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Aurora Mobile Limited Announces Third Quarter 2019 Unaudited Financial Results

November 21, 2019

SHENZHEN, China, Nov. 21, 2019 (GLOBE NEWSWIRE) -- Aurora Mobile Limited (“Aurora Mobile” or the “Company”) (NASDAQ:JG), a leading mobile developer service provider in China, today announced its unaudited financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Financial Highlights

-- Revenues were RMB202.0 million (US$28.3 million), an increase of 3% year-over-year. -- Cost of revenues was RMB145.1 million (US$20.3 million), an increase of 1% year-over-year. -- Gross profit was RMB56.9 million (US$8.0 million), an increase of 7% year-over-year. -- Total operating expenses were RMB111.5 million (US$15.6 million), an increase of 41% year-over-year. -- Net losswas RMB31.7 million (US$4.4 million), compared with a net loss of RMB8.6 million for the same period last year. -- Adjusted net loss (non-GAAP)was RMB37.6 million (US$5.3 million), compared with a RMB14.1 million adjusted net loss for the same period last year -- Adjusted EBITDA (non-GAAP)was negative RMB26.0 million (US$3.6 million), compared with negative RMB6.9 million for the same period last year.

Third Quarter 2019 Operational Highlights

-- Number of mobile appsutilizing at least one of the Company’s developer services, or the cumulative app installations, increased to approximately 1,386,000 as of September 30, 2019 from approximately 991,000 as of September 30, 2018. -- Number of monthly active unique mobile devicesincreased to 1.34 billion in September 2019 from 1.03 billion in September 2018. -- Cumulative SDK installations increased to 30.8 billion as of September 30, 2019 from 17.4 billion as of September 30, 2018. -- Number of paying customers increased to 2,312 from 1,877 in the third quarter of 2018.

Mr. Weidong Luo, Chairman and Chief Executive Officer of Aurora Mobile, commented, “The number of mobile apps utilizing at least one of our developer services, or the cumulative app installations, reached 1.39 million as of September 30, 2019 from approximately 991 thousand last September. The cumulative SDK installations increased to 30.8 billion as of September 2019 from 17.4 billion last September. The number of monthly active unique mobile devices we cover continued to increase, reaching 1.34 billion in September 2019 from 1.03 billion in September 2018. This was largely fueled by the increasing number of apps that used our SDK, and in particular, the rapid adoption of JVerification SDK. The number of paying customers increased from 1,877 during the third quarter of 2018 to 2,312 in the third quarter of 2019.”

“Starting this quarter, we will begin breaking down revenue into three categories to better reflect our core strategic focus of serving app developers: developer services, SaaS products, and targeted marketing. Targeted marketing revenue decreased 8% year-over-year to RMB146.4 million. This was due to the combined effect of a softening macroeconomic environment which impacted advertising budgets and our strategic shift in focus from a traditional targeted marketing model to a new SaaS-based model. This transition will lower gross revenue, but also help improve gross margins, lower our working capital requirements, and expand our advertising customer base to address a bigger TAM over time.”

Mr. Fei Chen, President of Aurora Mobile, added, “Our revenues from developer services, which are by their nature, a SaaS business model, increased 39% from RMB15.7 million during the same period last year to RMB21.9 million. This was mainly due to the growth in the number of customers from 1170 to 1675, while our ARPU remained stable.”

“Revenues from our SaaS products, which include financial risk management, market intelligence and iZone, continue to show resilience and grew 52% from RMB22 million in the third quarter last year to RMB33.6 million in the third quarter of 2019. This was mainly due to a strong 18% year-over-year increase in the number of paying customers as well as the continued expansion of ARPU which increased 29% year-over-year.”

“Together, our SaaS-nature developer services and SaaS products generated RMB55.5 million in revenue during the quarter, up 47% year-over-year. As more enterprises outsource some of their IT functions to third party specialists to improve efficiency, we will continue to devote resources towards these SaaS businesses to drive growth.”

Mr. Shan-Nen Bong, Chief Financial Officer of Aurora Mobile, added, “Despite the tough operating environment we faced this quarter, we remain confident in our strategy and ability to effectively control costs and allocate financial resources to focused business areas. As of September 30, 2019, we maintained a healthy level of working capital at RMB501 million and believe this will ideally position us to drive future sustainable growth.”

Third Quarter 2019 Financial Results

Revenues were RMB202.0 million (US$28.3 million), an increase of 3% from RMB196.8 million in the same quarter of last year, mainly due to an increase in the number of customers by 23% from 1,877 in the third quarter of 2018 to 2,312 in the third quarter of 2019.

Cost of revenues was RMB145.1 million (US$20.3 million), an increase of 1% from RMB143.6 million in the third quarter of 2018. The increase was mainly due to a RMB1.0 million increase in cloud computing costs and a RMB0.8 million in short message costs.

Gross profit was RMB56.9 million (US$8.0 million), an increase of 7% from RMB53.2 million in the third quarter of 2018, primarily due to the continued optimization of the Company’s businesses towards higher gross margin services which contributed a larger percentage of total revenues during the quarter, increasing from 19% during the same period last year to 28% during the third quarter of 2019.

Total operating expenses were RMB111.5 million (US$15.6 million), an increase of 41% from RMB78.9 million in the same quarter of last year.

-- Research and development expenseswere RMB43.3 million (US$6.1 million), an increase of 16% from RMB37.2 million in the same quarter of last year, mainly due to a RMB3.3 million increase in depreciation of servers, a RMB1.9 million increase in bandwidth costs, and a RMB0.5 million increase in personnel costs. -- Sales and marketing expenses were RMB30.5 million (US$4.3 million), an increase of 26% from RMB24.2 million in the same quarter of last year, mainly due to a RMB2.1 million increase in marketing expenses, a RMB1.3 million increase in personnel costs, and a RMB 1.1 million increase in lease and office expenses. -- General and administrative expenses were RMB37.7 million (US$5.3 million), an increase of 115% from RMB17.6 million in the same quarter of last year, mainly due to a RMB16.7 million increase in bad debt allowance, a RMB2.6 million increase in staff costs, and a RMB1.0 million increase in professional fees. -- Loss from operations was RMB54.6 million (US$7.6 million), compared with RMB 25.8 million in the same quarter of last year.

Net Loss was RMB31.7million (US$4.4 million), compared with RMB8.6 million in the same quarter of last year.

Adjusted net loss (non-GAAP) was RMB37.6 million (US$5.3 million), compared with a RMB14.1 million in the same period of last year.

Adjusted EBITDA (non-GAAP) was negative RMB26.0 million (US$3.6 million) compared with negative RMB6.9 million for the same period of last year.

Through disciplined cash management, the cash and cash equivalents, restricted cash and short -term investment increased from RMB381.4 million as of June 30, 2019 to RMB419.9 million (US$58.7 million) as of September 30, 2019.

Business Outlook

For the full year 2019, the Company expects total revenues to be between RMB909 million and RMB919 million, representing year-over-year growth of approximately 27% to 29%.

The above outlook is based on current market conditions and reflects the Company’s current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change.

Update on Share Repurchase

As of September 30, 2019, the Company had repurchased a total of 805,648 ADS, of which 7,937 ADSs, or around US$29.9 thousand were repurchased during third quarter of 2019 at an average purchase price of US$3.77

Conference Call

The Company will host an earnings conference call on Thursday, November 21, 2019 at 7:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time on the same day).

Dial-in details for the live conference call are as follows:

International: +65 6713-5090 U.S.: +1 845-675-0437 Hong Kong: +852 3018-6771 China: 400-620-8038 Passcode: 3993899

A telephone replay of the call will be available after the conclusion of the conference call through 9:00 p.m. U.S. Eastern Time, November 28, 2019.

The dial-in details for the replay are as follows:

International: +61 2 8199 0299 U.S. Toll Free: 1-855-452-5696 Passcode: 3993899

A live and archived webcast of the conference call will be available on the Investor Relations section of Aurora Mobile’s website at http://ir.jiguang.cn/.

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses two non-GAAP measures, adjusted net loss and adjusted EBITDA, as a supplemental measure to review and assess its operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company defines adjusted net loss as net loss excluding share-based compensation and change in fair value of derivative liability. The Company defines adjusted EBITDA as net loss excluding interest expense, depreciation of property and equipment, amortization of intangible assets, income tax (expense) benefit, share-based compensation and change in fair value of derivate liability.

The Company believes that adjusted net loss and adjusted EBITDA help identify underlying trends in its business that could otherwise be distorted by the effect of certain expenses that it includes in loss from operations and net loss.

The Company believes that adjusted net loss and adjusted EBITDA provide useful information about its operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by the management in their financial and operational decision-making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using adjusted net loss and adjusted EBITDA is that they do not reflect all items of income and expense that affect the Company’s operations. Further, the non-GAAP financial measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company’s performance. The Company encourages you to review its financial information in its entirety and not rely on a single financial measure.

Reconciliations of the non-GAAP financial measures to the most comparable U.S. GAAP measure are included at the end of this press release.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the Business Outlook and quotations from management in this announcement, as well as Aurora Mobile’s strategic and operational plans, contain forward-looking statements. Aurora Mobile may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Aurora Mobile’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Aurora Mobile’s strategies; Aurora Mobile’s future business development, financial condition and results of operations; Aurora Mobile’s ability to attract and retain customers; its ability to develop and effectively market data solutions, and penetrate the existing market for developer services; its ability maintain or enhance its brand; the competition with current or future competitors; its ability to continue to gain access to mobile data in the future; the laws and regulations relating to data privacy and protection; general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release, and Aurora Mobile undertakes no duty to update such information, except as required under applicable law.

About Aurora Mobile Limited

Founded in 2011, Aurora Mobile is a leading mobile developer service provider in China, and a pioneer in providing mobile developer services such as push notification, instant messaging, analytics, sharing and short message service (SMS). Aurora Mobile has accumulated data from approximately 1.39 million mobile applications that have utilized the Company’s developer services and nearly 30.8 billion installations of the Company’s software development kits (SDKs), with monthly active unique device base of nearly 1.34 billion, as of September 2019. Based on Aurora Mobile’s vast data coverage and insights garnered, the Company has expanded its offerings into big data solutions, including targeted marketing, financial risk management, market intelligence and location-based intelligence. By utilizing artificial intelligence and machine learning, Aurora Mobile strives to help improve productivity for businesses and society through harnessing the power of mobile big data to derive actionable insights and knowledge.

For more information, please visit http://ir.jiguang.cn/.

For investor and media inquiries, please contact:

Aurora Mobile Limited ir@jiguang.cn

ChristensenIn ChinaMr. Christian ArnellPhone: +86-10-5900-1548E-mail: carnell@christensenir.com

In U.S.Ms. Linda BergkampPhone: +1-480-614-3004Email: lbergkamp@ChristensenIR.com

_

Footnote:This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB 7.1477 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of September 30, 2019.

AURORA MOBILE LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED INCOME STATEMENTS

(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”)

Three months ended Nine months ended ----------------------------------------------- ---------------------------------- September June 30, September 30, September September 30, 30, 2019 2019 30, 2019 2018 2018 --------- --------- --------------------- --------- --------------------- RMB RMB RMB US$ RMB RMB US$ Revenues 196,771 291,225 201,951 28,254 488,288 723,695 101,249 Cost of revenues (143,616 ) (214,910 ) (145,076 ) (20,297 ) (353,520 ) (527,218 ) (73,761 ) -------- -------- -------- ------- -------- -------- ------- Gross profit 53,155 76,315 56,875 7,957 134,768 196,477 27,488 -------- -------- -------- ------- -------- -------- ------- Operating expenses Research and (37,200 ) (46,349 ) (43,295 ) (6,057 ) (93,224 ) (132,302 ) (18,510 ) development Sales and marketing (24,156 ) (30,550 ) (30,478 ) (4,264 ) (63,216 ) (88,041 ) (12,317 ) General and (17,554 ) (18,298 ) (37,679 ) (5,271 ) (46,574 ) (80,468 ) (11,258 ) administrative -------- -------- -------- ------- -------- -------- ------- Total operating (78,910 ) (95,197 ) (111,452 ) (15,592 ) (203,014 ) (300,811 ) (42,085 ) expenses -------- -------- -------- ------- -------- -------- ------- Loss from operations (25,755 ) (18,882 ) (54,577 ) (7,635 ) (68,246 ) (104,334 ) (14,597 ) -------- -------- -------- ------- -------- -------- ------- Foreign exchange 921 39 499 70 (74 ) 495 69 (loss)/gain, net Interest income 965 1,485 1,395 195 1,104 4,966 695 Interest expense (2,494 ) (2,733 ) (2,858 ) (400 ) (4,455 ) (8,213 ) (1,149 ) Other income 5,772 5,313 23,308 3,261 7,809 35,347 4,945 Change in fair value of derivative 12,008 584 662 93 21,302 2,231 312 liability/asset -------- -------- -------- ------- -------- -------- ------- Loss before income (8,583 ) (14,194 ) (31,571 ) (4,416 ) (42,560 ) (69,508 ) (9,725 ) taxes -------- -------- -------- ------- -------- -------- ------- Income tax — — (162 ) (23 ) 5 (162 ) (23 ) (expenses)/benefit -------- -------- -------- ------- -------- -------- ------- Net loss (8,583 ) (14,194 ) (31,733 ) (4,439 ) (42,555 ) (69,670 ) (9,748 ) -------- -------- -------- ------- -------- -------- -------

AURORA MOBILE LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED INCOME STATEMENTS (continued)

(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)

Three months ended Nine months ended ------------------------------------------------------- ----------------------------------------- September June 30, September 30, September September 30, 30, 2019 2019 30, 2019 2018 2018 ----------- ----------- ----------- -------------------------- RMB RMB RMB US$ RMB RMB US$ Net loss attributable to Aurora (8,583 ) (14,194 ) (31,733 ) (4,439 ) (42,555 ) (69,670 ) (9,748 ) Mobile Limited’s shareholders Accretion of contingently redeemable (2,938 ) — — — (24,094 ) — — convertible preferred shares ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net loss attributable (11,521 ) (14,194 ) (31,733 ) (4,439 ) (66,649 ) (69,670 ) (9,748 ) to common shareholders ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net loss per share, for Class A and Class B common shares: Common Shares - basic and — — — — — — — diluted Class A Common Shares (0.17 ) (0.19 ) (0.42 ) (0.06 ) (1.31 ) (0.91 ) (0.13 ) - basic and diluted Class B Common Shares (0.17 ) (0.19 ) (0.42 ) (0.06 ) (1.31 ) (0.91 ) (0.13 ) - basic and diluted Shares used in net loss per share computation: Common Shares - basic and — — — — — — — diluted Class A Common Shares 50,367,160 59,273,921 59,236,116 59,236,116 33,990,519 59,336,906 59,336,906 - basic and diluted Class B Common Shares 17,000,189 17,000,189 17,000,189 17,000,189 17,000,189 17,000,189 17,000,189 - basic and diluted Other comprehensive loss Foreign currency 8,160 (8,134 ) (5,641 ) (789 ) 2,476 (21,903 ) (3,064 ) translation adjustments Total other comprehensive 8,160 (8,134 ) (5,641 ) (789 ) 2,476 (21,903 ) (3,064 ) loss, net of tax ---------- ---------- ---------- ---------- ---------- ---------- ---------- Comprehensive (423 ) (22,328 ) (37,374 ) (5,228 ) (40,079 ) (91,573 ) (12,812 ) loss ---------- ---------- ---------- ---------- ---------- ---------- ---------- Comprehensive loss attributable (423 ) (22,328 ) (37,374 ) (5,228 ) (40,079 ) (91,573 ) (12,812 ) to Aurora Mobile Limited

AURORA MOBILE LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”))

As of ------------------------------ December September 30, 2019 31, 2018 -------- ------------------- RMB RMB US$ ASSETS Current assets: Cash and cash equivalents 576,562 199,784 27,951 Restricted cash 115 115 16 Derivative assets — 441 62 Short-term investment — 220,000 30,779 Accounts receivable 141,911 149,725 20,947 Prepayments and other current assets 80,578 131,080 18,339 Amounts due from related parties 4,564 521 73 ------- ------- ------- Total current assets 803,730 701,666 98,167 ------- ------- ------- Non-current assets: Other non-current assets 14,237 17,050 2,385 Long-term investments 79,696 133,946 18,740 Property and equipment, net 92,874 110,442 15,451 Intangible assets, net 1,531 8,303 1,162 ------- ------- ------- Total non-current assets 188,338 269,741 37,738 ------- ------- ------- Total assets 992,068 971,407 135,905 ------- ------- ------- LIABILITIES AND SHAREHOLDERS’ DEFICIT Current liabilities: Accounts payable 18,811 21,761 3,044 Deferred revenue and customer deposits 59,483 84,841 11,870 Accrued liabilities and other current liabilities 76,666 91,593 12,814 Amounts due to related parties 8,864 2,113 296 ------- ------- ------- Total current liabilities 163,824 200,308 28,024 ------- ------- ------- Non-current liabilities: Other non-current liabilities 140 140 20 Deferred revenue 10,265 9,340 1,307 Convertible notes 216,179 230,566 32,257 ------- ------- ------- Total non-current liabilities 226,584 240,046 33,584 ------- ------- ------- Total liabilities 390,408 440,354 61,608 ------- ------- -------

AURORA MOBILE LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET (continued)

(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)

As of ---------------------------------- December September 30, 2019 31, 2018 --------- --------------------- RMB RMB US$ Shareholders’ (deficit) equity Common shares 48 48 7 Treasury shares (3,165 ) (9,012 ) (1,261 ) Additional paid-in capital 944,500 952,167 133,213 Accumulated deficit (348,123 ) (417,791 ) (58,451 ) Accumulated other comprehensive loss 8,400 5,641 789 -------- -------- ------- Total shareholders’ (deficit) equity 601,660 531,053 74,297 -------- -------- ------- Total liabilities, mezzanine equity and shareholders’ deficit 992,068 971,407 135,905 -------- -------- -------

AURORA MOBILE LIMITED

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”))

Three months ended Nine months ended ------------------------------------------- ------------------------------- September June 30, September 30, September September 30, 30, 2019 2019 30, 2019 2018 2018 -------- -------- ------------------- -------- ------------------- RMB RMB RMB US$ RMB RMB US$ Reconciliation of Net Loss to Adjusted Net Loss: Net loss (8,583 ) (14,194 ) (31,733 ) (4,439 ) (42,555 ) (69,670 ) (9,748 ) Add: Share-based compensation 6,493 15,749 8,384 1,173 13,387 34,169 4,780 Change in fair value of (12,008 ) — — — (21,302 ) — — derivative liability /asset Fair value gain of long-term — — (14,255 ) (1,994 ) — (17,231 ) (2,411 ) investment ------- ------- ------- ------ ------- ------- ------ Adjusted net (loss)/income (14,098 ) 1,555 (37,604 ) (5,260 ) (50,470 ) (52,732 ) (7,379 ) ------- ------- ------- ------ ------- ------- ------ Reconciliation of Net Loss to Adjusted EBITDA: Net loss (8,583 ) (14,194 ) (31,733 ) (4,439 ) (42,555 ) (69,670 ) (9,748 ) Add: Interest expense 2,494 2,733 2,858 400 4,455 8,213 1,149 Depreciation of property and 4,599 7,611 7,976 1,116 11,924 21,883 3,062 equipment Amortization of intangible 71 638 604 85 125 1,594 223 assets Income tax expense/(benefit) — — 162 23 (5 ) 162 23 ------- ------- ------- ------ ------- ------- ------ EBITDA (1,419 ) (3,212 ) (20,133 ) (2,815 ) (26,056 ) (37,818 ) (5,291 ) Add: Share-based compensation 6,493 15,749 8,384 1,173 13,387 34,169 4,780 Change in fair value of (12,008 ) — — — (21,302 ) — — derivative liability /asset Fair value gain of long-term — — (14,255 ) (1,994 ) — (17,231 ) (2,411 ) investment ------- ------- ------- ------ ------- ------- ------ Adjusted EBITDA (6,934 ) 12,537 (26,004 ) (3,636 ) (33,971 ) (20,880 ) (2,922 ) ------- ------- ------- ------ ------- ------- ------