Aurora Mobile Q3 2025 Earnings Call - Back-to-Back GAAP Net Profit and EngageLab's 160% ARR Surge

Michelle, Conference Call Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Aurora Mobile Third Quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you would need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your host today, René Vanguestaine. Please go ahead, sir.

René Vanguestaine, Investor Relations, Aurora Mobile: Thank you, Michelle. 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 irgiguang.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 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 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.

Weidong Luo, Chairman and Chief Executive Officer, Aurora Mobile: Thanks, René. Good evening to all. Welcome to Aurora Mobile’s 2025 Third Quarter earnings call. Before I comment on our Q3 results, I would like to remind everyone that the quarterly earnings data is available on our IR website. You may refer to the data as we proceed with the call today. Without further ado, let’s get started. As we did in the past, based on the Q3 earnings numbers, the suitable description I will give to the third quarter result is "good things come in pairs." Because we record the first-ever back-to-back quarterly net GAAP profit in our history, following the maintained net GAAP profit last quarter, our strong business performance carried us across the line again in Q3. Let me elaborate more on the strong business we have had in this quarter.

Firstly, the group’s revenue this quarter of RMB 19.9 million, achieving a remarkable 15% year-over-year and 1% sequential growth. This RMB 19.9 million was at the very high end of the guidance we have provided. Secondly, our global flagship product, EngageLab, continued its great momentum with another quarter of great numbers. EngageLab recorded very strong quarterly growth in customer number and contract value growth. In particular, EngageLab’s ARR for September 2025 stood strongly and reached a new milestone at RMB 53.7 million. It has grown by 160% year-over-year. Thirdly, our Financial Risk Management business had its best quarter yet, recording highest quarterly revenue of RMB 22.6 million with growth of 43% year-over-year. Fourthly, gross profit exceeded our expectations and grew strongly by 20% year-over-year while achieving the highest gross profit for the past 15 quarters. Gross margin has also improved year-over-year and quarter-over-quarter.

Last but not least, having all the great numbers above is great. It’s equally important that we are generating positive cash flow and in great cash position. Indeed, we are. The net operating cash inflow of RMB 23.3 million recorded the highest level since Q4 of 2020. It is very humbling for me to share with you all on yet another quarterly financial results. As I mentioned in the pre-earnings call, achieving historical GAAP net profit was not easy. For us to have back-to-back GAAP net profit is simply a great achievement for Aurora Mobile to achieve that, all the process in the organization worked really well for the entire fourth quarter of 2025. Our hard work and commitment to excel throughout Aurora Mobile will not stop here. There are more we need to achieve together, and we will.

Short of giving our promise on this call, I truly hope for all the team’s dedication and execution on our group’s strategy and going forward. Now, let me share more on the individual business performance. Our total Q3 group revenue has grown both year-over-year and quarter-over-quarter. In particular, revenue grew 15% year-over-year driven by strong numbers from developer services and financial risk management business. Again, in this quarter, all business segments, mainly developer subscription services, value-added services, and vertical applications recorded solid acceleration with double-digit year-over-year revenue growth. This is the second consecutive quarter we have such a strong revenue growth momentum. Developer services revenue, which consists of subscription services and value-added services, increased by a strong 12% growth year-over-year and flat quarter-over-quarter. Subscription revenue has solid revenue numbers where it increased by 11% year-over-year and increased 7% quarter-over-quarter.

Value-Added Services revenue grew by an impressive 22% year-over-year but decreased 34% quarter-over-quarter. Our core business, Developer Subscription Services, with revenue of RMB 57.3 million, recorded growth of 11% year-over-year and 7% quarter-over-quarter. The year-over-year revenue growth was mainly driven by increase in both customer numbers and output. Subscription revenue recorded the fifth consecutive quarter of RMB 50 million plus revenue and reached its highest level in history in this quarter. Next, let me share more on our global flagship product, EngageLab, which continued its excellent growth acceleration path quarter after quarter since its introduction. Firstly, EngageLab’s ARR has reached a new and important milestone of RMB 53.7 million marked in September 2025. This 160% year-over-year ARR growth was just impressive. Secondly, we had another very strong quarter for EngageLab where the cumulative contract value we had signed amounted to RMB 128 million by the end of Q3 of 2025.

In Q3 alone, we signed up more than RMB 15 million worth of new contracts. This is just outstanding. We do expect this revenue growth momentum to continue for the next 24 months. Furtherly, global customers from all corners of the world continue to purchase our products and services. The customer number has increased by 156% year-over-year, reaching 1,312. This was driven by the continued progress we are making for our global go-to-market effort. Firstly, our EngageLab products and services are now sold to customers in more than 52 different countries and regions globally. This is a great testament that our global flagship product, EngageLab, is indeed a globally accepted product from customers originating from all four corners of the world. Our global flagship product, EngageLab, has a very unique and different position in the market.

We have been taking market share from competitors in all of the overseas markets we operate in. This is evident from the growth rate of EngageLab we have seen today. From the market intelligence we have gathered, it shows that the demand for our EngageLab products and services remains strong. With this great result delivered by EngageLab, it once again reinforced my strong belief that this global flagship product is the tallest bell as far as revenue growth is concerned for us in the next 12 months or 24 months. Within subscription revenue, some of the notable wins in the quarter include, but not limited to, DeepSeek, Shanghai Disneyland, BYD, and China Eastern Airlines, just to name a few. Value-added services revenue were RMB 7.1 million, increased by 22% year-over-year but decreased by 34% quarter-over-quarter.

The solid revenue year-over-year growth was mainly due to the increase in new advertisers acquired between the years. The absence of traditional quarter online shopping festival resulted in the negative revenue growth sequentially. Now, let me pass the call over to Shan-Nen, who will share more about the vertical application and other aspects of our financial performance for this quarter.

Shan-Nen Bong, Chief Financial Officer, Aurora Mobile: 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 good quarter where revenue grew both year-over-year and quarter-over-quarter. Within vertical application, Financial Risk Management recorded a significant 33% growth in revenue year-over-year and 3% quarter-over-quarter. Following the strong Q2, Financial Risk Management had its sequential excellent quarter. It has now the third consecutive quarter of revenue in excess of RMB 21 million under its belt. Another significant milestone for this business is that it recorded the highest quarterly revenue in history of RMB 22.6 million in this quarter. This 33% year-over-year revenue growth was mainly due to a strong 44% in customer number growth. The customers that we signed up or renewed in Q3 include, but not limited to, LESING, Saoying Herti, Ningbo Bank, and many more licensed credit and financial institutions throughout China.

Market Intelligence revenue, on the other hand, decreased by 23% year-over-year and 2% quarter-over-quarter due to the continued weak demand for the Chinese app data, and this result is in line with our expectation. Next, I’ll go over some of the P&L and balance sheet items. Our gross profit had a spectacular result too in this quarter where it grew 20% year-over-year and 7% quarter-over-quarter. The RMB 63.8 million gross profit we had was also the highest gross profit for the past 15 quarters. With the group revenues grew 15% year-over-year, yet our gross profit grew by 20% year-over-year, it shows that we had recorded very high margin revenue in this quarter. This is certainly a key target that we would like to maintain and extend beyond this quarter. On to operating expenses.

The Q3 operating expenses was at RMB 64.4 million, representing a 12.8% increase year-over-year and an increase of 5.8% quarter-over-quarter. Operationally, our Q3 revenue grew by 15% year-over-year, while OPEX only grew by 12.8%. Overall, we are pleased to see how we have been controlling OPEX to support the double-digit revenue growth across our business line. I’ll now dive deeper into the individual OPEX category. For R&D expenses, increased by 7% year-over-year to RMB 25.9 million, mainly due to the increase in staff costs and associated expenses. Technical service fee and cloud costs also contributed to the year-over-year increase in R&D expenses. Selling and marketing expenses increased by 19% year-over-year to RMB 26.6 million, mainly due to the increase in sales commission in line with revenue growth and the cash collection in this quarter.

Marketing expenses for investment in global business expansion also contributed to the year-over-year increase in selling and marketing expenses. G&A expenses increased by 13% year-over-year to RMB 11.9 million, mainly due to increase in staff costs, professional fees, and better provision. Next, I’ll share three very important KPIs that we closely monitor. For NDR, which means Net Dollar Retention Rate, a commonly used KPI for SaaS companies, it stood at 104% for our core developer service business for the trailing 12 months ended September 30, 2025. This is the very first time where NDR numbers have exceeded 100% milestone. The number says it all. It means customer retention rate coupled with the fact that our customers have increased their spending with us through upsell, upgrades, and expansion. This is the best testament of our sustainable SaaS business.

Secondly, another important financial KPI for tracking the performance of SaaS companies is total deferred revenue, which represents cash collected in advance from customers for future contract performance, which was at a historical high of RMB 166.3 million. This high deferred revenue balance is a hallmark of a high-quality, scalable business. It signifies strong customer loyalty, predictable future revenue, healthy cash flow, and effective sales strategy. Thirdly, we continue to maintain healthy AR turnover days level at 49 days, and this remains at an industry-leading level. We will continue to work hard to ensure we are actively and timely collecting cash from customers and, at the same time, mitigating the risk of bad and doubtful debts. On the cash flow, we recorded another great number. For the quarter ended September 30, 2025, we recorded net operating activities cash inflow of RMB 23.3 million.

This is the best quarterly cash flow numbers we have since Q4 of 2020. On to balance sheet. Total assets were RMB 388.2 million as of September 30, 2025. This includes cash and cash equivalent of RMB 141.2 million, accounts receivable of RMB 43.9 million, prepayments and other assets of RMB 15.7 million, operating lease right-of-use assets of RMB 15.9 million, fixed assets of RMB 2.9 million, long-term investment of RMB 113 million, goodwill of RMB 37.8 million, and intangible assets of RMB 11.5 million resulting from SAN-CLAW acquisition in March 2022. Total current liabilities were at RMB 274.6 million as of September 30, 2025. This includes accounts payable of RMB 31.9 million, other operating lease liability of RMB 4.1 million, deferred revenue of RMB 166.3 million, accrued liabilities of RMB 72.3 million.

Let me take a few minutes here to recap the description, "Good things come in pairs," that Chris mentioned at the beginning of this call. In this quarter, we have many great achievements that I would like to take a few minutes to reiterate. First, we achieved our very first back-to-back GAAP net profit in history. Number two, our core developer subscription business had its best revenue in history of RMB 57.3 million, as did the financial risk management business. Our flagship product, EngageLab, continued its expansion beyond the shores. Apart from great growth in customers’ number and contract value, EngageLab business reached another very important key milestone where the ARR was at RMB 53.7 million in September 2025, representing a stunning 160% year-over-year growth. Gross profit grew 20% year-over-year and recorded its highest levels for the past 15 quarters.

Number five, operating activities brought in net cash inflow of RMB 33.3 million. Our NDR, net dollar retention for core developer service, recorded at the best number in history of 104%. Now, let’s turn to business outlook. Based on the current available information, the company sees the Q4 2025 revenue guidance to be in the range of RMB 94 million-RMB 96 million, representing a solid growth of 1%-3% year-over-year compared to the same quarter 2024. 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. Before I conclude, I’ll give a quick update on the share repurchase plan. In this quarter ended September 30, 2025, we repurchased 4,000 ADS.

Cumulatively, we have repurchased a total of 327,000 ADS since the start of our repurchase program. Today, our board of directors of the company approved a share repurchase program whereby the company is authorized to repurchase up to $10 million worth of its ordinary share, including in the form of ADS, during the 12-month period starting today. This is a 100% increase from the $5 million program we had previously. The company proposed repurchase may be made from time to time in the open market at a prevailing market price, in privately negotiated transactions, in block trades, and/or other legally permissible means, depending on the market conditions and in accordance with the applicable rules and regulations. The company’s board of directors will review the share repurchase program periodically and may authorize adjustment in terms of size and terms.

The company expects to fund the repurchase out of its existing cash. This concludes our prepared remarks. We’ll be happy to take your question now. Operator, please proceed.

Michelle, Conference Call Operator: Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question will come from Calvin Wong with Spica Capital. Your line is now open.

Calvin Wong, Analyst, Spica Capital: Good evening, management. Thank you for taking my questions. First of all, congrats for delivering another set of stunning results this quarter. I have only one question. Based on my reading of the earnings release, I noticed the strength of EngageLab business and how it strengthened the group’s financial results. I would appreciate if management could tell us more about EngageLab and why the growth trajectory has been so strong since day one. Thank you.

Weidong Luo, Chairman and Chief Executive Officer, Aurora Mobile: Let me take this call. Hey, Kevin, good to hear from you again, and thanks for your interest. I’ll take your earlier statement about EngageLab’s growth trajectory has been strong since day one, this is factual, and we are very proud of the achievement since day one. For those listeners who have access to our deck that we have uploaded to the IR web page, you can refer to, I think, slide number three, where we have the pictorial display or diagram of EngageLab business to date. One new particular data point that we have included in this quarter’s earnings deck is the ARR, the annual recurring revenue for EngageLab business. For the month of September 2025, the ARR was at RMB 53.7 million. This is a 160% jump from a year ago.

We are very encouraged by this number because it shows that the business has a very significant growth trajectory, and we have made great revenue expansion in just 12 months. I would say the success of EngageLab is not by chance or that we are lucky. It was a result of endless improvement upgrades that we made to the product and service offering that helped us to acquire more new customers and retain existing customers globally. If we look back, when Chris decided to launch EngageLab back in Q4 of 2022, the mission was pure and direct, just to address our customers’ main needs of reaching out and engaging with their users in a cost-efficient and effective manner.

Through EngageLab, our customers are able to reach and engage with their users through any one or all of the following messaging channels, such as app push, web push, email, SMS, WhatsApp, and OTP. Also, from a technical standpoint, we have done all the heavy lifting for our customers too. To deliver the global solution for our customers, we have invested heavily in data facility in eight cities globally. Just this week, we have launched a new data center in Turkey, further expanding our global infrastructure. That aside, we have also incorporated our notification channel for all different operating systems, from iOS to Android, from HarmonyOS to others. It makes it easy and efficient for our customers to ensure that their notifications are delivered no matter where their users are and what phone they are using.

Maybe you can think of EngageLab as reaching your users without borders. For service-wise, we have received countless compliments from our customers that our customer service team are very responsive and deliver a much better service than our peers. This says a lot from a customer standpoint. When they encounter issues, they need solution. This is something that we can deliver, and we are proud of it. Therefore, with such a great value proposition where customers can get one-stop engagement platform and great services all wrapped in one, it is not hard to see why EngageLab has been able to deliver such great numbers quarter over quarter. Historical results aside, both Chris and myself have great hopes and confidence in the EngageLab business going forward.

As Chris rightly called out during the call earlier, EngageLab is the torchbearer for our revenue growth in the next 24 months. Kevin, hope this answers your question adequately.

René Vanguestaine, Investor Relations, Aurora Mobile: Great to hear that. It’s very clear. Thanks.

Michelle, Conference Call Operator: Thank you. Our next question will come from Jack Sun with Gongwu Research. Your line is open.

Jack Sun, Analyst, Gongwu Research: Good evening. I’m Jack Sun from Gongwu Research. Thank you, management, for taking my question. Congratulations on another good quarter. We saw the earnings, in particular, two consecutive quarters with GAAP net profit. Well done. I have a question for the management. Help me to recap on what went well in Q3 that delivered another quarter with GAAP net profit. Thank you.

Weidong Luo, Chairman and Chief Executive Officer, Aurora Mobile: Hey, hi, Jack. Thanks for the question. Yeah, it was a great quarter, indeed. I think Chris mentioned we executed very well operationally, and everything just went well. This flowed on to our financial number that we have released earlier today. There are a couple of things I can share more. Firstly, revenue in Q3 has been very strong. All business lines recorded great year-over-year double-digit growth. What that means is we are now head and shoulders above where we were a year ago. Both the subscription business and the Financial Risk Management recorded their own best revenue quarter in history. Equally important is the revenue by EngageLab, where it contributed RMB 13 million in this quarter alone, also a historical high. We grew our revenue not at the expense of sacrificing margins.

This is evident that while we grew our revenue significantly, our gross profit reached the highest level for the past 15 quarters. At the same time, our gross margin increased year-over-year and quarter-over-quarter too. This is a really hard act to follow. Since revenue and gross profit grew at a faster pace than our OPEX, the U.S. GAAP net profit is a certainty, which is why we had the second consecutive quarters of U.S. GAAP net profit. Two other important and great KPIs that I would like to reiterate here. One is the NDR, where we reached 104% for our core developer subscription business. This is the very first time NDR exceeded 100%. What that means is simple and straightforward. Our customer has been buying more of our services between the periods through upgrades, upsells, and other services. This is a great number to have.

Secondly, it’s the deferred revenue balance of RMB 166.3 million, another historical high balance. In short, we have RMB 166.3 million worth of secure revenue that we can recognize in the future. The best part is we have already received the cash. For this RMB 166.3 million, we don’t even have to worry about cash collection effort or the risk of bad debt in the future. Managing cash flow has also yielded great results. In this quarter, we have net operating cash inflow of RMB 23.3 million, the highest level for the past 20 quarters, which is actually the past five years the best results. With that positive inflow of cash, our September 30 quarter-end cash balance has also climbed to RMB 141.2 million, the highest balance in the past 14 quarters. It improved by 40% year-over-year.

You can see it’s not hard for you or anyone to conclude that this quarter has been great. However, rest assured that we are not contented by the present. We need to move faster and expand more. Therefore, we will continue to invest as part of our global growth plan. Lastly, if time permits, I would like to cordially invite you and other investors to drop by our Shenzhen head office. We are more than happy to host you and chat with greater detail for any question you might have. Yeah, this is my answer to your question, Jack.

Jack Sun, Analyst, Gongwu Research: Okay, thank you. That’s very clear. I appreciate that.

Michelle, Conference Call Operator: Thank you. I show no further questions in the queue at this time. I would like to turn the call back over to René for closing remarks.

René Vanguestaine, Investor Relations, Aurora Mobile: Thank you, everyone, for joining our call tonight. If you have any further questions and comments, please do not hesitate to reach out to the IR team. This concludes the call. Have a good night. Thank you all.

Michelle, Conference Call Operator: This does conclude the conference call. Thank you for participating, and you may now disconnect.