers to grow and monetize. Our app mediation platform enables one-stop SDK-based access to mainstream app platforms such as Shanshanjia, Tencent, Youlianghui, and Kuaishou. And at the same time, it can also quickly access more than 70 other high-return demand-side platforms. As a service provider with extensive experience in the mobile internet industry, we have the niche and we believe we are in great position to help mobile app developers complete the closed loop of development, operation, and monetization, and achieve sustainable business success. To enable our customers going global to access more overseas messaging channels, in August, we signed a cooperation agreement with WhatsApp, the world's leading private messaging giant. This global cooperation represents a breakthrough in advancing our overseas business and enlarging our business ecosystem. Under this cooperation, WhatsApp is now embedded as one of the channels within our overseas messaging cloud solution. which was created to empower Chinese enterprises to expand in the overseas market with omni-channel intelligent messaging services. I am also very excited to share some updates from our core product, JPush. We have recently released our new customer management feature for VIP Push customers. Users of our service now can easily select target users and send promotional and customized push messages to their end users. without having to go through the software coding process. According to various research reports, QuickRate will largely improve when sending the dynamic and customized campaign push messages to end users, rather than just sending the same generic broadcasting message to everyone. This new feature is another meaningful add-on to our comprehensive series of tools, along with our Smart Push function, which helps the developer perform the push-to-push analytics. As you see, we were very productive this quarter and met the necessary product improvements and innovations despite the tough business conditions. We believe that only when we have superior products that market demand can we continue to strive and come back even stronger after the current slowdown. I am confident that we are fully equipped and ready for the Thais to train. With that, I will now pass the call over to Shan Nian, who will share more about the vertical applications and other aspects of our performance.