Q1 2020 Aurora Mobile Ltd Earnings Call
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Did you said you're going to this conference is scheduled to be children's gummies can use them. Thank you feel patients.
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Ladies and gentlemen, thank you for standing by welcome to the.
Fourth quarter Twentytwenty.
So at this time all participants.
The speakers presentation will be a question answer session lots of questions recession, you would need to press star one penny for <unk>.
Please be advised that today's conference is fee because there's probably no like healthcare conference over the also study Houston I know. Thank you. Please go ahead so.
Thank you Hello, everyone and thank you for joining us today or hours earnings release was distributed earlier today and is available on the IR website at <unk> IR dot cheek long that's yet.
On the call today are Mr. way don't you'll chairman and Chief Executive Officer, Mr., featuring President and Mr., Chen and Chief Financial Officer.
Following their prepared remarks, all three will be available to answer your question. During the Q1 day 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 21, each 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 managements current expectations and current marketing.
Operating conditions, which are difficult to predict and may cause the companys actual results performance or achievements to differ materially from those are the forward looking statements.
Further information regarding these and other risks uncertainties and or factors are included in the company's filings with the U.S. FCC. 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 call.
In France over to Mr. law. Please go ahead.
Thanks, operator.
Good morning, I couldn't even into every one of the call I live until her mobile device called us with other times earnings call.
Plus Philadelphia, the Harvey has pulled them to be not changing wonderful many companies.
That's great color that you typically do somebody who lead.
Two.
While there was already go to the Chinese urea money.
Probably not be outbreak that went live in past the internet, even though he arrangement for the across China.
Many of these days and brought temporary shutdowns Lucky later study ill patients for many weeks.
As something that May have voted.
Despite us at all a day that degree range that we wrap that up to a lot different that capacity it as an adult.
The loudly most of our customers who they send a normal operations into late March.
You like it feels ever rabies, Russia.
They put the English I get to for the strange I'll call and begin to see.
In Colombia nailing I'll focus on developments are they did.
Operational and technical proficiency.
Generally lateral.
In terms of course teachers and reinforcing our commitment of eating my recession no customer service.
If you need Turkey look now pay.
<unk>, maybe they will be real emerge.
I'll do it and that is stronger than ever and ideally positioned to be better adapt to the current I've spoken to.
Beth I know some out.
Let's say model, if they get Harley real alky operating and financial performance for the full breadth of Philadelphia dozen times.
But the nonvolatile mobile app recognizing that it's a wonderful I'll do that as a basis.
No matter the ABS installation reached a lot of plus one last one for me that as of March but.
For the first without the tiny broad question, if anybody wants it will be meeting last month.
These represent and athletes all 16000, you have coming on board every month given the colder.
This was an impressive achievement considering that we concur and changing operating environment. During the fourth quarter second film rental SDK invalidation has increased by 64% too.
But if everyone could be done as of March 2000 tons in front I mean, I want to once they don't need and the mouse.
Without the 90.
First the novel all multi add to your Liberty right, because look I'd love to increase.
So, let's say six figure that you matched with other times going from one place else they must be done in March two other lucky because it wasn't so unified increasing the number over the past years, I'll actually pay or because I think I'd add justification, we paid becomes more widely adopted across the maki.
That's sitting in their first call go up because other times and we saw the nominal paying pessimistic in place to 2211 for all 1000.
900.
50, while yet.
Now before I go over our financial performance.
He quickly provide an update well I'll ask the beneficial facing revenue classification.
You mean for all this quarter that revenue was brought appetite Lasalle and life was shut basis, which how active adipose well and monetize fail user base.
They'll be separate city cross afraid to add value added services under the beneficial thing.
No changes I made other revenue classifications.
Oh, that's to offset the good for person remains with drive to grow up the beneficial bases and stockpile at all or whatnot, despite the revenue and gross propane catastrophe.
Isn't from talking marketing cooking Alas Alas significant.
And with a financial numbers.
Our topic than it is all these changes including developers are they did as I've brought us.
You know that was eat healthy 15% year over year revenue growth and time different Danielle tee up gross profit growth. Despite the impact from that have them and lucky does attitude.
I like that that you just fixing away from their own lodging and I was talking about the same between that leaves I think in the world for Dakota 2019.
Has done really well, they're talking about looking now I mean, contributing about 11% of out total gross profit.
That's transitions hasn't refreshing our revenue declined by 45% far renminbi, Toronto and forgive me that he addressed the call. It that's what does it 90 to renminbi, Angela and 26 million in acquiring corridor outflows of revenue and profitability. If not please know that depends a lot like this.
Hi, good marketing business.
You bet. It was certainly if it was a day what the highlight of the college or at least as impacts your premise.
Good I never said it is which includes popped up suspicion embedded at the surfaces WRECO data of Salt Lake 72 per se revenue growth yeah for Ya.
The balance increased both Apple and happened list.
For suspicious of easy because he knew what was the more customers signing off to a lesser I'll be beneficial as.
We've talked so much input on the I'm not limited to China parts of the Israel.
I'd say.
Hi, Keith China, I wish I thought that we also launched a light version of private college at least that's really took off and that's coordinate a private college set top box close up at Citi.
Subscription SaaS subscription revenue good bye.
Did you say look and say you ever year Highbury driven by an increase in the number of couple of ice whatsoever. So.
In Q1 Sunday.
If you're left with other antigen reasonable happened less signing up to all sleep. They get verification Sophie's. They include the but not limited to catch Oriental why lives. So you will get done now given activity. We now have more than 2000, absolutely. Good surprises, we like leaf equity gay. The are you at least 50 expecting.
Well I'm driving second meeting.
The growing the amount by after that but I still use object education Proto I love These Jay push.
<unk> ability to that continued growth have been do settlement.
I guess services, which includes revenue from advertisements off and I push if they did reach we did not hopeful the window simply last year.
We're strongly.
Okay. That's helpful. I'll admit it at this will take it doesn't it visit our expectations.
Average monthly revenue probably later at the interfaces that was a person to tell you that maybe 2.1 lead in into first quarter of 2020.
He's got seems a bubble at home and we expect a strong revenue growth will then to forgive me to continue into Q2.
Perhaps the most of the life of all I push up they just in a quota include the recall can go door and holiday.
Like actively transition away from taking another game business.
Revenue for all of this segment was down.
59% year over year and not helpful. I mean, 61 cousin of total revenue compared with 81 put a year ago. Despite accounting for 50 weapons have revenue imagine contributor, but these pieces that on a couple on me about telepathy with all told of less property.
As we mentioned in previous quarters or Nicole. This is obviously, if we want to which official away for all these different Corona light outbreak. That's already got this transition we ask that both of that revenue and margin contribution from that talking magazine busy to further declines in coming quarters.
No I real Chipotle C. will then discuss a few less apartments office leases that I've with insights for that but he will do.
Thank you Chris [noise].
Combined the revenues from the past products, including financial risk management mock intelligence and I zone decreased by 28% from got maybe 24.8 million in the first quotes or for last year too on the 17.8 coming into the quarter revenues from our mocking Providence product.
Grew by 26% year over year me fueled by strong growth in the number of customers.
Secondly, we launched at all I Apple was the version where customers now can obtain deep insights into app analytics in the Southeast Asia, India markets.
Muni investor and how many customers in the quota in crude deep biopsy to quiver Mira and achieving.
And the new corporate customers include the pool box I do and Abawi.
For financial risk management revenue declined year over year by 47 consent that it was attributable to increases in both the number of customer and ARPU year over year. The impact of Corona virus has taken a toll on the overall business environment in China, the financial sector, one small adversely.
Impact is that how that business sector.
With that significantly decline in lending activity in foot quote for over 10, TNT demand for all financial risk management products also fell Nevertheless, we didn't manage to fine tune your contract with.
Leading.
Financial companies, such as JD finance nimble back and the teams on bank during the quarter.
Listeners in this sector has things stabilize the in second quarter.
And then lastly, Oh, I think business recorded 31% decline in revenue year over year as expected with that so short distance in the travel restrictions imposed since the outbreak of criminal virus in late January they.
Many daily activities, such as traffic congestion to tourism bike and a shopping malls were temporarily impacted.
There is different resulted in weaker demand to analyze location based that they talked during the quarter.
Since the beginning in April we have begun to see an uptick in demand for our eyes on products.
The businesses graduates we tend to normal we believe that demand for all I can product in the real estate presented in the retail sector will rebound quickly with that I'll now pass the call to Shannon.
Thanks for me.
Since crews and three that's what we did talk about our top line numbers for the quarter I'll go through some of our piano items.
Despite the tough this isn't volume in the first quarter. All Twentytwenty you managed to maintain on cross margining at 33% flat sequentially.
In a meaningful increased from 27.5% doing the same period last year.
He was this was a direct result will focus shift away from the traditional public that marketing business first and most in Q3 2019.
Our focus is now ongoing all high margin sauce business was mainly due to look. This is this just machine keep boothby subscription and value added services and SaaS product.
As a percentage of revenue.
For services and software based products accounted for 39% during the quarter <unk>.
A significant increase from 19% doing the same period last year.
I couldn't marketing on the other hand accounted for 61% of revenue during the quarter, both from 81% doing the same period last year.
But gross margin contribution developers services in South, Florida, and accounted for 88% of plus profit compared to the public that nothing which is no longer our strategic focus.
Looking for only 12% of gross profit during the quarter.
We took roofing high margin contribution and importance of developers movies and plus pulled up over the quarters. We believe these are we'd have to identify and do a higher quality moments Indian and sustainable business model that can support and fuel in growth and profitability in the future.
Next onto the Opex.
Total operating expenses decreased by 1% year over year to 91 million Mb.
In particular.
As reported in the previous quarter ended 2019, we have reduced all he called by approximately 120.
That's a result choose some savings in terms of staff costs in Q1 Twentytwenty in hindsight is proven to be advice Weiss disposition.
R&D expenses decreased by 3% to really be 41 million, mainly driven by decreases in coal cost and personnel costs.
What was partly offset by increasing depreciation of subs are still goes.
Selling and marketing expenses decreased 7% do remain between 5.2 million, that's coffee 19 restricts the Trump [noise].
Then was help.
Drew enhancements just interested to send to really be doing 6.5 million man.
Due to increases in staff costs embedded provision.
Our adjusted EBITDA was negative we wouldn't be 30 million during the quarter compared to negative let me be someone's.
4 million or you go.
Onto the balance sheet items total assets were 884 million wouldn't be a soft much to these first 2020.
This includes pension festival in of 282 million Mickelson suitable of 107 million prepayment of 54 million six assets of 109 million long term investment of 170 million.
Total liabilities were 175 million as of March.
So the first Twentytwenty does include a cost capable of 18 million different liabilities deferred revenue of 89 million accrued liabilities of 68 million.
That's off much we maintained a healthy level of working capital of 397 million.
Lastly, before I conclude I'll give an update on the share repurchase plan.
In the quarter ended March 31st Twentytwenty, we did not produce any shares.
Much.
36, 2020 cumulatively, we have researchers are to the of 931000 GDS soon just stop all repurchase program.
And the company to do acknowledge that piece board of directors has approved a new program under which the company me a good repurchase up to U.S. dollar 10 million of his shares over the next 12 months.
The company pension funding. This we put uses for me that just didnt cash balances.
This concludes managements prepared remarks, we're happy to pick the call.
Good question long well Christian back to you.
We're ready to begin to Kuni operator.
Ladies and gentleman and I'll begin the question answer session. If you restructured question. Please press star one telephone every funny you know.
Yes, your friends there'll be Chris Please press the pound Ashton.
Your first question comes from Ryan Roberts from their this capital. Please ask your question.
Hi, Good evening management. Thanks for taking the question just want to actually maybe some more for Shannon I'm going to get a sense of the with the new kinda disclosure or that you change for Q1.
Make sure I understand why not be called out kind of in his prepared remarks. Please so looks like.
I guess, the Boulder services and SAS was about 49 million target marketing was about 77.
Can you with a break down the ER that 49 million are they going to go on the a script you guys you're mentioning what's in there or access and baskin something else to give us more more clarity what got it looks.
[noise] Dominion.
Well you know this one across all your question do you want to have a good at brick though.
The revenue numbers.
Yeah, we would get the new kind of any segment disclosure, yes, it's it's not that I just want to verify that that's.
My understanding is correct I think I think yeah, if you could run through that it'd be great.
Yeah, Yeah. So so right now actually the developer is the prescription hock you tend to 5 million, Okay and are under development service to value added service is 6.4 million, Okay, and then for that product, it's 17.8 million.
And then having marketing it's 77 million.
Got you, Okay, and the Oh, Okay. Okay got you and then you mentioned it kind of in remarks that you've seen some kind of a better than expected I suppose momentum on the vast segment or kind of a it wasn't as Nick mentioned April.
Oh I'm here, we are now in June about halfway through June can you give us a sense about Q twos tracking please.
Yeah, I live to double.
Internationally, yeah, yeah, yeah modern level.
Got you it's really that's that's what that's for the for the basket of monthly basis could you give us a sense of how the rest of business is doing kind of a you've been not going the opposite.
Actually on quarterly basis, if you shouldn't I'm sure the more than double okay.
Sorry is that is that for the entire segment that the debt service. So services and SAS segment, where you mean just is I just bass.
Brad Fat just that Okay, and then can you give a sense of how the rest of the business is kind of recovering and maybe tracking I'm kinda now we are kind of post kobe to getting to a point, where maybe go opposed to go but how things are shaping up I think you've you've had everyone back kind of in the office for a little bit now onto I'm curious, what you're seeing no any color you can offer.
Alferon that'd be great.
Yeah. So yeah, let me talk about you know I'm business aligned I didnt quite different services line right. So for the development services. The subscription business. As you know this is a very sticky newspaper business and we will continue to see quarterly growth. Okay. In the second quarter, Okay, which is winning all I can back.
Fishing and a lot as I've said, you're shooting wasn't up over from the fourth quarter and therefore the top products.
And then the recovery is any of it is lower than than the other business and then this business should now you know.
Slightly increased from the from the fourth quarter Okay.
And therefore, the timing of marketing as we mentioned this is not our strategic focus anymore. The overtime. You know this business will gradually go down hand, a you know at a certain point of time, we might completely you know wind down doesn't it right in the second quarter revenue and.
And the margin contribution in terms of the absolute dollar amount should be slightly smaller than the fourth quarter.
So net net basically you will see I'm bullish the revenue growth as well as you know a meaningful margin gross margin growth from political.
Got you Okay. That's that's actually a that's very helpful. If we look at like maybe how the rest of the you're tracking and I was obviously early this it's going to think about second half, but I'm curious people, you're like that you're you're talking to and kind of activity you're seeing can you give a sense of how how your second half is looking we're hearing from other people in the market that second half is looking good.
Recently, I guess better than perhaps it look maybe I don't know a couple of months ago and want to get a sense of what you guys you're saying.
Yeah.
Yeah, we feel very comfortable about you know the Aldo go second quarter from macro.
Economic perspective, we think is healthy business has begun seems a two to normal okay, and a and no specifically to our business right. You know like developer. So then that should have continued to grow you know I'm very nicely in the second quarter, because if you look at even in the first quarter.
Actually we achieved very good numbers for for the development. So this is a subscription business right. You know we even in the first quarter, we had a 41% a year over year growth not to mention you know or are those the second half.
This year. So so you know we I'm very confident about the subscription business and the for the value added service I think that this business. You know is you know we are really seeing the joint ramp up quarter over quarter, you know a triple digit growth and ER and are we.
I'm very confident you know the growth momentum will continue and and a you know we expect a significant revenue contribution.
Margin contribution from the spots business in the in the second in the second half and the for the top doesn't seem to second half or we think of them together should already be completed by the by there by the end of and then second quarter.
Okay, and the fourth quarter, we shouldn't see we shouldn't see you know I should have commencement address that I zone on these two business. We saw a decline in the in the second quarter right. Oh, you mean, the first quarter, but but you know the thing has has come back to normal and the we should expect you know the the you know.
The revenue pickup from these two seconds and that's what I'm asking how doesn't actually that business in the first quarter. You know, we even under the grown up I would assume you saw the you know very very nice you know a double digit growth right and that this growth will continue.
[noise] in that in the second half and the for the talking Pega marketing business. You know are actually this legacy business as I mentioned, the it becomes less and that's relevant you got it is not right.
Listen to our revenue to margin contribution right. So so you know probably even though.
Some point of time in that sort of course, all fourth quarter.
At U.S. He does business is gonna be cannot be removed from our from calling difficult I'm sure. So so no not too we're very confident about second half I think a you know fourth quarter.
We reach reached a low point and ER and Oh and the we are we're very confident about the growth trajectory fall for both revenue and so as the margin you know from from for today.
Gotcha. Thanks, Thanks, Richard it's actually a detailed answer if I could just tack on one real quick one I'm just a follow up to while on the margin you just mentioned it looks like for developers services and insights that kind of I guess everything X target marketing looks like the gross margin was around 74% and about about 6% or so but kind of target marketing fitting into the earlier discussion.
You guys were getting us on on earlier calls about how shifting to this newer model Assaf model billing is gonna be margin accretive I'm sure double check my you know that there was that that math is roughly on the roughly correct and also just get a sense of how the margins should be tracking as this transition or kind of completes the or let's say progressing.
Further later in the second half thanks Bye.
Yeah, Yeah, you're right, it's actually a young athletes very accurate. It's a it's the same [laughter], so I'm not talking mccabe actually on but under the basis, you know all those business they pretty much shifts some in the margin profile gross margin profile. It's about like you know, 74% you might you might have some no small fluctuation from quarter to quarter.
Around to see 75, Percentish, that's the right number to think about and therefore, the talking marketing business. You know falls well first quarter is 6% right, but you know things businesses, it's not going to grow and the you know the non how the marketing business is going to go into growing revenue right. So you should expect the gross.
The the overall.
Company gross margin.
Due to improved meaningfully in the second quarter compared to fourth quarter, and a and as the growth continue to two you know kicking in for the non Hodgkin Mcneil business in the second Uh Huh.
You know the them Hajime should that continue to grow Oh quarterly basis. Ideally you know actually if you remove how you're not going to business right. Now today, we don't have 74% the gross margin.
That and that's the that's the direction, we only out we don't read anything you know inventory.
Got it understood. Thank you very much appreciate it.
Yeah.
Once again, if you wish to answer your question. Please press star one oil telephone and wait for wanting to be unknowns.
Once again, if you read.
Your question. Please press star one.
That's there's no one in the you know I will close, though especially also session I'll now hand, the call back.
Two Christian.
No for closing remarks.
Thank you everyone for joining our call Tonight, you do you have any further questions or comments. Please don't hesitate to reach up the IR team. This concludes the call have a good night. Thank you.
Thank you. Thank you all.
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[music].
[music].
Ladies and gentlemen, thank you for standing by welcome to the.
<unk> fourth quarter Twentytwenty.
At this time all participants.
That's because when they show.
Oh, so session lots of questions. During this session you would need to press star one.
Please be advised that today's conference is being recorded.
And the conference over the office today Kristen.
Thank you. Please go ahead.
Thank you.
Thank you for joining us today earnings release was distributed earlier today and is available on the IR website at <unk> dot she Guam dots yet.
The call today are mr. weight, only you'll chairman and Chief Executive Officer, Mr. Fade, Chairman, President and Mr., Chen and Chief Financial Officer.
Following their prepared remarks, all three will be available to answer your question. During the Q1 day 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 21, each of the Securities Exchange Act like 34 as amended and that's fine in the U.S. Private Securities Litigation Reform Act 1995. These forward looking statements are based upon managements current expectations and current market you know.
Operating conditions, which are difficult to predict and may cause <unk> actual results performance or achievements to differ materially from those are the forward looking statements.
Further information regarding these and other risks uncertainties and or factors are included in the company's filings with the U.S. FTC.
The company does not undertake any obligation to update any forward looking statement as the 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. law. Please go ahead.
[noise] thanks, operator.
Good morning, I couldn't even little everyone at all and ramp until I remember, it's let's call it up with other times earnings call.
I guess whats Philadelphia, the Harvey has proven to be not changing wonderful Manny.
That's right because I typically I think that even links.
I think lawsuit already.
For me.
We see another probably not outbreak that resonate in the past the international LP arrangements slowdown across China.
And if they export temporary shutdowns are the Lakers dotting all patients for many weeks.
Hi, sometimes I think about it.
Despite the lower day that degree range that we wrapped up too optimistic capacity at an adult not.
I would like most of our customers cool that's in a normal operation into late March.
Yeah like experience I've already was roughly.
Ladies and put that in your second to further strengthen our Paul and we can see.
In Kodiak nailing I'll focus on the benefits are they did.
Operational and technical proficiency.
Generally lateral internal procedures and reinforcing our commitment to leading our industry melt customer service.
If you need truculent now in pace.
We believe that maybe they will emerge.
Broadly pandemic stronger there hammerhead ideally positioned to paid better after that comment I've spoken Dave.
I know what about.
Let's say model, if they get holiday meal, alky operating and financial performance for the fourth vessel Philadelphia Southern tide.
But then I'm all for mobile App, recognizing that it's a wonderful I'll get benefits if they did.
Document out to the Abbvies, Malaysia risk the last one for not one one will not need excess of loss, but.
Let me first with other funding process in a pretty level, unless they only need and let them off.
These represent an athlete to all 16000 your past coming on board every month given the color.
This was an impressive achievement considering that difficult challenging operating environment during the fourth quarter.
Sure, let lastly, hey incarnation increased by 54% to.
I think I want to lead us as of March to another positive from honey, probably two plus they don't need at the muscle.
2019.
First the novel all multi atom Uniboss, you might recall, but I'd love to increase.
And one one think speed at your matched with other times being drawn one what's your favorite beat out in March with other lucky because it wasn't failed the Bible increasing number of perhaps they use I'll have been pay or because I think I'd ask Jeff edification actually paid becomes more widely adopted across the market.
That's pretty in depth, let's call it off because all the time resort and I'm all paying tenants in place to 2211 from 1000.
900.
50, while yet.
Now before I go over our financial performance.
The quickly provide an update on our two benefits are facing revenue classification.
And then brought this quarter that revenues brought out of heightened lifestyle and like was shut basis, which have to that press wrote them monetized fail user base will be separately classified to add value add their surfaces I'm ducky beneficial basis.
No changes on made it to other revenue classification.
I'll ask to offset the good fulkerson relentless drive that well be beneficial basis, and the south Florida.
Hi witnessed by the revenue and gross profit contribution from talking about it could be Alas Alas significant.
And with a financial numbers.
I'll be submitted all public opinion, including the benefits are they did as hot products.
That would lead healthy, 15% Yeltsin the revenue growth and time different that ultimately up gross profit growth. Despite the impact from that at that late and Lucky does that.
Our strategy just fixturing away from their own lodging highways talking about that there between definitely I think in.
Well I Dakota without a lot of team has done really well theyre talking about looking now I mean contributing about 11% of our total gross profit.
Such transactions has refreshing our revenue declined by 45% far renminbi Twangizas fucking meet at him threats the call into 2019 to renminbi well on July.
Six meta in hiring quarter outflow of revenue adequate flexibility if not in the run that depends a lot. This legacy packet processing business.
You bet, but certainly if it was a day what the highlight of the quarter I believe as impact to permit.
Your next question.
Which includes coughed up that's question embedded at the services.
Okay the of Salt Lake, 72% revenue growth Yeltsin yet.
The balance increased in both Apple and top Atlas.
But that's pushing something that we can you also see more customers signing up to illustrate the beneficial.
We've talked so much input on the I'm not limited to China parts of the initiative.
David.
Ikea, China I wish I thought that we also lunch alive version of private college updates cuts are a little calculus coordinate a private college set top box plus up at Citi.
Suspicious so subscription revenue rose by 37% year over year Highbury, driven by an increase in the number of cuts on the ice whatsoever.
In tier one Sunday.
And your led to another and titanium resale multiple signing up to our fleet bank gratification. So if they think they include but are not limited to Josh I'll be dental why lives will really be more will get done now.
But activity, we now have more than 2000, absolutely get surface that we would leave equity gate. The are you at least is being expecting.
Giants second meeting.
The growing the amount by active efforts to use our diversification product I love. The Staples has contributed to that continued growth in development.
Maybe I just started to reshape or without revenue for all of our pipeline I saw I like Bush separately recently did not awful dual into February last one year.
There were strongly.
Much assumption for all our better I guess, what they expect to hit our expectations.
The average monthly revenue probably later adds up business. It was approximately that maybe 2.1 media into first quarter of 2020.
If that is a bubble in Apple and we expect a strong revenue growth momentum for cooking to continue into Q2.
Perhaps the most of the life of all IPO surfaced in the call doesn't go that way ball Pandora and holiday.
Next actively transition away from packet networking business.
And the overall this settlement.
Down.
At least 9% year over year and not a couple unnamed 61% of total revenue.
Well the of 81 Parkdale yard, though this by accounting for 50 weapons have revenue margin contributor bought these pieces, but on a couple on the about telepathy volatile Douglas property.
As we mentioned in previous quarters on this call.
This is we want to transition away from.
If corona light outbreak that's already got this transition layoffs that both of that revenue and margin contributor fund, that's how you're managing busy to further declines in coming quarters.
No I Rio Tinto Jose will lead this topic to lever for most of that's pretty good subsidized within South Florida Emoji, though.
Thank you Chris.
Combined the revenues from the past products, including financial risk management market intelligence and I zone decreased by 28% from Renminbi 24.8 million in the first quarter last year too on the 17.8 million at this quarter revenues from all unlocking talented product.
Grew by 26% year over year may fueled by strong growth in the number of customers.
Currently we launched but all I Apo, let's see version where customers now account of the pain deep insight into analytics in the Southeast Asia, India markets.
Nearly investor and how many customers in the quarter include despite our prepared.
We have a niraj and achieving.
And the new corporate customers include the box by two Ali.
Our financial risk management revenue declined year over year by 47%.
Got it was attributable to increases in both the number of customer and ARPU year over year the impact of criminal virus has taken a toll on the overall business environment in China, the financial sector, what mall adversely impacted that other business sector.
Let's begin to pick on the decline in lending activity in fourth quarter of Twentytwenty demand for all financial risk management products also fell Nevertheless, we didnt managed by a few neo contracts with.
Leading.
Financial companies, such as JD finance nimble back and then jump back during the quarter.
Business in this sector has seen a stabilized during second quarter.
And then lastly, Oh, I think business recorded a 31% decline in revenue year over year as expected with that so short distance in the travel restrictions imposed since the outbreak krona virus in late January they.
They they activities such as traffic congestion, who tourism bike and a shopping mall what temporarily impacted.
There is this has resulted in weaker demand to analyze location based that they taught doing the quoted.
Since the beginning in April we have begun to see an uptick in demand for our eyes on products.
The businesses graduates we tend to normal we believe that demand for all I've been caught up in the real estate presented at the retail sector will rebound quickly with that I'll, then I'll pass the call to Shannon.
Thanks, Mike.
Since crews and maybe that's what we do talk about our topline numbers one quarter of go through some of our piano items.
Despite a tough business environment into first quarter of Twentytwenty managed to maintain our gross margin at 32% flat sequentially.
In a meaningful increased from 27.5% during the same period last year.
He was this was a direct result of focus shift away from the traditional publicly bumping business for two months in Q3 2019.
Our focus is now ongoing all high margin sauce businesses, namely you've looked at service assist machine peak, both the subscription and value added services and SaaS product.
That's what percentage of revenue then we'll put services and software based products accounted for 39% during the quarter.
Significant increase from 19% doing the same period last year.
But those marketing on the other hen accounted for 61% of revenue during the quarter ball from 81% doing the same period last year.
On gross margin contribution.
So we said then saw spooled up and accounted for 88% of plus profit compared to the public that bucket.
Which is no longer our strategic focus the calling for only 12% gross profit during the quarter.
Which are growing high margin contribution and importance of developer service and plus pulled up over the quarters.
We need vision, we'd have to identify and do a higher quality more resilient and sustainable business model that can support and fuel in growth and profitability in the future.
Next onto the Opex.
Total operating expenses decreased by 1% year over year to 91 million and B.
In particular.
As reported in the previous quarter ended 2019, we have reduced I'll hit call by approximately 120.
As a result chip some savings in terms of spot cost in Q1 Twentytwenty in hindsight is proven to be advice Weiss disposition.
R&D expenses decreased by 3% to really be 41 million, mainly driven by decreases in call cost and personnel costs.
What was partly offset by increasing the position of service cost of those.
Selling and marketing expenses decreased 7% to really be between 5.2 million as coffee 19 restricts the truck.
And we'll sell.
Drew enhancements just interested to send to really deepening 6.5 million many due to increases in staff costs embedded solution.
Our adjusted EBITDA was negative we wouldn't be 30 million during the quarter compared to negative let me be someone's.
4 million or you know.
Onto the balance sheet items total assets were 884 million wouldn't be a soft much studies since 2020.
This includes pension pessimist covenant of 380 treatment in the pulse and still go off 170 million prepayment of 54 million six that that's off 109 million long term investment of 170 million.
Total liabilities were 175 million as of March.
The first Twentytwenty does include the cost April 18 million different liabilities deferred revenue of 89 million accrued liabilities of 68 million.
So as much we maintained a healthy level of working capital of 397 million.
Lastly, before I conclude I'll give an update on the share repurchase plan.
In the quarter ended March 31st 2020, we did not produce any shares.
Watch.
31st 2020, cumulatively, we have repurchased a total of.
121000, Mds soon just stop all repurchase program.
And the company to didn't and all of that piece Board of Directors has approved a new program under which the company may put repurchase up to you last August 10 million of these shares over the next 12 months.
The company pension funding these repurchases for me that existing cash balances.
And this concludes managements prepared remarks, we're happy to pick the call.
The good question long well Christian back to you.
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Your first question comes from Ryan Roberts from their this capital. Please ask your question.
Hi, Good evening management. Thanks for taking the question just want to actually maybe some more of a Shannon got to get a sense of the with the new kind of disclosure or to change for Q1 to make sure I understand the line items you called out kind of in his prepared remarks. Please so it looks like.
Yeah, I guess, the Boulder services and SAS was about 49 million target marketing was about 77.
He was a breakdown of the ER that 49 million or they go on the the script you guys you're mentioning what's in there are like sasson bass and something else can give us more.
More clarity what got it looks.
Yeah.
Right and I just want to across all your question do you want to have a good of rigs all the revenue numbers.
Yeah, we would get the new kind of the new segment disclosure. It's it's it's not that I want to verify that that's.
From my understanding is correct I think I think yeah, if you could run through that I'm not be great.
Yeah, Yeah. So so right now actually it's a developer in the prescription a pop you tend to 5 million, Okay and on the development of if the value added service is 6.4 million.
Okay, and therefore, the top product, it's 17.8 million.
And then having lapping the 77 million.
Got you, Okay and the.
Okay. Okay got you and then you mentioned it could have been remarks that you've seen some kind of a better than expected I suppose.
On the vast segment or kind of a it wasn't as Nick mentioned April.
Oh I'm here, we are now in June about halfway through June can give us a sense about Q2 is tracking please.
Yeah, I live to double.
Yeah, Yeah, yeah modern level.
Got you. It so that's that's what that's for the for the basket of monthly basis can you give us a sense of how the rest of business is doing kind of a you Ben I'm not going the opposite.
Actually on quarterly basis, if they shouldn't contributed more than double okay.
Sorry is that is that for the entire segment that the desert services and stuff segment or you mean, just is I just bass.
Brad Fat Justice, Okay, and they can you give us a sense of how are the rest of the business, it's kind of recovering and maybe tracking I'm kinda now we are kind of post kobe to getting to a point, where maybe go opposed to go but how things are shaping up I think you've you've had everyone back kind of in the office for a little bit now onto I'm curious, what you're saying no any color you can offer.
Well not be great.
Yeah. So yeah, let me talk about you know on business aligned by that require different. The this is lying right. So for the different other services. The subscription business. As you know this is a very sticky as people are business and we we continue to see quarterly growth. Okay. In the second quicker, Okay, which is within our expected.
Jason and a lot as I said, you should more than doubled from the fourth quarter and therefore, the hot products.
The third recovery is any of that is lower than than the other business and the this business should know you know.
Ah slightly increased from the from the fourth quarter Okay.
And therefore, the talking marketing as we mentioned this is not our strategic focus anymore the overtime.
Listeners will gradually go doll and a you know at a seven point of time, we my completely you know went down this difference right, but in the second quarter revenue and and the margin contribution in terms of the absolute dollar amount should it be slightly more.
Other than the fourth quarter.
So net net basically you will see.
Both the revenue growth as well as you know a meaningful margin gross margin growth from Switzerland.
Gotcha, Okay. That's that's actually yeah, that's very helpful.
If we if we look at like maybe how the rest of the you're tracking I know, it's obviously early there it's going to think about second half, but I'm curious people, you're like that you're you're talking to and kind of activity you're seeing can you give a sense of how how your second half is looking we're hearing from other people in the market that second half is looking increasingly.
I guess better than perhaps it look maybe I don't know a couple of months ago and want to get a sense of what you guys are saying.
Yeah.
We feel very comfortable about the Aldaco second quarter.
You know from macro.
Economic perspective, we think is healthy business has to continue into two to normal okay, and ER and the specifically to our business right. You know like developer so that that should that continue to grow.
Very nicely in the second quarter because.
If you look at even in the first quarter actually we achieved very good numbers.
For for the development, so that the subscription business right. You know we even in the first quarter, we had a 41% a year over year growth not to mention you know ER or the second half.
This year so so.
You know, we're very confident about the subscription business and the for the value added service I think the.
You know is.
You know, we are really seeing the strong ramp up quarter over quarter triple digit growth and and we are very confident.
Lots of momentum will continue and and you know we expect a significant revenue contribution as well as margin contribution from its Pos business in the in the second in the second half and for the top business in the second half we think it to recover should already be completed by the by there.
And the end of second quarter in the third quarter and the fourth quarter, we shouldn't see we she was a few you know financial risk management to address that I zone on digital business. We saw in time in the in the second quarter right in the fourth quarter, but but the.
I think has has come back to normal and the we should expect you know the the you know the revenue pick up from these two segments and the for them at mocking Pelican actually got business in the fourth quarter, you know, we even under the criminal virus that we saw the you know very very nice.
Double digit growth right and that this growth will continue.
[noise] in either in the second half and the for the how can I get marketing business, you know or actually the legacy business as I mentioned, the it becomes less and thats relevant regardless.
In terms of into our revenue too.
Jim contribution right. So so you know probably in the.
Some point of time in the sort of course, all fourth quarter.
You see this business is gonna be cannot be removed from our from call. It gets culture. So so now that we're very confident about second half I think as you know for the quarter.
We reach reached a low point and ER and the end that we are we're very confident about the growth trajectory fall for both into revenue as well as the margin from on foot.
Gotcha. Thanks, Thanks, Richard it's actually a detailed answer if I could just tack on one real quick one.
Follow up.
While on the margin you just mentioned it looks like for developers services and insights that kind of.
It's everything X target marketing looks like the gross margin was around 74% and about about 6% or so we're kind of target marketing fitting kind of the earlier discussion you guys were giving us on earlier calls about how shifting to this newer model assaf modeled billing is gonna be margin accretive towards double check my that there was that that math is roughly on.
Roughly correct and also just get a sense of how the margins should be tracking.
As this transition or kind of completes the or let's say progress is further later in the second half. Thanks Bye.
Yeah, Yeah, Youre right actually a young athletes to very accurate. It's the same [laughter], so I'm not talking market they actually our blended the basis.
Those business they pretty much shifts some in the margin profile gross margin profile. It's about like you know 74% he might have some.
Small fluctuations from quarter over quarter, but around the 50 75 Percentish. That's a round number to think about and that's what we're talking about cutting business you know for slow first quarter. Its six the sounds right, but you know things this business, it's not going to grow and the non hobby marketing business is going to go into growing revenue right.
So you should expect the growth the the overall the company gross margin to tweak improve meaningfully in the second quarter compared to fourth quarter, and a and as the growth to continue to to kick team for the non Hodgkin Mcneil business in the second half.
The the margin we should continue to grow our quarterly basis. Ideally you know actually if you remove haggen marketing business right now today, we have 74% of gross margin.
That said and that's the direction, we only out we don't want.
I mean, I'm you know inventory.
Got it understood. Thank you very much appreciate it.
Yeah.
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That's there's no one in the you know I will close the question answer session I'll now hand, the call back to Chris.
Sure.
No for closing remarks.
Thank you everyone for joining our call Tonight, you do you have any further questions or comments. Please don't hesitate to reach out the IR team. This concludes the call have a good night. Thank you.
Thank you. Thank you all.
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