Q1 2019 iClick Interactive Asia Group Ltd Earnings Call

May 29, 2019 PM UTC 查看原文
ICLK.OQ - iClick Interactive Asia Group Ltd
Q1 2019 iClick Interactive Asia Group Ltd Earnings Call
May 29, 2019 / 12:00PM GMT 

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Corporate Participants
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   *  Lisa Li
      iClick Interactive Asia Group Limited - Senior Manager of Investor Relations
   *  Terence Li
      iClick Interactive Asia Group Limited - CFO
   *  Sammy Hsieh
      iClick Interactive Asia Group Limited - CEO & Co-Founder

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Conference Call Participants
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   *  Bo Pei
      Oppenheimer & Co. Inc., Research Division - Research Analyst
   *  Darren Aftahi
      Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst
   *  Nelson Cheung
      Citigroup Inc, Research Division - Associate
   *  Fawne Jiang
      The Benchmark Company, LLC, Research Division - Equity Research Analyst

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Presentation
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Operator   [1]
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 Hello, ladies and gentlemen. Thank you for standing by for iClick Interactive Asia Group Limited's First Quarter 2019 Financial Results Conference Call. (Operator Instructions) Today's conference call is being recorded.

 I'll now turn the call over to your host Ms. Lisa Li, Senior Manager of Investor Relations. Lisa, please go ahead.

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 Lisa Li,  iClick Interactive Asia Group Limited - Senior Manager of Investor Relations   [2]
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 Hello, everyone, and welcome to iClick's First Quarter 2019 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.

 Sammy Hsieh, our Chief Executive Officer and Co-Founder; and Terence Li, our Chief Financial Officer, will provide an overview of the quarter, and then, we will turn the call over to Q&A.

 Before we continue, please know that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's 20-F as filed with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements except as required under applicable law.

 Please also know that iClick's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. iClick's press release contains a reconciliation of the unaudited non-GAAP measures to the most directly comparable unaudited GAAP measures.

 I will now turn the call over to our CEO and Co-Founder, Sammy Hsieh. Sammy, please go ahead.

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 Sammy Hsieh,  iClick Interactive Asia Group Limited - CEO & Co-Founder   [3]
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 Thank you, Lisa. Hello, everyone, and thank you for joining us today. We had a good start to 2019 with strong first quarter results despite a challenging macro environment. In addition to making significant progress with our Enterprise & CRM Solutions, we achieved another quarter of record high gross profit and generated substantial growth in adjusted EBITDA.

 2019 marks iClick's 10th anniversary. And when I reflect on all the hard work to get us to this point, I'm proud of what we have accomplished and excited about the company's prospects as a fully integrated CRM and marketing cloud platform. Terence will discuss our financial results in greater detail later in the call, but I would like to point out that generally speaking, our results in the first half of the year are historically seasonally slower than the second half. This year, this seasonality has been compounded by extraordinary macro forces. That being said, I'm very pleased with the robust performances we achieved and the traction we have made with our enterprise solution business, which I will now discuss.

 You may have noticed that in our earnings announcement, we broke out revenues for our enterprise solutions and marketing solutions business for the first time. As you may recall, we launched the strategic growth initiative to provide SaaS-based enterprise solutions last year. The change in our revenue reporting is to reflect our progress in moving beyond the online marketing business as we have begun to generate solid contribution from enterprise solution business.

 We took a big leap forward in enterprise solutions early this year with the acquisition of controlling interest in Changyi, a leading independent software vendor that provides smart retail and CRM solutions with the capability of consolidating online and off-line customer data.

 China is at an inflection point with more off-line business going online, while generating online traffic is getting more expensive, brand marketers are eagerly looking for cost-effective ways to improve their sales performances. Therefore, managing relationships with customers during this transition is imperative, and brand marketers are facing the challenge of integrating their online and off-line customers' data to generate useful insights for successful marketing campaigns, customer retention and increased sales performances.

 As China undergoes this significant digital transformation in smart retail, we believe that iClick is in the right place at the right time to help these businesses with our fully integrated marketing and enterprise solutions, which enable brand marketers to unlock the full potential of online to off-line business.

 Earlier this month, we announced a strategic partnership with BTG WELINK, the online servicing arm of Beijing Tourism Group, and Tencent Holdings, China's leading provider of Internet value-added systems. The partnerships represent great opportunities for our enterprise solution business as we help BTG establish a new customer relationship management system for a network that currently spans across more than 7,000 retail outlets, including hotels and lodging facilities, retailers, travel and transportation providers, restaurants and caterers and entertainment venues. Under the new partnerships, customers of the BTG business will have access to a wide range of mobile services powered by iClick and Tencent, including reservation, quick pay, spending notification via the official WeChat account, mini programs and WeChat Pay, et cetera, et cetera.

 With iClick's integrated marketing and CRM cloud solution riding on Tencent ecosystems, we hope to support BTG to achieve more targeted marketing and equip BTG's frontline staff with a more personalized customer servicing tool.

 We are pleased with the BTG partnership and consider this relationship to be a milestone achievement for our enterprise solutions. Additionally, we expect to see strong demand from a number of top-tier clients for our enterprise solution in the quarters ahead. We believe that iClick's strength in data and technology will help unleash the enormous potential of the smart retail market, which is estimated to reach USD 8 trillion by 2022.

 Furthermore, we strongly believe that iClick is a natural fit for implementing an SaaS-based CRM solutions for 3 distinct reasons. The first one, we have 10 years of experiences in advertising, marketing and data analytics, which clearly differentiates us from our peers. The second one, we provide an efficient total solution that allows marketers to target new customers and increase sales from existing customers. The third one, iClick's experienced account servicing team have worked with more than 2,000 top-tier accounts.

 Now that I have provided a robust picture about the early success and potential of our enterprise solution business, I would like to discuss our core marketing technology business, which is always our bread and butter. We remain fully committed to building our core business where we foresee organic growth from the total addressable market.

 Last month, we announced a joint venture with VGI Global Media, a leading online to off-line solution provider across advertising, payment and logistic platforms in Thailand. The joint venture will give us better access to a geographic region with a rapidly growing digital market. Our ability to bring effective, flexible and targeted mobile and new media products to the joint venture, while at the same time, align with one of the most successful media companies in South Asia, opens up the door to significant cross-border marketing and investment opportunities.

 Recently, we started to tap into China multi-channel network ecosystem, which has been expanding rapidly due to the growing significance of key opinion leader, marketing and brand communication in the countries. iClick is poised to deliver an integrated marketing solutions to local and international brands that supports both data-driven brand marketing and KOL marketing. We have established a network of over 300 mid- and top-tier KOLs, who are actively on Xiaohongshu, more commonly known as RED, one of the fastest-growing integrated social media and e-commerce platforms in China with over 200 million active users.

 Moving forward, our priorities for our marketing solutions business are to continue to focus on the Chinese markets to generate stable organic growth and enhance profitability within that market while simultaneously expanding our geographic reach and collaborate with complementary platforms such as VGI when those opportunities arise.

 As we approach the second half of the year, we are cautiously optimistic about our outlook for growth due to the current macro environment. Supported by strength and stability of our business model, we view ourselves as well-positioned for continued top line growth as our addressable market continues to grow rapidly. In addition, our core competency in marketing technology and data capabilities set a great barrier to entry, and there's huge potential for our enterprise solution business and its ability to enhance gross margins. Our healthy balance sheets coupled with an experienced management team and strong track record of execution form an excellent foundation from which we continue to aggressively seek opportunities.

 With that, I would now like to turn the call over to our CFO, Terence Li, to review the first quarter financials.

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 Terence Li,  iClick Interactive Asia Group Limited - CFO   [4]
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 Thank you, Sammy. Hello, everyone. I will start with a few key financial highlights for the first quarter. Please note that all figures given are in U.S. dollars, unless otherwise noted.

 During the quarter, revenue growth was solid. We generated another gross profit record, and adjusted EBITDA improved both year-over-year and on a sequential basis. Importantly, we made significant progress in our enterprise solutions business, which positions iClick for continued growth this year and into the future. As Sammy mentioned, given the importance of our enterprise solutions business to the company's future, we are now breaking out our revenue results between 2 areas: marketing solutions and enterprise solutions. This should provide you with a much better indicator of our ongoing evolution and how we are now looking at the business internally.

 We will no longer be providing revenue result for mobile solutions and other solutions in our earning release because mobile solutions always take a dominant 90% share of our marketing budget now, and we expect that will continue to grow and stay at a very high percentage.

 Total revenue grew 11% in the first quarter to $39.2 million from $35.2 million last year despite continued weakening of renminbi, which negatively impacted top line. Excluding the foreign exchange impact, we should see a healthy growth trend in our top line. On a currency neutral basis, total revenue indeed increased by 19% to $41.8 million.

 Revenue from marketing solutions grew to $37.8 million for the first quarter of 2019, up 7% from $35.2 million for the first quarter of 2018. On a currency neutral basis, revenue increased by 15% to $40.4 million for the first quarter of 2019 compared with the same period last year.

 Additionally, we generated $1.5 million in sales from our new enterprise solutions business. As a reminder, we began to see revenue from enterprise solution in the first quarter of 2019, so there was no revenue from this business in last year's first quarter.

 Gross profit once again improved to a record $12.4 million, up 53% from $8.1 million from last year's first quarter. The growth was mainly attributable to contribution from our enterprise solutions business and an improvement in marketing solutions margins.

 During the quarter, we continued to invest in high-margin new business in both marketing solutions and enterprise solutions. To drive adoptions, we increased marketing activities for both, expanding our sales force and providing high incentive for sales personnel. As a result, our total operating expenses increased to $14.6 million for the first quarter of 2019 compared with $9.9 million for the first quarter of 2018. We expect the trend of gross profit improvement with the greater mix of high-margin business, will continue to outpace the higher operating expenses increase in the short term and, ultimately, reflect positively in the bottom line.

 Our balance sheet remains healthy with cash and cash equivalents at $44.7 million as of March 31, 2019. We have no short-term investment deposits as of the end of March. As of December 31, 2018, cash and cash equivalents equaled $39.8 million.

 The rest of my discussions will focus on our non-GAAP results. You can find reconciliations of these non-GAAP results in the press release we posted earlier today, and which can be accessed at our Investor Relations website.

 Adjusted EBITDA grew to $538,000 from $408,000 (sic) [$409,000] for last year's first quarter. We also improved from an adjusted EBITDA loss on a sequential basis. This improvement primarily resulted from our gross profit improvement and again proved our ability to generate profits operationally on a sustainable basis.

 In addition, adjusted net loss attributable to iClick's shareholders, which excludes share-based compensation expenses, fair value losses on convertible notes and other gains, narrowed to $1.2 million for the first quarter of 2019 from an adjusted net loss of $1.4 million one year ago. You can find additional financial results in the press release we issued earlier today.

 I will end my prepared comments with our outlook for the 2019 second quarter. Our revenue outlook is based on current market condition and reflects our preliminary estimates of the market and operating conditions, expected foreign exchange rate and customer demand, all of which are subject to change.

 For the second quarter of 2019, we estimate revenue to be in the range of $46 million and $50 million, which translates to growth of between 8% and 17%. On a currency neutral basis, this would translate to growth between 15% and 24%.

 Growth profit margin expected to be between 26% and 28%. Based on current market conditions and assumptions, we are maintaining our full year guidance and continue to expect revenues between $200 million and $220 million and gross profit margin between 28% and 30% based on favorable growth in marketing solutions and the fast, current ramp-up from enterprise solutions in the second half.

 In closing, the online/off-line marketing environment may still face challenges, but we believe that we are well positioned for continued growth and financial improvement in 2019. Our enterprise solutions business is addressing a significant need in China, and iClick is expected to strongly benefit from providing effective and efficient solutions to marketers' current challenges.

 We remain focused on becoming the CRM and marketing cloud of choices for global brands looking to capture significant opportunities with Chinese consumers. And we are looking forward to the continued healthy development of both our enterprise solutions business and our marketing services business.

 I will now turn the call back over to Sammy for closing remarks.

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 Sammy Hsieh,  iClick Interactive Asia Group Limited - CEO & Co-Founder   [5]
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 Thank you, Terence. We are proud of our accomplishments in the first quarter, especially the progress we have made with our enterprise solution business. In our 10th anniversary year, iClick will continue to move forward to become a fully integrated CRM and marketing cloud platform, which has been a long-term goal for the company. There are tremendous opportunities for our company, and we are in a solid position to continue to grow our business and take market share.

 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.

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Questions and Answers
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Operator   [1]
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 (Operator Instructions) Our first question comes from the line of Fawne Jiang from Benchmark.

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 Fawne Jiang,  The Benchmark Company, LLC, Research Division - Equity Research Analyst   [2]
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 Congrats on a very solid quarter. My first question is actually regarding your gross margin -- gross profitability growth. It has been on a very positive trajectory. Just wonder whether you can elaborate the drivers behind it a bit more, in particular, I think, the margin -- the different margin profile for your marketing solution versus your enterprise solution front.

 And secondly, in relation to that, clearly, you had made a very solid headway on the enterprise solution part. Just wonder whether you can give us a bit more color on your pipeline in the coming quarters? And how should that shape up the guidance for second quarter into the [second term] as well as for the full year? That will be helpful.

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 Sammy Hsieh,  iClick Interactive Asia Group Limited - CEO & Co-Founder   [3]
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 Okay. Thanks for your questions. So I will let Terence to answer the gross margin question first, and then I will address the second part on the pipeline and also on number of customer sign-ups on the enterprise solution so far. Okay. Terence, can you give some color on the margin profile first?

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 Terence Li,  iClick Interactive Asia Group Limited - CFO   [4]
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 Okay. I think, first of all, we do see a better gross profit margin percentage in the first quarter because we do have a very good start of the enterprise solutions and also the sales of some high-margin marketing products, which is a result of our strategies and the effort of the teams to really focus on higher-margin business, both on the marketing side and also the enterprise solutions.

 Right now, the enterprise solutions do share around 70%-plus in terms of the gross margin at the moment, and this is basically a really good head start for us. And for the marketing solutions, we do improve that to the range of like 26% to 28%, and because we are focusing on some proprietary kind of traffic and also some applications that we get some exclusive right to sales. So basically that make us much better in the first quarter margin.

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 Sammy Hsieh,  iClick Interactive Asia Group Limited - CEO & Co-Founder   [5]
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 Okay. And also in terms of our customers sign-up, so as we mentioned in our previous conference call, so we want to focus on up-selling our current iClick customer database. So we want to focus on those top-tier multinational customers, those big names. So far in Q1, we have signed up 10 big key customers so far, and also we have over 10 customers in the pipeline.

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 Fawne Jiang,  The Benchmark Company, LLC, Research Division - Equity Research Analyst   [6]
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 Got it. Sammy, in regard of that, for each project just going through a little bit more understanding of the nature of the projects. Like what's the timeline you normally see from your signing up the customers versus the development stages as we move into the launch? And also, how typically these projects are in economics? At least, currently, whether you see the opportunities in terms of increase of size of the, I think, contract going forward as well as repeated pattern of different contracts going forward?

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 Sammy Hsieh,  iClick Interactive Asia Group Limited - CEO & Co-Founder   [7]
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 Okay. Thanks, Fawne, for the questions. I think, at this moment, so we are targeting those multinational customers. We need to do a little bit of the customization at the moment because every single big customer, they have their own internal system. So -- but from the signing, from the launch, it will take us around 30 days to 45 days for the launch.

 In terms of the charging model, we will charge our clients upfront on a seller fee and then we will charge our client on the maintenance fee, and then the maintenance fee will be based on 1 year contract terms. We do see that all these clients, so far, we have signed-up, they are highly recurring because we are owning the data and also all this software, which means that all our clients, they have to stay, with the system, in operating their mobile commercial business.

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 Terence Li,  iClick Interactive Asia Group Limited - CFO   [8]
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 This is Terence. And I'll just add on a bit to what Sammy said. And basically, I think on the first couple of contracts or the accounts that we have signed up, right now, we do have some initial fee recognitions, and we also have some remaining completion development fee and will amortize over the course of the contract value. So we will be able to recognize substantial or more than 50% of the contract at the beginning and then there will be some will be amortized over the course of the years.

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 Fawne Jiang,  The Benchmark Company, LLC, Research Division - Equity Research Analyst   [9]
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 Got it. Terence, also a quick follow-up there. For your annual guidance of $200 million to $220 million, what is the potential breakdown of your marketing solutions versus your enterprise solution here we are looking for?

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 Terence Li,  iClick Interactive Asia Group Limited - CFO   [10]
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 We still reiterate the guidance. I think since last quarter, we've been communicating with the market that we will be able to complete like 5%-plus revenue of the whole pie on enterprise solutions. So we are still targeting to complete $10 million, $15 million plus revenue. And given the traction that we have right now, we are still having confidence to go into that number.

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Operator   [11]
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 (Operator Instructions) Our next question comes from the line of Darren Aftahi from Roth Capital Partners.

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 Darren Aftahi,  Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst   [12]
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 Can you start with just some of the backdrop on the marketing services business? Just how much sort of risk have you factored into your current revenue guidance right now in terms of just kind of what's going on in the general economic environment?

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 Sammy Hsieh,  iClick Interactive Asia Group Limited - CEO & Co-Founder   [13]
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 Thanks, Darren, for the questions. So I think we do see that there's some impact from the macro environment, especially with uncertainties associated with the U.S. and also the China trade war. I think, first, a little bit of the macro sentiment. But we do see that we are in a very good position because what we are offering to our client at a certain level, performance-based marketing, which means that the marketing budget they spend, which we'll be tying in with some kind of result we are bringing to our client. So in that sense, we think that on the marketing solution part, that will be kind of like resilient to the slow economy.

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 Terence Li,  iClick Interactive Asia Group Limited - CFO   [14]
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 And just to add on Sammy's statement, I think on our usual experience, we usually see stronger seasonality into the second half of the year. And right now, I think we still believe that trend will continue and expect the momentum to gradually improve in the second half with better visibility now that especially from some of our clients that we do see some of them holding off some budget, but we expect to see them gradually picking up and also spending in the second half of the year.

 And we're also seeing some new verticals and verticals that have less impact on the macro, including some of the consumption products, education, luxury brands that we work with and still remain a relatively stable growth as of now. And just I want to highlight also that, I think, we have a [request] stop or has stop on the enterprise solutions. So it is possible to see that there would be also some more ramp-up into second half of these new solutions. And with all these contributions, we are still maintaining the full year guidance at the moment based on all the conditions that we could assess.

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 Darren Aftahi,  Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst   [15]
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 That's helpful. And just one more, if I may. On your enterprise solutions business, could you talk about which verticals you're sort of seeing traction with in terms of current business? And then as you kind of look at your pipeline and perhaps a little bit farther down for the year, which verticals are you seeing kind of traction in terms of business today versus the kind of business in the next 6 to 12 months?

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 Sammy Hsieh,  iClick Interactive Asia Group Limited - CEO & Co-Founder   [16]
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 Darren, currently, we are focusing on a couple of industries. So the first one is cosmetic products because we see that for the cosmetic products, they are kind of like -- we do not have any of the impact, no matter how good or how bad the economy is. And the second one is we targeted those like traditional retail because given the current situation. So all these traditional retailers, they need some help to transform their off-line business into more like a mobile business so that they can improve their efficiency. And also now, we are focusing on those like food and beverages. So we think that these 3 categories -- industry will be our core focus in the upcoming 12 months.

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 Darren Aftahi,  Roth Capital Partners, LLC, Research Division - MD & Senior Research Analyst   [17]
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 Just the last one for me. How much stock did you buy back in the quarter?

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 Terence Li,  iClick Interactive Asia Group Limited - CFO   [18]
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 Okay. I think we stopped some of the buyback programs in the first quarter, but we have capital always and using our cash. Our priority is still on doing our business and funding our new business. So I could tell you, as of today, the money that was spent on the buyback is still less than $1 million in value. So that's the latest conditions. But we will review the market conditions and also the regulatory requirements from time to time to decide the execution strategy.

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Operator   [19]
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 Our next question comes from Bo Pei from Oppenheimer.

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 Bo Pei,  Oppenheimer & Co. Inc., Research Division - Research Analyst   [20]
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 I just had 2 questions, if you don't mind. So the first one is just a follow-up on the macro issue. So you mentioned the macro weakness in 1Q and then the first half of the year. Is it across all channels you work with? Or is it just related to some specific channels, the marketing platforms you work with?

 And then you also mentioned you see some customers pushing the advertising budget to the second half. How -- I mean, your guidance also implies big acceleration in the second half. So could you just talk more about how -- like what give you confidence that the revenue growth will accelerate in the second half?

 And my second question is on the sales and marketing expense. It seems 1Q actual expense are a little bit more than I thought. And then could you just talk a little bit about why you spent? And is it related to enterprise solutions business?

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 Sammy Hsieh,  iClick Interactive Asia Group Limited - CEO & Co-Founder   [21]
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 Thanks for the question. So as I mentioned previously, we do see that there is some slowdown in the macro environment. Some clients may be more cautious on the new product launch, but some may be eager for more cost-effective performance marketing solutions, the performance marketing. Some of the branding customers, they are still expecting to spend their regular budgets. But under such market conditions, performance marketing solutions, as we have seen, may be able to gain more budget from the traditional marketing dollars from certain clients. And also our product position on the CRM solution, which focuses on helping customers to monetize internal traffic is also expected to get more attention. So I think that iClick is sitting at a relatively very favorable position on all this, but we will try. You need to focus more on those like high-margin business and existing clients with good relationships and lower risk. So therefore, we reiterate our full year guidance at this moment.

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 Terence Li,  iClick Interactive Asia Group Limited - CFO   [22]
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 Also to add a bit color, I think from our experience, close to 20% completion in our first quarter and then add up to like 45% completion in the second quarter would always make us to the 100% numbers that we want. So that's why we do have some confidence at the moment to fill up some of the gap and also because of the ramp-up of the enterprise solutions that we believe that, that we had achievable targets at the moment.

 And on your second question, you basically asked about the increase in the operating expenses, right? So I think, in my remarks, I also explained a little bit that we do invest more in terms of higher sales force and also more marketing dollars. And mainly it's on the new enterprise solutions but also on some of the new marketing solutions that we're also growing, for example, like KOL networks and all this new business. And right now, our head count does increase to close to like 700 people. We do like to invest a bit upfront, but I could say that basically this is relatively stable from now on, from this quarter, on this expense basis. And on the basis that our ramp-up of the gross profit would still be able to help us to overcome these increase expenses in the quarters that are coming in.

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Operator   [23]
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 (Operator Instructions) Our next question comes from the line of Nelson Cheung from Citibank.

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 Nelson Cheung,  Citigroup Inc, Research Division - Associate   [24]
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 Congratulations on the solid results. I have a follow-up question on the overall ad sentiment in China market. So actually during the first quarter results, we see that many peers talking about soft ad sentiment going into 2019. So how do management see the overall ad sentiment for the entire year? And do you see any specific verticals of your clients that you believe will continue to be mostly impacted from the current headwinds? And do you expect them to recover in the second half?

 And one more follow-up question on the Q&A just now. You mentioned that there are some industry verticals picking up. Is it from the top 5 verticals you mentioned last quarter? And my second question is regarding the joint venture with VGI. Can you share or elaborate more about what brand verticals you're actually targeting? And in the long run, how many brands you want to target or address? And how can iClick can share this experience in tapping into these opportunities in Southeast Asian markets?

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 Sammy Hsieh,  iClick Interactive Asia Group Limited - CEO & Co-Founder   [25]
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 Thanks, Nelson, for the question. So let me address your questions one by one. So for the first one about the soft ad sentiment in 2019, right, so I think as I have mentioned that we do see that the macro uncertainty, which is impacting some of the marketers' sentiment. But I think that iClick, we did very good job in working very closely with our existing clients to ensure that healthy growth in the first quarter. And looking ahead, we remain cautiously optimistic with stable growth from the marketing solutions and expecting faster ramp-up of our enterprise solution into the second half. At the end of last year and early this year, we have seen the growth rate of spending slowdown from some of our gaming, e-commerce clients. However, we do expect a certain level of recovery from this vertical going into the second half, especially like those industry I mentioned, for example, like cosmetics, some necessities like consumer products categories. I do see that they could be ramping up fast in the second half of the year.

 And also regarding your questions on the JV with our partner, VGI, in Thailand. So far, there are more than 20 brands across different verticals, including luxury, fashion, skin care, fast-moving consumer goods, which have already expressed strong interest in our cross-border innovative marketing solutions to target the huge number of Chinese outbound travelers. As we have previously addressed, we will leverage our in-depth insights of more than 800 million Chinese outbound travelers and our leading marketing technology. Together with VGI's strong network and resources locally, we help the local brands in Thailand to reach out and unlock the great potential from Chinese travelers.

 So based on the Chinese government, the One Belt, One Road strategy, we hope to leverage China's expertise and also our Internet Big Data capabilities, iClick's capabilities, which can help for the neighbors in Asia more closely. Thailand is our first stop of our Southeast Asia strategy. There are also neighbor countries, which are also the top destination of the Chinese travelers, and the Thailand experiences shall help us to duplicate the business model and expand into other countries quickly in longer term. So I hope I answered all your questions, Nelson?

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 Nelson Cheung,  Citigroup Inc, Research Division - Associate   [26]
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 That's very helpful.

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Operator   [27]
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 As there are no further questions, I'd like to turn the call back to iClick for closing remarks.

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 Lisa Li,  iClick Interactive Asia Group Limited - Senior Manager of Investor Relations   [28]
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 Thank you once again for joining us today. If you have further questions, please feel free to contact iClick's Investor Relations department through the contact information provided on our website.

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Operator   [29]
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 Thank you. This concludes today's conference call. You may now disconnect your lines. Thank you.




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