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spk06: Ladies and gentlemen, thank you for standing by and welcome to Aurora Mobile fourth quarter and fiscal year 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. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. And I'd like to hand the conference over to your host today, Rene Regenstein. Thank you. Please go ahead, sir.
spk12: Thank you, Amber. Hello, everyone, and thank you for joining us today. Aurora's earnings release was distributed earlier today and is available on our IR website. On the call today are Mr. Wei Dongluo, Chairman and Chief Executive Officer, Mr. Shanlan Bong, Chief Financial Officer, and Mr. Guan Yang Chen, General Manager. Following their prepared remarks, they 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'd now like to turn the conference over to Mr. Luo. Please go ahead.
spk11: Thanks, Rene. Good morning and good evening, everyone. Welcome to Aurora Mobile's 2022 fourth quarter on this call. Before I comment on our Q4 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. Before looking at the fourth quarter, I would like to reflect upon our journey in the past couple of years. In a challenging environment caused by pandemic, what we did right what we learned, how we came through the toughest time, and how much we have grown as an organization. I'm proud to say that we came out of the difficult times and became more resilient and efficient. Along the way, we have been constantly reviewing our overall strategy, not afraid of making necessary decisions, no matter how tough, to ensure we are always on the right track to long-term growth. Throughout this effort, our revenues and margins remained strong as we improved gross profit while technically controlling and lowering our path. We started up fresh as a pure start business in Q1 2021. Amidst the transition period, we didn't start innovating and harnessing our core business line developer services. This really is bringing us rewards for the long run. I will give you more details later. With economic efficiency going globally, in mid-2021, we act quickly and proactively to make our organization stronger and nimble by enacting restructuring and strict cost management across the company. We are so glad we made these decisions, and our efforts are reflected in our financial results. Let me share some of the key results with you. Second, Positiva adjusted EBITDA since 2021 Q4 at RMB 0.6 million. All businesses, including developer services, subscription value add services, and vertical applications can record Q of Q growth. Highest gross profit in 2022 at RMB 59.8 million. operating expenses since IPO or for the past 18 quarters at RMB $62.8 million. Lowest adjusted net loss since Q3 of 2019 at RMB $6.6 million, improved by 18% year-over-year. AR turnover days at 32 days, lowest since IPO. default revenue balance is the highest in the history of the company at RMB 142.4 million. Total customer number up 70% year-over-year to 4,719. I am afraid to report renewed growth in Q4 2022. Total revenue rose to RMB 86.9 million, up 8% quarterly over quarter. And both developer services or co-business and vertical applications have achieved sequential growth with the biggest revenue growth contribution by developer services at 11%. In this quarter, we record the highest quarterly revenue of 2022 and lower our adjusted OPAS, being the cash component of OPAS, to a historically low level. With that, our adjusted EBITDA was positive for the second quarter since Q4 2021 at RMB 0.6 million, significantly improved by RMB 7.3 million from negative RMB 6.7 million in Q3 2022. Our adjusted net loss was also the lowest since Q3 2019 at RMB 6.6 million, improved by 18% year-over-year. Furthermore, We ended this quarter on a higher note, with more than $142 million in total deferred revenue, our remaining performance obligations up 15% versus last year. This is a set of impressive financial numbers for Q4 2022 that our team has worked hard to achieve, and it shows that we are running the business well. I sincerely believe more good things will come. We are confident that the end of the COVID zero policy in December 2022 marks the beginning of China's emergence from the pandemic, even though there may be some short-term headwinds. This, we believe, has put the country on a path to return people's lives to normalcy and resume pre-COVID levels of consumer, social, and economic growth. Therefore, the outlook for Renewal consumer activities and the gradual recovery of our business in 2023 is very promising. Now, let me go through our different revenue streams. Developer service revenue increased 11% quarter-over-quarter to revenue of $63.2 million, which was mainly due to the increase in both subscription services and value-added services. Year-over-year, developer services revenue decreased by percent, mainly due to the weakness in value-added services offset by the growth in subscription services. Subscription services revenue will remain be 46.3 million, up 11% quarter-over-quarter, and up 4% year-over-year. Subscription services, our core business line, include J-PUSH, Analytics, UMS, and other products and services that help developers and enterprise to improve optional efficiency. Our private car service revenue increase has contributed to the subscription revenue growth, and we were able to bring a number of renowned customers on board, including but not limited to Zhaoshan Zhengjuan, Ping An Bank, and Zhongxin Bank. The increase in our pool also contributed to the growth in revenue, and we managed to grow our customer base with several well-known and successful customers, like IKEA, Guangda Bank, Taiping Yang Baochuan, and J&T Express, just to name a few. Since our launch of the overseas service platform Engagelab in October, we have seen encouraging trends and customers have been expressing their strong interest in our products. We are expecting stronger revenue growth going into 2023, and we will continue to improve our products and services to help global developers with high-efficiency and cost-effective user reach. As I mentioned earlier, we are anticipating consumer activities to recover further in 2023. During Q4, we already saw some growth in our value-added services revenue, which is a good indicator of overall reviving consumer activities. The value-added services revenue increased quarter-of-quarter by 10%, and it was the first quarter-of-quarter growth in 2022, a major positive sign for us. Year-over-year revenue was down 44% to revenue of $16.9 million, and we expect the year-over-year growth trend will continue to recover in 2023. Major customers of the JG Alliance services consisted of repeated customers and market leaders across many industry verticals. Key customers included BAT, Baidu, Alibaba Tencent, Zhaoxiang Bank, and Zhihu. For our ADPub that was launched back in Q2 2022, we are seeing more and more entries from various apps. Over 10 million DAUs joined our platform by the end of this quarter, a growth in DAUs of over 300%. And as the overall economy recovers in China, we believe that more DAUs will join our platform going forward. Another exciting news, which also marked a major milestone for us, is our pioneer work in integrating the ChatGPT's technology in our JPUCH, our push notification solution, and in our email and SMS service platform. Today, AI has become the cornerstone of many products and services, and it is very important for us to be one of the first movers in applying AI technology. Our proactive integration of interactive leverage model technology and AIGC really give us the edge and a great opportunity to make our product smarter, further benefiting all our customers. For a long time, a critical concern of developers has been how to attract users' attention for creative, high-quality push content and improve message click-through rate and user conversion. The AI creation tool resulting from the integration of ChatGPT into J-Push delivers a powerful solution. Using this tool, developers can quickly tap into the AIGC generated personalized intelligent push content to achieve high query and high conversion, effectively improving the efficiency of user reach and engagement. And for our email service, integrating ChatGPT will enable customers to generate AIGC personalized email content according to the recipient information profile and preference. The upgraded email services will not only improve the readability and attractiveness of emails, but also increase the response rate and conversion rate of email, thereby helping our customers interact with their target users more effectively and achieve higher marketing success. Furthermore, earlier last month, we became one of the first ecosystem partner of ErnieBot, a generative AI chatbot developed by Baidu. We will access ErnieBot and apply Baidu's leading intelligent dialog technology in our customer engagement and marketing technology services. This initiative is an additional step in our implementation of our AI-driven strategy with the support and empowerment of leading AI checkbox technology. As an ecosystem partner, we will be given priority for internal testing with Earnings Board and will integrate Earnings Board in our products. Many renowned companies have joined the Earnings Board ecosystem, including iQiyi, Jidoo Automobile, Xiaoduo, high enterprise solution, Kindle, Jalpin, and PCAuto. It's clear that going forward, our businesses are getting ready for this new mega AI trend. We will also carry out in-depth research and development in chatGPT-related technology, realize interactive dialogue similar to real people through chatGPT technology, and further improve the richness of our push message, email, and SMS content to empower the great conversion rate, and marketing engagement. With that, I will now pass the call over to Shannon, who will share more information about the vertical application and other aspects of our performance.
spk14: Thanks, Chris. I would like to echo Chris' comment on our revenue trend. With our relentless effort in developing our core developer service, we see a very promising recovering trend in Q4 and going forward. Not only in developer services, We also seen sequential growth in vertical application revenues, especially in market intelligence. Vertical applications mainly consist of financial risk management and market intelligence. Vertical application revenue increased by 1% quarter over quarter and decreased by 11% year over year. In the financial risk management segment, revenue decreased by 14% Q over Q to remedy 12.4 million and decreased 25% year over year. The decrease in financial risk management revenue was due to many of our customers' consumption were impacted by COVID outbreak in November to December last year. We are not too worried about financial risk management revenue in 2023 as we believe the decline in Q4 was temporary and we are already seeing recovery in consumption so far this year. Our market intelligence services delivered strong revenue growth, up 16% quarter-over-quarter and 27% year-over-year to RM10.4 million. During this quarter, our revenue increased as a result of recovery in customer spending and the addition of many well-known and sizeable new clients. Furthermore, our strategy of focusing on KA customers has helped us gain additional market share. The big and renowned customers that we sign up in this quarter include, among others, Tencent, Baidu, Baobao, Zhongxing Securities, and Shenzhou Zhuce. I will now go through some of the key expenses and balance sheet items. On to operating expenses. As Chris mentioned earlier, our strategy of active and stringent cost management proved very wise. and our quick action help us to maintain as a nimble organization. We have had another historically low quarter in terms of operating expenses, excluding non-cash impairment loss of long-lived assets at $73 million, down 21% year-over-year. All three components within OPEC's category recorded year-over-year non-cash reduction, in particular R&D expenses decreased by 22% to RMB 35 million, mainly due to lower headcount that reduced salary cost and associated share-based compensation, and a decrease in cloud cost and depreciation expenses as a result of improvement and optimization of our cloud platform. Selling and marketing expenses decreased by 26% to RMB 24.5 million, mainly due to decrease in headcount by 39%, marketing expenses and salary costs decreased accordingly in this quarter. G&A expenses increased by 149% to RMB $35.9 million, mainly due to a $22.4 million non-cash increase in the long-lived assets impairment due to one-time costs for going cloud in this quarter. Our adjusted EBITDA Delivered second positive quarter since Q4 of 2021 at positive RMB 0.6 million. A company-wide prudent and deliberate hiring and expenses control strategy has helped us maintain a comparatively low operating expenses level. Let me recap some of the highlights of this quarter. We achieved lowest adjusted operating expenses since IPO at RMB 62.8 million, down 19% year-over-year. We had the lowest adjusted net loss since Q3 of 2019 at negative RMB 6.6 million, improved by 18% year-over-year. We had a second positive adjusted EBITDA since 21Q4 at RMB 0.6 million, improved by 7.3 million quarter-over-quarter. And onto the balance sheet. I will share two very important KPIs that we closely monitor. Firstly, the AR turnover days decreased from 38 days in Q3 to 32 days, which is the lowest AR turnover days since IPO. I have to pay tribute to our team who has been working hard and diligently to collect payments from our customers on a timely basis. Maintaining a low AR turnover days level is very important. and it means that we have short cash collection cycle which help us to mitigate risk in bad and doubtful debts. Secondly, one of the key financial KPIs for tracking performance of SaaS companies is total deferred revenue, which represent cash collected in advance from customer for future contract performance, where we recorded another highest balance in the history of the company, standing at RMB 142.4 million. This is the 11 consecutive quarters that our deferred revenue has exceeded $100 million. In addition, this quarter also marks the 7 quarters that we have deferred revenue with continuous sequential growth, which is another great source of cash flow for us in such a challenging time. Healthy cash flow aside, the level of deferred revenue also signifies that our business is in great shape. Our customer has continued to buy our services quarter over quarter and year after year, and we are very pleased with the trending of this deferred revenue balance. Next, total assets were at $420.9 million at December 31, 2022, and this includes cash and cash equivalent of $116.3 million, accounts receivable of $29.7 million, prepayments and other current assets of $30.4 million, fixed assets at $14.9 million, long-term investment of $141.9 million, goodwill of $37.8 million and intangible assets of $23.9 million resulted from the SandCloud acquisition in March 2022. And total current liabilities were at $249.6 million as of December 31, 2022. This includes short-term loan of $5 million, accounts payable of $18.2 million, deferred revenue of $138.8 million, and accrued liabilities of $87.6 million. And lastly, before I conclude, I'll give a quick update on the share repurchase plan. In the quarter ended December 31, 2022, we repurchased 246,000 ADS. Cumulatively, we have repurchased a total of 1.19 million ADS since the start of our repurchase program. And this concludes the management prepared remarks. We're happy to take the question now. Operator, you may proceed.
spk06: Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and write for a name to be announced. To withdraw your question, please press dial 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Brian Kingslinger from Alliance Global Partners. Please ask your question, Brian.
spk09: Great. Thanks for taking my question, and good to see the recovery in your businesses. Can you first talk about the strategic partnership with WhatsApp? It's your first slide, and maybe I missed it. Can you discuss how and which segments this might drive revenue growth as you see it?
spk14: Sure. Brian, this is Shannon. Based on what we have collected from our customers, especially overseas, a lot of our customers are not able to tap onto WhatsApp communication channel. Probably, as you know, outside of China, WhatsApp is huge in Southeast Asia, even the entire Asia X China. So what we are helping the customer to do is they are able to, as part of the communication channel, besides the so-called push notification, they are able to tap onto the channel managed by WhatsApp to reach their users. So this is something that we are able to help them to ensure that they reach the click-through rate or the usability rate is much higher. So this is something that WhatsApp is happy that we are able to help them as well to reach more customers. So along that, a lot of our customers are waiting for us to launch this new product which is already in the market. So what we are doing is we will be able to charge our customers for the communication channel done through WhatsApp channel. And of course, with that, we need to pay an expense or cost to WhatsApp too.
spk09: So essentially, you're going to be able to send push notifications through WhatsApp. Is that right?
spk14: Correct. So this is something that in the event that the traditional push notification doesn't get through, the customers are able to use the WhatsApp channel to reach their customers.
spk09: Now, for existing customers that are using push, will this drive increases in the rates they pay or will it just be part of this service they already get?
spk14: Yes, it will be an increase. We will charge every single push notification done through WhatsApp. So there will be additional cost to the customer, additional revenue to us.
spk07: Great.
spk09: And then, um, maybe you can talk about chat GBT and with your push and send cloud. How were the services operated before ChatGPT? Was it not automated or intelligent?
spk14: No, you see, what we are seeing is probably, as you know, AIGC is very huge for the past two months. So they can come up with really creative answers for whatever question that you ask. So what we are seeing is customers are asking us to see if we are able to tap onto ChatGPT's brain, so to speak. Because what they are doing is they are saying they really need some creative content for their push to improve their click-through rate. So how do they do that is they are able to use our service to tap onto ChatGPT's content creative site. So which means that for a traditional customer, they used to be having to come up with their own push content themselves, which might not be creative at all. So what they are able to do is through our service, they can ask Chair GP2 to create say like five optionality in terms of content provision so that they can choose the best to suit their case. So they are able to tap onto that and with that they are able to send through their message with the hope that there will be better click-through rate for that. So in a similar fashion, For a similar fashion, for the email, our customer who uses the SendCloud ChatGPT link, they are able to customize, they use the ChatGPT's AIGC to come up with a template so that they can better customize their email to send to their users, which will be hopefully at a better click-through rate and a better result for the customers. So this is something that we are seeing a lot of customers are asking for this service. And probably as you know, these services are not available in China as yet. So we have a great, great opportunity here to help our customers to get around this issue.
spk09: Great. That's super helpful. Can you talk about the advertising market in China? I know we saw a small recovery in the fourth quarter recently. for revenue sequentially for value-added services. But maybe talk about the trends you're seeing today in advertising and how you see that recovery in 2023.
spk14: Yeah, as you see, the quarter over quarter, we've achieved sequential growth, which is really encouraging. But if you look ahead for the next 12 months, we still see some weakness or headwinds in the advertising space. As is more so for us, because our platform is not as huge as, say, like the Tencent or the other bigger player. So I think we do not expect it to be back to, say, like 2020 or 21 level, but I'm sure we'll be better than 2022.
spk09: Outside of that, maybe you did see sequential growth in basically all your business lines. First, We got the holiday in the first quarter. So maybe should we expect seasonality in the first quarter in each of your segments? And then do you see gradual improvement in each of them? Maybe just touch on the segments. You know, I know you don't give revenue guidance, but maybe from a high level, talk about the segments outlook for the year.
spk14: So the short answer to your both questions is yes, yes. So yes, we do expect to see a seasonality low in Q1 because of the Chinese New Year and the holidays and the shorter month in February. That is what we expected. Going forward, yes, we do anticipate Q2, Q3, Q4 to see uptake. Going forward as 2023 versus 2022, yes, we do expect all business lines to achieve at least a single-digit growth
spk09: Great. Thank you so much. Thank you.
spk06: Thank you. Our next question comes from the line of Kelvin Wong from Seeker Capital. Please ask your question, Kelvin.
spk03: Evening, management. Thank you for taking my question.
spk02: I would like to ask two questions, if I may. First of all, of course, we have already seen a very encouraging results for many aspects. Maybe the company could share with us how you have achieved these sets of good numbers. That's the first question. And the second question is a follow-up on this partnership with Boss App. Apart from that, will there be any other going overseas initiative which is on your table, and if yes, what's the progress of the other going overseas initiatives? Thanks.
spk14: Okay. If I recap your question, the first question is you're asking what are the things that
spk02: The drivers for the encouraging numbers for last year and Q4. And the second question is any more color on the going overseas initiative.
spk14: Sure, sure. Okay, sure. I think if you look at the Q4 numbers, I think there are a lot of things that we have done right. So maybe I can just give you the top three that internally as an organization we talk about it and we reflect it on ourselves and what we have done right. So these are the three things. First I'll say is staying focused. So what I meant here is doing what the market and customer want and do it well. So probably you know, despite a very tough environment for the past two or three years, we have been laser focused on our subscription business. So we continue to develop new functionality and new features to help our customers to operate at a higher efficiency. And as Brian has asked earlier, so as soon as we see the chat GPT become widely available, so we are the first to incorporate the access of chat GPT to our customers. So this is very important. So all our customers are appreciative that we have this functionality for them. Secondly, if I think what we did right is making the tough decision at the right time. Probably as you have heard for the past couple of earnings call, we started to re-examine our cost structure as soon as we see the pandemic is staying here longer than what we expect. During that time, we restructured many departments internally and regrouped our the few departments where possible. So in the process we have trimmed our headcount significantly from a high of I think 620-ish employees in 2021 to 415 last month. So this is a very tough decision that we have to make, but if you look back it was necessary and it was timely. And I think the third is We have to execute our cost cutting initiative continuously. I believe that the impact of cost saving is minimal if it's only one time exercise. For us in Jigwang, the mentality of cost concierge is embedded in all departments, be it from the sales VP all the way to our admin staff. Everyone is tightly controlling all the expenses. And this is important because we need to stay afloat, we need to have a sustainable business model for long-term profitability. I guess in summary, I just recap what we have read earlier in the earnings call. For those things that we have done well, so that's the reason why this quarter we have achieved quarter-over-quarter revenue growth in all business lines. We have the highest quarterly revenue and gross profit in 2022. And again, we achieved the lowest adjusted OPEX since IPO. And last but not least, we have the adjusted EBITDA turned positive this quarter. It's a bit long-winded, but I hope it answers your question. Yes, very clear. Secondly, it's on the growing overseas. Yes, this has been pretty popular, and we have been asked by a lot of analysts and investors for the past month or so. In summary, let me conclude the going overseas update. Based on the latest number of vaccines, since we started going overseas in second half of 2022, we have achieved a few milestones that I'd like to share on the call. One is we have signed up more than 50 contracts with overseas customers. All the contract values are higher than those in China. And we do not offer free trial service overseas, which means that all users of our services overseas are fee-paying customers. And also, at this stage, I'd like to elaborate more on how we are doing in terms of how we compare to our peers. And for us, we have actually invested infrastructure overseas to service and support our customers. So we are not just lip-servicing that we are going overseas. So we do actually make investment in the overseas venture. And secondly, we have the actual product, which is called EngageLab, that will launch in Q3 of 2022. And again, WhatsApp, which is a mainstream and very popular overseas, is one of our communication channels that we can help our customers to reach their users. And number four is We are well versed in the legal requirement in all the Southeast Asia countries on data privacy that we can help our customers to better manage their data risks. Lastly, with our current presence in Singapore, we can effectively and efficiently help our customers to cover the entire Southeast Asia region. With that, I think we are very confident that we will do well in the overseas market. Definitely, we will provide more colors of this segment in the future quarters earning course.
spk04: Great, very clear. Thanks.
spk06: Thank you. As a reminder, to ask a question, please press star 11 on your telephone. I'm sharing no further questions. I'll now turn the conference back to René for closing remarks.
spk12: Thank you, Amber. 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 IR team. This concludes the call. Thank you.
spk06: Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.
spk05: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1 1. The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 111. you Thank you. Thank you. Thank you.
spk06: Ladies and gentlemen, thank you for standing by and welcome to Aurora Mobile fourth quarter and fiscal year 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. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. And I'd like to hand the conference over to your host today, Rene Regenstein. Thank you. Please go ahead, sir.
spk12: Thank you, Amber. Hello, everyone, and thank you for joining us today. Aurora's earnings release was distributed earlier today and is available on our IR website. On the call today are Mr. Wei Dongluo, Chairman and Chief Executive Officer, Mr. Shanlan Bong, Chief Financial Officer, and Mr. Guan Yang Chen, General Manager. Following their prepared remarks, they 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'd now like to turn the conference over to Mr. Luo. Please go ahead.
spk11: Thanks, Rene. Good morning and good evening, everyone. Welcome to Aurora Mobile's 2022 fourth quarter on its call. Before I comment on our Q4 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. Before looking at the fourth quarter, I would like to reflect upon our journey in the past couple of years. In a challenging environment caused by pandemic, what we did right what we learned, how we came through the toughest time, and how much we have grown as an organization. I'm proud to say that we came out of the difficult times and became more resilient and efficient. Along the way, we have been constantly reviewing our overall strategy, not afraid of making necessary decisions, no matter how tough, to ensure we are always on the right track to long-term growth. Throughout this effort, our revenues and margins remained strong as we improved gross profit while technically controlling and lowering our path. We started up fresh as a pure start business in Q1 2021. Amidst the transition period, we didn't start innovating and harnessing our core business line developer services. This really is bringing us rewards for the long run. I will give you more details later. With economic efficiency going globally, in mid-2021, we act quickly and proactively to make our organization stronger and nimble by enacting restructuring and strict cost management across the company. We are so glad we made these decisions, and our efforts are reflected in our financial results. Let me share some of the key results with you. Second, Positiva adjusted EBITDA since 2021 Q4 at RMB 0.6 million. All businesses, including developer services, subscription value add services, and vertical applications can record Q of Q growth. Highest gross profit in 2022 at RMB 59.8 million. operating expenses since IPO or for the past 18 quarters at RMB $62.8 million. Lowest adjusted net loss since Q3 of 2019 at RMB $6.6 million, improved by 18% year-over-year. AR turnover days at 32 days, lowest since IPO. default revenue balance is the highest in the history of the company at RMB 142.4 million. Total customer number up 70% year-over-year to 4,719. I am afraid to report renewed growth in Q4 2022. Total revenue rose to RMB 86.9 million, up 8% quarterly over quarter. And both developer services or co-business and vertical applications have achieved sequential growth with the biggest revenue growth contribution by developer services at 11%. In this quarter, we record the highest quarterly revenue of 2022 and lower our adjusted OPAS, being the cash component of OPAS, to a historically low level. With that, our adjusted EBITDA was positive for the second quarter since Q4 2021 at RMB 0.6 million, significantly improved by RMB 7.3 million from negative RMB 6.7 million in Q3 2022. Our adjusted net loss was also the lowest since Q3 2019 at RMB 6.6 million, improved by 18% year-over-year. Furthermore, We ended this quarter on a higher note, with more than $142 million in total deferred revenue, our remaining performance obligations up 15% versus last year. This is a set of impressive financial numbers for Q4 2022 that our team has worked hard to achieve, and it shows that we are running the business well. I sincerely believe more good things will come. We are confident that the end of the COVID zero policy in December 2022 marks the beginning of China's emergence from the pandemic, even though there may be some short-term headwinds. This, we believe, has put the country on a path to return people's lives to normalcy and resume pre-COVID levels of consumer, social, and economic growth. Therefore, the outlook for Renewal consumer activities and the gradual recovery of our business in 2023 is very promising. Now, let me go through our different revenue streams. Developer service revenue increased 11% quarter-over-quarter to revenue of $63.2 million, which was mainly due to the increase in both subscription services and value-added services. Year-over-year, developer service revenue decreased by percent, mainly due to the weakness in value-added services offset by the growth in subscription services. Subscription services revenue will remain be 46.3 million, up 11% quarter-over-quarter, and up 4% year-over-year. Subscription services our core business run include J-PUSH, Analytics, UMS, and other products and services that help developers and enterprise to improve optional efficiency. Our private car service revenue increase has contributed to the subscription revenue growth, and we were able to bring a number of renowned customers on board, including but not limited to Zhaoshan Zhengjuan, Ping An Bank, and Zhongxin Bank. The increase in our pool also contributed to the growth in revenue, and we managed to grow our customer base with several well-known and successful customers, like IKEA, Guangda Bank, Taiping Yang Baochuan, and J&T Express, just to name a few. Since our launch of the overseas service platform Engagelab in October, we have seen encouraging trends and customers have been expressing their strong interest in our products. We are expecting stronger revenue growth going into 2023, and we will continue to improve our products and services to help global developers with higher efficiency and cost-effective user reach. As I mentioned earlier, we are anticipating consumer activities to recover further in 2023. During Q4, we already saw some growth in our Value Added Services revenue, which is a good indicator of overall reviving consumer activities. The Value Added Services revenue increased quarter-to-quarter by 10%, and it was the first quarter-to-quarter growth in 2022, a major positive sign for us. Year-over-year revenue was down 44% to revenue of $16.9 million, and we expect the year-over-year growth trend will continue to recover in 2023. Major customers of the JG Alliance services consisted of repeated customers and market leaders across many industry verticals. Key customers included BAT, Baidu, Alibaba Tencent, Zhaoxiang Bank, and Zhihu. For our ADPub that was launched back in Q2 2022, we are seeing more and more entries from various apps. Over 10 million DAUs joined our platform by the end of this quarter, a growth in DAUs of over 300%. And as the overall economy recovers in China, we believe that more DAUs will join our platform going forward. Another exciting news, which also marked a major milestone for us, is our pioneer work in integrating the ChatGPT's technology in our JPUCH, our push notification solution, and in our email and SMS service platform. Today, AI has become the cornerstone of many products and services, and it is very important for us to be one of the first movers in applying AI technology. Our proactive integration of interactive language model technology and AIGC really give us the edge and a great opportunity to make our product smarter, further benefiting all our customers. For a long time, a critical concern of developers has been how to attract users' attention for creative, high-quality push content and improve message click-through rate and user conversion. The AI creation tool resulting from the integration of ChatGPT into J-Push delivers a powerful solution. Using this tool, developers can quickly tap into the AIGC-generated personalized intelligent push content to achieve high query and high conversion, effectively improving the efficiency of user reach and engagement. And for our email service, integrating ChatGPT will enable customers to generate AIGC personalized email content according to the recipient's information profile and preference. The upgraded email services will not only improve the readability and attractiveness of emails, but also increase the response rate and conversion rate of email, thereby helping our customers interact with their target users more effectively and achieve higher marketing success. Furthermore, earlier last month, we became one of the first ecosystem partner of ErnieBot, a generative AI chatbot developed by Baidu. We will access ErnieBot and apply Baidu's leading intelligent dialog technology in our customer engagement and marketing technology services. This initiative is an additional step in our implementation of our AI-driven strategy with the support and empowerment of leading AI checkbox technology. As an ecosystem partner, we will be given priority for internal testing with Earnings Board and will integrate Earnings Board in our products. Many renowned companies have joined the Earnings Board ecosystem, including iQiyi, Jidoo Automobile, Xiaoduo, high enterprise solution, Kindle, Jalpin, and PCAuto. It's clear that going forward, our businesses are getting ready for this new mega AI trend. We will also carry out in-depth research and development in chatGPT-related technology, realize interactive dialogue similar to real people through chatGPT technology, and further improve the richness of our push message, email, and SMS content to empower the great conversion rate, and marketing engagement. With that, I will now pass the call over to Shannon, who will share more information about the vertical application and other aspects of our performance.
spk14: Thanks, Chris. I would like to echo Chris' comment on our revenue trend. With our relentless effort in developing our core developer service, we see a very promising recovering trend in Q4 and going forward. Not only in developer services, We also seen sequential growth in vertical application revenues, especially in market intelligence. Vertical applications mainly consist of financial risk management and market intelligence. Vertical application revenue increased by 1% quarter over quarter and decreased by 11% year over year. In the financial risk management segment, revenue decreased by 14% Q over Q to remedy 12.4 million and decreased 25% year over year. The decrease in financial risk management revenue was due to many of our customers' consumption were impacted by COVID outbreak in November to December last year. We are not too worried about financial risk management revenue in 2023 as we believe the decline in Q4 was temporary and we are already seeing recovery in consumption so far this year. Our market intelligence services delivered strong revenue growth up 16% quarter-over-quarter and 27% year-over-year to RM10.4 million. During this quarter, our revenue increased as a result of recovery in customer spending and the addition of many well-known and sizeable new clients. Furthermore, our strategy of focusing on KA customers has helped us gain additional market share. The big and renowned customers that we sign up in this quarter include, among others, Tencent, Baidu, Baobao, Zhongxing Securities, and Shenzhou Zhuche. I will now go through some of the key expenses and balance sheet items. On to operating expenses. As Chris mentioned earlier, our strategy of active and stringent cost management proved very wise. and our quick action help us to maintain as a nimble organization. We have had another historical low quarter in terms of operating expenses, excluding non-cash impairment loss of long-lived assets at 73 million, down 21% year-over-year. All three components within OPEC's category recorded year-over-year non-cash reduction, in particular, R&D expenses decreased by 22% to RM35 million, mainly due to lower headcount that reduced salary cost and associated share-based compensation, and a decrease in cloud cost and depreciation expenses as a result of improvement and optimization of our cloud platform. Selling and marketing expenses decreased by 26% to RM24.5 million, mainly due to decrease in headcount by 39%, marketing expenses and salary costs decreased accordingly in this quarter. G&A expenses increased by 149% to RMB $35.9 million, mainly due to a $22.4 million non-cash increase in the long-lived assets impairment due to one-time costs for going cloud in this quarter. Our adjusted EBITDA Delivered second positive quarter since Q4 of 2021 at positive RMB 0.6 million. A company-wide prudent and deliberate hiring and expenses control strategy has helped us maintain a comparatively low operating expenses level. Let me recap some of the highlights of this quarter. We achieved lowest adjusted operating expenses since IPO at RMB 62.8 million, down 19% year-over-year. We had the lowest adjusted net loss since Q3 of 2019 at negative RMB 6.6 million, improved by 18% year-over-year. We had a second positive adjusted EBITDA since Q21 at RMB 0.6 million, improved by 7.3 million quarter-over-quarter. And onto the balance sheet. I will share two very important KPIs that we closely monitor. Firstly, the AR turnover days decreased from 38 days in Q3 to 32 days, which is the lowest AR turnover days since IPO. I have to pay tribute to our team who has been working hard and diligently to collect payments from our customers on a timely basis. Maintaining a low AR turnover days level is very important. and it means that we have short cash collection cycle which help us to mitigate risk in bad and doubtful debts. Secondly, one of the key financial KPIs for tracking performance of SaaS companies is total deferred revenue, which represent cash collected in advance from customer for future contract performance, where we recorded another highest balance in the history of the company, standing at RMB 142.4 million. This is the 11 consecutive quarters that our deferred revenue has exceeded $100 million. In addition, this quarter also marks the 7 quarters that we have deferred revenue with continuous sequential growth, which is another great source of cash flow for us in such a challenging time. Healthy cash flow aside, the level of deferred revenue also signifies that our business is in great shape. Our customer has continued to buy our services quarter over quarter and year after year, and we are very pleased with the trending of this deferred revenue balance. Next, total assets were at $420.9 million at December 31, 2022, and this includes cash and cash equivalent of $116.3 million, accounts receivable of $29.7 million, prepayments and other current assets of $30.4 million, fixed assets at $14.9 million, long-term investment of $141.9 million, goodwill of $37.8 million and intangible assets of $23.9 million resulted from the SandCloud acquisition in March 2022. And total current liabilities were at $249.6 million as of December 31, 2022. This includes short-term loan of $5 million, accounts payable of $18.2 million, deferred revenue of $138.8 million, and accrued liabilities of $87.6 million. And lastly, before I conclude, I'll give a quick update on the share repurchase plan. In the quarter ended December 31, 2022, we repurchased 246,000 ADS. Cumulatively, we have repurchased a total of 1.19 million ADS since the start of our repurchase program. And this concludes the management prepared remarks. We're happy to take the question now. Operator, you may proceed.
spk06: Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and write for a name to be announced. To withdraw your question, please press dial 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Brian Kingslinger from Alliance Global Partners. Please ask your question, Brian.
spk09: Great. Thanks for taking my question, and good to see the recovery in your businesses. Can you first talk about the strategic partnership with WhatsApp? It's your first slide, and maybe I missed it. Can you discuss how and which segments this might drive revenue growth as you see it?
spk14: Sure. Brian, this is Shannon. Based on what we have collected from our customers, especially overseas, a lot of our customers are not able to tap onto WhatsApp communication channel. Probably, as you know, outside of China, WhatsApp is huge in Southeast Asia, even the entire Asia X China. So what we are helping the customer to do is they are able to, as part of the communication channel, besides the so-called push notification, they are able to tap onto the channel managed by WhatsApp to reach their users. So this is something that we are able to help them to ensure that they reach the click-through rate or the usability rate is much higher. So this is something that WhatsApp is happy that we are able to help them as well to reach more customers. So along that, a lot of our customers are waiting for us to launch this new product which is already in the market. So what we are doing is we will be able to charge our customers for the communication channel done through WhatsApp channel. And of course, with that, we need to pay an expense or cost to WhatsApp too.
spk09: So essentially, you're going to be able to send push notifications through WhatsApp. Is that right?
spk14: Correct. So this is something that in the event that the traditional push notification doesn't get through, the customers are able to use the WhatsApp channel to reach their customers.
spk09: Now, for existing customers that are using push, will this drive increases in the rates they pay or will it just be part of this service they already get?
spk14: Yes, it will be an increase. We will charge every single push notification done through WhatsApp. So there will be additional cost to the customer, additional revenue to us.
spk07: Great.
spk09: And then, um, maybe you can talk about chat GBT and with your push and send cloud. How were the services operated before ChatGPT? Was it not automated or intelligent?
spk14: No, you see, what we are seeing is probably, as you know, AIGC is very huge for the past two months. So they can come up with really creative answers for whatever question that you ask. So what we are seeing is customers are asking us to see if we are able to tap onto ChatGPT's brain, so to speak. Because what they are doing is they are saying they really need some creative content for their push to improve their click-through rate. So how do they do that is they are able to use our service to tap onto ChatGPT's content creative site. So which means that for a traditional customer, they used to be having to come up with their own push content themselves, which might not be creative at all. So what they are able to do is through our service, they can ask Chair GP2 to create say like five optionality in terms of content provision so that they can choose the best to suit their case. So they are able to tap onto that and with that they are able to send through their message with the hope that there will be better click-through rate for that. So in a similar fashion, For a similar fashion, for the email, our customer who uses the SendCloud ChatGPT link, they are able to customize, they use the ChatGPT's AIGC to come up with a template so that they can better customize their email to send to their users, which will be hopefully at a better click-through rate and a better result for the customers. So this is something that we are seeing a lot of customers are asking for this service. And probably as you know, these services are not available in China as yet. So we have a great, great opportunity here to help our customers to get around this issue.
spk09: Great. That's super helpful. Can you talk about the advertising market in China? I know we saw a small recovery in the fourth quarter recently. for revenue sequentially for value-added services. But maybe talk about the trends you're seeing today in advertising and how you see that recovery in 2023.
spk14: Yeah, as you see, the quarter over quarter, we achieved sequential growth, which is really encouraging. But if you look ahead for the next 12 months, we still see some weakness or headwinds in the advertising space. As is more so for us, because our platform is not as huge as, say, like the Tencent or the other bigger player. So I think we do not expect it to be back to, say, like 2020 or 21 level, but I'm sure we'll be better than 2022.
spk09: Outside of that, maybe you did see sequential growth in basically all your business lines. First, We got the holiday in the first quarter. So maybe should we expect seasonality in the first quarter in each of your segments? And then do you see gradual improvement in each of them? Maybe just touch on the segments. I know you don't give revenue guidance, but maybe from a high level, talk about the segment's outlook for the year.
spk14: So the short answer to your both questions is yes, yes. So yes, we do expect to see a seasonality low in Q1 because of the Chinese New Year and the holidays and the shorter month in February. That is what we expected. Going forward, yes, we do anticipate Q2, Q3, Q4 to see uptake. Going forward as 2023 versus 2022, yes, we do expect all business lines to achieve at least a single-digit growth
spk09: Great. Thank you so much. Thank you.
spk06: Thank you. Our next question comes from the line of Kelvin Wong from Seeker Capital. Please ask your question, Kelvin.
spk03: Good evening, management. Thank you for taking my question. I would like to ask two questions, if I may.
spk02: First of all, of course, we have already seen a very encouraging results from many aspects. Maybe the company could share with us how you have achieved this sense of good numbers. That's the first question. And the second question is a follow-up on this partnership with BossApp and Apart from that, will there be any other going overseas initiative which is on your table? And if yes, what's the progress of the other going overseas initiatives? Thanks.
spk14: Okay. If I recap your question, the first question is you're asking what are the things that
spk02: The drivers for the encouraging numbers for last year and Q4. And the second question is any more color on the going overseas initiative.
spk14: Sure, sure. Okay, sure. I think if you look at the Q4 numbers, I think there are a lot of things that we have done right. So maybe I can just give you the top three that internally as an organization, we talk about it and we reflect it on ourselves and what we have done right. So these are the three things. First, I would say is staying focused. So what I meant here is doing what the market and customer want and do it well. So probably you know, despite a very tough environment for the past two or three years, we have been laser focused on our subscription business. So we continue to develop new functionality and new features to help our customers to operate at a higher efficiency. And as Brian has asked earlier, so as soon as we see the chat GPT become widely available, so we are the first to incorporate the access of chat GPT to our customers. So this is very important. So all our customers are appreciative that we have this functionality for them. And secondly, if I think what we did right is making the tough decision at the right time. And probably as you have heard for the past couple of earnings call, we started to re-examine our cost structure as soon as we see the pandemic is staying here longer than what we expect. So during that time, we restructure many departments internally and regroup our the few departments where possible. So in the process, we have trimmed our headcount significantly from a high of I think 620-ish employees in 2021 to 415 last month. So this is a very tough decision that we have to make, but if you look back, it was necessary and it was timely. And I think the third is We have to execute our cost cutting initiative continuously. I believe that the impact of cost saving is minimal if it's only one time exercise. For us in Jigwang, the mentality of cost concierge is embedded in all departments, be it from the sales VP all the way to our admin staff. Everyone is tightly controlling all the expenses. And this is important because we need to stay afloat, we need to have a sustainable business model for long-term profitability. I guess in summary, I just recap what we have read earlier in the earnings call. For those things that we have done well, so that's the reason why this quarter we have achieved quarter-over-quarter revenue growth in all business lines. We have the highest quarterly revenue and gross profit in 2022. And again, we achieved the lowest adjusted OPEX since IPO. And last but not least, we have the adjusted EPITAR turned positive this quarter. It's a bit long-winded, but I hope it answers your question. Yes, very clear. Secondly, it's on the growing overseas. Yes, this has been pretty popular, and we have been asked by a lot of analysts and investors for the past month or so. In summary, let me conclude the going overseas update. Based on the latest number of vaccines, since we started going overseas in second half of 2022, we have achieved a few milestones that I'd like to share on the call. One is we have signed up more than 50 contracts with overseas customers. All the contract values are higher than those in China. And we do not offer free trial service overseas, which means that all users of our services overseas are fee-paying customers. And also, at this stage I'd like to elaborate more on how we are doing in terms of how we compare to our peers. And for us, we have actually invested infrastructure overseas to service and support our customers. So we are not just lip-servicing that we are going overseas. So we do actually make investment in the overseas venture. And secondly, we have the actual product, which is called EngageLab, that will launch in Q3 of 2022. And again, WhatsApp, which is a mainstream and very popular overseas, is one of our communication channels that we can help our customers to reach their users. And number four is We are well versed in the legal requirement in all the Southeast Asia countries on data privacy that we can help our customers to better manage their data risks. Lastly, with our current presence in Singapore, we can effectively and efficiently help our customers to cover the entire Southeast Asia region. With that, I think we are very confident that we will do well in the overseas market. Definitely, we will provide more colors of this segment in the future quarters earning course.
spk04: Great. Very clear. Thanks.
spk06: Thank you. As a reminder, to ask a question, please press star 11 on your telephone. i'm showing no further questions i'll now turn the conference back to renee for closing remarks thank you amber 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 ir team this concludes the call thank you thank you that concludes today's conference call thank you for participating you may now disconnect
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