Aurora Mobile Limited — FY2022 Form 20-F
Reporting period: Year ended December 31, 2022. This is an annual report, not a standalone Q4 filing; separate Q4 financial results are not provided in the filing text. Financial statements are prepared under U.S. GAAP. Amounts below are in RMB unless otherwise stated.
Business context and reporting period
Aurora provides mobile app developer services and data analytics applications, including market intelligence, financial risk management and location-based intelligence. It exited targeted marketing by the end of 2020 and has since focused on SaaS Businesses. In 2022, developer services generated RMB235.2 million of revenue and vertical applications RMB93.6 million.
Aurora is a Cayman Islands holding company and consolidates its China-based VIE through contractual arrangements rather than equity ownership. The VIE generated 96.7% of external revenue in 2022. In July 2022, the VIE’s minority shareholders transferred their interests to Guangyan Chen, leaving Weidong Luo with 80% ownership and Chen with 20%.
Key financial metrics
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | RMB328.8 million (US$47.7 million) | RMB357.3 million |
| Gross profit / margin | RMB225.8 million / 68.7% | RMB264.9 million / 74.1% |
| Operating loss | RMB132.4 million | RMB138.1 million |
| Net loss | RMB108.5 million (US$15.7 million) | RMB140.6 million |
| Operating cash flow | RMB17.5 million used | RMB76.7 million used |
| Investing cash flow | RMB26.9 million provided | RMB26.4 million provided |
| Financing cash flow | RMB148.0 million used | RMB54.5 million used |
| Cash, cash equivalents and restricted cash, year-end | RMB116.3 million | RMB254.6 million |
| Total assets / liabilities, year-end | RMB433.1 million / RMB274.9 million | RMB595.5 million / RMB380.1 million |
| Short-term loan, year-end | RMB5.0 million | RMB150.0 million |
Year-end shareholders’ equity was RMB127.7 million, alongside RMB30.6 million of redeemable noncontrolling interests. Current assets of RMB176.6 million were below current liabilities of RMB255.4 million. Lease liabilities totaled RMB25.1 million; these are separate from the short-term loan.
Material changes and unusual items
- Revenue fell 8.0% year over year. Management attributed the decline mainly to COVID-19-related weakness in macroeconomic conditions. Paying customers rose to 6,060 from 3,516, mainly following the SendCloud acquisition, while average spending per customer declined to RMB54,261 from RMB101,627.
- Gross profit declined 14.8% and gross margin fell 5.4 percentage points, primarily because of higher JG Alliance channel costs and media costs.
- Operating expenses fell 11.1% overall: R&D declined 25.3% and sales and marketing declined 15.5%, while G&A rose 32.0%. The G&A increase included RMB22.4 million of long-lived asset impairment related to the one-time “Going Cloud” project.
- Net loss narrowed by 22.9%. Other income was RMB26.3 million, compared with a RMB2.9 million expense in 2021, including RMB31.5 million of government grants; this helped offset operating losses and investment impairments.
- Operating cash use improved to RMB17.5 million from RMB76.7 million. Cash and restricted cash nevertheless decreased by RMB138.3 million, with financing cash use including RMB188.0 million of loan repayments, partly offset by RMB43.0 million of new short-term borrowing. The 2021 RMB150.0 million bank loan was repaid in April 2022; the remaining RMB5.0 million loan was due in October 2023.
- In March 2022, Aurora acquired 52.37% of SendCloud for RMB34.5 million. The filing reports RMB16.8 million of unpaid acquisition consideration at year-end.
Outlook, risks and contingencies
- Management expects SaaS Businesses to remain the key revenue driver and says cash on hand should meet anticipated general corporate needs for at least 12 months. It gives no numerical revenue or profit guidance and cautions that further funding may be needed. No cash dividends are planned for the foreseeable future.
- Management identifies growth in paying customers and spending, product development, access to data, AI capabilities and margin improvement as important business drivers. It also expects continued investment in R&D, sales and marketing, and infrastructure.
- The VIE structure is a central risk: investors own shares in the Cayman holding company, not the China operating entities. Contract enforceability is uncertain, the VIE generated 96.7% of 2022 external revenue, and the company says loss of control could require deconsolidation. Luo also held 76.1% of total voting power as of February 2023.
- China regulatory risks include evolving cybersecurity, personal-information, foreign-investment and offshore-listing requirements. The filing says the VIE’s financial risk management services may be viewed as credit reporting requiring a license; the scope is unclear. CSRC overseas-listing filing measures became effective after year-end, with implications for existing issuers and future financings subject to applicable filing requirements.
- COVID-19, economic weakness, customer payment risk, competition, data-security incidents, foreign-exchange movements and restrictions on moving cash from China may affect results or liquidity. Aurora also disclosed underpayment accruals for employee social-insurance and housing-fund contributions, and certain unregistered leases that could lead to fines.
- Nasdaq notified Aurora in December 2022 that its ADS bid price had been below US$1.00 for 32 consecutive business days; the stated deadline to regain compliance was June 26, 2023. The PCAOB restored inspection access to China and Hong Kong firms in December 2022, and Aurora said it did not expect to be identified under the HFCAA after filing this report; future inspection access remains relevant.
- Management concluded internal control over financial reporting was effective as of December 31, 2022. The auditor issued an unqualified opinion on the financial statements but did not attest to internal-control effectiveness.
Important facts for investors to verify
- Whether revenue and average customer spending stabilize, and whether SendCloud contributes sustainable growth and cash generation.
- Whether operating cash flow improves and cash remains sufficient given negative working capital, lease obligations and limited ability to move funds from China.
- The amount, timing and settlement terms of remaining SendCloud consideration and any further acquisition-related obligations.
- Current status of the Nasdaq minimum-bid-price requirement and compliance with applicable PRC licensing, data-security and overseas-listing filing requirements.
- Whether the VIE agreements remain enforceable and effective, given the VIE’s revenue concentration and the controlling shareholder’s influence.
- Reconciliation of the reported RMB116.3 million in cash and restricted cash with the balance-sheet cash figure of RMB116.1 million and the locations and accessibility of those balances.