On June 6th, Aurora Mobile (NASDAQ: JG), a leading provider of customer interaction and marketing technology services in China, announced its unaudited financial report for the first quarter ended March 31, 2024.

Overall, Aurora's overseas business maintained a rapid expansion and expanded the imagination. At the same time, despite the first quarter being the traditional "off-season", one of Aurora's core businesses, the value-added service business for developers, still performed well and maintained double-digit growth year-on-year. Aurora's cost reduction and efficiency improvement results were also obvious, and it has been profitable for three consecutive quarters. Founder and CEO of Aurora Luo Weidong said: We achieved excellent results in the first quarter of 2024.

In today's market environment, returning to healthy operation, balanced growth and profits have become the consensus of SaaS companies. Aurora has already taken the lead.

Founder and CEO of Aurora, Luo Weidong, said that we achieved excellent results in the first quarter of 2024.

1. The subscription revenue of developers increased by 13% year-on-year.

2. The gross margin reached the highest level since the fourth quarter of 2021.

3. Historical adjusted EBITDA indicators achieved profitability for the first time in three consecutive quarters.

4. Total operating expenses were 53 million yuan, the lowest level since the company went public in July 2018.

5. The number of customers for the EngageLab overseas message service platform product increased by more than 30% month-on-month, and the cumulative contract amount increased by more than 60% month-on-month.

I. EngageLab and GPTBots.AI are growing vigorously, showing resilience in overall performance.

1. Engagelab's cumulative contract value has increased significantly, with a month-on-month growth rate of more than 60%.

In the first quarter, Aurora's overseas customer base continued to expand, and its internationally facing products and solutions EngageLab and GPTBots.AI performed strongly.

Among them, EngageLab has become an internationally renowned overseas message service platform, with a market share among the top. Its customers cover industries such as technology, the Internet, mobile phones, videos, media, automobiles, and finance, and are distributed in more than 22 countries and regions worldwide, achieving a quarterly increase in both the number of customers and order amounts.

(EngageLab overseas customer distribution map; source: Aurora official website)

Specifically, in the first quarter, the number of EngageLab's customers increased by more than 30% month-on-month, and the cumulative contract amount increased by more than 60% month-on-month, continuing to soar on the basis of the high growth in the previous quarter; both have doubled compared to the third quarter of 2023.

(EngageLab's phased achievements in going overseas; source: Aurora official website)

This performance further reflects the growth quality of EngageLab, which means that it not only expands the customer base but also receives more large orders, that is, it obtains more high-quality customers and establishes closer and firmer cooperative relationships with them to solidify the foundation for sustained development.

It is also worth noting that recently, EngageLab has completed the deployment of the data center in Hong Kong, China, which is the fourth data center launched by EngageLab after Singapore, the United States and Europe; EngageLab has launched a new OTP product, which verifies the identity of global users and is expected to further enhance Aurora's service capabilities in Asia and the world, meet the compliance requirements of different enterprises worldwide, and better support business expansion.

As for GPTBots.AI, as a no-code AI Bot building platform that helps companies integrate AI into business scenarios and achieve cost reduction and efficiency improvement, it quickly opened up the market since its launch three months ago.

As of 2023, with a short period of three months since its launch, the number of registered users (including enterprises and developers) has exceeded 10,000, more than 60% of which are from overseas, covering different industries and markets, and are distributed in over 30 countries worldwide including China, the United States, India, Japan, etc.

Recently, the new version of GPTBots has been officially launched, providing more comprehensive and intelligent products and solutions. For example, it will fully support the latest model version of OpenAI GPT-4o-128k, and add four new large models: Alibaba Communication Thousand Questions, Meta Llama, Mistral AI, and Anthropic Claude, adapt to customers' business needs with multiple models. In addition, GPTBots has officially supported private deployment, realizing enterprise autonomy and highly customization in a secure and internal environment, and at the same time meeting multiple customer needs such as compliance and personalization.

Considering the current trend of accelerated AI penetration, many traditional models and processes in various industries will eventually need to change, which will drive a strong demand for digital services. This part of the business increment is expected to gradually emerge.

Subscription service revenue increased by 13% year-on-year, demonstrating the group's stable operation and growth potential.

Affected by the traditional "low season", Aurora's total revenue in the first quarter was slightly under pressure, at 64.5 million yuan, a year-on-year decrease of 1%.

(Group total revenue chart; data source: Aurora official website)

However, from internal segmentation, Aurora's core business has remained growth-oriented and the foundation is still evolving. As for other businesses, the market environment has temporarily caused a contraction in related demand, but it is expected to gradually recover in the future.

In the first quarter, Aurora's developer services business achieved a total revenue of 44.7 million yuan, accounting for about 70% of the total revenue. Among them, subscription service revenue was 42.3 million yuan, an increase of 13% year-on-year, demonstrating strong growth momentum; value-added service revenue was 2.4 million yuan, the main reason for dragging down revenue.

(Group developer services business revenue chart; data source: Aurora official website)

Behind this, subscription revenue is an important indicator of the product and service quality of a SaaS enterprise, intuitively reflecting its market competitiveness and future growth potential. Because the essence of subscription is to establish and maintain a relationship with customers, meaning high customer loyalty and stable cash flow.

As for developer value-added services, their linkage with the advertising industry is relatively close, and they have performed poorly due to the pressure of the advertising industry (weak demand in the first quarter plus the Spring Festival effect).

Some industry professionals pointed out that the beauty industry has brought a 5% decline in overall advertising revenue; advertising placements in some vertical industries (such as real estate and franchising) are still weak, and this impact has also extended to upstream and downstream industries.

3. Industry application revenue decreased slightly by 1% year-on-year, demonstrating strong operating resilience in the adversity.

In the first quarter, Aurora's industry application business revenue was 19.8 million yuan, maintaining stability overall, a year-on-year decrease of only 1%. Among them, the financial risk control business continues to show strong growth momentum, with revenue increasing by 14% year-on-year and an increase of 2% on a month-on-month basis, fully demonstrating its good development trend and potential.

(Aurora industry application revenue chart; data source: Aurora official website)

Despite the pressure on demand from the market, Aurora has still achieved relatively stable revenue performance by relying on its professional advantages in the data services field. This shows that Aurora is able to support its performance with its core competitiveness when facing market challenges and has strong operating resilience.

II. The gross profit margin soared to 72%, reaching a peak in nearly 10 quarters, with double increase year-on-year and quarter-on-quarter.

In the first quarter, Aurora's gross profit margin soared to 72%, reaching the best level in nearly 10 quarters (since the fourth quarter of 2021), with an increase of 3 percentage points quarter-on-quarter and 2 percentage points year-on-year. At the same time, Aurora achieved a total gross profit of 46.4 million yuan, maintaining a year-on-year growth, which comprehensively reflects the improvement of its profitability level.

(Aurora gross profit chart; data source: Aurora official website)

Combined with the aforementioned content, this point may be clearer. For example, Aurora's overseas business is growing rapidly, and the cumulative contract amount growth rate is higher, that is, ARPU is increasing, which may reduce customer acquisition pressure and customer maintenance costs, driving the increase of gross profit margin; Aurora's subscription service revenue is growing strongly, and the proportion of subscription service revenue has increased, which may optimize performance structure and contribute more gross profit. At the same time, Aurora has strong self-adjustment ability, or can release profit space from it.

III. Adjusted EBITDA has been positive for three consecutive quarters, with remarkable achievements in cost reduction and efficiency enhancement.

In addition, Aurora Mobile continues to adhere to strict cost control, achieving more results on the profit side. In the first quarter, its adjusted EBITDA was approximately 160,000 yuan, achieving three consecutive quarters of profitability. In terms of product structure, the operating income of 10-30 billion yuan products was 40.1/128.8/6 million yuan, respectively.

(Aurora Mobile Adjusted EBITDA chart; source: Aurora Mobile official website)

This is a very positive signal, which means that Aurora Mobile has healthy finances and superior models, and has the possibility of sustainable profitability. In the context where many SAAS companies have not yet achieved profitability, sustained profitability records will further enhance the brand image and help Aurora Mobile attract more customers and partners.

1. Operating expenses hit a new low, cost reduction and efficiency improvement highlights, and development quality climbs.

This quarter, Aurora Mobile's total operating expenses were 53 million yuan, with a significant year-on-year decrease and a new low in the market. Among them, research and development expenses were 22.7 million yuan, with a high proportion, and the reduction in operating expenses mainly came from sales and marketing expenses. This also further verifies the decrease in customer acquisition and maintenance costs of Aurora Mobile, as well as the improvement of its development quality. Behind this, Aurora Mobile's management continues to focus on this expense and has taken a series of effective control measures to ensure the reasonableness and efficiency of the expenses.

(Aurora Mobile total operating expenses chart; source: Aurora Mobile official website)

In terms of adjusted OPEX (i.e. the cash part of operating expenses), it also hit a new low, with data for this quarter of 49.1 million yuan, a year-on-year decrease of approximately 15%.

(Aurora Mobile adjusted OPEX chart; source: Aurora Mobile official website)

2. Deferred revenue has been steadily above 100 million yuan for 16 consecutive quarters, laying a solid foundation for long-term development.

In the first quarter, Aurora Mobile's deferred revenue representing prepaid payments from customers reached 135 million yuan, maintaining year-on-year growth and achieving a historically high level. This is also the 16th consecutive quarter that Aurora Mobile's deferred revenue has exceeded 100 million yuan.

(Aurora Mobile deferred revenue chart; source: Aurora Mobile official website)

Deferred revenue, as an important indicator, once again reveals Aurora Mobile's long-term development potential. Its continuous growth often indicates that the company's customer base is expanding, or that customers are willing to cooperate with the company for a long time and have loyalty to the company's products and services. At the same time, it provides a stable source of income, demonstrating Aurora Mobile's stable business model.

IV. Conclusion

Although Aurora Mobile's overall revenue and some businesses have declined, its intrinsic value improvement should not be ignored.

Overall, Aurora Mobile's core fundamentals continue to improve, and this conclusion can be drawn from a perspective of overseas market business, cornerstone business, and profitability. These dimensions also represent the keys to its future value in terms of incremental growth, resilience, and sustainability.

At the same time, looking at the market environment, Aurora Mobile has achieved healthy management, balanced growth, and profit ahead of its peers. This may better support its long-term value as an SAAS company.