Jiangbo Pharmaceuticals Inc. (OTCBB:JGBO) Q3 2022 Earnings Call Transcript

Jiangbo Pharmaceuticals Inc. (OTCBB:JGBO) Q3 2022 Earning Call Transcript November 23, 2022

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Aurora Mobile Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be 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 Vanguestaine. Thank you. Please go ahead.

Rene Vanguestaine: Thank you, Desmond. Hello, everyone, and thank you for joining us today.Aurora's earnings release was distributed earlier today and is available on the IR Web site at ir.jiguang.cn. On the call today are Mr.Weidong Luo, Chairman and Chief Executive Officer; Mr.Shan-Nen Bong, Chief Financial Officer; and Mr.Guangyan Chen, General Manager. Following their prepared remarks, they will be available to answer your questions during the Q&A session that will follow. Before we begin, I'd like to remind you that this conference 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.

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 statements as a result of new information, otherwise, except as required under applicable law. With that, I will now turn the conference over to Mr.Luo. Please go ahead.

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Weidong Luo: Thanks, Rene. Good morning, and good evening, everyone. Welcome to Aurora Mobile's 2022 third quarter earnings call. Before I comment on our Q3 results, I would like to remind everyone that the quarterly earnings deck is available on our IR Web site, you may refer to the deck as we proceed with the call today. While we continued to navigate through macro-economic uncertainties, Q3 was a solid quarter for performance and financial measurements in most of our business lines. We are also actively expanding our footprint into overseas markets and prioritizing opportunities for future growth. I will expand into more details in the later section of my remarks. We continued our cost control initiatives in the third quarter and are very pleased with our progress.

Here is a snapshot of some of the great key results that we want to share with you. Lowest operating expenses for the past 16 quarters since Q4 of 2018, at RMB80 million, down 23% year-over-year. Lowest net loss since Q3 of 2019, at RMB20.7 million, narrowed down by 42% year-over-year. Adjusted EBITDA at negative RMB6.7 million, significantly improved by 58% year-over-year. Deferred revenue balance is the highest in the history of the Company, at RMB139.1 million. Total customer number up 71% year-over-year to 4,665.AR turnover days significantly improved by 8 days from 46 days in Q2 2022 to 38 days despite the tough business environment. And I'm sure everyone in the call about the massive layoff announced by one of the world's large -- largest social media tech company recently.

Looking back our decision to start restructuring and cost cutting in the second half of 2021 could not have been wiser. We've been slow and on make such a decision now, we will be in a much worse financial situation. Back to these key financial highlights in this and past few quarters. I'm very proud that our team has stayed together and executed brilliantly to help the company become leaner and more efficient. I am confident that we will come out of these difficult times on a stronger. This quarter, we record another quarter with historically low operating expenses level of RMB80 million, down 23% year-over-year. Our net loss is also the lowest since Q3 of 2019 at RMB20.7 million, narrowed down by 42% year-over-year. One of our main goals going into Q4 and financial year 2023 is to ensure we continue to operate efficiently where we organically grow our revenue faster than expenses.

Another encouraging sign is from the revenue perspective, as we saw sequential revenue growth in most of our business lines this quarter. While we are anticipating more recovery in growth, it's still too earlier to call this a definite trend. However, the sequential growth in our business lines is a major positive sign for us. As the global and domestic economies are currently going through some major transitions in countries, we look at sequential revenue growth as more indicative of the health of our business and possible that will change. With that said, we want to see the sequential trends continue for several more quarters before we are comfortable saying the business are back to normal. Now, let me go through the different revenue streams within the Group.

Developer Services revenues increased by 3% quarter-over-quarter to RMB57 million, which was mainly due to the increase in Subscription Services. Year-over-year Developer Services decreased by 12% mainly due to the weakness in value-added services, offset by the growth in Subscription Services. Subscription Services revenues were RMB41.7 million, up 9% quarter-over-quarter and up 5% year-over-year. Subscription Services, our core business line, including JPUSH, Analytics, UMS and others, are products and services that help APP developers and enterprises to improve their operational efficiency. The increase in ARPU contributed to the growth in revenues, and we managed to grow our customer base, signing up several well-known and sizable customers including just to name a few.

Value-added Services revenue decreased quarter-over-quarter by 9% and year-over-year by 39% to RMB15.3 million.As we saw market demand further pressured and advertisers continuing to cutback budgets, this trend is quite visible and similar to those reported by larger advertisement pipelines.Direct customers contributed more than 75% of JG Alliance revenue stream, while the rest came from third-party AHS.Major customer of JG Alliance consisting of reputed customer and market leaders across many industry verticals, key customers include, Baidu, Alibaba Tencent, .Although we believe that these factors are temporary, and the advertising market is expected to bounce back, we are taking actions and continue to prioritizing our resources on projects that will drive the most growth.

With the launch of our AD Mediation Platform in Q2, over 3 million DAUs and over 40 APPs have joined our platform and we are anticipating more DAUs to join our platform in Q4.Services enabling traffic monetization for advertise -- ADs have become an important driver during the development of the mobile internet ecosystem. As the major mobile AD Mediation platform have spread overseas, in establishing -- established market, such as , we are also striving to have the developers to rapidly grow and improve monetization efficiency. While we put some emphasis on coping with the near-term uncertainties, we consistently stay focused on our long-term strategy of expanding our business overseas since we believe that going overseas is becoming a substantial growth strategy for Chinese companies.

After several months of our team's effort, in mid-October we launched our overseas messaging service platform EngageLab, allowing developers to reach global users efficiently and effectively. This is a major milestone for us, since we can now help both the Chinese companies and overseas based companies to carry out refined and accurate user reach and engagement at low cost with high message delivery rates and conversion rates. I invite you to visit our Web site at www.Engagelab.com to see for yourselves. At present, EngageLab provides five major services including: AppPush, WebPush, Email Service, SMS Service, and WhatsApp Business API and is exploring additional messaging channels in overseas markets. Based on the current and nature of inquiry from our -- from both Chinese companies going overseas and overseas based companies, we are very pleased with our progress.

We believe we have a set of tools and services that meet the market demand and we are in the best possible position to tap into the growth in this segment of the market going forward. We will provide regular updates on this business in the future quarters when the numbers are material. With that, I will now pass the call over to Shan-Nen, who will share more information about our Vertical Applications and other aspects of our performance.

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Shan-Nen Bong: Thanks, Chris. And now let me provide some colors on the Vertical Application business. In this quarter, we have seen such sequential growth in Vertical Application revenue, which is very encouraging. Vertical Applications mainly consists of financial risk management and market intelligence. Vertical applications revenues increased by 12% year -- quarter-over-quarter and decreased by 9% year-over-year. In the Financial Risk Management segment, revenue increased by 20% quarter-over-quarter to RMB14.4 million and decreased by 7% year-over-year. The Financial Risk Management quarter-over-quarter revenues growth was mainly due to the increase in customer numbers as demand has shown good growth over the quarters. While our Financial Risk Management team has pushed continuously to establish deeper connection with our key customers, it has also discovered more opportunities with our existing client base.

Also, our ongoing improvement and additions to the product mix have helped our first signing up many more new clients and renew customer, including but not limited to .Our Market Intelligence Services delivered strong revenue growth, up 23% quarter-over-quarter and up 24% year-over-year to RMB8.9 million. During this quarter, we have further cemented our strategy to retain key customers from both PRC and overseas markets, and we signed up numerous well-known customers including, but not limited to Morningstar, Tsinghua University. I will now go through some of our key expenses and balance sheet items. Onto operating expenses. As Chris mentioned earlier, tightening expense control has been the theme over the past few quarters. And by doing so, we have achieved very solid results to tide us through these tough times.

And we have had another record low quarter for operating expenses at RMB80 million, down 23% year-over-year. All three components within the operating expense category have recorded year-over-year reductions, in particular, R&D expenses decreased by 31% to RMB38.3 million, mainly due to lower headcount, reduced salary costs and associated share-based compensation and a decrease in cloud costs as a result of improvement and optimization of our cloud platform. Selling and marketing expenses decreased by 18% to RMB24.2 million, mainly due to the decrease in our headcount by 42, and marketing expenses and salary costs decrease accordingly this quarter. G&A expenses decreased by 7% to RMB17.6 million, mainly due to salary costs, which is the result of a reduction in headcount.

Adjusted EBITDA improved by 58% year-over-year, and by 16% quarter-over-quarter, respectively to negative RMB6.7 million. Our company-wide effort to optimize headcount and operating expenses has continued to pay off and yielded good results for us. And below are the highlights I want to recap. In this quarter, we have had the lowest operating expenses for the past 16 quarters since Q4 of 2018 at RMB80 million, decreased 23% year-over-year. We had the lowest net loss since Q3 of 2019 and negative RMB20.4 million, narrowed down by 43% year-over-year. As mentioned, adjusted EBITDA at negative RMB6.7 million improved by 58% year-over-year. We had the lowest adjusted operating expenses, which represent the cash component of OpEx since Q1 of 2019 at RMB66.

9 million, decreased by 24% year-over-year. And on to the balance sheet. I will again share two very key KPIs that we closely monitor. Firstly, the AR turnover days decreased from 46 days in Q2 2022 to 38 days in this quarter. Our disciplined accounting policy and cash collecting efforts ensure a timely collection of our accounts receivables. And this is very important to mitigate the exposure to bad and doubtful debts during these particularly challenging times. And secondly, one of the key financial KPIs for tracking the performance of SaaS companies that total deferred revenue, which represent cash collected in advance from customer for future contract performance, we recorded the highest balance in the history of the company at RMB139.1 million.

Another angle on this matter, our deferred revenue balance has continually growing and exceeded RMB100 million at quarter end for the 10th consecutive quarter. And this demonstrates excellent health conditions of our financial KPI under the SaaS business. And next, total assets were RMB445 million as of September 30, 2022.And this includes cash and cash equivalent of RMB108 million. Accounts receivable of RMB32 million, prepayments and other current assets of RMB32 million; fixed assets of RMB42.9 million, long-term investment of RMB142.9 million; goodwill of RMB37.8 million and intangible assets of RMB25.2 million resulted from the SendCloud acquisition in March 2022.And total current liabilities were at RMB238.4 million as of September 30, 2022.

This includes accounts payable of RMB17.5 million, deferred revenue of RMB132.7 million and accrued liabilities of RMB88.2 million. And lastly, before I conclude, I shall give a quick update on the share repurchase plan. In the quarter ended September 30, 2022, we repurchased 27,000 ADS and cumulatively we have repurchased a total of 948,000 ADS during -- since the start of our repurchase program. And with this concludes the management prepared remarks. We're happy to take the question now. Operator, you may proceed.

Operator: First question is from the line of Brian Kinstlinger from Alliance Global. Please proceed.

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