Jianpu Technology Inc.

Good day, and welcome to the Jane Blue Technology Inc. Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. please note this event is being recorded. I would now like to turn the conference over to Li Ting, head of IR. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us today. Our third quarter 2023 earnings release was distributed earlier today and is available on our IR website at ir.genpu.ai, as well as on PR Newswire services. On the call today from Genpu Technology, We have Mr. David Yeh, co-founder, chairman, and chief executive officer, and Mr. Oscar Chen, chief financial officer. Mr. Yeh will talk about operations and company highlights, followed by Mr. Chen, who will discuss the financials. They will all 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. is defined in Section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and current market and operating conditions and relate to events that involve no or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the company's control. These risks may cause the company's actual results or performance to differ materially. Further information regarding this and other risks, uncertainties, or factors is included in the company's filings with the USFCC. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under applicable law. Finally, please note that unless otherwise stated, all figures mentioned during the conference call are in IMB. It is now my pleasure to introduce our co-founder, chairman, and chief executive officer, Mr. David Yeh. David, please go ahead.

Thank you, Li-Ting. Hello, everyone, and thank you all for joining us today. As a company dedicated to embracing new technology, we are constantly exploring ways to improve our productivity and efficiency. Today, I'm glad to use a trained AI assistant to work through my CEO scripts. The next part of my presentation will be delivered using an AI-generated voice that has been approved by our team and myself.

Thank you, everyone, for being with us today. The macroeconomy showed signs of improvement in the third quarter as GDP grew 4.9% year over year, surpassing market expectations. Total social financing, a broad measure of credit and liquidity in the economy, continued to increase sequentially, standing at RMB 372.5 trillion at the end of the third quarter. We also observed that the steady uptick in retail sales growth reflects a certain degree of resilience in the economy. Meanwhile, the overall recovery of consumer confidence was relatively slow, and it would take some time for the stimulus, such as the current accommodative monetary policy, to have a noticeable effect at the grassroots level. We have made progress in carefully navigating this challenging environment since earlier this year and continue to diligently execute our diversification strategy. Our total revenue has witnessed a commendable increase of 12.0% year over year to RMB 830.5 million during the past three quarters. Thanks to our capital light platform model and our relentless efforts of efficiency improvements, ROI reached 133.7% for the first three quarters of 2023, and our loss from operations narrowed by 65.0% to RMB 42.9 million. In the third quarter, our total revenue experienced a decrease of 4.9% year-over-year and 10.5% quarter-over-quarter, mainly due to certain headwinds and challenges on our businesses. For example, banks continued to tighten their marketing budget, particularly on credit cards, given the softening consumer spending and rising delinquency. However, as we successfully executed our strategy to prioritize efficiency over scale, we managed to achieve a significant efficiency gain with a higher ROI of 141.2% in this quarter. I will now take you through our key performance highlights for the third quarter. First, we continue to benefit from our platform model with rich product offering and network effect. We leveraged our deep industry insights, market-leading technologies, and diversified business model to maintain steady revenue growth since the start of the year. Revenues from loan recommendation, credit card recommendation, big data, and system-based risk management and marketing and other services accounted for 30 percent, 38 percent, 8 percent, and 24 percent, respectively, of our total revenues during the first three quarters. We also expanded the reach of our AI solutions beyond the financial sector, addressing opportunities in adjacent categories. Through these services, we have equipped our financial partners as well as non-financial partners, including the partners offering telecommunications, e-commerce, and lifestyle products and services to explore new operating models in the context of digital transformation. Revenues from marketing services and other services saw year-over-year growth of 72.1% during the first three quarters of 2023. Starting from the second quarter, banks have refined their credit card related strategy, further tightening credit policy, enhancing risk management, and placing greater emphasis on the quality of services provided to existing credit card holders. As a result, Banks further cut down their marketing budget on new card issuance, providing challenges for our credit card recommendation services. We have proactively streamlined our acquisition channels to stay agile in response to the market and to align with the policy adjustments of banks. Additionally, the industry where our big data and risk management services are situated has been affected by recent regulations. Due to these impacts, our total revenue in the third quarter experienced a year-over-year decrease of 4.9 percent to RMB 255.6 million. Second, we further enhanced our efficiency and improved our cost optimization. Despite the fluctuation in revenue, our ROI experienced a remarkable 5.9 percentage points increase year-over-year, reaching 141.2 percent in the third quarter. We continue to integrate various AI tools into an internal one-stop portal used across all our departments. These tools have consistently streamlined our work processes and boosted our operational efficiency. At the same time, we continue to diversify our marketing and acquisition channels and successfully signed up a number of strategic partners in the third quarter. Through our continued efforts to balance growth and efficiency, our cost of operation and cost of promotion and acquisition decreased by 30.5 percent and 7.0 percent year-over-year to RMB 14.6 million and RMB 167.6 million in the third quarter of 2023, respectively. Effective cost control measures over research and development expenses, as well as general and administrative expenses, have led to a decline in our fixed costs by 5.4 percent . As a result of our continued efficiency gain and cost optimization, our net loss was RMB 6.4 million in the third quarter, achieving 74.5% improvement year over year. Third, we remain committed to cultivate our company culture. Last month, we celebrated our company's 12th anniversary by organizing an outdoor sports day with a live show of rock music, which marked the first gathering of all our employees post COVID. Looking back into the past 12 years, we have experienced remarkable achievements as well as challenging obstacles. Thanks to our commitment to the corporate culture, the unwavering collaboration and mutual support of all employees have brought us to where we are now. Our culture also encourages being open-minded and embracing changes and innovations. Inspired by such culture, An AI hackathon event has been successfully organized to pursue new avenues of AI development. Encouragingly, a number of projects and initiatives from the event are undergoing continuous development, and some of them have entered the internal testing phase during this quarter. Moving forward, we will remain committed to our vision of becoming everyone's financial partner. and foster a culture of continuous learning and innovation. Our unwavering dedication to being user-oriented will drive us to consistently deliver services and products that deeply connect with our customers. Before I turn the call to Oscar, let me briefly discuss the macro environment and our business outlook. The Chinese government has taken proactive steps to address the current economic conditions characterized by lingering uncertainties and the need to strengthen the momentum of the recovery. The continuous implementation of stabilization policies has yielded encouraging results, driving a recent acceleration in growth. We believe that the government's recent measures to stimulate demand and stabilize the property market will act as positive catalysts, injecting new energy into the ongoing economic recovery. Furthermore, We are cognizant of the immense opportunities that come with the advancement of AI and will target to develop flexible and low coupling AI solutions with comprehensive coverage in AI product architecture. We will continue to execute on our strategy for driving the digital transformation of the financial and other industries, empowering our ecosystem partners with digital technology and artificial intelligence. I will now hand over to our CFO, Oscar Chen, to run through our financials.

Thank you, David, as well as David's AI assistant, who did a great job just now. Hello, everyone. As David mentioned earlier, we have made progress in carefully navigating this challenging environment. During the third quarter, we continue to diversify our business mix, improve our operational efficiency, and optimize our cost structure. In the third quarter, the total recommendation service revenues decreased by 9.6% year-over-year to RMB 191.2 million. Revenues from loan recommendation services maintained a strong growth momentum, increasing by 25.3% year-over-year in the third quarter, mainly driven by a 48% year-over-year increase in the number of loan applications to approximately 7.4 million. Revenues from credit card recommendation services decreased by 31.8% year-over-year, mainly due to that certain bank credit card issuers tightened their credit policy and lowered their marketing budgets since the second quarter. Credit card volume decreased by 27.3% year-over-year to approximately $0.8 million. Revenues from our big data and system-based risk management services decreased by 24.4% to RMB $18.9 million in the third quarter of 2023 from RMB $25 million in the same period, 2022. The decrease was mainly due to the deconsolidation of a subsidiary, and to a less extent, a gradual shift of our business model of database risk management services towards the cooperation with the licensed credit reporting agencies. Revenues from marketing and other services increased by 41.3% to RMB 45.5 million in the third quarter of 2023. from RMB 32.2 million in the same period of 2022, primarily due to the growth of our insurance brokerage services and other new businesses. This is a strong testament to our success in applying our advanced AI technologies and strong digital marketing capabilities beyond the financial sector into adjacent categories. Let me now move on to cost and expenses. Cost of promotion and acquisition decreased by 7% year-over-year to RMB 167.6 million in third quarter. The overall ROI for recommendation services and marketing and other services improved by 6 percentage points year-over-year to 141% in third quarter. reflecting our continuous efforts to expand new business initiatives, monitor customer acquisition costs, and improve operational efficiency. We also continue to execute our cost optimization initiatives. As a result, cost of operation decreased by 30.5% to RMB 14.6 million in the third quarter of 2023, from RMB 21 million in the same period of 2022. Our sales and marketing expenses, R&D and the general and administrative expenses decreased by 3.8%, 8.4%, and 1.7% year-over-year respectively. Measured as a percentage of total revenue, sales and marketing, R&D, and the G&A expenses in total stood at 32.1% in the third quarter of 2023. With our continued efforts to optimize our cost structure and improve productivity of our business, loss from operations was RMB 8.7 million in the third quarter of 2023, compared with RMB 31.9 million in the same period of 2022. Operating loss margin was 3.4% in the third quarter of 2023. compared with 11.9% in the same period of 2022. In the third quarter, we recorded net loss and adjusted net loss of RMB 6.4 million and RMB 5.6 million, respectively, compared with RMB 25.1 million and RMB 9.4 million in the same period of 2022. Our net loss margin and non-GAAP adjusted net loss margin for third quarter improved to 2.5% and 2.2%, respectively, compared with the same period of 2022. As of September 13, 2023, we had RMB 687.3 million in cash and cash equivalents, time deposits, and the restricted time restricted cash, and time deposits on our balance sheet. This concludes our prepared remarks. Operators, please go ahead.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Showing no questions, this concludes our question and answer session. I would like to turn the conference back over to the team for any closing remarks.

Thank you once again for joining us today. If you have any further questions, please contact us at ir at room360.com. Thank you for your attention, and we hope you have a wonderful day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.