Q4 2022 Aurora Mobile Ltd Earnings Call
And for up for our E Mail service integrating chat GBT will enable customers to generate aig's.
Personalized E mail content according to the recipient information profile and preferences.
The upgrade your email surfaces will not only improve the readability at journeys of email, but also increase the response rate and corrosion array of E mail, thereby helping our customers integrate with packet users more effectively and agile marketing stack.
For the Moe.
Early last month, we became one of the first the ecosystem partner of <unk>.
R&D part.
All generative AI chatbot developer by Baidu.
SaaS only book and a pipe Baidu is the leading intelligent dialogues technology in our customer engagement and marketing technology services.
This initiative is an additional step in our implementation of our AI driven strategy, if that's a poll and empowerment of leading AI chip technology.
And ecosystem partner, where we are.
Given priority for internal testing with our nimble and will integrate or in a bar in RF products.
Mainly right now the company has joined as our new broad ecosystem inquiry.
Tito Automobil shall do.
Enterprise solution can get.
<unk> and <unk>.
It's clear that going forward, our businesses are getting ready for this new Mega AI trend will also carry out in depth research and development and <unk> technology realized interactive dialogue similar to rail people for <unk> technology and further improve the richness of our push a message in there.
SMS content to empower the great commercial array and marketing engagement.
With that I will now pass the call over to Shannon, who will share more information about our vertical application and other aspects of our performers.
Thanks, Chris.
I would like to Echo Chris' comment on our revenue trend.
With our relentless effort in developing our cord develop a service we see a very promising recovering trend in Q4 and going forward.
Not only in development business, we also seen sequential growth in vertical application revenues, especially in market intelligence.
Whats the good applications, mainly consists of financial risk management and market intelligence.
Application revenue increased by 1% quarter over quarter and decreased by 11% year over year.
In the financial risk management segment revenue decreased by 14% Q over Q2, renminbi, $12 4 million and decreased 25% year over year.
The decrease in financial risk management revenue was due to many of our customers consumption were impacted by Covid outbreak in November to December last year.
We are not too worried about financial risk management revenue in 2023.
We believe the decline in Q4 was temporary and we are already seeing recovery in consumption. So far this year.
Our market intelligence services delivered strong revenue growth up 16% quarter over quarter, and 27% year over year to $10 4 million renminbi.
During this quarter, our revenue increased as a result of recovery in customer spending and the addition of many well known sizable new clients.
Furthermore, our strategy of focusing on key customer has helped us gain additional market share.
The baked in we know customer that we sign up in this quarter include among others.
Baidu Baba Chongqing Securities incidental tusa.
I will now go through some of the key expenses and balance sheet items.
Onto operating expenses.
As Chris mentioned earlier.
Strategy of active and stringent cost management improved very wise and our actions help us to maintain a nimble organization.
<unk> had another historical low quarter in terms of operating expenses.
Excluding noncash impairment loss of long lived assets.
73% 73 million down 21% year over year.
All three components, we didnt opex category recorded year over year noncash reduction.
In particular, R&D expenses decreased by 22% to renminbi 35 million, mainly due to lower head count that reduced salary cost and associated share based compensation and a decrease in costs and depreciation expenses as a result of improvements and optimization of our.
Platform.
Selling and marketing expenses decreased by 26% to renminbi $24 5 million, mainly due to decrease in headcount by 39.
Marketing expenses and salary costs cost decreased accordingly in this quarter.
G&A expenses increased by 149% to <unk> $35 9 million, mainly due to <unk>.
$22 4 million.
Cash increased in the long lived asset impairment due to onetime cost foregoing club in this quarter.
Adjusted EBITA.
Deliver a second positive quarter since Q4 finish to anyone.
Positive renminbi zero point $6 million.
The company was prudent and deliberate hiring and expenses control strategy has helped us maintain a comparatively low operating expenses level.
Now, let me recap some of the highlight of this quarter.
And we will achieve lowest adjusted operating expenses since IPO at <unk>, $62 8 million down 19% year over year, we had the lowest adjusted net loss since Q3 of 2019 at.
Negative <unk> $6 6 million improved by 18% year over year, we had a second positive adjusted EBITA since 'twenty one Q4.
0.6 million improved by $7 3 million quarter over quarter.
Now onto the balance sheet.
I will share two very important kpis that we closely monitor.
Firstly the aten over these decreased from 38 days in Q3 to 32 days, which is the lowest payout annuities since IPO.
I have to pay tribute to our team who has been working hard and diligently to collect payments from our customers on a timely basis.
Maintaining a low <unk> over this level is very important and it means that we have.
They have shot cash collection cycle, which help us to mitigate risk and bad and doubtful debts.
Secondly, one of our key <unk>.
Financially it keep your eyes were tracking performance of SaaS companies as total deferred revenue, which represents cash collected in advance from customer for future contract performance.
We record it and other highest balance in the history of the company standing at <unk> $142 4 million.
And this is the 11 consecutive quarters that we that our deferred revenue has exceeded 100 million.
In addition, this quarter also marks the seven quarters that we have deferred revenue.
With continuous sequential growth.
Just another good source of cash flow for us in such a challenging time.
And healthy cash flows, but the level of deferred revenue also signifies that our business is in great shape.
Our customer has continued to buy our services.
After over quarter and year after year and we are very pleased with the trending of this deferred revenue balance.
Next total <unk> with $420 9 million at December 31, 2022.
And this includes cash and cash equivalent of $106 3 million.
Accounts receivable of $29 7 million prepayments and other current assets of $30 4 million fixed assets at $14 9 million long term investment of one for $1 9 million.
Goodwill of $37 8 million in intangible assets of $23 9 million resulted from the central acquisition in much of 2022.
In total current liabilities were at $249 6 million as of visa.
December 31, 2022. This includes short term loan of $5 million.
Accounts payable of $18 2 million deferred revenue of <unk>, eight 8 million in accrued liabilities of $87 6 million.
And lastly, before I conclude I'll give a quick update on the share repurchase plan.
In the quarter ended December 31, 2022, we repurchased 246000 <unk> cube.
Cumulatively, we have repurchased a total of $109 million since the start of our repurchase program.
And this concludes the management's prepared remarks, we are happy to take a question now operator.
You May proceed.
Thank you.
As a reminder to ask a question. Please press star one one on your telephone and wait for a name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Our first question comes from the line of Bryan Keane Slinger from Alliance Global Partners. Please ask your question Brad.
Hey, Thanks for taking my question could you see the recovery in your businesses can you first talk about the strategic partnership with Whatsapp. It's your first slide and maybe I missed it could you discuss how and which segments you think might drive.
Revenue growth as you see it.
Sure Brian This is Shannon.
This is based on what we have.
Collected from our customer, especially overseas.
Although all of our customers are not able to tap onto Whatsapp community.
Communication channel policy as you know outside of China Whatsapp is huge in southeast Asia, even the Empire, China entire Asia ex China. So while we are helping the customer to do as they are able to.
As part of the communication channel Besides.
So quarter push notification they are able to tap onto the.
China managed by Whatsapp to reach users. So this is something that you are able to we are able to help them to and should add.
Rich the click through rate, although the usability rate is much higher so it is something that.
Whatsapp is happy.
We are able to help them as well to reach more customers so along that.
A lot of our customers are waiting for us to launch this.
This new product, which is already.
In a market. So what we are doing this we will be able to charge.
Our customers for the communication channel down through Whatsapp channel and of course, we've done we need to pay up.
<unk> come off expense or cost to whatsapp too.
So essentially you are going to be able to.
Push notifications through Whatsapp right.
Correct. So this is something that in the event that traditional push notification doesn't get through the <unk>.
Customers are able to use the whatsapp channel to reach their customers.
Now for existing customers that are using push.
This drive increases in the rates they pay or would you be part of the service they already get you.
Yes.
It would be an increase we would charge everything push notification done through whatsapp.
So there will be additional cost to the customer additional revenue to us.
Great and then.
Maybe you can talk about <unk> with you.
And <unk> cloud services.
Services operated before <unk> was it not automated or intelligence.
No.
What we're seeing is probably as you know aig's is very huge.
For the past two months, so you can come up with really creative.
For whatever question to us so what we're seeing is customers asking us to see if we are able to tap onto.
Chad Gbt's brain, so to speak because what youre doing is youre seeing they really need some creative content for their push.
To improve the click through rate so how do they do that is to be able to use our service to tap onto CECI Bts.
Content.
So which means that for a traditional customers that used to be.
Having to come up we've got one push content themselves, which might not be creative at all.
We're able to do is through our service.
They can they can ask Chad <unk> to two <unk>.
Slide five optionality in terms of content provision so that they can choose the best to suit.
So we'll be able to tap into that and we've said, they're able to send through their message.
The hope that <unk>.
<unk> better click through rates for that so in a similar fashion for a similar fashion for the E Mail.
Our customers, who use us the sand call chat GBT link, they're able to customize their use the chat gpt's.
AIG C to come up with a template so that they can better.
Customized email to send to the users which will be.
Hopefully better click through rate and our better results for our customers. So it is something that.
We are seeing a lot of customers are asking for the service and probably as you know these services are not.
Available in China as yet so we need to.
So we have a great great opportunity here to help our customers to get around this.
Issue.
Great that's super helpful.
Can you talk about the advertising market in China, I know, we saw a small recovery in the fourth quarter for revenue sequentially for value added services, but maybe talk about.
The trends Youre seeing today.
In advertising and how you see that recovery in 2023.
Yes.
Youll see the quarter over quarter, we achieve.
Sequential growth, which is really encouraging.
If you look at if we look ahead for the next 12 months, we do see some weakness or headwinds in the advertising space. As is also for us because our platform is not.
Fusion is still at the <unk> or the other bigger player. So I think we do not.
Aspect it to be back to C&I, 'twenty, 'twenty or 'twenty, one level, but I'm sure we'd be better than 2022.
Got it.
Outside of that maybe.
You did see sequential growth in basically all your business lines.
First.
We got the holiday.
In the first quarter. So maybe should we expect seasonality in the first quarter lead generic segment and then do you see gradual improvement in each of them, maybe just touch on the.
The segments.
I know you don't give revenue guidance, but maybe from a high level talk about the segment outlook for the year.
So the and the short answer to your question is yes, yes. So yes, we do expect to see Susan nullity.
So in Q1 because of the Chinese new year holidays, and a short short month in February .
Is.
What we expected going.
Going forward, Yes, we do anticipate Q2, Q3 Q4 to see uptake.
Going forward <unk>.
We've assistant to yes, we do expect all business lines to achieve at least a single digit growth.
Yeah.
Great. Thank you so much.
Thank you.
Thank you.
Our next question comes from the line of Calvin Wong fence Speaker capital. Please ask your question and Kelvin.
Okay.
So even though.
Thank you for taking my question.
I would like to ask two questions if I may.
First of all of course, we have already seen very encouraging.
Results for many aspects, maybe the company could share with us how you have achieved.
Good.
Members.
The first question and the second question is a follow up on this.
These partnership with both of them.
Apart from that.
Will there be any other going overseas initiative, which is on the table.
Yes, it was the power grid off the other going overseas.
<unk>.
Yes.
Okay.
Recap your question the first question you're asking.
What are the things that.
Paul.
Encouraging numbers.
Total for last year.
In Q4, and the second question is more any more color on that going overseas in these <unk> sure sure. Okay. Sure I think if you look at the Q4 numbers I think there are a lot of things that we have done right.
So maybe I can just give you the top treated internally at the organization, we talk about it and we reflected on ourselves and hull, what we have done right and so these are the three things first our C is staying focused.
So what I meant is doing what the market and customer one and do it well.
So probably you know despite a very tough environment for past two or three years, we have been laser focused on our subscription business. So we continue to develop new functionality and new features to help our customers to operate at a higher efficiency and that's what as.
Brian has asked earlier so as soon as we see the GBT become widely.
Widely available. So we are the first to incorporate the access on chat GBT to our customers. So it is very important so all our customer are appreciative that we have this functionality for them.
And secondly, if I think what we did right is making the tough decision at the right time.
And probably as you have heard for the past couple of earnings call. We restarted our restarted our we started to re let me.
Our cost structure as soon as we see the pandemic is.
Staying here longer than what we expect so during that time, we restructure many departments internally and regroup our.
Okay.
The few departments, where possible so in the process, we have trimmed our head count significantly from a high of I think 620 ish employees in 2021 to 415 last month.
So this is a very tough decision that we have to make but if you look back it was necessary and it was timely.
And I think the third is.
We have to actually execute our cost cutting initiative continuously.
I believe that the impact of cost saving is minimal if it's only one time exercise.
For us in the mentality of cost conscious is embedded.
In all departments B from the sales VP, all the way to adding staff everyone is tightly controlling expenses.
And this is important because we need to stay afloat, we need to have a sustainable business model for long term profitability.
In summary I'll.
Just recap what we have read.
Earlier in the earnings call.
For those things that we have done well. So that's the reason why this quarter, we have achieved quota.
Quarter over quarter revenue growth in all business lines, we have the highest quarterly revenue and gross profit in 2022.
And again, we achieved the lowest adjusted Opex since IPO and last but not least we have the adjusted EBITDA turned positive this quarter.
It was a bit long winded, but I hope this answer your question.
And Chris.
Secondly is on a going overseas. Yes. This has been pretty popular and we have been asked by a lot.
The analyst and investor for the past.
<unk> also.
In summary, let me conclude the.
The the going overseas update so based on the latest number we are since since we started growing we will cease in second half of 2022, we have achieved.
<unk> milestone the largest share on the call. One is we have signed up more than 50 contracts with these customers.
The customers for the.
For the contract values are higher than those in China and.
And we do not offer free trial service.
Disease, which means that all users of our services overseas.
Our fee paying customers.
And also.
It is.
I'd like to elaborate more on how we are doing and in terms of how we compare to our peers.
And for Us.
We have actually invested infrastructure overseas to service and support our customers. So we are not just lip servicing that we are going overseas. So we do actually have mixed investment.
The overseas debenture.
And secondly, with the actual product, which is called English lab that will launch in Q3, oftentimes you're doing too.
And again, Whatsapp, which is a mainstream and were popular overseas.
And it's one of our communication channel that we can help our customer to reach the users.
And number four is where we are.
Well versed in the legal requirement in order as far as Asia country on data privacy that we can help our customers to better manage data.
Data risks.
And lastly, with our current presence in Singapore, we can effectively and efficiently help our customer to cover the entire region.
So we've done I think.
We're confident that we'll do well in the overseas market.
Definitely we will provide more colors in of this segment in the future quarters, earning cost.
Great very clear thanks.
Yes.
Uh huh.
Thank you as a reminder to ask a question. Please press star one on your telephone.
And I'm showing no further questions I'll now turn the conference back to Rene for closing remarks.
Thank you Andrea thank.
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. Thank you.
Thank you.
Today's conference call. Thank you for participating you may now disconnect.
The conference will begin shortly to raise and lower Johan during Q&A, you can dial star one one.
[music].
Okay.
Yes.
Okay.
Yes.
Okay.
Okay.
Okay.
Okay.
[music].
Okay.
Sure.
Yes.
Yes.
Yes.
Okay.
Okay.
Okay.
Yes.
Okay.
Yes.
Okay.
Okay.
[music].
[music].
Okay.
Yes.
Yes.
Yes.
[music].
Okay.
[music].
Yes.
The conference will begin shortly to raise and lower Johan during Q&A, you can dial star one.
[music].
Okay.
[music].
Yes.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Yes.
Okay.
Yes.
Okay.
Okay.
Okay.
[music].
Yes.
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
Yes.
[music].
Yes.
Okay.
Yes.
Okay.
Okay.
Okay.
Thanks.
Yes.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
[music].
Yes.
[music].
[music].
Yes.
Okay.
Okay.
[music].
Okay.
[music].
Yes.
[music].
Yes.
[music].
Okay.
[music].
Yes.
Sure.
Yes.
Yes.
Okay.
Okay.
[music].
Okay.
Yes.
[music].
Thanks.
Okay.
[music].
Sure.
Yes.
Yes.
[music].
Okay.
[music].
Okay.
[music].
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
[music].
Okay.
Yes.
Yes.
Okay.
Yes.
[music].
Sure.
[music].
Okay.
Yes.
[music].
Okay.
Okay.
Okay.
Okay.
[music].
Okay.
Sure.
Yes.
Thanks.
Yes.
Okay.
Okay.
Yes.
Okay.
Sure.
Okay.
Ladies and gentlemen, thank you for standing by and welcome to Aurora Mobile fourth quarter and fiscal year 2022 earnings Conference call.
At this time.
Participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
To ask a question. During this session you will need to press star one on your telephone.
<unk> automated message advising yohan is raised.
<unk>. Your question. Please press star one again.
Please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your host today Rene vegan student. Thank you. Please go ahead Sir.
Thank you Amber.
Hello, everyone and thank you for joining us today.
<unk> earnings release was distributed earlier today and is abated.
Our our IR website.
Yeah Chi Guang Dong CN.
On the call today are Mr. <unk> Zhang Chairman.
Chairman and Chief Executive Officer Mr.
Mr Shannon Burns Chief Financial Officer.
And Mr. Guan Yang Chen General manager.
Following their prepared remarks, there will be available to answer your questions. During the Q&A session that will follow.
Before we begin.
To remind you that discuss earnings call contains forward looking statements within the meaning of section 21 E of the Securities Exchange Act of 1934 as amended and as defined in the U S. Private Securities Litigation Reform Act of $19 95.
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 different dose in the forward looking statements.
Further information regarding these and other risks uncertainties and factors.
Included in the company's filings with the U S Securities and Exchange Commission.
Company does not undertake any obligation to update any forward looking statement.
As a result of new information future events or otherwise.
Correct as required.
Pick up a load.
With that I'd now like to turn the conference over to Mr. Raul. Please go ahead.
Okay.
Thanks.
Yes.
Good morning.
Everyone.
Welcome to Aurora, Mobile's 22, plus quarter on this call.
Before I comment on our Q4 results.
I'd like to remind everyone that the quarterly on this that is available on our IR website.
You may refer it to that that as we proceed with the call today.
Before looking at the fourth quarter.
I would like to reflect upon our journey in the past couple of years.
In a challenging environment caused by pandemic.
Right, what we learn how we can through the toughest times and how much breakout growing as an organization.
I am proud to say that we can out of the difficult times and became more resilient and efficient.
Our underway without being constantly reviewing our overall strategy.
Of making necessary decisions no matter, how tough to ensure we are always on the right track to long term growth.
For all of this effort our revenues and margins remained strong as we improved gross profit, while tightly controlling and lowering opex.
We're starting to offer <unk> as a pure SaaS business in Q1 2021.
Amit this transition period, where their stock innovating and harnessing our core basis land developer services.
It's already it's bringing us railroads for the long run.
I'll give you more details later.
Economic uncertainty going globally.
Typically the way, we act quickly and proactively to make our organization stronger and Nimbler buy in ethane restricting and strict cost management across the company.
We also glass mat this decisions and our efforts are reflected in our financial results let.
Let me share some of it.
Key results with you.
Second positive adjusted EBITDA.
<unk> Q4.
<unk> 6 million.
Our business, our business, including Indianapolis surfaces does kristian surfaces and vertical applications scale record Q on Q.
Growth.
Highest gross profit in 2020 to RMB 59.
$8 million.
Lloyds adjust operating expenses since the IPO for the past 18 quarters.
$52 8 million.
<unk> adjusted net loss in Q3 of 2019.
There may be six 6 million improved by 18% year over year.
Hey, that's another day at 32 days since the IPO.
Deferred revenue balance is the highest in the history of harmony.
<unk> hundred 42 4 million.
Total customer number up 70%.
Year over year to 4719.
Failure to report rating renewed growth in Q4, 2022 total revenue rose to RMB, 86, 9 million up 8% quarter over quarter.
And both developer services, our core business.
Our vertical applications.
Achieved sequential growth with the biggest revenue growth contribution by developer services at 11%.
And this quarter, we record the highest quarterly revenue of 2022.
Our adjust opex being debt free.
The cash component of our path to a historically low level.
Our adjusted EBITDA was prestige for the second quarter since Q4 of 2021, <unk> 6 million. So a difference of three important vitamin B seven <unk> for negative renminbi six seven meter in Q3 2022, our adjusted net loss was also the lowest Deloitte.
Q3, 2019 at maybe $6 6 million inputted by 18% year over year. Furthermore, we ended this quarter on a higher note with more data than the 142 media in total deferred revenue or remaining proclaimers obligations up 15% versus last year.
This is a desktop impressive financial numbers for Q4 2013 that our team has worked hard to achieve.
And he showed that we are running the business well I'll just answer it more good things will come.
We are confident that the end of the call the share repurchase policy.
December 10, it'll little marks the beginning of China's emerges from the pandemic.
Even though there may be some short term headwinds.
This has put the country on a path to return <unk>.
Nobody in Brazil, pre COVID-19 levels of consumer social and economic growth. Therefore, the outlook for new consumer activities and the gradual recovery of our business in China tariff rate is very promising.
Now, let me go through our different revenue streams.
Developer services revenue increased 11% quarter over quarter to RMB $63 2 million.
It was mainly due to the increase in both subscription and services and value added services.
Yes, David.
So basis revenue decreased by one 5%, mainly due to the weakness in value added services offset by the growth in Tuscaloosa surfaces.
First question on services revenue were RMB 46.
<unk> at 11% quarter over quarter, and up 4% year over year subscription services, our core business and coach Apush analytics <unk> other products and services that are out there.
<unk> and enterprise to improve operational efficiency.
Our private cloud service revenue.
<unk> has contributed to the subscription revenue growth and we were able to bring a number of we know customers umbrella, including but not limited to Charlestown, Sanjay P&I Johan and joining Johan.
The increase in <unk> also contributed to the growth in revenue and we managed to grow our customer base, we have several well known and tebo customer like.
One that been typing oncology and JMP its Brad.
Just to announce it.
Since our launch of the overseas. So based patois engaged in October we have seen encouraging trends and customer at scale have been its pricing down a strong interest in our product.
We are expecting a stronger revenue growth going into 'twenty, three and we will continue to improve our products and services to have global developers with efficient and cost effective user reach.
As I mentioned earlier, we are anticipating consumer S&P.
It is to recover further in terms of delivery. During Q4, we already saw some growth in our value added services revenue, which is a good indicator of overall revolving consumer activities.
The value added service revenue increased quarter on quarter by 10%.
First quarter of quarter of growth and try to talk you through our major positive sign for us year over year revenue was down 44% to RMB <unk> $6 9 million and we expect the year over year growth trend will continue to recover in 2023.
Customers of that JJ, I'll answer basis, consisting of repeated customer and market leaders across many industrial vertical key customers <unk> baidu.
Baidu Alibaba Tencent Joseph Bank and <unk>.
For our <unk> pop that was launched in Q2 of 2022, we are seeing more and more interest from very apps.
Oh for <unk> joined our platform by the end of this quarter.
Growth in da use of our 300% and as the overall economic recovery in China repeated with that <unk> will drive outperformance going forward.
Another exciting news, which also marked a major milestone for US is a pioneer work integrating that chat gbt's technology in our papers are pushing notification solution and in our E Mail SMS service platform.
AI has become the cornerstone of many products and services.
<unk> eight is very important for us to be one of the <unk>.
AI technology.
Our poor accurate integration of in the agile language model technology and Aig's irregular.
<unk>, a great opportunity to make our products merger further benefiting our customers.
For a long time.
Okay.
<unk> has been how to attract users attention for recruiting.
High quality content and inform message AAA and user conversion.
The AI, Croatia, two resulting from the integration of <unk> delivers a powerpoint erosion.
These two developers can quickly capped into tap into the aig's.
Generated a personalized <unk> content to agile high cliff array and high compression.
Effectively in poverty, improving the efficiency of our user reach and engagement.
And for up for our E mail surveys integrate inkjet GBT.
<unk> customer to generate aig's.
Personalized E mail content. According to the recipient information profile as preference.
The upgrade yet E mail services will not only improve the readability attorneys of email, but also increase the response rate and conversion rate of email, thereby helping our customers integrate with their target users more effectively and agile higher marketing and <unk>.
For the Moe.
Early.
Last month, we became one of the first the ecosystem partner of <unk>.
R&D part.
Generative AI chatbot developer by Baidu.
SaaS or in April and a pipe idose.
<unk>, leading intelligent dialogue technology in our customer engagement and marketing technology services.
This initiative is an additional step in our implementation of our AI driven strategy.
And empowerment of leading AI chip technology.
As an ecosystem partner, where we'll be given priority for internal testing with our nimble and will integrate our brought in RF products.
Many right now the company has joined our new Bronx ecosystem inquiry.
Tito Automobil shall do.
Enterprise solution can get.
European <unk>.
It's clear that going forward, obviously is getting ready for this new Mega AI trend will also carry out in depth research and development and chatter irregularity technology realized interactive dialogue similar to rail people for <unk> technology and further improve the richness of our pushing message.
Male NSS SMS content to empower the great commercial array and marketing engagement.
With that I will now pass the call over to Shannon, who will share more information about our vertical application and other aspects of our performance.
Okay. Thanks, Chris.
Let me Echo Chris' comment on our revenue trend.
We have a relentless effort in developing our Cogs.
Local service, we see a very promising recovering trend in Q4 and going forward.
Not only in developer services.
You're also seeing sequential growth in vertical application revenues, especially in market intelligence.
Good applications, mainly consists of financial risk management and market intelligence.
With a good application revenue increased by 1% quarter over quarter and decreased by 11% year over year.
In our financial risk management segment revenue decreased by 14% Q over Q2, renminbi, $12 4 million and decreased 25% year over year.
The decrease in financial risk management revenue was due to many of our customers consumption were impacted by Covid outbreak in November to December last year.
We're not too worried about financial risk management revenue in 'twenty two 'twenty three as we believe the decline in Q4 was temporary and we are already seeing recovery in consumption. So far this year.
Our market intelligence services delivered strong revenue growth up 16% quarter over quarter, and 27% year over year to $10 4 million renminbi.
During this quarter, our revenue increased as a result of recovery in customer spending and the addition of many well known sizable new clients.
Furthermore, our strategy of focusing on key customer has helped us gain additional market share.
The big <unk>, and we know customer that we sign up in this quarter include among others.
Tencent Baidu Baba Chongqing Securities Vincenzo Tusa.
I will now go through some of the key expenses and balance sheet items.
Onto operating expenses.
As Chris mentioned earlier, our strategy of active and stringent cost management.
<unk> wise and our quick action helped us to maintain as a nimble organization.
We have had another historical low quarter in terms of operating expenses, excluding noncash impairment loss of long lived assets at 73% to $73 million down 21% year over year.
All three components, we didnt opex category recorded year over year noncash reduction.
In particular, R&D expenses decreased by 22% to RMB 35 million, mainly due to lower head count that reduced delivery costs and associated share based compensation and a decrease in cloud costs and depreciation expenses as a result of improvement and optimization of our call.
Platform.
Selling and marketing expenses decreased by 26% to renminbi, Fannie four 5 million, mainly due to decrease in headcount by 39.
Marketing expenses and salary costs cost decreased accordingly in this quarter.
G&A expenses increased by 149% to <unk> $35 9 million, mainly due to <unk>.
$22 4 million non.
Cash increased in the long lived asset impairment due to onetime cost.
Gwen Clark.
In this quarter.
Adjusted EBITA.
Deliver a second positive quarter since Q4 finish to anyone.
Positive roaming fees <unk> 6 million.
Our company wide prudent and deliberate hiring and expenses control strategy has helped us maintain a comparatively low operating expenses level.
And let me recap some of the highlight of this quarter.
And we achieve lowest adjusted operating expenses since IPO at <unk>, $62 8 billion down 19% year over year, we had the lowest adjusted net loss since Q3 of <unk>.
2019 at.
Negative <unk> $6 6 million improved by 18% year over year, we had a second positive adjusted EBITA since 'twenty one Q4.
0.6 million improved by $7 3 million quarter over quarter.
Now onto the balance sheet.
I will share two very important kpis that we closely monitor.
Firstly, the alternate where these decreased from 38 days in Q3 to 32 days, which is the lowest payout annuities since IPO.
I have to pay tribute to our team who has been working hard and diligently to collect payments from our customers on a <unk> basis.
Maintaining a low <unk> over this level is very important and it means that we have.
They have shot cash collection cycle, which help us to mitigate risk and bad and doubtful debts.
Secondly, one of our key.
Financial Kpis were tracking performance of SaaS companies.
Total deferred revenue, which represents cash collected in advance from customer for future contract performance.
We recorded another highest balance in the history of the company standing at <unk> $142 4 million.
And this is the 11 consecutive quarters that we that.
Our deferred revenue has exceeded $100 million.
In addition, this quarter also marks the seven quarters that we have deferred revenue.
With continuous sequential growth.
Which is another good source of cash flow for us in such a challenging time.
And healthy cash flow with the level of deferred revenue also signifies that our business is in great shape.
Our customer has continued to buy our services quarter over quarter and year after year and we are very pleased with the trending of this deferred revenue balance.
Next total assets were $420 9 million at December 31, 2022.
This includes cash and cash equivalent of $106 3 million accounts receivable of $29 7 million prepayments and other current assets of $30 4 million fixed <unk>.
$14 9 million long term investment of one for $1 9 million.
$37 8 million in intangible assets of $23 9 million resulted from the central acquisition in much 2022.
And total current liabilities were at $249 6 million as of <unk>.
December 31, 2022. This includes short term loan of $5 million.
Accounts payable of $18 2 million deferred revenue of <unk>, eight 8 million accrued liabilities of $87 6 million.
And lastly, before I conclude I'll give a quick update on the share repurchase plan.
In the quarter ended December 31, 2022, we repurchased 246000 <unk> cumulatively.
Cumulatively, we have repurchased a total of $1 one $9 million since the start of our repurchase program.
And this concludes the management's prepared remarks, we are happy to take a question now operator.
You May proceed.
Thank you.
As a reminder to ask a question. Please press star one on your telephone and wait for a name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Yes.
First question comes from the line of Brian Kingston Linger from Alliance Global Partners. Please ask your question Brian .
Great. Thanks for taking my question and good to see the recovery in your businesses can you first talk about the strategic partnership with Whatsapp. It's your first slide and maybe I missed it could you discuss how and which segments might drive.
Revenue growth as you see it.
Sure Hey, Brian This Shannon.
This is based on what we.
Collected from our customers, especially overseas.
Although all of our customers are now able to tap onto whatsapp.
Communication channel, probably as you know outside of China Whatsapp is huge in southeast Asia, even the Empire, China Anti Asia ex China. So while we are helping the customer to do is you're able to as part of the communication channel. Besides.
So quota push notification they are able to tap onto the.
China managed by Whatsapp to reach users. So this is something that they are able to we are able to help them to ensure that the.
Rich the click through rate, although the usability rate is much higher so it is something that whatsapp.
Whatsapp is happy.
We are able to help them as well to reach more customers so along that.
A lot of our customers are waiting for us to launch this.
This new product, which is already.
<unk> in the market. So what we are doing this we will be able to charge.
Our customers for the communication, China down through Whatsapp channel and of course, we have that we need to pay up.
<unk> expense.
<unk> expense or cost to whatsapp too.
So essentially youre going to be able to.
Push notifications through Whatsapp that right.
Correct. So this is something that in the event that.
Traditional push notification that we will get through the customers are able to use the whatsapp channel to reach their customers.
Now for existing customers that are using per well.
Drive increases in the rates they pay or would you be part of the service they already get yes. It will be an increase we would touch everything.
Push notification untrue whatsapp.
So there will be additional cost to the customer additional revenue to us.
Great and then.
Maybe you can talk about Jack GBT with your push.
And 10 cloud services.
Services operated before Jack GBT was it not automated or intelligent.
No.
What we're seeing is probably as you know aig's is very huge.
For the past two two months. So you can come up with really creative.
For one of the question that you asked so what we're seeing is customers asking us to see if we are able to tap onto.
Chad Gbt's brain, so to speak because what youre doing is youre seeing they really need some creative content for their push.
To improve the click through rate so how do they do that is to be able to use our service to tap on to catch.
<unk>.
Content creative site, so which means that for a traditional customers that used to be.
Having to come up with their own push content themselves, which might not be creative at all.
You've got to do is through our service.
They can they can ask Chad <unk>.
To create optionality in terms of content provision so that they can choose the best to suit. The decade. So we're able to tap into that and we've said they are able to send through their message.
Hope that Nam do be better click through rates for that so in a similar fashion for a similar fashion for the E Mail.
Our customers, who use us the sand.
GBT length, they are able to customize their use the chat gpt's.
AIG C to come up with a template so that they can better.
Customized email to send to the.
Users, which will be <unk>.
Definitely better click through rate and our better results for our customers. So it is something that we have.
We're seeing a lot of customers are asking for this service.
And probably as you know these services are not.
Available in China as yet so we need to.
So we have a great great opportunity here to help our customers do.
Got around this.
Issue.
Great that's super helpful.
Can you talk about the advertising market in China, I know, we saw a small recovery in the fourth quarter for revenue sequentially for value added services, but maybe talk about the.
The trends Youre seeing today.
In advertising and how you see that recovery in 2023.
Yes, as you see the quarter over quarter, we achieve.
Sequential growth, which is really encouraging.
But if you look at if we look ahead for the next 12 months, we do see some weakness or headwinds in the advertising space. As is also for us because our platform is not as huge as soon as the <unk> or the other bigger player. So I think we do not.
Aspect is to be back to like 2020, or 21 level, but I'm sure we would be better than 2022.
Got it.
Outside of that maybe.
You did see sequential growth in basically all your business lines.
First.
We got the holiday Inn.
In the first quarter. So maybe should we expect seasonality in the first quarter lead generic segment and then do you see gradual improvement in each of them, maybe just touch on the segments.
You don't give revenue guidance, but maybe from a high level talk about the segment outlook for the year.
So the short answer to your question is yes, yes. So yes, we do expect to see Susan nullity.
Low in Q1, because of the Chinese new year holidays.
Shorter month in February .
As.
What we expected.
Going forward, Yes, we do anticipate Q2, Q3 Q4 to see uptake.
Going forward as to anything <unk>.
<unk> versus 22, yes, we do expect all business lines to achieve at least a single digit growth.
Okay.
Great. Thank you so much.
Thank you.
Thank you.
Our next question comes from the line of Calvin Wong fence Speaker capital. Please ask your question Kelsen.
Okay.
Even though.
Thank you for taking my question.
I would like to ask two questions if I may.
First of all of course, we have already seen very encouraging.
Results for many aspects, maybe the company could share with us how you have achieved.
Numbers.
Thats. The first question and the second question is a follow up on.
These.
Partnership with both of them.
<unk>.
Apart from that.
Uh huh.
Any other going overseas in these ATM, which.
So on your table.
Yes, it was.
Hello, Greg.
Going overseas.
It is.
Yes.
Okay.
Recap your question the first question you're asking.
What are the things that.
Paul.
Encouraging numbers.
Lastly.
In Q4, and the second question is more any more color on that.
And overseas in these <unk> sure sure Okay sure.
If you look at the Q4 numbers I think there are a lot of things that we have done right.
So maybe I can just give you the top treated.
Internally at the organization, we talk about it and we reflected on ourselves and hull, while we have done right and so these are the three things first our C is staying focused.
So what I meant is doing what the market and customer one and do it well.
So probably even though despite a very tough environment for past two or three years, we have been laser focused on our subscription business. So we continue to develop new functionality and new features to help our customers to operate at a higher efficiency and that's what as Brian has asked earlier so.
One is we see the GBT become.
Widely available. So we are the first to incorporate the access of chat GBT to our customers. So it is very important so all our customers.
I appreciative that we have this functionality for them.
And secondly, if I think what we did right is making the tough decisions at the right time.
And probably as you have heard for the past couple of earnings call. We restarted our restarted our we started to re examine our cost structure as soon as we see the pandemic has sustained year longer than what we expect so during that time, we restructure many departments internally and regroup our.
Okay.
The few departments, where possible so in the process, we have trimmed our head count significantly from a high of I think 620 ish employees in 2021 to 415 last month.
So this is a very tough decision that we have to make but if you look back it was necessary and it was timely.
And I think the third is.
We have to accident, we are execute our cost cost cutting initiative continuously.
I believe that the impact of cost saving is minimal if it's only one time exercise.
For us in <unk>, the mentality of cost conscious is.
Embedded.
In all departments B from the sales VP all the way to our admin staff, everyone is tightly controlling expenses.
And this is important because we need to stay afloat, we need to have a sustainable business model for long term profitability.
I guess in summary, I'll, just recap what we have read earlier.
We're in the earnings call for.
For those things that we have done well. So that's the reason why this quarter we have achieved.
Quarter over quarter revenue growth in all business lines, we have the highest quarterly revenue and gross profit in 2022 and again, we achieved the lowest adjusted Opex since IPO and last but not least we have the adjusted EBITDA turned positive this quarter.
It was a bit long winded, but I hope it answer your question Andrew.
Chris.
Secondly is on a going overseas. Yes. This has been pretty popular and we have been asked by a lot.
The analyst and investor for the past month or so.
In summary, let me conclude the.
The growing overseas update so based on the latest number we have seen since we started growing who received in second half of 2022, we have achieved.
<unk> milestone the largest share on the call. One is we have signed up more than 50 contracts with these customers.
Other customers.
For the contract values are higher than those in China.
And we do not offer free <unk> service.
Which means are all users of our services overseas.
Our fee paying customers.
And also.
I'll just finish I would like to elaborate more on how we are doing and in terms of how we compare to our peers.
And for US, we have actually invested infrastructure overseas to service and support our customers. So we are not just lip servicing that we are going overseas. So we do actually have.
MC investment.
The overseas debenture.
And secondly, with the actual product, which is called English lab that will launch in Q3 of the engineering too.
And again, Whatsapp, which is a mainstream embraer popular overseas and it's one of our communication channel that we can help our customer to reach the users.
And number four is where we.
We're always in the legal requirement in order as far as Asia country on data privacy that we can help our customers to better manage data.
Data risks.
And lastly, with our current presence in Singapore, we can effectively and efficiently help our customer to covered Empire region.
I think.
We're confident that we'll do well in the overseas market.
Definitely we will provide more colors in of this segment in the future quarters, earning cost.
Great very clear thanks.
Yeah.
Thank you as a reminder to ask a question. Please press star one on your telephone.
And I'm showing no further questions I'll now turn the conference back to Rene for closing remarks.
Thank you Andrea.
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. Thank you.
Thank you.
Today's conference call. Thank you for participating you may now disconnect.