Aurora Mobile (NASDAQ:JG) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.

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Summary

Aurora Mobile Limited reported a strong Q2 2026 with RMB 100 million in revenue, marking a 13% year-over-year growth and achieving this milestone a quarter earlier than anticipated.

The company's SaaS business, particularly EngageLab, demonstrated significant growth with a 170% year-over-year increase in ARR to $14.6 million. EngageLab also recorded RMB 27.5 million in recognized revenue, up 186% year over year.

Gross profit increased by 16% year-over-year, with a gross margin improvement of 197 basis points. The company achieved its fifth consecutive quarter of US GAAP net profit and recorded a net cash inflow of RMB 23.3 million.

Operational highlights include the successful launch of SilentAuth and upgrades to the GPTBots platform, enhancing authentication and AI capabilities, respectively.

Management expressed cautious optimism for the remainder of 2026, emphasizing strict cost discipline while investing in growth initiatives.

Full Transcript

OPERATOR

Ladies and gentlemen, thank you for standing by. Welcome to the Aurora Mobile second quarter 2026 earnings 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 will 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 like now to hand the conference over to your host today, Christian Arnell. Please go ahead.

Christian Arnell, Investor Relations

Thank you. Hello everyone, and thank you for joining us today. Aurora Mobile's earnings release was distributed earlier today and is available on its IR website at ir.aurora-mobile.com. On the call today are Mr. Wei Dong Luo, Chairman and Chief Executive Officer, Mr. Shannon Bong, Chief Financial Officer, and Mr. Guang Yen 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 factors are included in the company's filings with the U.S. SEC. 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'd now like to turn the conference call over to Mr. Luo. Please go ahead.

Wei Dong Luo, Chairman and Chief Executive Officer

Thanks, Christian. Hi everyone. Welcome to Aurora Mobile's 2026 second quarter earnings call. Before I comment on our Q2 results, I would like to remind everyone that we have uploaded the quarterly earnings deck on our IR website. You may refer to the deck as we proceed with the call today. As we've done in the past, the suitable description that I would give to the second quarter of 2026 is our RMB 100 million revenue quarter. The reason for this narrative is obvious.

Our achievements in the second quarter of 2026 are as follows. Firstly, for the third time in our history, we recorded SaaS business revenue in excess of RMB 100 million in a single quarter. This was fueled by the highest developer service revenue in history of RMB 79.9 million in this quarter. Secondly, our global flagship product EngageLab had its best quarter yet. The EngageLab ARR for June 2026 has scaled to a record high of $14.6 million, representing 170% year-over-year growth.

Thirdly, gross profit grew by 16% year over year. Gross margin improved by 197 basis points between the years. Having top-line growth alone is not enough. In this quarter we delivered the fifth consecutive quarter of US GAAP net profit. Last but not least, operationally, we brought in net cash inflow of RMB 23.3 million this quarter. This marks a strong second quarter performance building on our Q1 results released in May. Taken together, the first two quarters of 2026 validate our robust growth momentum and we remain on track to deliver against our target for a highly promising full year 2026.

Let me now share more on the business aspect. RMB 100 million revenue a quarter, yes, we made it. Again, this milestone came a quarter earlier than what we previously anticipated. We are very pleased with this early, pleasant surprise. Our total Q2 group revenue reached RMB 101.2 million, representing a strong 13% year-over-year growth. This RMB 100 million quarterly revenue is a very important milestone for us. It signifies a few key messages that I think are important that I share with you all today.

Firstly, the RMB 100 million quarterly revenue milestone marks a landmark validation of Aurora Mobile's pure SaaS strategic transformation, forming a durable, larger revenue foundation. Secondly, top-line expansion is anchored by high-margin recurring developer subscription revenue supported by solid customer retention and rising enterprise demand. Thirdly, dual growth engines—domestic developer ecosystem and fast-growing global EngageLab business—jointly drive scalable cross-market revenue expansion.

Fourthly, greater revenue scale improves operating leverage, underpinning our consistent profitability trend and long-term path of sustainable shareholder returns. In this quarter, Developer Services recorded a great 24% revenue growth year over year, but Vertical Applications revenue decreased 16% year over year. Developer Services revenues, which consist of subscription services and value-added services, delivered excellent performance in this quarter.

Our core business, developer subscription services, delivered another historic high quarterly revenue number of RMB 70.7 million, representing growth of 32% year over year and 9% quarter over quarter. The year-over-year and quarter-over-quarter revenue growth was mainly driven by increases in both customer number and ARPU. In short, the momentum of this business is very strong and I do have high hope of the continued growth in many more quarters to come.

Now let's move on to the update on our global flagship product, EngageLab. EngageLab, being the jewel of Aurora Mobile's growth engine, has again brought in excellent numbers every quarter since its launch, and this quarter the highlights include: firstly, EngageLab recorded another quarter of tremendous growth where the ARR reached a new milestone of $14.6 million as of June 2026. This represents 170% year-over-year growth. Secondly, EngageLab broke another record where the cumulative signed contract value has exceeded RMB 200 million by the end of Q2 of 2026.

This speaks volumes in terms of the market acceptance and total addressable market for this product. For sure we are very pleased with this achievement. Nevertheless, we will continue to work hard and smart to conquer more markets and win more contracts. In Q2 alone we inked more than RMB 27.4 million worth of new contracts. Certainly, more and more new global customers are being converted and switched to EngageLab. The EngageLab customer number has exceeded 2,100 as of June 30, 2026.

The expansion of EngageLab across the globe has been very successful. Fourthly, the recognized revenue for EngageLab in Q2 of 2026 reached RMB 27.5 million, representing an outstanding 186% growth year over year. Also in this quarter there was a new addition to the EngageLab family where we officially launched SilentAuth, an advanced passwordless authentication solution designed to complement existing SMS OTP services and elevate identity verification for the global market.

SilentAuth provides a more dependable approach to authentication across three key use cases, namely: firstly, faster registration and logins; secondly, secure verification for high-risk operations; and thirdly, marketing fraud prevention. We view the launch of SilentAuth as not only enriching EngageLab's omnichannel customer engagement portfolio but also reinforcing Aurora Mobile's commitment to providing global enterprises with stable, efficient, and intelligent solutions.

Going forward, it is my goal that EngageLab will continue to leverage advanced technology to help businesses build stronger, trust-based customer relationships and accelerate global growth. Within subscription revenue, some of the notable wins in this quarter include, but are not limited to, Bank of China (Hong Kong), CXMT, DeepSea, Ming Chun, Zhongtuan, and HashQ. Value-added services revenues were RMB 9.2 million, up 36% quarter over quarter but down 15% year over year.

The quarter-over-quarter spike was mainly attributable to the traditional quarterly online shopping of 6.18 in Q2. I think it is also time for me to provide an update on the progress and update we have on our enterprise AI agent platform, GPTBots. Recently, we released a major production-grade upgrade to GPTBots, tackling the key industry limitations whereby conventional AI agents only support conversations and demos, lacking deep business system integration and end-to-end task execution.

The upgrade centers on three pillars: a graph-enhanced knowledge base for context-aware business analysis; autonomous workflow automation across 14 communication channels via agent collaboration; and robust enterprise governance with audit trails, runtime safeguards, and mandatory human validation for Live 2.0. This product advancement supports GPTBots' global expansion through the following: firstly, transforms the platform into a production-ready solution to improve overseas sales conversion; secondly, native compatibility with global channels including WhatsApp, Slack, and Teams extends market reach across North America, Europe, and Southeast Asia; thirdly, strengthened governance satisfies international data compliance requirements, enabling deals with multinationals and regulated sectors; fourthly, optimized knowledge processing reduces customization and onboarding costs for global clients and improves project gross margins. We believe the upgrade puts Aurora Mobile in a strong position to capture market share as enterprises worldwide transition from AI testing to large-scale deployment of agentic AI.

As you can see, besides growing the business globally, we have been busy on the R&D front. Our team has not taken our eyes off the need to continue to upgrade and create new products and services to supplement our entire suite of services to our customers. This is important because we will not rest on our laurels amidst our achievements to date. We must remain attuned to the latest developments across global markets and implement necessary product upgrades, adjustments, and innovations as circumstances demand.

Only by doing so can we stay relevant and meet the evolving needs of our global customer base. Collectively, these efforts form critical building blocks to sustain ongoing revenue growth and advance our path toward improved profitability. Now let me pass the call over to Shannon, who will take you through the metrics on Vertical Applications and financial performance for this quarter.

Shannon Bong, Chief Financial Officer

Thanks, Chris. For Vertical Applications that includes Financial Risk Management and Market Intelligence, overall, Vertical Applications revenue decreased year over year and quarter over quarter. Within Vertical Applications, Financial Risk Management revenue decreased 17% year over year and pretty much remained flat quarter over quarter. We are still operating in a tough business environment and we are making the necessary adjustments on go-to-market and various strategies.

The customers that we sign up or renew in Q2 include, but are not limited to, Fufa, Yinghang, Ping An, Xiaojing, Weizhong, Yinghang, and many more licensed credit or financial institutions throughout China. Market Intelligence revenue decreased 11% quarter over quarter and 12% year over year due to the continued weak market demand for Chinese app data, and this result is in line with our expectation. Coming to the other P&L items, our gross profit recorded another strong Q2 quarter with 16% year-over-year growth to Renminbi 69.2 million.

Our gross margin has also recorded significant improvement by 197 basis points year over year. This improvement reflects better product mix and tighter operating control discipline. Higher gross profit gives us greater flexibility to invest in growth while absorbing external cost pressures. Most importantly, it proves that we can convert business scale into sustainable profit generation, which is critical to driving shareholders' return over time.

On net profit, following the great momentum we had in Q1 of 2026, we recorded yet another GAAP net profit quarter, making it the fifth consecutive quarter of GAAP net profit. We are very pleased with how this quarter has played out financially, from top-line growth to bottom-line profitability. Onto operating expenses, Q2 OpEx was at Renminbi 67.6 million, up 2% quarter over quarter and up 11% year over year. The OpEx is within our forecast and we're happy at the level where they are.

I'll now dive deeper into the individual OpEx categories. R&D expenses increased by 13% year over year to Renminbi 29.3 million, mainly due to the higher staff cost and associated expenses. Technical service fees also contributed to the year-over-year increase. Selling and marketing expenses increased by 25% year over year to Renminbi 28.3 million, mainly due to the higher staff cost driven by overseas business expansion. G&A expenses decreased by 18% year over year to Renminbi 10 million, mainly due to the decrease in bad debt provision resulting from improved collection efficiency.

Besides, there was no loss on disposal of property and equipment in Q2 of 2026, while such a loss was incurred in the same quarter last year. Next I'll share four other very important KPIs that we closely monitor. Our net dollar retention rate, a commonly used KPI for SaaS companies, stood at 106% for our core developer subscription business for the trailing 12-month period ended June 2026. This is the highest NDR number that we have recorded to date.

This is an important signal of existing customer health. This record NDR speaks to strong product stickiness, expanded usage from our installed base, and successful upsell and cross-selling activity within our current clients. While NDR can fluctuate quarter over quarter given customer-specific renewal dynamics, we are very encouraged by this peak result and we are focused on sustaining healthy retention trends ahead. Secondly, another financial KPI for tracking the performance of SaaS companies is total deferred revenue.

This represents cash collected in advance from customers for future contract performance, and it stood at Renminbi 181.9 million as of 06-30-2026. This is also a historic high balance. This balance acts as a high-quality leading indicator; it gives us good visibility into the near-term revenue stream and strengthens our operating cash flow profile by bringing cash collection forward relative to the income statement recognition. Thirdly, we continue to maintain a healthy level of AR turnover days of 37.

This low AR turn ensures we have great cash liquidity while mitigating the risk of bad and doubtful debt. And onto cash flow, another important financial KPI for us to manage the business: for the quarter ended June 30, 2026, we recorded net operating cash inflow of Renminbi 23.3 million. Having operating net cash inflow is very important as it validates our earnings quality and gives investors and shareholders greater confidence in the sustainability of the reported profit.

Our core developer subscription business has outdone itself again by recording another historical high of Renminbi 70.7 million revenue in this quarter. The jewel of Aurora Mobile, EngageLab, continues to scale rapidly across the globe. Our EngageLab business exceeded its past record in this quarter. The ARR in June 2026 reached US dollars 14.6 million. This represents a stunning 170% year-over-year growth. Fourth, our gross margin grew by 197 basis points year over year and gross profit grew by 16% year over year.

Fifth, our net dollar retention for core developer service stood strongly at 106%, another historic high. Sixth, equally important was the net cash inflow that I mentioned of Renminbi 23.3 million we brought in from operating activities. As I have alluded in the last quarter's earnings call, Q1 numbers we have recorded paved the way for a great financial year of 2026 and this momentum rebuilt in Q2 of 2026 was truly phenomenal. The quarterly operating and financial results that Chris and I shared during the call today reflect the considerable strength across our business.

We will continue to execute against our established strategic priorities as we deliver on our execution roadmap. We are confident these operational wins will translate into sustained improvement in our financial statements. Lastly, before I conclude, I'll give a quick update on our share repurchase plan. In the quarter ended June 30, 2026, we repurchased 44,000 ADS. Cumulatively, we have repurchased a total of 485,000 ADS since the start of our repurchase program.

And this concludes our prepared remarks. We are happy to take your questions now. Operator, please proceed.

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. And to withdraw your question, please press star 11 again. And the first question comes from Calvin Wong with Spica Capital. Your line is now open.

Calvin Wong, Analyst at Spica Capital

Good evening, management. Thank you for taking my question. Based on the numbers released today, we note that you have a very, very strong Q2 quarter. So can I get the management to shed some light on the Q2 quarter and perhaps maybe some hints on how Q3 and Q4 will fare for 2026?

Shannon Bong, Chief Financial Officer

Hi, Kevin. Thanks for your question. Let me take your question today. Yes, you're right. The Q2 number that we just had was a good quarter for us. If I may take a few minutes, or just probably just one minute to summarize here, the three key highlights for Q2 of 2026 would be: number one, our quarterly revenue exceeded Renminbi 100 million mark; number two, we recorded the fifth consecutive quarter of US GAAP profit; and number three, operating activities brought in net cash inflow of Renminbi 23.3 million.

And hitting all these three milestones in one quarter is significant. It reflects a thriving business where revenue is at a high level. We are delivering GAAP profitability while we also generate net cash inflow, which is very important. And Chris and I are very pleased with how this quarter has unfolded. As we look into the rest of 2026, our stance remains cautiously optimistic. We are encouraged by the business growth trajectory with the global EngageLab business delivering standout momentum.

Meanwhile, we will continue to exercise strict cost discipline. Even so, we still allocate resources selectively to high-priority initiatives that we believe are critical to driving durable and long-term sustainable growth. I hope this answers your question, Kevin.

Calvin Wong, Analyst at Spica Capital

Very clear.

Shannon Bong, Chief Financial Officer

Thank you.

OPERATOR

Thank you. And our next question is going to come from Jack Sun with Gelonghui Research. Your line is open.

Jack Sun, Analyst at Gelonghui Research

Thanks, management, for taking my question. I'm Jack Sun from Gelonghui Research. I noticed from the press release by the company and the commentary made by Chris during the call, you are launching various new services such as SilentAuth and Modelix, together with some upgrades to GPTBots. My question is, are they necessary, and how do they benefit the company as a whole?

Wei Dong Luo, Chairman and Chief Executive Officer

Hi Jack, good to hear from you. Let me take this question. Those services and upgrades that you mentioned are purpose-built upgrades built upon our existing customer engagement and AI platforms. They are not disconnected new ventures, and this is an important differentiator when compared to others in the space. We are not building all these new tools or services just to follow the flavor-of-the-month trend. Instead, every single new capability ties back to our core business.

I think, for example, SilentAuth expands EngageLab's value proposition beyond traditional messaging. It reduces user log-in drop-off, it strengthens the fraud defense, and it gives us high-value authentication revenue from our existing global enterprise clients. And for Modelix that you mentioned also, it addresses the fragmentation enterprises face juggling different AI model vendors. It acts as our unified AI model gateway, cutting integration overheads for customers, and it simplifies billing and operation, and feeds multimodal capability directly into GPTBots to make our AI agent more powerful for end users.

And just to share, even our own internal IR team used Modelix to prepare the Q2 deck that we uploaded to the IR website today. It's simply because Modelix has so many different large language models that we can pick and choose from within one single platform. There's no need to switch between different large language model accounts for different companies. It is also very easy to use. So I will sincerely encourage everyone on this call to try out Modelix too.

As for our GPTBots platform upgrades, it advances our enterprise AI agent offering. It expands multi-agent orchestration, multimodal workflow, and no-code tooling. And this drives upsell among our large existing customer base and attracts new clients seeking production-ready AI automation and not just AI prototypes. So if I may summarize, collectively I believe these upgrades or new products that you mentioned reinforce our integrated platform strategy, increase stickiness within our current accounts, help raise our average contract value, and also represent a new revenue stream while leveraging our existing global sales, compliance, and infrastructure footprint. I hope this answers your question, Jack.

Jack Sun, Analyst at Gelonghui Research

Yeah, yeah, that's very clear. Thanks a lot, operator. I have no more question.

OPERATOR

Thank you, thank you. And as a reminder, to ask a question, please press star 11 on your telephone. I am showing no further questions at this time. I will now turn the call back over to Christian for closing remarks.

Christian Arnell, Investor Relations

Thank you everyone for joining the call tonight. If you have any further questions or comments, please don't hesitate to reach out to the IR team. This concludes the call. Have a good evening. Thank you very much.

OPERATOR

Thank you. This does conclude today's conference call. Thank you for participating, and you may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.