Aurora Mobile Ltd Q3 FY2025 Earnings Call

Ladies and gentlemen, thank you for standing by, and welcome to the Aurora Mobile Third Quarter 2025 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. You will then hear an automated message advising your hand is raised. And to withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your host today, Rene Vanguestaine. Please go ahead, sir.

Hello, everyone, and thank you for joining us today. Aurora Mobile's earnings release was distributed earlier today and is available on the IR website at ir.gguang.cn. On the call today are Mr. Weidong Luo, Chairman and Chief Executive Officer, Mr. Shan-Nen Bong, Chief Financial Officer, and Mr. Guanyang 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 is defined in the US Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions, which are difficult to predict and may cause the company's actual results, performance, or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties, and or factors are included in the company's filings with the US 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, as required under applicable law. With that, I would now like to turn the conference over to Mr. Luo. Please go ahead.

Thanks, Rene. Greetings to all. Welcome to Aurora Mobile's 2025 Third Quarter Earnings Call. Before I comment on our Q3 results, I would like to remind everyone that the quarterly earnings are available on our IR website. You may refer to that as we proceed with the call today. Without further ado, let's get started. As we did in the past, based on the Q3 earnings numbers, the suitable discretion I will give to the fourth quarter result is good things. Kind of impulse. Because we record the first-ever back-to-back quarterly net GAAP profit in our history. Following the Mandan net debt profit last quarter, our strong business performance carried us across the line again in Q3. Let me elaborate more on the strong business we have had in this quarter. Firstly, the group's revenue this quarter of RMB 19,900,000, achieving a remarkable 15% year-over-year and 1% sequential growth. This RMB 19,900,000 was at a very high end of the guidance we have provided. Secondly, our global flagship product, Engagement, continued its great momentum with another quarter of great numbers. Engagement app recorded a very strong quarterly growth in customer number and contract value growth. In particular, Engage Labs ARR for September 2025 stood strongly and reached a new milestone at RMB 53,700,000. It has grown by 160% year-over-year. Thirdly, our financial risk management business had its best quarter yet, recording the highest quarterly revenue of RMB 222,600,000 with growth of 43% year-over-year. Fourthly, gross profit exceeded our expectation and grew strongly by 20% year-over-year while achieving the highest growth gross profit for the past fifteen quarters. Gross margin has also improved year-over-year and quarter-over-quarter. Last but not least, we are generating positive cash flow and are in a great cash position. Indeed, we are. The net operating cash inflow of RMB 23,300,000 recorded the highest level since 2020. It is very humbling for me to share with you all our quarterly financial results. As I mentioned in the pre-earnings call, assuming historical GAAP net profit was not easy. For us to have back-to-back GAAP net profit is simply a great achievement for Aurora Mobile. We will not stop here. There are more we need to achieve together. And we will. To achieve that, all the processes in the organization worked really well for the entire fourth quarter of 2025. Our hard work and commitment to excel throughout Aurora Mobile will not stop here. Now let me share more on the individual business performance. Our total Q3 group revenue has grown both year-over-year and quarter-over-quarter. In particular, revenue grew 15% year-over-year driven by strong numbers from developer services and financial risk management basis. Again, in this quarter, all business segments, including developer subscription services, video ad services, and vertical applications, recorded strong acceleration, with double-digit year-over-year revenue growth. This is the second consecutive quarter we have such a strong revenue growth momentum.

Next, let me go over the revenue for a particular application that includes financial risk management and market intelligence. Overall, vertical applications had a good quarter, where revenue grew both year-over-year and quarter-over-quarter. Within vertical applications, financial risk management recorded significant 33% growth in revenue year-over-year and 3% quarter-over-quarter. Financial Risk Management had another excellent quarter, now the third consecutive quarter of revenue in excess of RMB 21,000,000 under its belt. Another significant milestone for this business is that it recorded the highest quarterly revenue in history of RMB 22,600,000 in this quarter. This 33% year-over-year revenue growth mainly due to a strong 44% customer number growth. The customers that we signed up or renewed in Q3 include, but are not limited to, various licensed credit and financial institutions throughout China. Market intelligence revenue, on the other hand, decreased by 23% year-over-year and 2% quarter-over-quarter due to continued weak demand for Chinese app data. This result is in line with our expectation. Our gross profit had spectacular results too. In this quarter, it grew 20% year-over-year and 7% quarter-over-quarter. The RMB 63,800,000 gross profit we had was also the highest gross profit for the past fifteen quarters. With group revenues growing 15% year-over-year, yet our gross profit grew by 20% year-over-year. This shows that we recorded very high margin revenue in this quarter. This is a key target that we would like to maintain and extend beyond this quarter. On to operating expenses, the Q3 operating expenses were at RMB 64,400,000, representing a 12.8% increase year-over-year and an increase of 5.8% quarter-over-quarter. Operationally, our Q3 revenue grew by 15% year-over-year while OpEx only grew by 12.8%. Overall, we are pleased to see how we have been controlling OpEx to support the double-digit revenue growth across our business line.

First, we achieved our very first back-to-back GAAP net profit in history. Number two, our core developer subscription business had its best revenue in history of RMB 57,300,000. As did the financial risk management business. Our flagship product, EngageLab, continued its expansion beyond the shores. Apart from great growth in customer numbers and contract value, EngageLab business reached another very important key milestone, where the ARR was at RMB 53,700,000 in September 2025, representing a stunning 160% year-over-year growth. Gross profit grew 20% year-over-year and recorded its highest levels for the past fifteen quarters. Operating activities brought in net cash inflow of RMB 33,300,000. Our net dollar retention for core developers reached the best number in history, at 104%. Now let's turn to business outlook. Based on the current available information, the company sees the Q4 2025 revenue guidance to be in the range of RMB 94,000,000 to RMB 96,000,000, representing solid growth of 1% to 3% year-over-year compared to the same quarter of 2024. Before I conclude, I'll give a quick update on the share repurchase plan. In this quarter ended 09/30/2025, we repurchased 4,000 ADS. Cumulatively, we have repurchased a total of 327,000 ADS since the start of our repurchase program. Today, our board of directors has approved a share repurchase program whereby the company is authorized to repurchase up to USD 10,000,000 worth of its ordinary share, including in the form of ADS. The company expects to fund the repurchase of its existing cash.

As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced.

Good evening, management. Thank you for taking my questions. First of all, congrats for delivering another set of stunning results this quarter. I have only one question. Based on my reading of the earnings release, I noticed the strength of the engagement business and how it strengthened the group's financial results. So I would appreciate it if management could tell us more about EngageLab. And why the growth trajectory has been so strong since day one. Thank you.

Let me take this call. Kevin, it's great to hear from you again, and thanks for your interest. I acknowledge your earlier statement about EngageLab's strong track record since day one. We are very proud of this achievement. For those listeners who have access to our earnings release deck, I recommend referring to slide number three, where we display a diagram of the EngageLab business to date. One new important data point included in this quarter's earnings deck is the ARR. For September 2025, the ARR was at RMB 53,700,000, which is a 160% jump from a year ago. We are encouraged by this number, as it demonstrates our significant growth trajectory and revenue expansion in just twelve months. The success of EngageLab is not by chance; it was due to endless improvements and upgrades we have made to our product and service offerings, which help us acquire new customers and retain existing customers globally. Back when we launched EngageLab in 2022, our mission was clear: to address our customers' main needs for reaching out and engaging with their users in an effective manner. Through EngageLab, our customers can effectively engage with users through various messaging channels such as app push, web push, email, SMS, WhatsApp, and OTP. From a technical standpoint, we have invested heavily in data facilities in eight cities globally, with our most recent data center launched in Turkey this week, further expanding our global infrastructure. Our engagement products are sold in over 52 different countries and regions globally. Our customer service team has been very responsive, which contributes to our high retention rates. With such a compelling value proposition, it's not hard to see why EngageLab has been able to deliver such strong results quarter after quarter. Both Chris and I have great hopes and confidence in the EngageLab business going forward.

Good evening. I'm Jack Sun from Gong Fu Research. Thank you, management, for taking my question. Congratulations on another good quarter with solid earnings. In particular, two consecutive quarters with net profit. Well done. I have a question for management; could you help me recap what went well in Q3 that delivered another quarter with a GAAP net profit? Thank you.

Hi Jack, thanks for the question. Yes, it was a great quarter indeed. As mentioned, we executed very well operationally, and everything just aligned for our financials as released earlier today. Several things contributed to this success. First, revenue in Q3 was strong, with all business lines recording impressive year-over-year double-digit growth. The subscription business and financial risk management both achieved their historical best revenue quarters. Importantly, EngageLab contributed RMB 13,000,000, another historical high. We managed to grow revenue without sacrificing margins; our gross profit reached its highest level for the past fifteen quarters, and our gross margin also increased year-over-year and quarter-over-quarter. This combination of factors solidified our GAAP net profit for the second consecutive quarter. Additionally, our NDR reached 104% for the first time, and we achieved a historically high deferred revenue balance of RMB 166,300,000. With strong cash flow yielding net operating cash inflow of RMB 23,300,000, this quarter has truly been exceptional, and we are committed not to being complacent but to continue expanding and investing for future growth.

Thank you, everyone, for joining our call tonight. If you have any further questions or comments, please don't hesitate to reach out to the IR team. This concludes the call. Have a good night. Thank you all.

This does conclude the conference call. Thank you for participating, and you may now disconnect.