Hello ladies and gentlemen, thank you for standing by for iClick Interactive Asia Group Limited’s Third Quarter 2020 Financial Results Conference Call. At this time all participants are in listen-only mode. After management’s prepared remarks there will be a question-and-answer session. Today’s conference call is being recorded. I will now turn the call over to your host Ms. Lisa Li, Senior Manager of Investor Relations. Lisa, please go ahead.

Hello, everyone, and welcome to iClick’s Third Quarter 2020 Financial Results Conference Call. The Company’s results were issued earlier today and are posted online. You can download the earnings press release and sign up for our distribution list by visiting the IR section of our website at ir.i-click.com.

Thank you, Lisa and welcome to the call, everyone. Despite the continued uncertainty brought on by both a global pandemic and the political unrest, I’m excited to share that iClick’s reported another record quarter of financial results, including record revenues and gross profit. These results continue to underscore the value of our innovative data analytics to our customers and our ability to meet the needs of rapidly changing online consumer behaviors in China. Our total revenue reached 68 million in the third quarter, an increase of 27% from the third quarter of last year. We are also pleased to have reported record gross profit of 20 million, an increase of 48% from the third quarter of last year. Our adjusted net income for the third quarter of 2020 was 2.4 million versus a loss of 0.5 million in the third quarter of 2019. We have now achieved four consecutive quarters of positive adjusted net income. The record financial performance in the third quarter demonstrates that our data-driven solutions are resonating with brand customers and that we enjoy significant operating leverage in our business model, allowing us to be increasingly profitable as we achieve additional economies of scale.

Thank you, TJ. I’m happy to report another successful step of financial results for the Company. As TJ mentioned earlier, we reported record revenues and gross profit in the third quarter. Furthermore, adjusted EBITDA and adjusted net income also reached record levels for any third quarter in our Company’s history. Our revenue for the third quarter of 2020 grew to 68.9 million, an increase of 27% from 54.2 million for the same period of the prior year. As TJ mentioned earlier, these results are attributable to the increased contributions from existing Marketing Solutions and Enterprise Solutions segments for the third quarter of 2020 compared to the same period in 2019. The revenue from Marketing Solutions grew to 60.1 million for the third quarter of 2020, an increase of 17% from 51.6 million for the third quarter of 2019, primarily as the result of growing market demand from marketers. The revenue of our core business has steadily increased overtime and has given us the ability to improve our platform and branch out into other opportunities. The revenue from Enterprise Solutions was 8.8 million for the third quarter of 2020, an increase of 236% from 2.6 million we reported for the third quarter of 2019. The robust growth was driven primarily by the increasing immediateness for online and off-line customers’ behavioral data integration. We continue to build on our success as revenues in this division continue to increase. As stated before, the higher gross margins in Enterprise Solutions may continue growth in this division, a strategic priority for us. The gross profit for the third quarter of 2020 was 20.1 million, an increase of 48% versus 13.6 million for the comparable year-ago period. Driving the higher gross profit was revenue growth from both the Marketing Solutions and Enterprise Solutions segments, the latter of which generates significantly higher gross margins. I would like to provide further color on the GAAP net loss of 7.1 million in the third quarter. The net loss result primarily from the one-off fair value losses of convertible notes and divertive liabilities of 7.8 million as our stock price performance remained strong during the third quarter 2020.

Thank you, Terence. These results represent significant hard work that despite the challenging environment has once again brought us to record setting performance. We continue to execute on our major objectives and continue to grow our client base, we expect to have our Marketing Solutions business to continue on a stable path, growing organically toward profitability. At the same time, we will continue to grow our Enterprise Solutions business as we continue to develop the appropriate resources to promote its development. We expect that in the near future, we will launch a suite of standard products associated with Enterprise Solutions to help us tap into the midsized client. This initiative will help us expand our overall market share, while also pursuing a new client base. Also, as we continue to be recognized as a leading in integrated enterprise and marketing cloud platform for China’s consumer market through our tailored digital analytics services for brand customers, we will integrate on the launch products on four key platforms. Programmatic Marketing platform, Consumer Experience platform, Social Commerce platform and the Consumer Life Cycle Data Management platform. These new initiatives will empower clients to boost sales from different combinations of product lines. We will continue to update you on our progress when we launch any products. Overall, we are very proud of our achievements in the third quarter as we reached record revenue and gross profit, made product enhancements and upgrades to further benefit our brand customers and was recognized by industry awards and accolades for our capabilities, which indicates we are on-track to reaching our ultimate goal. This concludes our prepared remarks. Thank you for joining us on today’s call. We will now open the call to questions. Operator, please go ahead.

Our first question is from Thomas Chong from Jefferies. Please go ahead.

Thanks management for taking my questions and congratulations on a solid set of results. My first question is about the 2021 business outlook. We just read in the press release, you have highlighted that the COVID may still have some impact coming into 2021. So just wonder any thoughts about Q1 next year or the full-year 2021, across the online Marketing and Enterprise Solutions. And my second question is about our M&A strategies. Can you comment about the M&A on CMRS. On top of SaaS as well as online marketing, it seems that it is also complementary to our online Marketing Solutions business. So just want to get a sense about how it can generate synergies to iClick?

So Hi. I’m Terry. Thank you very much for your first question. I will just like to briefly sum up my point here. So first, as you can see, the pandemic in China is actually under control, and the economy of China is being recovered very rapidly. So we can see that starting from quarter three, a lot of the sectors that were impacted by the pandemic in the first half, actually started to coming back to the normal track. So, for example, for the travel sector, it was hard hit in the first half. But now, we can see it regaining business. It is slightly increasing in the quarter four. And for the sectors, like games, which were increasing quite well in the first half, it is still increasing. So we expect this trend of the best growing sectors to continue into 2021. So overall, we think, last year, for the outlook of last year, if the pandemic doesn’t bring any new change, hopefully, the economy of China will be back to the pre-pandemic level. Thank you.

Okay. So to answer your second question, first, I would like to emphasize again on our M&A strategy. So like we mentioned in the past, right now, we mainly focus on the M&A with the Enterprise Solutions, SaaS providers. And there were four major divisions that we focus on. First, we will mainly look at the providers, which are about customer behavior data analysis and also big data analysis and also AI technology. And second, we will look at enterprises that provide services or products about KOL, or Livestream, because we think that this can better help our clients achieve more consumers in the future. And the third direction is the Customer Experience Management, which is CEM for short and - question is the market product and surface. So as we now in the U.S., there is a very well known market company, which called the Hotspot. They are already entered by email marketing. But in China, still people to use WeChat here more than e-mails. So here, for the market products, we will focus on WeChat. So this is the first point I will make. And the second, talking about the rationale and the strategy of the CRM app. So I would say this company is very similar to our business and services. It focuses on the KOL and also it is very market-oriented. So it can provide a supplementary services to our company. And besides that, it can also help us expand the overseas market better, because they have been better operating in the overseas market, they also have very strong capabilities of data analysis. And more importantly, they have a very strong client base, including . So we hope that in the future, this company will have more joint cooperation with us and better integrated services and products into our ecosystem. Thank you.

The next question is from Brian Kinstlinger from Alliance Global Partners. Please go ahead.

Great, thanks so much. I’m curious how many enterprises you have built many apps for in the third quarter year-to-date in your total installed base? And then what percentage of your enterprise revenue today is recurring, and talk about the successes you are having in selling second and third applications to these customers? Thank you.

Brian this is Terence. During the quarter, we had around 40, 50 new clients, and the total installed base was already over 100 clients, within which around 20% was recurring. Thank you.

And your ability to sell second and third applications with these customers?

Can you repeat the second part?

Yes, I was curious, your ability to cross-sell new applications into your existing client base?

We are currently working on some standardized and new applications. Maybe TJ can add more color on that. TJ.

. So there were three major strategies that we are taking. So for the expanding of Enterprise Solutions, the first, we will mainly focus on the organic growth of the old clients that we have already got in 2019. We will try to have them use this year’s products and services that we have been providing to them for a while. So we can see that during this process, there was a huge space for the up-sell. And second, we will also try to transition more Marketing Solutions clients to be the Enterprise Solutions clients. Of course, because the Enterprise Solutions, right now, mainly focused on the consumer goods industry. So when we transition the Marketing Solutions clients, we will also focus more on this sector. And with the development of our new products and also the capabilities that we integrate from our M&A partners in the future, we expect to see a bigger transition of the clients. And also third is our development of standard products. We hope that in the future, after we develop the standard products, we can hopefully acquire more mid-end clients. Yes.

The next question is from Fang Jiang from Benchmark. Please go ahead.

My question is really on your relationship with Tencent, particularly with the recent strength in relationship. How should we look at the potential growth for your Enterprise Solutions next year?

Okay. So Tencent and our company have been maintaining a very good cooperation relationship for a long time, whether in the services of Marketing Solutions or in Enterprise Solutions. We are actually one of the sixth derivative businesses providers for Tencent company, including Tencent’s Smart Retail, Enterprise WeChat, WeChat Payment, Mini Program, Tencent Cloud and also Tencent Livestream. So we have a lot of touch points with Tencent company in the cooperation. So for the first one, we have co-developed a new sales products with Tencent Cloud platform together. And second, earlier, we also have worked with Tencent tier with them in cultural recommendation platforms together to develop automatic recommendation system, which can help our Enterprise Solutions. And also in terms of the cooperation with Tencent Advertising segment, we have some very successful case like the Kans, K-A-N-S, case we had earlier. So we believe that with more successful cases like this, we can easily touch more new clients in the future and expand our market. And also fourth, we are also working with Tencent International Business Group to provide SaaS solution in terms of the small retail and smart travel. And we expect to expand our market share in Hong Kong, South Korea and Thailand markets. Yes. So this is the brief of our cooperation with Tencent company.

The next question comes from Darren Aftahi from ROTH Capital Partners. Please go ahead.

Hi thanks for taking my questions. Just on the Enterprise Solutions growth. Could you kind of talk about what the relative mix is between existing clients contributing to growth versus new? And I’m just curious about what retention rates are right now. Thanks.

So for the Enterprise Solutions, this year, we have acted about 100 clients, which we almost achieved our annual target. And that will start at the beginning of this year. And last year, we have acquired about 100 clients, and some of them have already recurred and for those two started working with us later and they still haven’t recurred yet. So I would say, in total the recurring rate of the existing clients is about 10%. And the other clients they were in the first area of trial.

Next question comes from Colin Liu from China Renaissance. Please go ahead.

So I will just fully translate for myself. I just want to ask about if there are timetable of potential integration timetable that management can share with us regarding the CMRS acquisition? And about what time from now on, we can see the very clear financial impacts? And also operational-wise, when are we going to see the company start capitalizing the cross-selling opportunities from these two sides, please?

Okay. So hi, I’m TJ. To answer your first question, so why we briefly introduced the version now and launch it of M&A of CMRS. First, about the time line, we expect to finish the integration of CMRS in about two to three quarters. So hopefully, by mid-2021 or at least in the quarter three of 2021, we can finish the integration with CMRS and also become more adjusted to their team and products.

The next question is from (Ph) from Bank of America. Please go ahead.

Thank you very much TJ and Terence good evening and congratulations on the terrific results. I was wondering, looking at the gross billings, is down slightly, down 7% year-on-year because we are trying to optimize client base in regard specifically to credit control. Now with a strong cash position, particularly after the capital raise in a couple of months ago. Are we done with that optimization? And what should we expect in terms of the traditional business and gross billings going forward? And secondly, looking at the strong growth in Enterprise Solutions. Looking at the ASP trends and looking at the strong client base of 100-plus clients probably in the fourth quarter, how are we comfortable with the upcoming year and the makeup of the Enterprise Solutions as a percentage of revenue? Thank you.

So hi, I’m TJ. Thank you very much for your question. So to briefly answer the question of gross billing. I would say, because of the pandemic of China, some of the sectors have been hard hit, including the automobile sectors and the travel sector. So that is why we intentionally selected the clients who are performing better than the average of their industry. So right now, what we focus most is the quality of clients, not just the number of gross billing. So we really hope that we can develop more clients and sectors that can match the strategies of our Enterprise Solutions who can develop sustainably with our business development. So overall, I will say, although we have seen slight decrease in the gross billing, our revenue in total is still growing quite healthy. So to answer your second question is like what will be the growth rate of the Enterprise Solutions. So we expect it to still be growing at a very fast pace. So hopefully, we made the contribution of Enterprise Solutions to the total revenue up to 20%. But it depends on the specific market conditions last year.

Due to time constraints, we will be taking no more questions. I would like to turn the conference back over to Lisa Li for closing remarks.

Hi. Thank you all once again, for joining us today. Due to the time constraints, we need to wrap up the call today. If you have any further questions, please feel free to contact iClick’s Investor Relations department through the contact information provided on our website. Thank you.

This concludes this conference call. You may now disconnect your line. Thank you.