Aurora Mobile Limited (NASDAQ:JG) Q2 2025 Earnings Call Transcript

Aurora Mobile Limited (NASDAQ:JG) Q2 2025 Earnings Call Transcript August 28, 2025

Operator: Ladies and gentlemen, thank you for standing by, and welcome to Aurora Mobile Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I’d now like to hand the conference over to your host today, Christian Arnell. Thank you. Please go ahead, sir.

Christian Arnell: Thank you. 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.jiguang.cn. On the call today are Mr. Weidong Luo, Chairman and Chief Executive Officer; Mr. Shan-Nen Bong, Chief Financial Officer; and Mr. Guangyan Chen, General Manager. Following their prepared remarks, 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 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 or factors are included in the company’s filings with the U.S. SEC. 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 now — with that, I’d now like to turn the conference over to Mr. Luo. Please go ahead.

Weidong Luo: Thanks. Christian. Greeting to all, welcome to Aurora Mobile’s 2025 second quarter earnings call. Before I comment on our Q2 results. I would like to remind everyone that the quarterly earnings deck is available on our IR website. You may refer the deck as we proceed with the call today. I’m so excited about this call today and sharing this Q2 earnings release with you because this was just the best quarter we have ever had. At the end of this call, I believe all of you will be equally excited as I am now. Let’s get started. As we did in the past, based on the Q2 numbers, I have a suitable description for the second quarter results, which is our new chapter in Aurora Mobile. For one very significant milestone we have achieved, we recorded the first ever quarterly net profit.

This is GAAP profit by the way, in our history. This great milestone aside, we have recorded many other great operating results in this quarter 2. Let me elaborate more later in the call. Firstly, our global flagship product EngageLab, continues to expand and scale globally with great year-over-year and quarter-over-quarter customer number and contract value growth. Secondly, the group’s revenue this quarter of RMB 89.9 million, achieving a remarkable year-over-year and sequential growth. This RMB 89.9 million was the higher end of the guidance we have provided. EngageLab recognized revenue also grew strongly by 67% year-over-year and 24% quarter-over-quarter. Thirdly, our financial risk management business has another great quarter, recording solid revenue growth of 27% year-over-year.

Fourthly, gross profit grew strongly by 13% year-over-year while achieving the highest gross profit for the past 10 quarters. Gross margin has also improved quarter-over-quarter. In summary, I’m truly pleased with the great achievement we have had in this quarter. Achieving historical GAAP net profit is not easy. We can spend considerable time, effort and energy over the past 2 to 3 years to strategize the growth path. Looking back, it was a tough but truly enjoyable and fulfilling journey. During that period, we explored new markets, consolidates our services, creating our global flagship product, EngageLab for global market. Our AI agent platform, GPTBots.ai, [indiscernible] providing our enterprise customers an easy-to-use AI agent platform for them to easily embrace the advancement and the great power of artificial intelligence.

Over these periods, we saw significant increase in both customer numbers and business volume. This puts the business firmly on solid ground and on sustainable expansion path. Apart from ensuring top line growth, we also serious look at the OpEx. We challenged and improved operational efficiency of the entire organization, hard decisions were made to streamline our services offering and certain departments. Certain services with less than ideal gross margins were abandoned or ditched. The group head count was also reduced from the higher of more than 820 to around 400 now. As we work hard scaling up revenue, maintaining high gross margins and with tight and lean cost structure, achieving the quarterly GAAP net profit is just a matter of when.

Since everything fell into the right place in Q2, that’s the very first Aurora Mobile GAAP net profit came in this quarter. Now let me share more on the individual business performance. Our total Q2 revenue has grown 13% year-over-year, driven by the great performance from Developer Services. Within the group revenue, all business segment, mainly Developer Subscription Services, value-added services and Vertical Applications, record solid acceleration and double-digit year- over-year revenue growth. Development Services revenue, which consists of subscription services and value-added services increased by a strong 14% growth year-over-year, 3% growth quarter-over-quarter. Subscription revenue get solid revenue numbers, well, increased by 12% year- over-year and increased slightly quarter-over-quarter.

Value-added services revenue grew by an impressive 30% year-over-year and increased 21% quarter-over-quarter. Our core business developer subscription services revenue of RMB 53.7 million, record growth of 12% year-over-year and increased slightly quarter-over-quarter. The year-over-year revenue growth was mainly driven by increase in both customer number and ARPU, I believe this segment has stood firmly on its solid foundation where the subscription revenue record fourth consecutive quarter of RMB 40 million plus revenue. For subscription services, we have record year-over-year revenue growth in both the domestic and overseas markets. Next, I shall elaborate more on our EngageLab business this quarter. Our flagship product EngageLab continue to be the star performer for the group, as far as revenue growth trajectory goes.

Firstly, we had another strong quarter of — for EngageLab where the total contract value we have signed amount to RMB 11.2 million in Q2. The growth acceleration has been great for this business since day 1. Secondly, global customers from all corners of the world continue to purchase our product and services. The customer number has increased by 25% sequentially, reaching to 1,058. This was driven by the continued progress we are making across our go-to-market growth. Further, the revenue recognized for the EngageLab, again, recorded very strong growth of 67% year-over-year, 24% quarter- on-quarter. Firstly, our EngageLab products and services are now sold to customers in more than 45 different countries and regions globally, customers from 4 new countries has been converted and signed up with us in Q2.

As I mentioned this before, but we would like to reiterate that. I truly believe that EngageLab is the engine of growth for Aurora Mobile in the next 12 — 24 months. The number it has delivered over the past 8 quarters is the greatest testament of my belief. Next, within subscription revenues, some of the notable wins this quarter include but not limited to [indiscernible] China Citibank International, just to name a few. Value-added services revenue were RMB 10.7 million increased by 30% year-over-year and increased by 21% quarter-over-quarter. The significant revenue year-over-year growth we have seen was mainly due to the increased advertiser spending allocation to us and new customers acquired in Q2. In addition, the traditional Q2 online shopping festival also contribute to the revenue growth.

Now let me pass the call over to Shan-Nen, who will share more about the Vertical Application and other aspects of our financial performance for this quarter.

Shan-Nen Bong: Thanks Chris. Next, I’ll go over the revenue for Vertical Application that includes financial risk management and market intelligence. Overall, Vertical Application had a strong quarter where revenue increased by 10% year-over-year but decreased 4% quarter-over- quarter. Within Vertical Application, financial risk management recorded a 27% growth in revenue year-over-year, but decreased 1% quarter-over-quarter. Financial risk management has another excellent quarter recorded 2 consecutive quarters of revenue in excess of RMB 21 million. The 27% year-over-year revenue growth was mainly due to a strong 48% in customer number growth. As I have shared in the previous quarter, the upgraded product and services found their place in the financial industry vertical.

We continue to see deeper cooperation and usage of our financial risk management product by many leading platforms in China. This will further solidify the continued demand for this service in the many quarters to come. We see new and existing licensed financial institutions continue to buy and use our products and services in their risk model. The customer that we signed up all renew in Q2 include, but not limited to, [indiscernible] and many more licensed credit and financial institutions throughout China. Market Intelligence revenue, on the other hand, decreased by 38% year-over-year and 23% quarter-over-quarter due to the continued weak demand for Chinese APP data. This result is within our expectation. For market intelligence we started making major and meaningful upgrades for the product to better meet the dynamic market needs.

We believe upon completion, we will attract more usage and customers. Based on the current feedback we have received, it has been very encouraging. I shall provide more timely update on this upgraded market intelligence product in the future earnings call. Next, I’ll go over some of the profit and loss and balance sheet items. Our gross profit continued to scale new heights. It grew both year-over-year and quarter-over-quarter to RMB 59.6 million. This was the record high level that we have achieved for the immediate past 10 quarters. This shows that at Aurora Mobile, we can have revenue growth and gross profit acceleration at the same time. This is a very hard act to juggle but we did it. It demonstrated the high quality revenue that we have been able to generate.

And we do not blindly go after revenue growth at an expense of margin, and this is a fundamental of how we go about managing the business as a whole. On to operating expenses. The Q2 operating expenses was at RMB 60.8 million, representing an 11% increase year-over-year and slightly increased quarter-over-quarter. Operationally, our Q2 revenue grew by 13% year-over-year, while OpEx only grew by 11%. And we are pleased to see how we have been controlling OpEx to support the double-digit revenue growth across all business lines. I’ll now dive deeper into the individual OpEx categories. For R&D expenses, it increased 10% year-over-year to RMB 26 million, mainly due to an increase in staff costs and associated expenses. Technical service fee and cloud costs also contributed to the year-over-year increase.

Selling and marketing expenses increased by 11% year-over-year to RMB 22.7 million mainly due to the increase in sales commission and traveling expenses in line with revenue growth and cash collection recorded in this quarter. And marketing expenses for investment in global business expansion also contributed to the year-over-year increase in selling and marketing expenses. G&A expenses increased by 14% year-over-year to RMB 12.2 million mainly due to the increase in staff costs and the loss on disposal of property and equipment. And next, I shall share 3 very important KPI that we closely monitor. For net dollar retention, a commonly used KPI for SaaS company, it stood at 99% for our core developer service business for the trailing 12-month period ended June 30, 2025.

This high NDR number reflecting that we have high customer retention rate, coupled with the ability to increase revenue to upsell, upgrades and expansion. And this is another quarter with impressive NDR number. Secondly, another financial KPI for tracking the performance of SaaS companies is the total deferred revenue, which represents cash collected in advance from customers for future contract performance. which was at high of RMB 156.1 million. This is the second consecutive quarter where we have deferred revenue balance in excess of RMB 150 million. Thirdly, we continue to maintain a healthy AR turnover days at 54 days. This remains an industry-leading low level. We continue to work hard to ensure we actively and timely collecting cash from customers and at the same time, mitigating the risk of bad and doubtful debt.

On the cash flow, we are also very pleased with the overall cash collection and usage in operating activities this quarter. For the quarter ended June 30, we recorded net operating cash inflow of RMB 7.9 million. On to balance sheet. Total assets were RMB 381 million as of June 30, includes cash and cash equivalent of RMB 119.8 million, accounts receivable of RMB 54.1 million, prepayments and other current assets of RMB 16.5 million. Operating lease right-of-use asset of RMB 17.4 million, fixed assets of RMB 3.2 million; long-term investment RMB 113.3 million, goodwill of RMB 37.8 million and intangible assets of RMB 12.1 million, resulting from the SendCloud acquisition in March 2022. The total current liabilities were RMB 267.7 million, this includes accounts payable of RMB 38.4 million.

Current operating lease — current operating lease liability of RMB 84.8 million, deferred revenue of RMB 156.1 million, accrued liabilities of RMB 68.4 million. And let me now take a few minutes here to recap the description, a new chapter in Aurora Mobile that Chris mentioned in the beginning of this call. In this quarter, we achieved our very first quarterly GAAP profit in the history. Equally important, all business lines achieved double-digit year-over-year revenue growth, our core developer subscription business had the fourth consecutive quarter of RMB 50 million plus, plus revenue quarter. Our flagship product, EngageLab continues its great growth trajectory, we won and signed more than RMB 11 million worth of new contracts in Q2 alone, fueled by the new global customer acquisition.

Gross profit grew 13% year-over-year, achieving the highest level for the past 10 quarters. Operating activities brought in net cash inflow of RMB 7.9 million, and our net dollar retention for core Developer Service stood strongly at 99%. And this was indeed a spectacular quarter where all our business lines and related KPIs have done very well. And we are encouraged by the excellent Q2 numbers we have delivered. As we look ahead for the rest of 2025, we are very optimistic and confident about our ability to execute against the things that we can control. And Chris and I are very thankful for the dedication and commitment by the teams. In this quarter’s stellar performance is a true testament to the effort that they put in day in and day out.

And we are truly honored to come to work side by side with such an exceptional group every day. And now let’s turn to business outlook. And based on the current available information, the company sees the Q3 revenue guidance to be in the range of RMB 88 million to RMB 91 million, representing a solid growth of 11% to 15% year-over-year compared to the same quarter in 2024. And the above outlook is based on the current market condition and reflects the company’s current and preliminary estimates of the market and operating condition and customer demand, we are all subject to change. Lastly, before I conclude, I shall give a quick update on the share repurchase plan. In this quarter, for the quarter ended June 30, 2025, we repurchased 27,000 ADS.

Cumulatively, we have repurchased a total of 323,000 ADS since the start of our repurchase program. And this concludes our prepared remarks, and we are happy to take your questions now. Operator, please proceed.

Q&A Session

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] We will now take out first question from the line of [ Kelvin Wong from Speaker Capital ].

Unidentified Analyst: First of all, congrats on the great first GAAP net profit in the history. I would like to have 2 questions, if I may. The first question, I will be appreciated if you could share with us what was the factors behind the great results in Q2. And secondly, more on outlook, are you expecting quarterly GAAP net profit to be along going forward?

Shan-Nen Bong: Kelvin, good to hear from you again. Let me take this call — take this question. This quarter’s breakthrough performance reflects a collaborative effort of multiple forces. It is primarily driven by the diligent contribution of our employees in Aurora Mobile, whose ongoing commitment to overcoming challenges across technology, development, customer service and operational execution has collectively strengthened the foundation for the performance growth. And more importantly, our forward-looking strategy have anchored a clear direction for the business development with the precise execution. From a business perspective, the growth momentum stem from the strong push of internal and external dual engine. On one hand, our overseas flagship product, EngageLab continues to accelerate its expansion, constantly breaking boundaries to globalized reach and localized service capability.

On the other hand, our AI agent platform, GPTBot.ai leveraging AI-driven technological empowerment to drive innovative across business scenario, becoming the next growth engine. It is worth emphasizing that domestic market also performing well in this quarter, achieving solid year-over-year growth and creating synergistic pattern of internal and external linkage of growth alongside with overseas markets, together contributing to this quarter’s outstanding over performance. And also from a deeper perspective on business drivers and financial support, these driving forces are not short-term variables but rooted in the long-term accumulation of capability building, strategic implementation and market trends and with the ongoing release of synergies between internal and external businesses, the continuous deepening of technologic empowerment and the steady advancement of strategic execution will bring us across the line.

And Kelvin, I hope this answers your question.

Operator: We will now take our next question from [ Marco Zhang from Gelonghui Research ].

Unidentified Analyst: This is Marco from Gelonghui Research. Congrats to the management for delivering a set outstanding results in this quarter. It has been proven that the business model does work and it works well to deliver net profit, in particular we know that your EngageLab has been delivering strong numbers and is driving the growth for the group. So appreciate management to share more on this business, including the current and future states.

Shan-Nen Bong: Marco, thanks for your question. Also let me take this question, too. As you rightly pointed out, our EngageLab product, our flagship product is highly promising business segment of the group, and it has already demonstrated strong business viability and becoming the group’s next engine group. Currently, EngageLab is serving customers in more than 45 countries and region worldwide with a total signed contract amount — affects existing RMB 113 million in a year-on-year revenue growth of 67%. And looking ahead to the upcoming quarters, we are confident and have high hopes of EngageLab growth momentum. And from the perspective of market expansion, its global market footprint has clearly outlined its path. We have established localized presence in Hong Kong Singapore and Malaysia and is solidifying the services foundation by forming local teams in Thailand and Japan.

And leveraging this regional depth and localized service capability, combined with the existing technological advantage and service experience, EngageLab will continue to penetrate market demand across different industries and regions, attracting more customers to collaborate. And both Chris and myself are very confident on the continuous growth trajectory of this business. I hope this answers your question, Marco?

Operator: I am showing no further questions. I’d now like to turn the conference back to Christian for closing comments.

Christian Arnell: 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. Have a good evening or morning. Thank you.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect your lines.