Q2 2023 Aurora Mobile Limited Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the Aurora Mobile second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host for today, Renee Vagastain. Thank you. Please go ahead, sir.
Ladies and gentlemen, thank you for standing by and welcome to the Aurora Mobile's second quarter 2023 earnings Conference call. At this time, all participants are in a listen only mode.
Later, we will conduct a question answer session and instructions will be given at that time.
Be advised that today's conference is being recorded.
I would now like do you have the conference over to your host for today Rene bag of state. Thank you. Please go ahead Sir.
Thank you, Michel. Hello everyone and thank you for joining us today.
Thank you Michelle Hello, everyone.
And thank you for joining us today.
Aurora's earnings release was distributed earlier today and is available on the IR website at IR.G1.cn
<unk> earnings release was distributed earlier today and is a bit about on the IR website.
On the Jaguar I don't see.
On the call today I am Mr. Weidong Guo, Chairman and Chief Executive Officer, Mr. Shan Nenbong, Chief Financial Officer and Mr. Guan Yan Chen, General Manager.
On the call today are Mr weighed on rule, Chairman and Chief Executive Officer.
Mr Shan Nen, Bong, Chief Financial Officer, and Mr. Guang Yang chips.
Guang Yang Chen General manager.
Following the prepared remarks, they will be available to answer your questions during the Q&A session that follows.
Following their prepared remarks, there will be available to answer your questions. During the Q&A session that follows.
Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21e of the Securities Exchange Act of 1934, as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995.
Before we begin I'd like to remind you that this conference call contains forward looking statements within the meaning of section 21 E of the Securities Exchange Act of 1934, as a mandate and as defined in the U S. Private Securities Litigation Reform Act.
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These forward-looking statements are based upon management's current expectations and current market and operating conditions.
These forward looking statements are based upon management's current expectations and current market and operating conditions.
which are difficult to predict and make because the company's actual results, performance or achievements, to defer material from those in the forward look-in state.
Which are difficult to predict and may cause the company's actual results performance or achievements to differ materially from those in the forward looking statements.
Further information regarding these and other risks, uncertainties and or factors are included in the company's filings with the U.S. Securities and Exchange Commission.
Further information regarding these and other risks uncertainties and factors are included in the company's filings with the U S Securities and Exchange Commission.
The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable laws.
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 conference call over to Mr. Louis. Please go ahead. Thanks, Rayny.
With that I'd now like to turn the conference call over to Mr. Luo. Please go ahead.
Thank you so right now.
Good morning, and good evening everyone.
Welcome to Arun Mobile's 2023 second quarter earnings call. Before I comment on our...
Welcome to Aurora Mobile's tried it on you for a second quarter earnings call.
Before I comment on our Q2 results.
I would like to remind everyone that the culturally earnest debt is available on our IR website. You may refer to the debt as we proceed with the call today.
I would like to remind everyone that the call today that is available on our IR website.
You may refer it to that that as we proceed with the call today.
Coming off from our seasonal slow Q1 quarter, we managed to achieve a few good results.
Coming off from her she has noticed that I'll kill one quarter, we managed to actually be a good result.
In this quarter.
Yeah.
Hello, Richard.
We see signs of recovery on most of the basis of lives within the quarter.
However, they are not back to the level a year ago.
During Q2 of 2023, we did a few things right. Firstly, we continue to expand our subscription business with the help of our Engaged App product offering overseas.
They already Q2 off touched any free they see a few things right.
We continue to expand our subscription business if that happens you can catch it up put us operating overseas.
I wish him I will share more on our engage it up basically it's at their laser products.
Secondly, our value at the surface basis records impressively sequential revenue growth. Thirdly, our radical application basis records solid growth. Last but not least, we continue to control our expenses throughout the organization.
Second study already.
So basically it is record impressive with sequential revenue growth.
Furthering our vertical application basis record solid growth last but not least we continue to control our expenses.
We're out of the organization.
If the U S a.
Backdrop, here are the good financial results that I would like to share with you.
Backdrop here are the financial results I would like to share with you.
Total revenue grew to well present quarter after quarter.
Total revenue grew 12% quarter after quarter.
growth profit grow quarter-up-quarter to maybe 47.7 million.
Gross profit for quarter after quarter to Renminbi 47, plus seven meter.
Loius adjusts operating expenses since IPO at RMB 54.6 million. Loius operating expenses since IPO at RMB 64.1 million.
Adjusted operating especially since the IPO and that can be 50 $54 six meter.
Lease operating expenses since the IPO and their babies.
<unk> for Apollo on media.
AR to another date at 37th days improvement year over year and quarter over quarter.
A number of days.
Seven days improvement year over year and quarter.
The further revenue balance above RMB $130 billion for the past six consecutive quarters.
Okay.
The further revenue bonds about renminbi Ababa M B Mahesh jokes that it'll be there for them.
Sixth consecutive quarters.
Yeah.
Now let me go for our different revonistings. The beneficial phase revenue decreased 6% over year, many due to the witnessing in the better additional phases, observed by the 6% growth and subscription service.
Now let me go for our deferred revenue stream.
The benefits of base revenue decreased 6% year over year many.
Many due to the witness thing.
No matter what basis offset by the 6% corporate and subscription services.
However, developers' surface revenue growth solid by 1.5% quarter after quarter. There are poor prescriptions and low-editsurface services have a record sequential revenue growth.
However, the benefits of the pace of revenue of course of course.
Solid by one 5% quarter over quarter.
Both subscription and services.
So patient services, having a record sequential revenue growth.
Subsequent surface revenue will remain be 40.5 million up 6% year over year mainly driven by increasing APU. Similarly, we record revenue growth of 8% quarter over quarter with the growth in APU between the quarters.
First question is does the revenue the renminbi 41, 5 million up 6% year over year, many driven by increasing Apple.
Similarly, we record revenue growth of 8%.
Although off a project with the quality of applebee's in the quarter.
Some of the notable new and renewable customers in this quarter include but not limited to Tai-Kang Ren show, Zhongguo Dianxin, Simaraya, Jixia, Hong Kong, Jiaxu, N and S Ivan Senate.
Some of the notable new and renewable.
Renewable renewal customers in this quarter include but not limited to take on this so jumbo dashing humira, Yeah, John Hancock just for Nancy.
As the surface revenue will remain be 11.5 million decreased by 32% year over year which was a result of great advertising demand. However, we did manage to record a good sequential revenue growth of 45% quarter over quarter. This was mainly due to our ability to capture good portion of the e-commerce advertising spending for the 618 online shopping festival. However, we remain cautious on the revenue growth in the online advertisement market.
But at the surface at revenue of RMB, 11, 5 million decreased by 32% year over year reach a as a result of the way advertising demand. However, we did manage to record good sequential revenues were up 45% quarter over quarter. You said was many due to our operated to capture good posture update e-commerce advertising spending.
But that takes 1819 shopping in Pittsburgh.
However, we remain cautious on the revenue growth in the online advertisers advertisement market.
Next, let me give you some updates on our overseas EngageLab product.
Let me give you some updates on all RBC and get you that product.
As I shared in the prequarter earnest release, we now have the data center across the global gathering for customers in different regions and continents.
As I shared in the parade Carter our newest release, we now have the data center across the global category for customers in different regions and continents.
As we expand our footprint globally, we can sign up more international customers. Our investment in technology innovation and building global infrastructure has paid off.
I believe it's been our footprint globally, we have a son.
More international customers.
Investment in technology innovation and building global infrastructure help pay off.
As of now, we have global customers coming from to well different countries and regions, including Hong Kong and Taiwan. For our discussion with these overseas customers, they selected our service many due to the following reasons. One reliable and stable service delivery. Two strings of data security and compliance.
That's all for now we have global customers coming in for Al Tobia with different countries and regions, including Hong Kong Taiwan.
Our discussion with a variety of customers. They said that the surface. Many due to the following or is it.
One reliable stable sophisticated very curious as Jane said data security and compliance.
free local data center across the world.
For a local data center across the across the world.
Let me show some other impressive metrics here in Q2. Our EngageLab-based assessment found contract value was at 21% of the total new contract value for the group.
Let me show some other impressive metric skier in Q2.
<unk>, let me say a step man sign the contract value was at time.
1% of the total new contract value for the group.
This number has grown three times between the cultures, showing great momentum.
This number has qualified times between the quarters showing great momentum.
In addition, we have also seen great overseas email and SMS volume growth. In Q2, the total overseas email request volume was at 3.3 billion, representing 4.2 tons of our domestic email request volume. Overseas email and SMS request volumes have a record 19% and 19% growth between the quarters.
In addition, we have also seen great oversee email SMS of order growth in Q2, the total RAC email request blowdown, what's F freight freight representing true ballpark two tons of our domestic email request border.
The email SMS request borders have a record of one 1% and 19% growth we tend to call.
Cortes.
Our engaged activities activity is gradually growing in importance for both transaction and contract value contribution.
Engage it up let me say its activity is gradually growing in importance football for transaction and contract value contribution.
Therefore, I am very confident on the progress of our urban services expansion strategy that we can start year or year ago. I believe we will have the benefit of these urban services in the near future. With that, I will not pass the call of the two shanlin. We will share more information about the vertical application and other aspects of our financial performance for this quarter.
Therefore, I'm very confident on the progress of our overseas expansion strategy that ratio.
I believe we will.
The benefit of the date of this arrest the effort in the near future we.
With that I will now pass the call over to Shannon, who will share more information of that vertical application.
At the back of our financial performance for this quarter.
Thanks Chris. I'm just a recap. With the application many consists of financial risk management and market intelligence.
Thanks, Chris.
Just to recap what the application mainly consists of financial risk management and market intelligence.
In this quarter, with the application recorded revenues growth on both year over year and quarter over quarter basis.
In this quarter, what the obligation recorded revenues growth.
On both year over year and quarter over quarter basis.
For financial risk management, revenue grew year over year and quarter over quarter.
Well risk financial risk management revenue grew year over year and quarter over quarter.
This was positively impacted due to our full growth between the periods.
This was positively impacted due to a port growth between the periods.
In Q2 of 2023, we have seen customer consumption or purchase of our services increase, past pushing the R2 quarter over quarter.
In Q2 of <unk>, we have seen customer consumption or purchase of other services increase past pushing that up quarter over quarter.
Apart from customers increasing their consumption, we managed to sign up more customers such as Wei Zhongyin Han.
Apart from customer increased their consumption, we managed to sign up more customers such as waste only huh.
Hing An self-aging room, Haier self-aging room, Zhongxing self-aging room
Jeff anything wrong higher shelf waiting room, it's almost self fitting room.
As for market intelligence, the revenue remains stable year over year and quarter over quarter.
So on market intelligence, the revenue remained stable year over year and quarter over quarter.
I will now go through some of our key expenses and balance sheet items. On to our….
I will now go through some of our key expenses and balance sheet items.
Onto onto operating expenses.
I'm again very pleased to share with you that in Q2 2023 we have yet another record low quarterly OPEX at RMB 64.1 million.
I am again very pleased to share review that in Q2, and even a tree, we have yet and yet another record low quarterly opex roaming be $64 1 million.
For year-over-year comparison, OPACs decreased by 27%, where all three categories of OPACs, being Research and R&D, S&M and G&A, all recorded reduction between the periods.
For year over year comparison, Opex decreased by 27% were all three categories of Opex being recession, R&D us and them and G&A all recorded reduction between the periods.
This is critically important for us to maintain our OPACs at optimal level. This is the reason why we are able to record a 42% year-over-year improvement in adjusted EPTAC when the revenue drops by 4% year-over-year.
This is critically important for us to maintain our opex that optimal level.
This is the reason why we are able to record a 42% year over year improvement in adjusted EBITA, when the revenue dropped by 4% year over year.
We strive to continue tightly monitor and control our OPACs now and going forward.
We strive to continue to tightly monitor and control our opex now and going forward.
Well now go to the individual Opex category.
In particular, R&D expenses decreased by 26% year-over-year to maybe 30.2 million, mainly due to lower paid count that reduced salary costs and associated share-based compensation, and a decrease in depreciation expenses as a result of us no longer needing as many servers due to our ongoing cloud initiative.
In particular our.
R&D expenses decreased by 36% year over year to really be $30 2 million.
Mainly due to lower head count that reduced salary costs and associated share based compensation and a decrease in depreciation expenses as a result of no longer needing as many so if it was due to our on going cloud initiative.
Selling and marketing expenses decreased by 14% year over year to RMB 20 million, mainly due to the decrease of headcount by 30.
Selling and marketing expenses decreased by 14% year over year to renminbi 20 million, mainly due to the decrease of hate call by 30.
GNA expenses decreased by 41% year-over-year to RMB 13.9 million, mainly due to a 2.5 million decrease in personnel cost and 5.3 million decrease in professional fee.
G&A expenses decreased by 41% year over year to rub 13, 9 billion, mainly due to a $2 5 million decrease in personnel costs and 5.3.
3 million decrease in professional fees.
As I mentioned earlier, as a result of our focus to drive OPEX at optimal level, the adjusted EBTA improves significantly by 42% over year to negative, let me be 4.6 million.
As I mentioned earlier as a result of our focus to drive Opex.
At optimal level, the adjusted EBIDTA improved significantly by 42% year over year to negative let me be $4 6 million.
Onto the balance sheet.
I will again share two very important KPI that we closely monitor.
Oh again share two very important keep you either we closely monitor.
We continue to maintain a healthy AR turnover days and...
We continue to maintain a healthy I'll turn over these.
37 days. This was a huge improvement from a year ago where the AR turnover was at 46 days.
30 70.
It wasn't a huge improvement from a year ago.
Turnover days was 46 days.
And we also shortened the AR turn where there is quarter over quarter.
And we were sort of shocked that the auto what these quarter over quarter.
In summary, our team has done a great job in this quarter to improve our cache collection and mitigating the AR doppel death risk.
In summary, our team has done a great job in this quarter to improve our cash collection and mitigating the ER docs with <unk> Suisse.
Secondly.
One of our key.
Financial KPI for tracking the performance of SARS company is a total deferred revenue which represent cash collected in advance from customers for future contract performance.
Finance, you'll keep your iPhone checking them the performance of SaaS company is a total deferred revenue we should represent cash collected in advance from customers for future contract performance.
The balance continued to be at high level of RMB 1.37.3 million. And this is the sixth consecutive quarter where our deferred revenue balance exceeded RMB 130 million.
The balance continues to be at a high level of renminbi, one <unk> seven 3 million.
And this is the sixth consecutive quarter, where our deferred revenue balance exceeded rather it'd be 130 million.
We continue to sign up new and renewal customers where they have prepaid their fees in advance. This again really improves our cash flow quarter over quarter.
We continue to sign on new and renewal customers, where they've prepaid fees in our bonds. This again really improve our cash flow quarter over quarter.
Next, total assets were at RMB 371.9 million as of June 30, 2023. This includes cash and cash equivalent of 81.1 million.
Next total assets, where whether it be trees $71 9 million as of June 30.
This includes cash and cash equivalent of $81 1 million.
The cost-reservoir of 34 million. Pre-payments and other current assets at 31.1 million. Fixed asset at...
Accounts receivable of 34 million.
Prepayments and other current assets of $31 1 million fixed asset.
10.1 million, long-term investment of 140.4 million, goodwill of 37.8 million and intangible assets of 20.9 million resulted from the same clock acquisition in March 2022.
$10 1 million long term investment of 140.4 million goodwill of $37 8 million and intangible assets of $20 9 million resulted from the central acquisition in March and you need to.
Total current liabilities were at $235.8 million as of June 30, 2023. This includes a short-term loan of $5 million.
Total current liabilities were 235 8 million as of June 30 have tended to entry. This include.
Short term loan of $5 million of.
Accounts payable to $2 2 million.
current operating list liability of 7.3 million.
Current operating lease liability of $7 2 million.
Deferred revenue of $135.4 million. Accrued liabilities of $65.8 million.
Deferred revenue of $125 4 million.
Accrued liabilities of $65 8 million.
And lastly, before I conclude, I'll give a quick update on the shared repurchase plan.
And lastly, before I conclude I'll give a quick update on the share repurchase plan.
In a quarter ended June 30th, 2023, we repurchased 443,000 EDS. Cumulatively, we have repurchased a total of 1.83 million EDS since the start of our repurchase program.
In the quarter ended June 30, if they need any tree we repay.
We repurchased 443000 eds.
Cumulatively, we have repurchased a total of 1.83 million since the start of our repurchase program.
And this concludes management prepared remarks. We're happy to take your call.
And this concludes management prepared remarks, we were happy to think a whole lot.
Thank you. If you'd like to ask a question, please press star 11. If your question hasn't answered and you'd like to remove yourself in the queue, please press star 11 again.
Yes.
Thank you if you'd like to ask a question. Please press star one one.
If your question has been answered and you'd like to remove yourself from the queue. Please press star one again.
Our first question comes from Calvin Wong with the Spica Capital. Your line is open.
Our first question comes from Calvin Wong with Speaker capital. Your line is open.
Yeah.
Thank you for taking my question. I'd like to have two questions if I may.
Operator: Ladies and gentlemen, thank you for standing by and welcome to the Aurora Mobile second quarter 2023 earnings conference call. At this time, all participants are listening mode. Later, we will conduct the question and session and instructions will be given at that time. Please be advised that today's conference is being recorded.
Thank you for taking my question.
Thank you I have two questions if I may.
The first question is related to your financials. Actually, it is great to see that your financials are recording continuous improvement every quarter. Like last quarter, we saw sequential increase in revenue, sequential decrease in op-eds, and sequential narrowing in negative adjusted EBITDA.
The first question is.
To your financials actually it is great to see that Youll finance those are recording.
<unk> improvements every quarter right last quarter, we saw sequentially, increasing revenue sequential decrease in opex as a credit so narrowly negative adjusted EBITDA.
Rene Vanguestaine: I would like to hand the conference over to your host for today, Renee Vanguestaine. Thank you. Please go ahead, sir. Thank you, Michelle.
So the pressure is very simple. What is the management expectations? Non-turning into positive adjusted EBDA.
Rene Vanguestaine: Hello, everyone. And thank you for joining us today. Aurora earnings release was distributed earlier today and is available on the IAR website at IAR.jiguang.cn.
The question is I assume what is the management's expectation now turning into positive adjusted EBITDA.
Is this something we will see like next quarter or in Q4 of this year?
Is this something where you will see like next quarter or in Q4 P. C.
Rene Vanguestaine: On the call today, Mr. Weidong Luo, Chairman and Chief Executive Officer, Mr. Shan and Bong, Chief Financial Officer, and Mr. Guanyan, General Manager. Following the prepared remarks, there will be available to answer your questions. During the Q&A session that follows.
And the second question is related to your engaged lab product.
And the second question is related to your engaged lab product.
We actually see that your EngageLab product was making good progress overseas. So could management share more about the progress and how management is looking at this business and its growth path.
Well, we actually see that.
<unk> told us was making good progress overseas.
So could management share more about the progress and how management is located at this business.
These girls huh.
So the first question is related to adjusted EBITDA. The second one is related to engaged lab products.
Rene Vanguestaine: Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meeting of Section 21 E of the Security Exchange Act of 1934, as amended and as defined in the U.S. Private Security's litigation reform act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions, which are difficult to predict and may cause the company's actual results, performance or achievements, to defer material from those in the forward-looking statements. Further information regarding these and other risks uncertainties and or factors are included in the company's findings with the U.S. Security Exchange Commission.
So.
First question is related to you.
The EBITDA the second one is willing to engage left Kodak.
Thank you. Sure. Sure, Kevin. This is Shannon. Let me take a poll. Yes, you're right. Your observation is...
Sure sure Kevin Shannon, Let me think of Paul Yes, you are right. Your observation is spot on the financial Kpis beat revenue grow Opex number adjusted EBIDTA improving sequentially. So that's a.
Spot on. Yes, the financial KPI, be it revenue growth, OPEX number or adjusted EBITDA are all improving sequentially. So as a company, we are very pleased with the effort made by the team throughout the organization over the few quarters.
Rene Vanguestaine: 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.
A company, we're pleased with the effort made by the team throughout the organization with a few quarters.
I guess our work is not done. We still need to make good progress on the revenue expansion. I think we need to move in customers.
Yes.
Work is not done.
You still need to make good progress on the revenue expansion I think we need to.
Moving customers.
Moving into more customer, getting more customer in and outside of China and increasing the RQ across the board.
And moving into more customer or getting more customer and I'll start with China and increasing the offer of across the board.
And secondly, I think we certainly cannot take our eyes off monitoring our expenses.
And secondly, I think wish. So then you cannot take all eyes of monitoring expenses.
But the market conditions are relatively volatile as you know. So I believe we are in a great position to the hard work that we have put in for the past six or eight quarters in the past year or two.
But the market conditions are relatively volatile as you know so I believe we are in.
Great position to the hard work that we have put in for the past six or eight quarters in the past.
Weidong Luo: With that, I'd now like to turn the conference call over to Mr. Lu. Please go ahead. Thanks, Rene.
And the question you asked, based on our current trajectory, we are cautiously optimistic that should everything goes according to our plan, we should be able to positive adjusted EBITDA in Q4 of this year. I guess I still have to put a disclaimer, this is our best current estimate and is subject to market conditions.
Oh two.
And the question you asked them based on our current trajectory.
Weidong Luo: Good morning and good evening, everyone. Welcome to our Ramobos 2023, Section Quarter, on its call. Before I comment on our Q2 results, I would like to remind everyone that the quarterly earnest death is available on our website. You may refer to the death as we proceed with the call today. Coming off from our original low Q1 quarter, we manage to achieve a few good results sequentially in this quarter. Overall, we did see signs of recovery on most of the business lines between the quarters. However, they are not back to the level a year ago.
We are cautiously optimistic that should everything goes according to our plan, we should be able to.
Record positive adjusted EBITDA in Q4 of this year.
Hum.
Still have to put a disclaimer.
This is our best current estimate and is subject to market conditions.
Nevertheless, I think there is still a possibility that we could turn adjusted E-beta positive in Q3 should everything goes according to plan or earlier than what we expected. So we will see how we turn in Q3.
Nevertheless, I think should but there is still a possibility that we could turn adjusted EBITDA positive in Q3 should everything goes.
According to plan or earlier than what we expected. So we will see how we trend in Q3.
And the second question you asked about the English lab. Yes, I think you have heard what Chris has said. We are very pleased with the progress with our English lab product.
And the second question you asked about it and goes to that.
Yes, I think you have put what Chris I would say we are very pleased to have been a progressive and get you that product.
I guess a few things that we have done well, I think one is the fact that we have invested additional data center infrastructure around the world. This gives our overseas customers a great option to choose how and where they want to store their data that better suits their security and compliance needs.
Weidong Luo: The early Q2 of 2023, we see a few things right. Firstly, we continue to expand our subscription business with the help of our engagement products offering overseas. I will share more on our engagement business at the later part. Secondly, our very official basis records the impressive sequential revenue growth. Thirdly, our radical application business records solid growth, last but not least, we continue to control our expenses throughout the organization.
I guess, a few things that we have done well I think there's one is the fact that we have to invest in additional data center infrastructure around the world I just gave our overseas customer a good option to choose how and where do you want to store their data.
Better suits that security and compliance needs.
And of course, ensuring our service delivery is utmost important. We need to make sure that our services meet or even exceed customer expectations.
And of course, ensuring our service delivery is utmost important we need to make sure that our services meet or even exceed customer expectation.
We need to address all our customers' concerns on a timely basis.
To address all our customers' concert on a timely basis.
Therefore whether the customers base in Singapore or Australia or in China, we have to provide the consistent high level quality, high quality services to all our customers around the globe.
Therefore, whether the customers basically Singapore, Australia or in China.
Weidong Luo: With this, as the backdrop, here are the good financial results that I would like to share with you. Total revenue grew to well present quarter of quarter. Growth-perfect growth quarter of quarter to let me be 47.7 million. Lois adjust operating expenses since IPO at let me be 54.6 million. Lois operating expenses since IPO at let me be 64.1 million. ARR to another days at 47 days, improvement year-over-year and quarter-over-quarter. The further revenue fans about ReminB, about ReminB, 130 billion for the past six consecutive quarters.
I have to provide a consistent high level of quality.
High quality services to our customers around the globe.
And also I will give you an update on the latest. I guess based on the depth you have seen, our customers are coming from 12 countries and regions around the world. I was told earlier this week that we are now starting to process additional services in Mexico and Turkey. So I guess you can see our services are moving into new territories quarter over quarter.
And also I was I'll give you an update on the latest I guess from based on the deck you have seen we are customer coming from 12 countries and regions around the world I was told earlier. This week that we are now starting to process additional service in Mexico, and Turkey. So I guess you can see our service.
Oh, so our services are moving into new territories quarter over quarters.
and therefore we believe we have done many things right for us to be able to venture outside of China and we should continue to grow our overseas customer base every quarter. So this is my answer to your question Kevin.
And therefore, we believe we have done many things right for us to able to venture outside of China, and we should continue to grow our overseas customer base every quarter. So this is my answer to your question Kevin.
Weidong Luo: Now let me go for our different revenue streams. The beneficial basis revenue decreased 6% year-over-year, many due to the witnessing in the better official basis, of that by the 6% growth in subscription services. However, the beneficial basis revenue growth solid by 15% quarter of quarter, they are both subscription and better additional basis services have a record sequential revenue growth. So, the question of its revenue will ReminB 40.5 million, up to 6% year-over-year, many driven by increasing APU. Similarly, we record revenue growth of 8% quarter of quarter with the growth in APU between the quarter.
Thank you for your comments on the positive adjusted EBITDA. It's very clear. Thanks.
Thank you. Thank you for your comment.
<unk> is on the positive adjusted.
EBITDA.
It's very clear thanks.
Thank you.
Thank you. Our next question comes from Brian Kinslinger with Alliance Global Partners. Your line is open.
Yes.
Thank you. Our next question comes from Brian can Slinger with Alliance Global Partners. Your line is open.
Great. Thanks so much. The early success you're having overseas sounds great. I'm wondering if you can quantify the revenue impact during the second quarter and maybe put some context into how you expect this to ramp overseas.
Great. Thanks, so much.
The early success you are having overseas sounds great.
I'm wondering if you can quantify the revenue impact during the second quarter and maybe put some context into how you expect this to ramp overseas.
In terms of revenue.
Hi Brian , this is Shannon. Right now the contribution is not material as yet, but probably as you know based on our business model
Weidong Luo: Some of the notable new and renewable customers in this quarter include but not limited to Thailand and Seoul, China, Dianxing, Ximilaria, Gisang, Hong Kong, and Japsunaya for you. Better as the suggested revenue of ReminB 11.5 million, decreased by 32% year-over-year, which was a result of a great advertising demand. However, we managed to record a good sequential revenue growth of 45% quarter of quarter. This was many due to our ability to capture a good portion of the e-commerce advertising spending for the 618 online shopping business world.
Hey, Brian just shut in right now the contribution is not material, yet, but probably as you as you know based on our business model.
one contract that we signed, the revenue is only contributed on a monthly basis for the next 12 months. So, I guess the good thing that we have seen is like what Chris has said, based on the new contract that we have signed in Q2, 20% of them is coming from overseas.
One contract that we signed the revenues contribute on a on a monthly basis for the next 12 months. So I guess a good thing that we have seen is like what Chris is paid based on the new contract that we have signed in Q2, 20% of them is coming from overseas.
Weidong Luo: However, we remained cautious on the revenue growth in the online advertising market.
and this is increased three times from Q1. So you can see the trending of this.
And this has increased three times from Q1, so we can see the trending of this.
so-called contract value contribution from overseas. So this is something that we are tracking. Maybe in the next portal or two, when the revenue contribution is material enough, we'll make the disclosure.
So called contract value contribution from overseas. So this is something that we are tracking.
Maybe in the next quarter or two Wyndham when when the revenue contribution is material enough, we will make that disclosure.
Weidong Luo: Next, let me give you some updates on our overseas engaged web product.
Weidong Luo: As I share in the pre-quartered earnings release, we now have the data center across the global catering for customers in different regions and continents. As we expand our footprint globally, we have signed up more international customers. Our investment in technology innovation and building global infrastructure have paid off. As of now, we have global customers coming from to well different countries and regions including Hong Kong and Taiwan.
it and what is that can you share that contract value with us?
Got it.
Is that can you share that contract value with us.
Not the value. We were not in the position to disclose the value of the country yet.
Not not another value.
Yes.
We're going to disclose the value of the contract yet.
Great. And then on subscriptions, you saw higher ARPU. Is that pricing or more services for customers? And then you see more opportunity for ARPU growth in the second half of the year. And if so, what drives?
Great and then on subscriptions you saw higher <unk> is that pricing or more services for our customers and then do you see more opportunity for <unk> growth in the second half of the year and if so what drives that.
Weidong Luo: For our discussion with these overseas customers, let's let our service manage due to the following reasons, one reliable and stable service delivery to strengthen data security and 3 local data centers across the world.
If any ARPU grows, that will come from overseas. And I think we have discussed before, I shared with you or other investors or analysts, the ARPU that we get from overseas is at least double that of China. So with the contribution from overseas getting bigger, our ARPU certainly will have to grow up.
Yes, if any upward growth that will come from overseas.
We have discussed before our share with the which I view, our order investor or analyst day, a pool that we get from overseas is is at least double that of China.
Weidong Luo: Let me share with you some other impressive metrics here in Q2. Our Engage Lab Business Statement Sun Contract Value was at 21% of the total new contract value for the group. This number has grown three times between the contrasts showing gray momentum. In addition, we have also seen gray over the email and SMS volume growth in Q2. The total over the email request volume was at 3.3 billion representing 2.4.2 tons of out domestic email requests volume. Over the email and SMS request volumes have record 100% and 90% growth between the quarters. Our Engage Lab Business Activity is gradually growing in importance for both transaction and contract value contributions.
With the contribution from overseas getting bigger all pools, but then you have to go up.
But if overseas was material in the second quarter, what was the factor that drove higher R2 in the second quarter?
And then the biggest overseas wasn't material in the second quarter, what was the factor that drove higher <unk> in the second quarter.
Yes, it's not material as yet, but it does help out on the output between the quarters, because Q1 is always the low quarter for the year.
Yes, its not material, but it does help out on the <unk> between the quarters, because Q1 is always the low quarter for the full year.
So back to your question, overall, overall, we did see some pickup on the APU, but what I'm trying to say is the major contribution is coming from overseas, the APU growth. The next little bit right here is the...
So back to your question overall overall, we did see some pick up on the a pool.
Well I'm trying to say is the major contribution is coming from overseas.
The AVO roofing.
And then.
How much of the sequential revenue growth in value added services as a result of tax capturing the AD spend on June 18th.
The sequential revenue growth and value added services really resulted capturing the ads that on June 18th, shopping festival. And then, are there any other such festivals that we should think about in the second half of the year?
Weidong Luo: Therefore, I am very confident on the progress of our over-seq business expansion strategy that we have started a year ago. I believe we will reap the benefit of these over-the-air for in the near future.
<unk> basketball and then are there any other such festivals that we should think about in the second half of the year.
Sure. I will say majority of the value-edited services revenue growth is from the 618.
Sure I would say a majority of the value added services revenue growth is from the 618 six.
6.18 festival. So if you look at going forward in China, I think that two big so called a big online e commerce festival. One is the 6.18 and the other one is double 11 in Q4.
Shan: With that, I will not pass the call of Tushanian. We will share more information about the vertical application and other aspects of our financial performance for this quarter. Thanks, Chris. Just to recap, vertical application mainly consists of financial risk management and market intelligence. In this quarter, vertical application recorded revenues growth on both year over year and quarter over quarter basis. For financial risk management, revenue grew year over year and quarter over quarter.
618 festival. So if you look at going forward in China, I think that's too big so called a big.
<unk> E Commerce first two one is the 618 and the other one is double 11 in Q4.
So having said that, which means that Q3 will likely to be a slower season compared to Q2 and Q4.
So have you say that which means that Q3 will likely to be.
Slowest season, compared to Q2 and Q4.
Great. And lastly, while you guys have done a great job in managing expenses, the gross margin, was it a multi-year low during the second quarter? What were the factors that drove that? And is that more of an anomaly or is it more of the new baseline for the company? Thank you.
Yes.
Got it great and lastly, while you guys have done a great job in managing expenses, the gross margin or is it a multi year low during the second quarter. What were the factors that drove back I mean is that more of an anomaly or is it more of a new baseline for the company. Thank you.
Shan: This was positively impacted due to our poor growth between the periods. In Q2 of 2023, we have seen customer consumption or purchase of our services increase, past pushing the upper quarter over quarter. Apart from customer increase their consumption, we managed to sign up more customers such as Wei Zhong in Hang, Pingang Self-Eating Room, Haier Self-Eating Room, Zhongxing Self-Eating Room. As for market intelligence, the revenue remains stable year over year and quarter over quarter.
No, it's not a baseline. If you look at what we have based on our current Q3 estimate, the gross margin is going to come up. It's going to be higher than 65.
No it's not a baseline if you look at what we have been based on our current Q3.
Estimate.
Gross margin is going to come up is going to be higher than 65 days.
There's an answer to your question. And the first question you asked, the reason was simply because the fact that the SMS related revenue contribution was higher in this quarter, because the SMS business or revenue tend to have a lower margin compared to other SARS business, because we have a kind of fixed cost that we need to pay to telcos.
The answer to your question and the first question you ask the reason was simply because of the fact that the SMS related revenue contribution was higher in this quarter because the <unk>.
<unk> business, our revenue tend to have a lower margin compared to other stocks business, because we have a kind of a fixed cost that we need to pay to telcos.
Shan: I will now go through some of our key expenses and balance sheet items. On to operating expenses, I am again very pleased to share with you that in Q2 2023, we have yet another record low quarterly OPEX at ₱64.1 million. For year over year comparison, OPEX decreased by 27%, where all three categories of OPEX being research and R&D, SNM and GAA all recorded reduction between the periods. This is critically important for us to maintain our OPEX at optimal level.
Alright, well I always think of SMA.
Okay. Thank you.
Okay.
As reminder, task a question, please press star 111.
As a reminder to ask a question. Please press star one one.
Okay.
If there are no further questions at this time, I'd like to turn the call back over to Renee for any closing remarks.
There are no further questions at this time I'd like to turn the call back over to Rene <unk> for any closing remarks.
Thank you, Michel. Thank you, everyone, for joining our call tonight. If you have any further questions and comments, please don't hesitate to reach out to the IR team. This concludes the call. Have a good night. Thank you.
Thank you Michelle 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.
Shan: This is the reason why we are able to record 42% year over year improvement in adjusted EBITDA, when the revenue dropped by 4% year over year. We strive to continue tightly monitor and control our OPEX now and going forward.
This concludes the call have a good night. Thank you.
This does conclude the program you may now disconnect.
Shan: Now, let's go through the individual OPEC categories. In particular, R&D expenses decreased by 26% year-over-year to maybe 30.2 million, mainly due to lower headcount that reduced salary costs and associated share-based compensation, and a decreased individualization expenses as a result of first no longer needing as many servers due to our ongoing cloud initiatives. Selling a marketing expenses decreased by 14% year-over-year to R&D 20 million, mainly due to the decrease of headcount by 30.
Okay.
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Okay.
Yes.
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Shan: DNA expenses decreased by 41% year-over-year to R&D 13.9 million, mainly due to a 2.5 million decrease in personnel costs and 5.3 million decrease in professional fee. As I mentioned earlier, as a result of our focus to drive OPEC's head optimal level, the adjusted EBTAR improves significantly by 42% year-over-year to negative R&B 4.6 million.
Shan: On to the balance sheet, I again share two very important KPI that we closely monitor. We continue to maintain a healthy AR turn-over days at 37 days. This was a huge improvement from a year ago, where the AR turn-over days was at 46 days. And we also shorten the AR turn-over days quarter-over-quarter. In summary, our team has done a great job in this quarter to improve our cash collection and mitigating the AR-DFU debt risk.
Shan: Secondly, one of the key financial KPI for tracking and the performance of SaaS company is the total deferred revenue, which represents cash collected in advance from customers for future contract performance. The balance continues to be at high level of R&B 1.37.3 million. And this is the sixth consecutive quarter where our deferred revenue balance exceeded R&B 130 million. We continue to sign up new and renewer customers where their prepaid year fees in advance. This again really improves our cash flow quarter-over-quarter.
Shan: Next, total assets were at R&B 371.9 million as of June 30, 2023. This includes cash and cash equivalent of R&B 31.1 million. A cash reserve of R&B 34 million. Pre-payments and other current assets at R&B 31.1 million. Fixed assets at R&B 10.1 million. Long-term investment of R&B 14.0.4 million. Goodwill of R&B 37.8 million and Intangible assets of R&B 20.9 million resulted from the cent-clock acquisition in March 2022.
Shan: Total current liabilities were at R&B 235.8 million as of June 30, 2023. This includes short-term loan of R&B 5 million. Accounts payable of R&B 22.2 million.
Shan: Current operating and last week before I conclude, I'll give a quick update on the shared repurchase plan. In a quarter and the June 30, 2020 tree, we repurchased 4, 4, 3,000 EDS. Cumulatively, we have repurchased a total of 1.83 million EDS since the start of our repurchase program.
Shan: And this concrete management prepared remarks, we're happy to think of how long. Thank you.
Operator: If you'd like to ask a question, please press star 1-1. If your question has an answer, you'd like to remove yourself from the queue. Please press star 1-1 again.
Calvin Wong: Our first question comes from Calvin Wong with Speaker Capital. Your line is open. Thank you for taking my question.
Shan: I'd like to have two questions, if I may. The first question is related to your financials. Actually, it is great to see that your financials are recording continuous improvement after quarter. Like last quarter, we saw sequential increase in revenue, sequential decrease in op-eds and sequential narrowing in negative adjusted EBDA. So the question is very simple. What is the management expectation? Not turning into positive adjusted EBDA? Is this something we will see like next quarter or in queue for of this year?
Calvin Wong: And the second question is related to your engage left product. We actually see that your engage left product was making good progress overseas. So, could management share more about the progress and how management is looking at this business and this growth path? So the first question is related to your adjusted EBDA. The second one is related to engage left product. Thank you.
Shan: Sure. I'll show Calvin this Shannon. Let me take your call. Yes, you're right. Your observation is spot on. Yes, the financial KPI, the revenue growth, op-eds number or adjusted EBDA are all improving sequentially. So, as a company, we are very pleased with the effort made by the team throughout the organization over the few borders.
Shan: I guess our work is not done. We still need to make good progress on the revenue expansion. I think we need to moving customers, moving into more customer or getting more customers in and outside of China and increasing the output across the board. And secondly, I think we certainly cannot take our eyes off monitoring our expenses. But the market conditions are relatively volatile as you know. So, I believe we are in great position through the hard work that we have put in for the past six or eight quarters in the past year or two.
Shan: And the question you asked, based on our current trajectory, we are cautiously optimistic that should everything goes according to our plan, we should be able to record positive adjusted EBDA in Q4 of this year. But I guess I still have to put a disclaimer. This is our best current estimate and is subject to market I think there is still a possibility that we could turn a just an EBITDA positive in Q3, should everything goes according to plan earlier than what we expected. So we will see how we tried in Q3.
Shan: And the second question you asked about the English lab, yes, I think you have heard what Chris has said, we are very pleased with the progress with our English lab product. I guess a few things that we have done well, I think one is the fact that we have invested additional data center infrastructure around the world, this gives our overseas customer a great option to choose how and where they want to store their data that better suits their security and compliance needs.
Shan: And of course, ensuring our service delivery is our most important, we need to make sure that our services meet or even exceed customer expectations. We need to address all our customers' concerns on a timely basis. Therefore, whether the customer is based in Singapore or Australia or in China, we have to provide a consistent, high level quality services to all our customers around the globe. And also, I will give you an update on the latest, I guess from based on the deck you have seen where our customers are coming from, 12 countries and regions around the world.
Shan: I was told earlier this week that we are now starting to process additional service in Mexico and Turkey. So, I guess you can see our services, our services are moving to new territories, quarter over quarters. And therefore, we believe we have done many things right for us to able to venture outside of China and we should continue to grow our overseas customer base every quarter. So, this is my answer to your question, Kevin.
Calvin Wong: Thank you. Thank you for your comments on the positive-adjusted EBITDA. It's very clear. Thanks.
Operator: Thank you.
Brian Kinstlinger: Our next question comes from Brian Kinslinger with Alliance Global Partners. Your line is open. Great. Thanks so much. The early success you're having overseas sounds great.
Shan: I'm wondering if you can quantify the revenue impact during the second quarter and maybe put some context into how you expect this to ramp overseas in terms of revenue. Hi, Brian Kinslinger. Right now, the contribution is not material as yet, but probably as you know, based on our business model, one contract that we signed, the revenue is only contribute on a monthly basis for the next 12 months. So, but I guess the good thing that we have seen is like what Chris has paid, based on the new contract that we have signed in Q2, 20% of them is coming from overseas. And this has increased three times from Q1, so you can see the trending of this so-called contract value contribution from overseas. So, this is something that we are tracking.
Brian Kinstlinger: Maybe in the next quarter or two, when the revenue contribution is material enough, we'll make the disclosure, and what is that? Can you share that contract value with us? Not the value.
Shan: Yeah, we're not in the position to disclose the value of the contract yet. Great.
Shan: And then on subscriptions, you saw higher RPU. Is that pricing or more services for customers and then do you see more opportunity for RPU growth in the second half of the year? And if so, what drives that? Yes, if any RPU growth that will come from overseas. And I think we have discussed before, I'll share with you or all the investors or analysts. The RPU that we get from overseas is at least double of that of China. So with the contribution from overseas getting bigger, our RPU is certainly we have to go up.
Shan: But in the overseas was material in the second quarter, what was the factor that drove higher RPU in the second quarter? Yeah, it's not material as yes, but it does help up on the RPU between the quarters because Q1 is always the low quarter for the year. So back to your question, overall, we did see some pick up on the RPU. But what I'm trying to say is the major contribution is coming from overseas, the RPU growth.
Shan: And then how much of the sequential revenue growth and value added services really resulted capturing the ads that on June 18th, shopping festival. And then, are there any other such festivals that we should think about in the second half of the year? Sure. I will say majority of the value added services, revenue growth is from the 618 festival. So if you look at going forward, in China, I think there are two big, so-called, the big online e-commerce festival. One is the 618. And their own is W11, the Q4.
Shan: So have you say that, which means that Q3 will likely to be a slower season compared to Q2 and Q4? Great.
Brian Kinstlinger: And lastly, while you guys have done a great job in managing expenses, the gross margin was at a multi-year low during a second quarter. What were the factors that drove that?
Shan: Is that more of an anomaly or is it more of the new baseline for the company? Thank you. No, it's not a baseline. If you look at what we have in based on our current Q3 estimate, the gross margin is going to come up. It's going to be higher than 65.
Shan: Let's answer to your question. And the first question you asked, the reason was simply because the fact that the SMS related revenue contribution was higher in the quarter because the SMS business or revenue tend to have a lower margin compared to other SaaS business, because we have a kind of fixed cost that we need to pay to the telcos for everything in the SMS that we send. Thank you.
Operator: As reminder, to ask a question, please press star 111. There are no further questions at this time.
Rene Vanguestaine: I'd like to turn the call back over to Renee for any closing remarks. Thank you, Michelle. Thank you everyone for joining our call tonight.
Operator: If you have any further questions and comments, please don't hesitate to reach out to the IR team. This concludes the call. Have a good night. Thank you. This does include the program. You may now disconnect.