Aurora Mobile Limited (NASDAQ:JG) Q2 2019 Earnings Conference Call - Final Transcript

Aug 16, 2019 • 07:00 am ET


Aurora Mobile Limited (NASDAQ:JG) Q2 2019 Earnings Conference Call - Final Transcript


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Q & A

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Bill Yu from Goldman Sachs. Please ask your question.

Bill Yu

Hello, Weidong, hello Fei, hello Shan-Nen. Thank you for taking the question, and also congratulations on your first profitable quarter. My question is about the business outlook. So if we look at the midpoint of your guidance of RMB300 million, so how should we think about this from a growth perspective because it's almost flattish on a Q-on-Q basis. So I wonder, does that factor in our SaaS strategy, given that the -- I mean the revenue may decline although the margin may increase for the SaaS portion of the revenue. So that's my first question.

And my second question is on the Tencent Cloud collaboration. So I wonder, how would you consider the potential impact in terms of a paying customer going forward? So I saw we already have a healthy increase up to 2,200. So, is there any expectation that you have that the Tencent collaboration can bring more paying customer? Thank you.

Fei Chen

Hi, Bill. This is Fei. Hi. So regarding the business outlook, actually, you are absolutely right. So, we have already incorporated our new strategy for target marketing to shift gradually to the SaaS-based model. And the main reason is because -- as we ramp up -- as you know for our existing model, if you ramp up with the new vertical and then the new vertical if they grow too fast, then it's going to have a negative impact to the overall target marketing gross margin. And also with current headwind of the macro environment and -- if we continue to grow this business which will require significant amount of working capital, which is also not something we want to do, right?

So, given that, if we switch the model from end-to-end performance-based advertisement service to a SaaS-based model, which can totally solve all these problems because it's a subscription based and the customers are required to pay in advance. And also in terms of the margins, absolute dollar term, it's not really go into effect much to our margin. So taking into consideration all these factors, that's why we purposely we do not want to 100% of focus on the existing model, but rather we want to switch to this. It's a very sticky SaaS-based target marketing business model. We are already actually currently rolling out -- trying out a few customers and already -- and the feedback has been pretty positive.

So, with that, I think I will let Chris answer the second question.

Weidong Luo

Yes. So for the strategic partnership with Tencent Cloud, so if you go to Tencent Cloud's website, , you can see our advanced developer product is -- are displayed and ready for use under the tab new Developers. So that's a pretty, very nice entry point on that menu page. So, we expect there's going to be very good incremental