Aurora Mobile reports record Q3 revenue growth and historic GAAP net profit, driven by Developer Services and Engage Lab expansion.

Chris - (00:00:00)

Achieving 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 to achieve that. All the process in the organization work really well for the entire fourth quarter of 2025. Our hard work and commitment to Excel throughout Aurora Mobile will not start here. There are more we need to achieve together and we will not fall short of giving our promise on this call. I am truly hopeful for all the team's dedication on execution on our group's strategy and going forward. 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 1.5% year over year driven by strong numbers from Developer services and financial risk management basis. Again in this quarter OPC 7 Developer subscription services, Value adding services and Vertical applications Record solid acceleration with double digital year over year revenue growth. This is the second consecutive quarter we have such a strong revenue growth momentum. Developer Services revenue which consists of subscription services and value added services increased by a strong 12% growth year over year and flat quarter over quarter. Subscription revenue has solid revenue numbers well increased by 11% year over year and increased 7% quarter over quarter. Value adding services revenue grew by an impressive 22% year over year but decreased 34% quarter over quarter. Our core business Developer Subscription services with revenue of Renminbi 57.3 million record growth of 11% year over year and 7% quarter over quarter the year over year revenue growth was mainly driven by increase in both customer numbers and ARPU subscription revenue. Record the fifth consecutive quarter of Renminbi 50 million plus revenue and reached its highest level in history in this quarter. Next, let me share more on our global flagship product Engage Lab which continue its excellent growth acceleration path quarter after quarter since its introduction. Firstly, Engage Labs ARR has reached a new and important milestone of Renminbi 53.7 million mark in September 2025. This 160% year over year ARR growth was just impressive. Secondly, we had another very strong quarter for Engage Lab where the cumulative contract value we can sign amount to Renminbi 128 million by the end of Q3 of 2025. In Q3 alone we signed up more than Renminbi 1.5 million worth of new contracts. This is just outstanding. We do expect this revenue growth momentum to continue for the next 24 months. Further, global customer from all corners of the world continue to purchase our products and services. The customer number has increased by 156% year over year, reaching 1,300 in total. This was driven by the continued progress we are making for our global go to market effort. Firstly, our engaged products and services are now sold to customers in more than 52 different countries and regions globally. This is a great testament that our global flagship product, Engage Lab is indeed a globally accepted product from customers originating from all four corners of the world. Our global flagship product Engage Lab has a very unique and different position in the market. We have been taking market share from competitors in all of the overseas markets we operate in. This is evident from the growth rate of Engage Lab we have seen today from the market intelligence we have gathered. It shows that the demand for our EngageLab products and services remains strong. With this great result delivered by EngageLab, it once again reinforced my strong belief that this global flagship product is the torch bell as far as revenue growth is concerned for us in the next 12 months 24 months within subscription revenue Some of the notable wins in the quarter include but not limited to DiDi, Shanghai, Disneyland BYD and China Eastern Airlines just to name a few. Value add in services revenue will remain B 7.1 million increased by 22% year over year but decreased by 34% quarter of quarter. The solid revenue year over year growth was mainly due to the increase in new advertisers acquired between the years. The absence of traditional quarter online shopping festival result in the negative revenue growth sequentially. Now let me pass the call over to Shannon who will share more about the Vertical Application and other aspects of our financial performance for this quarter.

Shannon - (00:05:26)

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 good quarter where revenue grew both year over year and quarter over quarter. Within Vertical Application, Financial Risk Management recorded a significant 33% growth in revenue year over year and 3% quarter over quarter. Following the strong Q2, Financial Risk Management had a sequential excellent quarter. It is now the third consecutive quarter of revenue in excess of Renminbi 21 million under its belt. Another significant milestone for this business is that it recorded the highest quarterly revenue in history of Renminbi 22.6 million in this quarter. This 33% year over year revenue growth was mainly due to a strong 44% in customer number growth. The customers that we sign up or renew in Q3 include but not limited to Lexing, Xiaoyunke, Ningbo, Yinghang and many more 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 the continued weak demand for the Chinese app data and this result is in line with our expectation. Next I'll go over some of the P and L and balance sheet items. Our gross profit had a spectacular result too in this quarter where it grew 20% year over year and 7% quarter over quarter. The Renminbi 63.8 million gross profit we had was also the highest gross profit for the past 15 quarters. Within with the group, revenues grew 15% year over year, yet our gross profit grew by 20% year over year. It shows that we had recorded very high margin revenue in this quarter. This is certainly a key target that we would like to maintain and extend beyond this quarter on to operating expenses. The Q3 operating expenses was at Renminbi 64.4 million, representing a 12.8% increase year over year and 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 all business lines. I'll now dive deeper into the individual OPEX category for R and D expenses increased by 7% year over year to Renminbi 25.9 million mainly due to the increase in staff cost and associated expenses. Technical service fee and cloud costs also contributed to the year over year increase in R and D expenses. Selling and marketing expenses increased by 19% year over year to Renminbi $26.6 million mainly due to the increase in sales commission in line with revenue growth and the cash collection in this quarter. Marketing expenses for investment in global business expansion also contributed to the year over year increase in selling and marketing expenses. GNA expenses increased by 13% year over year to Renminbi 11.9 million mainly due to increase in staff costs, professional fees and better provision. Next I'll share three very important KPIs that we closely monitor for NDR. Net dollar retention rate, a commonly used KPI for SaaS companies, it stood at 104% for our core developer service business for the trailing 12 months ended September 30, 2025 and this is the very first time where NDR numbers have exceeded 100% milestone. The number says it all. It means customer retention rate coupled with the fact that our customer has increased their spending with us through upsell upgrades and expansion and this is the best testament of our sustainable SaaS business. Secondly, another important financial KPI for tracking the performance of SAS company is total deferred revenue which represents cash collected in advance from customers from for future contract performance which was at historical high of Renminbi 166.3 million and this high deferred revenue balance is a hallmark of a high quality scalable business. It signifies a strong customer loyalties, predictable future revenue, healthy cash flow and effective sales strategy. Thirdly, we continue to maintain healthy AR turnover days level at 49 days and this remains at an industry leading level. We will 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 debts. On the cash flow we recorded another great numbers for the quarter ended September 30th, 2025 we recorded net operating activities cash inflow of Renminbi 23.3 million. This is the best quarterly cash flow numbers we have since Q4 of 2020. Onto balance sheet total assets were Renminbi 388.2 million as of 9-30-2025. This includes cash and cash equivalent of 141.2 million, accounts receivable of $43.9 million, prepayments and other assets of $15.7 million, operating lease right of use assets of $15.9 million, fixed assets of $2.9 million, long term investment of $113 million, goodwill of $37.8 million and intangible assets of $11.5 million resulting from Cenclo acquisition in March 2022. Total current liabilities were at $274.6 million as of September 30, 2025 and these include accounts favorable of $31.9 million, other operating lease liability of $4.1 million, deferred revenue of $166.3 million, accrued liabilities of $72.3 million and now let me take a few minutes here to to recap the description. Good things come in pairs that Chris mentioned at the beginning of this call. In this quarter we have many great achievements that I would like to take a few minutes to reiterate. 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 57.3 million as did the financial risk management business. Our flagship product engagedlab continued its expansion beyond the shores. Apart from great growth in customers number and contract value, Engaged Lab business reached another very important key milestone where the ARR was at Renminbi $53.7 million 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 15 quarters. Number five operating activities brought in net cash inflow of RENP 33.3 million. Our NDR net dollar retention for core developer service recorded at the best number in history of 104%. And 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 Renminbi 94 million to Renminbi 96 million, representing a solid growth of 1 to 3% year over year compared to the same quarter 2024. The above outlook is based on the current market conditions and reflects the Company's current and preliminary estimate of the market and operating conditions and customer demands, which are all subject to change. And before I conclude, I'll give a quick update on the share repurchase plan. In this quarter ended September 30, 2025, we repurchased 4,000 ADS. Cumulatively, we have repurchased a total of 327,000 ADS since the start of our repurchase program. And today our Board of Directors of the Company approved a share repurchase program whereby the Company is authorized to repurchase up to US dollars 10 million worth of its ordinary share, including in the form of ADS, during the 12 month period starting today and this is a 100% increase from the US dollar's 5 million program we had previously. The Company proposed repurchase may be made from time to time in the open market at a prevailing market price, in private negotiated transactions, in block trades and or other through other legally permissible means, depending on the market conditions and in accordance with the applicable rules and regulation. The Company's Board of Directors will review the share repurchase program periodically and may authorize adjustment in terms of size and terms. The Company expects to fund the repurchase of its existing cash and this concludes our prepared remarks. We'll be happy to take your question now. Operator, Please proceed.

Operator - (00:15:33)

Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 11 again. And our first question will come from Calvin Wong with Spica Capital. Your line is now open.

Calvin Wong - Equity Analyst - (00:15:57)

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 Engage Lab business and how it strengthened the group's financial result. So I would appreciate if management could tell us more about Engage Lab and why the growth trajectory has been so strong since day one. Thank you. Let me take this call. Kevin, good to hear from you again and thanks for interesting and I'll take your earlier statement about engagedlab Growth's trajectory has been strong since day one and this is factual and we are very proud of the achievement since day one. And for those listeners who have access to our ER deck that we have uploaded to the IR web page, you can refer to I think slide number three where we have the pictorial display or diagram of Engaged Lab business to date. And one new particular data point that we have included in this quarter's earning deck is the ARR. It's the annual recurring revenue for Engage Lab business and for the month of September 2025 the ARR was at Renminbi 53.7 million and this is 160% jump from a year ago and we are very encouraged by this number because it shows that the business has a very significant growth growth trajectory and we have made great revenue expansion in just 12 months. I would say the success of Engage Lab is not by chance or that we are lucky. It was a result of endless improvement upgrades that we made to the product and service offering that help us to acquire more new customers and retain existing customers globally. If you look back when Chris decided to launch Engage Lab back in Q4 of 2022, the mission was pure and direct just to address our customers main needs of reaching out and engaging with their users in a cost efficient and effective manner. And through Engage Lab our customers are able to reach and engage with their users through any one or all of the following messaging channels such as App Push, Web push, email, SMS, WhatsApp and OTP. And also from a technical standpoint we have done all the heavy lifting for our customers too. To deliver the global solution for our customers we have invested heavily in data facility in eight cities globally and just this week we have launched a new data center in Turkey, further expanding our global infrastructure. That aside, we have also incorporated our notification channel for all different operating systems from iOS to Android, from Harmony OS to others. And it makes it easy and efficient for our customers to ensure that their notifications are delivered no matter where their users are and what phone they are using. And maybe you can think of Engage Lab as reaching your users without borders. And for service wise we have received countless compliments from our customers that Our customer service team are very responsive and deliver a much better service than our peers and this says a lot from customer standpoint and when they encounter issues they need solution and this is something that we can deliver and we are proud of it. And therefore with such a great value proposition where customers can get one stop engagement platform and great services all wrapped in one and it is not hard to see why Engage Lab has been able to deliver such great numbers, quarter over quarters and historical results aside and both Chris and myself have great hopes and confidence in the EngagedLab business going forward. As Chris rightly called out during the call earlier, Engage Lab is the torch bearer for our revenue growth in the next 24 months. And Kevin, hope this answers your question adequately. Great to hear that, it's very clear. Thanks.

Operator - (00:20:18)

Thank you. And our next question will come from Jackson with Galingwi Research. Your line is open.

Jackson - (00:20:29)

Good evening, I'm Jackson Vongo Research. Thank you management for taking my question. Congratulations on another good quarter with solid earnings. In particular two consecutive quarters with GAAP net profit. Well done. I have a question for the management. Help me to recap what went well in Q3 that delivered another quarter with GAAP net profit. Thank you.

Chris - (00:20:57)

Hi Jack, thanks for your question. Yes, it was a great quarter indeed. I think Chris mentioned we executed very well operationally and everything just went well. And this flow on to our financials number that we have released earlier today. There are a couple of things I can share more. Firstly, revenue in Q3 has been very strong. All business line recorded great year over year double digit growth. What that means is we are now head and shoulder above where we were a year ago and both the subscription business and the financial risk management recorded their own best revenue quarter in history. Equally important is the revenue by Engage Lab where it contributed $13 million in this quarter alone. Also a historical high. We grew our revenue not at the expense of sacrificing margins. This is evident that while we grew our revenue significantly, our gross profit reached the highest level for past 15 quarters. At the same time our gross margin increased year over year and quarter over quarter. 2 and this is a really hard act to follow. And since revenue gross profit grew at a faster pace than our opex, the US GAAP net profits is a certainty and which is why we had the second consecutive quarter of US GAAP net profit and two other important and great KPIs that I would like to reiterate here. One is the NDR where we reach 104% for our core developer subscription business. And this is the very first time NDR exceeded 100%. And what that means is simple and straightforward. Our customer has been buying more of our services between the periods through upgrades, upsell and other services. And this is a great number to have. And secondly is the deferred revenue balance of $166.3 million, another historical high balance. In short, we have $166.3 million worth of secure revenue that we can recognize in the future. And the best part is we have already received the cash. So for this one, $66.3 million, we don't even have to worry about cash collection effort or the risk of bad debt in the future. And managing cash flow has also yielded great results in this quarter. We have net operating cash inflow of Renminbi 23.3 million, the highest level for the past 20 quarters, which is actually the five years. The past five years the best results. And with that positive inflow of cash, our 930 quarter end cash balance has also climbed to 141.2 million, the highest balance in the past 14 quarters. It improved by 40% year over year. And you can see it's not hard for you or anyone to conclude that this quarter has been great. And however, rest assured that we are not contented by the present. We need to move faster and expand more. Therefore, we will continue to invest as part of our global growth plan. And lastly, if time permits, I would like to cordially invite you and other investors to drop by our head office. We are more than happy to host you and chat with greater detail for any question you might have. This is my answer to your question, Jack.

Jackson - (00:24:21)

Okay, thank you. That's very clear. I appreciate that.

Operator - (00:24:29)

Thank you. I show no further questions in the queue at this time. I would like to turn the call back over to Renee for closing remarks.

Renee - (00:24:38)

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 night. Thank you all.

Operator - (00:24:52)

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