Aurora Mobile Ltd. — FY2021 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2021. This is an annual report; the supplied filing does not provide a standalone 2021 fourth-quarter income statement or cash-flow results.
Business context
Aurora provides mobile-app developer services and data-analytics SaaS solutions in China, including market intelligence, financial risk management and location-based intelligence. It reported about 1.44 billion monthly active unique mobile devices in China in December 2021. The company exited targeted marketing by the end of 2020, making 2021 its first full year focused on SaaS businesses.
Aurora is a Cayman Islands holding company. Its China operations are conducted mainly through a variable interest entity (VIE) under contractual arrangements, rather than direct ownership. Approximately 95% of 2021 external revenue came from the VIE.
Key financial metrics
| Metric | FY2021 | Prior comparable period |
|---|---|---|
| Revenue | RMB357.3 million (US$56.1 million) | RMB471.6 million in 2020 |
| Gross profit / margin | RMB264.9 million; 74.1% | RMB206.2 million; 43.7% in 2020 |
| Operating loss | RMB138.1 million | RMB189.8 million in 2020 |
| Net loss | RMB140.6 million (US$22.1 million) | RMB225.1 million in 2020 |
| Basic and diluted loss per share | RMB1.78 loss (US$0.28) | RMB2.91 loss in 2020 |
| Net cash from / (used in) operations | RMB76.7 million used | RMB75.8 million provided in 2020 |
| Cash and cash equivalents | RMB90.6 million | RMB356.1 million at year-end 2020 |
| Restricted cash / short-term investments | RMB164.0 million / RMB30.0 million | RMB0.1 million / RMB80.0 million at year-end 2020 |
| Total assets / liabilities | RMB595.5 million / RMB380.1 million | RMB787.4 million / RMB466.2 million at year-end 2020 |
| Short-term bank loan | RMB150.0 million | None at year-end 2020 |
The RMB150 million one-year bank loan bears fixed interest of 4.35%; RMB157.9 million of restricted cash was pledged as collateral. The US$35 million convertible notes were fully repaid in April 2021. The filing reports current assets of RMB381.1 million and current liabilities of RMB373.6 million. Cash, restricted cash and short-term investments totaled RMB284.6 million, but a substantial portion was restricted or pledged.
Material changes versus 2020
- Revenue declined 24%, principally because targeted-marketing revenue fell from RMB213.7 million to zero after the business exit. SaaS revenue rose 39% to RMB357.3 million: developer services increased 46% and vertical applications increased 24%.
- Gross profit rose 28% and gross margin expanded to 74.1%, reflecting the shift away from lower-margin targeted marketing.
- Operating expenses were broadly flat at RMB403.1 million. R&D rose 18% to RMB206.7 million and sales and marketing rose 14% to RMB116.4 million; general and administrative expense fell 33% to RMB79.9 million, mainly due to lower bad-debt provisions and no repeat of the prior-year long-lived-asset impairment charge.
- Operating cash flow moved from positive RMB75.8 million to negative RMB76.7 million. Cash, cash equivalents and restricted cash fell by RMB101.6 million during the year.
- Long-term investment impairment was RMB25.4 million in 2021. The company also recorded a RMB6.1 million gain from a foreign-currency swap and RMB20.9 million in government grants.
Outlook, risks and other items
- Management outlook: The filing provides no numerical revenue, profit or margin guidance. Management expects SaaS businesses to remain the principal growth driver and says available funds should meet general corporate needs for at least 12 months. It also expects continued spending on R&D, sales and marketing, and infrastructure.
- Near-term cash needs: The filing estimates approximately RMB193.8 million of 2022 cash requirements, including repayment of the short-term bank loan, operating leases and the SendCloud acquisition. It estimates about RMB12.0 million of lease obligations for 2023–2024.
- Subsequent events: In March 2022, Aurora completed its acquisition of 52.37% of SendCloud for RMB34.5 million cash and issued 1,366,128 restricted shares to certain SendCloud managers, subject to a nine-month service vesting period. In January 2022, it obtained a revolving credit line of up to RMB10 million; it drew the full amount on March 31, 2022 at 7.5% annual interest.
- Principal risks: Dependence on VIE contractual arrangements and uncertainty in PRC regulation; evolving cybersecurity, data-privacy, credit-reporting and overseas-listing requirements; potential limits on cash transfers from China; and PCAOB inspection restrictions that could threaten U.S. trading eligibility under the HFCAA. The company said it had not received cybersecurity-review inquiries or sanctions as of the report date, but the scope and application of relevant rules remained uncertain.
- Governance and audit: Management concluded internal control over financial reporting was effective as of December 31, 2021. The auditor did not attest to that conclusion; the company cited its emerging-growth-company exemption. The auditor issued an unqualified opinion on the financial statements, while noting it was not able to conduct a PCAOB inspection in China.
- Other: The company reported no material pending legal proceedings and no cash-dividend plan for the foreseeable future. It recorded RMB30.2 million of share-based compensation in 2021.
Important facts for investors to verify
- Reconcile the annual-only financial results with any separate Q4 release; this 20-F does not give standalone fourth-quarter figures.
- Assess whether SaaS revenue growth can offset the loss of targeted-marketing revenue, and whether the 74.1% gross margin is sustainable.
- Review cash availability after distinguishing unrestricted cash from the RMB164.0 million of restricted cash, including the amount pledged against the bank loan; track repayment and subsequent borrowing.
- Examine the VIE’s net liabilities of RMB326.2 million and the legal, licensing and cash-transfer risks attached to relying on contractual control.
- Monitor PRC cybersecurity, personal-information, credit-information and overseas-listing rules, as well as PCAOB inspection and HFCAA developments.
- Verify the SendCloud acquisition’s integration, results, funding and share-based consideration, and the company’s progress toward reducing operating losses and cash burn.