Earnings call transcript: Aurora Mobile’s Q1 2025 growth driven by global expansion

Aurora Mobile Ltd (JG) reported strong growth in its Q1 2025 earnings call, highlighting a 48% year-over-year increase in revenue, reaching RMB 89 million. The company noted its highest Q1 revenue since transitioning to a pure SaaS model. With an impressive gross profit margin of 65.03% and a market capitalization of $56.39 million, the company has shown resilience despite challenging market conditions. According to InvestingPro analysis, the stock is currently undervalued based on its Fair Value calculation. Despite the positive financial performance, the stock experienced a slight decline in pre-market trading, dropping by 0.11% to $8.95.

Key Takeaways

• Aurora Mobile achieved a 48% YoY revenue increase, marking its highest Q1 revenue post-SaaS transition.
• The company maintained a net dollar retention rate of 96% and recorded a seventh consecutive quarter of positive adjusted EBITDA.
• EngageLab, a key growth driver, saw a 127% revenue increase YoY and expanded into over 40 countries.
• Aurora Mobile provided Q2 2025 revenue guidance of RMB 87.5-90.5 million, projecting 10-14% YoY growth.

Company Performance

Aurora Mobile’s performance in Q1 2025 was marked by significant revenue growth and improved financial metrics. The company reported a 27% increase in gross profit and a 50 basis points improvement in gross margin quarter-over-quarter. While the company has demonstrated strong growth, InvestingPro data reveals a beta of 1.4, indicating higher volatility compared to the market. The strong performance was driven by robust demand for its SaaS offerings and continued expansion into global markets. Aurora Mobile also maintained its market leadership in developer services and competitive advantages in engagement and risk management solutions. InvestingPro subscribers have access to 12 additional key insights about Aurora Mobile, including detailed financial health scores and comprehensive valuation metrics.

Financial Highlights

• Revenue: RMB 89 million (+48% YoY)
• Gross profit: +27% YoY
• Gross margin: Improved by 50 basis points QoQ
• Net dollar retention rate: 96%
• Total deferred revenue: RMB 156.9 million

Outlook & Guidance

Aurora Mobile provided guidance for Q2 2025, expecting revenue between RMB 87.5 million and RMB 90.5 million, which represents a 10-14% year-over-year growth. While the company’s stock has shown remarkable performance with a 148.99% return over the last year, InvestingPro analysis indicates that net income is expected to decline this year. The company plans to continue investing in research and development and global expansion, with a focus on its EngageLab business as a primary growth engine. For deeper insights into Aurora Mobile’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Wei Dong Luo described the quarter as one of "accelerated growth driven by globalization," emphasizing the company’s strategic focus on expanding its global footprint. CFO Shan Nen Bong highlighted the competitive superiority of Aurora Mobile’s products and the need to balance spending to fuel continuous revenue growth.

Risks and Challenges

• Economic Uncertainty: Potential macroeconomic pressures could impact global SaaS demand.
• Competitive Market: Increased competition in SaaS and developer services could affect market share.
• R&D Investments: Continued investment in R&D may pressure short-term profitability.
• Global Expansion Risks: Challenges in entering and competing in new international markets.
• Regulatory Changes: Potential changes in data privacy regulations could impact operations.

Aurora Mobile’s Q1 2025 earnings call showcased the company’s strong financial performance and strategic focus on global expansion, setting a positive tone for the remainder of the year.

Full transcript - Aurora Mobile Ltd (JG) Q1 2025:

Conference Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Aurora Mobile First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your host today, Rene van Gesteyn.

Thank you. Please go ahead, sir.

Rene van Gesteyn, Investor Relations, Aurora Mobile: Thank you, Heidi. Hello, everyone, and thank you for joining us today. Aurora Mobile’s earnings release was distributed earlier today and is available on the IR website at ir.jiguang.cn. On the call today are Mr. Wei Dong Luo, Chairman and Chief Executive Officer Mr.

Shan Nen Bong, Chief Financial Officer and Mr. Guanyan Chen, General Manager. Following their prepared remarks, they will be available to answer your questions during the Q and 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 and Exchange Act of 1934 as amended and as defined in The U. S.

Private Securities Litigation Reform Act of 1995. These forward looking statements are based upon management’s current expectations and current market and operating conditions, which are difficult to predict and may cause the company’s actual results, performance or achievements to differ materially from those in the forward looking statements. Further information regarding these and other risks, uncertainties and or 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 law. With that, I would now like to turn the conference over to Mr. Luo. Please go ahead.

Wei Dong Luo, Chairman and Chief Executive Officer, Aurora Mobile: Thanks, Rene. Greetings to all. Welcome to our loan book twenty twenty five first quarter earnings call. Before I comment on our Q1 results, I would like to remind everyone that the quarterly earnings deck is available on our IR website. You may refer to the deck as we proceed with the call today.

As we did in the past, based on the Q1 numbers, I have a suitable description for the first quarter results, which is a quarter of accelerated growth driven by globalization for the following reasons. Firstly, our Engage Life business had a master quarter where we closed out more than 63,000,000 worth of contract value in just one quarter. This is unprecedented in our history. This brings the total cumulative engaged life contract value in excess of million by March 2035. Secondly, the group’s revenue this quarter of RMB89 million achieving a remarkable 48% growth year over year.

This RMB89 million was the highest Q1 quarterly revenue we had since transition to pure SaaS. Engage Labs recognized revenue also grew by 127% year over year. This Q1 revenue number here is what we have previously guided in Q4 of twenty twenty four. Thirdly, our Financial Risk Management business had its best quarter in its history, recording highest quarter revenue of RMB 22,200,000.0. Revenue grew by 64% year over year.

Firstly, gross profit grew strongly by 27% year over year, while achieving the highest gross profit for the past nine quarters. Gross margin has also improved five thirty basis points quarter over quarter. Fifth, we record another adjusted EBITDA profit in this quarter. This marks the seventh consecutive quarter quarterly positive adjusted EBITDA we have had. Overall, it was a great quarter where all the business lines have outperformed the targets we have set for them.

This is no doubt set of great momentum for the rest of 2025. Equally important, the progress in our performance and our solid financial position enable us to invest more resources into the development of our enterprise AI agent platform and its global expansion. Now let me share more on the individual business performance. Our total Q1 group revenue has grown 48% year over year, driven by the great numbers from Developer Services. Within the group revenue, our business segments, namely Developer Subscription Services, Value add Services and Financial Risk Management, all outperformed and record significant year over year revenue growth.

Developer Services revenues, which consist of Subscription Services and Value add Services, increased by a strong 39% year over year and decreased 12% quarter over quarter. Subscription revenue has been a record in great number, where it increased by 26% year over year and decreased 2% quarter over quarter. Better Agios services revenue grew by an incredible 269% year over year and decreased 46% quarter over quarter. Our core business is subscription services revenue of 53,500,000.0, record growth of 26% year over year and decreased 2% quarter over quarter. The year over year revenue growth was mainly driven by a 22% increase in ARPU, carrying on the great momentum we get in Q4 of twenty twenty four.

Our subscription revenue record fourth consecutive quarter of RMB50 million plus revenue. For Subscription Services, we can record year over year revenue growth in both the domestic and overseas markets. In particular, our Engage like revenue grew by 127% year over year. This remarkable number was a result of the hard work by the team to convert many notable wins in the overseas markets. Both the customer numbers and ARPU have solid growth year over year.

With the great products and services we have, I believe we can scale this business globally to get more customers and new wins in many quarterly in many quarters to come. Next, I shall elaborate more on our Engagement business this quarter. This business always gets me very pumped up when sharing with you. Firstly, the total contract value we have signed has broken the RMB110 million milestone in Q1 of twenty twenty five. Just to recap, the total contract value was only RMB10 million at Q3 of twenty twenty three.

’6 quarters later, this amount has grown 10x. This is a remarkable achievement by the team. Secondly, customer acquisition continued to be the driving force of the success of this business. The customer number has increased by 25%, reaching eight forty eight. Thirdly, the revenue recognized for the Engaged Lab again record great growth of 127% year over year.

Firstly, our Engaged Lab products and services are now sold to customers in more than 40 different countries and regions globally. I’m truly pleased with the team’s execution effort, results and the momentum of EngageLab. I believe that it’s the engine of growth for us in the next twenty four months. Within subscription revenue, some of the notable new and renewal customer in this quarter include, but not limited to, DeepSeek, BYD, SF Express, Moonshot AI and Hangzhou Bank, just to name a few. Value added services revenue were CNY 8,900,000.0, increased by 269% year over year, but decreased by 46% quarter over quarter.

The huge revenue year over year growth we have seen was mainly due to the recovery of the advertising spending we have seen in Q1. For the same period, the advertiser spending has increased more than 200%, which fueled the revenue spike year over year. The sequential revenue decline was mainly due to the Double eleven and Double twelve online shopping festival in Q4, but was not in existence in Q1. Let me pass the call over to Shannon, who will share more about the vertical application and other aspects of our financial performance of this quarter.

Shan Nen Bong, Chief Financial Officer, Aurora Mobile: Okay. Thanks, Chris. Next, I’ll go over the revenue for vertical application that includes financial risk management and market intelligence. Overall, vertical application had a very strong quarter, where revenue increased by 35% year over year and 20% quarter over quarter. And within Vertical Application, Financial Risk Management recorded a 64% growth in revenue year over year and 36% growth quarter over quarter.

Financial Risk Management has its best and biggest quarter ever, recorded Q1 revenue in excess of RMB22 million. This 64% year over year revenue growth was mainly due to the strong 19% customers number growth and 38% ARPU growth. As I mentioned in the prior quarter that our team has fine tuned and upgraded the service and products. The result is simply stunning to say the least. The upgraded product and services were in high demand amongst the financial industry vertical.

The new and existing licensed financial institution were buying and consuming our product and services. Apart from developer subscription revenue that Chris mentioned earlier, Financial Risk Management presented itself as a next growth engine in early twenty twenty five. We are certainly very pleased to see the resurgence of this business in this quarter and beyond. The customers that we have signed up or renewed in Q1 include, but not limited to, Feng Chele, Dingbo Yinhang, Xianghui Pu, Pohui and many more licensed credit and financial institutions throughout China. Market Intelligence revenue on the other hand decreased by 26% year over year and managed to record a modest 4% growth quarter over quarter due to the continued weakness in the market demand for Chinese APP data.

And this result is in line with our expectation. Next, I’ll go through some of the key expenses and balance sheet items. On to operating expenses. The Q1 operating expenses was at million, representing a 14% increase year over year and remained flat quarter over quarter. The majority of the increase was attributable to our sales and marketing department.

In a snapshot, our Q1 revenue grew by 38% year over year. Gross profit grew by 27%, while OpEx only grew by 14%. Overall, we are very pleased to see how OpEx has been trending in view of the revenue and gross profit growth we have achieved. And this is a sustainable growth model for long term basis. I’ll now go over the individual OpEx category.

For R and D expenses, increased 8% year over year to RMB24.6 million, mainly due to the increase in staff costs and associated expenses. Cloud costs has also contributed to the year over year increase in R and D expenses. Selling and marketing expenses increased by 34% year over year to RMB33.3 million, mainly due to the increase in sales commission and traveling expenses, in line with our revenue growth and cash collection recorded in this quarter. G and A expenses decreased by 2% year over year to million, mainly due to the reduction in professional fees as a result of our continuous disciplined management of expenses. Next, I’ll share three very important KPI that we closely monitor.

For net dollar retention rate, a commonly used KPI for SaaS company, it stood at 96% for our core developer subscription business for the trailing twelve months ended 03/31/2025. And this high NDR percentage, reflecting that we have high customer retention rate, coupled with the ability to increase revenue to up sales through upgrades and expansion. And this is another great quarter with such an impressive number. Secondly, another financial KPI for tracking the performance of SaaS company is the total deferred revenue, which represents cash collected in advance from customers for future contract performance, reached at a record high of RMB156.9 million. And this is the historical record where our deferred revenue balance has exceeded million.

Thirdly, we continue to maintain healthy eight hour turnover days that were at fifty three days. And this was slightly higher than what we had in Q4, simply due to the extended holiday during the Chinese New Year period where collection is typically slower than other quarters. We will continue to work hard to ensure we collect cash from customer activity and at the same time mitigating the risk of bad and awful debts. On to balance sheet. Next, total assets were RMB376 million as of 03/31/2025.

This includes cash and cash equivalent of RMB113.6 million, accounts receivable of million, prepayments and other assets of RMB17.4 million. Operating expenses operating lease right of use assets of million, fixed assets of RMB4.3 million, long term assets of RMB113.5 million, goodwill of million and intangible assets of RMB12.8 million resulting from the Sendcloud acquisition in March 2022. And total liabilities were RMB261.6 million as of March 31. This includes accounts payable of RMB34.1 million, current operating lease liability of RMB4.2 million, deferred revenue of million and accrued liabilities of million. And now let me take a few minutes here to recap the description, a quarter of accelerated growth driven by globalization that Chris used at the beginning of this call.

In this quarter, our revenue year over year grew strongly by 38%, reaching RMB89 million. This was the highest Q1 revenue since we transitioned into pure SaaS model. Our developer subscription service had another RMB50 million revenue quarter with RMB53.5 million. Secondly, our English lab had a very strong quarter. Revenue grew by close to million on year over year basis and cumulative contract value increased by more than RMB63 million in Q1 alone, bringing the total signed contract value to exceed RMB110 million.

Both the gross profit and gross margin has improved along with our global expansion effort. Fourth, we have a seventh consecutive quarter of positive adjusted EBITDA. And this is no doubt a very strong growth quarter for Aurora Mobile. We started the year with a great quarter ’1, and we believe the momentum will carry on to the other quarters of 2025. Now let’s turn to the business outlook.

And based on the current available information, the company sees the Q2 twenty twenty five revenue guidance to be in the range of RMB87.5 million to RMB90.5 million, representing a solid 10% to 14 year over year compared to same quarter of 2024. And the above outlook is based on the current market conditions and reflects the company’s current and preliminary estimate of the market and operating conditions and customer demands, which are all subject to change. Lastly, before I conclude, I’ll give a quick update on the share repurchase plan. In the quarter ended 03/31/2025, we repurchased 16,000 ADS. Cumulatively, we have repurchased a total of 295,000 ADS since the start of our repurchase program.

And this concludes our prepared remarks. We’re happy to take the question now. Operator, please proceed.

Conference Operator: Thank you. We will take our first question. And the first question comes from the line of Kelvin Wong from Spicer Capital. Please go ahead. Your line is open.

Kelvin Wong, Analyst, Spicer Capital: Good evening, management. Thank you for taking my question. I have one question related to the EngageLab. First of all, congrats on the EngageLab business. It has achieved breakthrough contract value of RMB110 million in Q1.

So if I work back the calculation correctly, so that’s total newly signed contract value was more than 60,000,000 in Q1. So I would be appreciate if management could provide some guidance outlook of the Engage Lab business going forward? Thanks.

Shan Nen Bong, Chief Financial Officer, Aurora Mobile: Okay. Thanks, Gavin. Let me take this call. This is this question. I guess your calculation is spot on.

So at the back of achieving this 60,000,000 contract in single quarter, there are a few matters that I will share with you and everyone on the call. One is the fact that we have proven to have the ability to win big contracts in global stage. Just to clarify, this newly signed 60,000,000 contract in Q1 twenty twenty five were from different customers outside of China. And second, our product and services are indeed meeting the needs of global customers. Customers are willing to sign a multiyear contract with us is another testament of the superior quality of our service and product.

And this customer have shown great long term commitment towards our product and services. And if you ask me whether we’ll get another RMB60 million new signed contract in Q2, I guess my frank and honest question is unlikely at this stage, which is a realistic expectation. But this RMB60 million a quarter taught us a few very useful lesson to make significant wins going forward. It shows that we have the technical capability and the know how to win big contracts. Our products are superior to competitors in the market.

So with our growing presence in the global stage, other overseas customers will start to look at EngagedLab differently. And maybe this 60,000,000 new contracts a quarter is not too far away after all. I hope this answer your question, Gavin.

Kelvin Wong, Analyst, Spicer Capital: Very clear. Thanks.

Conference Operator: Thank you. We will take our next question. Your next question comes from the line of Marco Zhang from Galongoli Research. Please go ahead. Your line is open.

Marco Zhang, Analyst, Galongoli Research: Hi, this is Marco from Galongoli Research. Congrats to the company on another strong quarters. I have one question for the management. So this quarter, your revenue grew 38% year over year, gross profit grew 27% year over year and your adjusted EBITDA is on the seventh consecutive quarter of positive number. However, the company is still recording net loss.

So my question is that when do you think we can expect your quarterly net profit? Thanks.

Shan Nen Bong, Chief Financial Officer, Aurora Mobile: Hi, Marco. Let me take your question. I think you are right to point out a few key numbers. Let me recap in this quarter what we have is revenue grew by 38%, gross profit grew by 27% and our OpEx has only grew by 14%. And this business model has a perfect relationship to generate profitability.

In short, you may conclude that we earn more than what we spend. But if I peel further deeper beyond the surface, one very important finding that I want to share with you and the others on the call is that there are certain expenses that we need to spend now in order to fill the continuous growth trajectory. Let me explain more. For example, R and D. And it is vitally important that we continue to research and develop and continue to fine tune our product.

And one great example is the financial risk management, where the business grew by 64% year over year. And this is mainly due to product upgrades that we have made. And this upgrade resulted in more customer using and consuming our products. Therefore, we have the 65% revenue growth. On the flip side, if we stand still and with no intention to increase our R and D activities, our product will not have evolved and we will not get a 65% revenue growth.

And secondly, marketing expenses is another crucial expense for any company needing to spend in order to broaden global reach and expansion. We need to have English Lab brand name known globally. It was because the marketing campaign that we had, we were able to grow the business without borders into 40 countries and region by 03/31/2025. As a matter of fact, if we want net profit next quarter, I think we can do that. All we need to do is just to freeze our R and D and marketing expenses.

However, this will come at the expense of product development and continuous market spend. And this will certainly hurt our ability to grow our revenue in the near future. Therefore, we need to strike a balance between spending diligently enough so that we can have the firepower to fuel our continuous revenue growth in the next twelve or twenty four months. And so long as we continue to scale our business, the results will come sooner or later. And hope this answer your question, Marco.

Marco Zhang, Analyst, Galongoli Research: Okay. Yes. Thanks. Congrats again and we look forward to see another strong quarter. Thanks.

I have no more question.

Rene van Gesteyn, Investor Relations, Aurora Mobile: Thank you.

Conference Operator: Thank you. There are no further questions. I would like to hand back to Rene van Gassene for closing remarks. There are no further questions. I’ll hand back to Rene van Gassen for closing remarks.

Rene van Gesteyn, Investor Relations, Aurora Mobile: Thank you, Heidi. 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.

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

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