Amber International Holding Ltd (AMBR) 2019 Q3 法說會逐字稿

Hello, ladies and gentlemen. Thank you for standing by for iClick Interactive Asia Group Limited's Third Quarter 2019 Financial Results Conference Call. (Operator Instructions) 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 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, will provide an overview of the third quarter of 2019. And we will also introduce Dr. Jian Tang, one of our co-founders, who has the dual role of Chief Operating Officer and Chief Technology Officer, to give more highlights on our business and operational planning as we begin to focus on 2020. Followed by our Chief Financial Officer, Terence Li, to give more highlights on the financial results and guidance. Then we will open the call for Q&A.

Before we continue, please note 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 note 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 Chief Executive Officer and co-Founder, Sammy Hsieh.

Thank you, Lisa. Hello, everyone. We are delighted to have you on our call today.

I am happy to report that for the third quarter of 2019, our total revenue grew 27% year-on-year to a record $54.2 million. Our revenue growth came despite a 4% depreciation of the RMB against the U.S. dollar compared to the same period last year. On a currency-neutral basis, the revenue would have increased 32% to $56.4 million for the third quarter of 2019 compared with the same period last year.

I just want to take a moment to mention that we are still operating in a challenging environment, yet we continue to grow our business. We still believe that the negative influences that may impact us from outside our normal operation still persist in the near term, but I'm optimistic about the long-term growth prospects of our enterprise and in the strength and stability of our business model. We are extremely confident in our ability to execute at a high level.

I would like to begin the call by conveying my excitement about our recently announced financing from Marine Central Limited and welcome Mr. T.C. Yam, the majority shareholder of Forbes Media LLC, as one of our key investors. Forbes Media is one of the most iconic media companies in the world. They command a global presence on every platform, with digital content reaching 94 million unique visitors monthly, 6.4 million readers through their print publications and an expansive social following of over 40 million touch points.

We are excited about the potential strategic value and possible partnership opportunities that this relationship might afford. We anticipate potential synergies that iClick's big data capability may be able to realize to support Forbes' ongoing efforts to maintain its status as a leading global media company and extend its digital footprint by affording its advertisers a deeper understanding of its consumer audiences, particularly in China. And we look forward to exploring and developing this relationship to its fullest potential.

Turning now to our Marketing Solutions business. Revenue grew to $51.6 million for the third quarter of 2019, which is an increase of 21% from $42.6 million for the third quarter of 2018. On a currency-neutral basis, the revenue would have increased 26% to $53.7 million for the third quarter of 2019 compared with the same period last year. This healthy growth does not only reflect the increasing demand for marketer companies who rely on the data we are able to provide but also indicate demand recovery in some verticals, such as e-commerce and gaming.

A great example of the strength in e-commerce was Singles' Day in China, which has now become the world's biggest online 24-hour shopping event. This year, the gross merchandise value figure sold during this period hit another record high of $38.3 billion. Results like this are very encouraging as they reinforce the demand for the services we provide as we help brands understand and reach out to the audiences effectively and efficient.

Turning to the Enterprise Solution unit. We report the revenue separately to track our progress effectively. For the third quarter, we reported $2.6 million in revenue. At this stage of development, we are still ramping up this division with personnel building a stronger pipeline with various innovative products, services and business model. I would like to remind everyone that launching a long-term and successful new business initiative such as this is a marathon, not a sprint, and quarterly variances are not uncommon this early on.

With the strong pipeline we have developed in this area, we are confident in our ability to achieve our target of $10 million revenue in total for the year. We are fully committed and expect the business will continue to emerge, drive revenues higher and expand our margins.

The fourth quarter looks solid for us as the holiday season is a typical strong time for -- strong time of the year for our company. We are noting that there's a positive shift in sentiment in the marketplace toward spending, where we expect a stronger-than-seasonal spending surge for Marketing Solutions. More importantly, we will see a substantial pickup for our Enterprise Services, which make us very confident in our ability to achieve another record year of top line results in 2019.

Separately, we are also looking at the new business initiatives in the period that leverage our core capability, including AI technology as well as the huge Chinese consumer datasets, such as blockchain technology. The Chinese government has recently passed new laws that will encourage research and development on commercial cryptography technologies while building up an inclusive standardized regulatory systems for the market in China.

These laws go into effect on January 1, 2020, and we believe this area looks promising. We are in the early stage of identifying potential new business partners for these initiatives, and we'll keep you updated as this progresses.

I would like to conclude my opening comments by welcoming Dr. Jian Tang as -- or as we call him, TJ, our co-Founder, Chief Operation Officer and Chief Technology Officer to the call. TJ was appointed to his position -- current positions in 2016 and has approximately 20 years of experiences in digital advertising, serving in key research and engineering and management roles. He's well known in this area of advertising technology and big data in China, holding a doctorate degree in Computer Engineering from Tsinghua University.

TJ has a unique vision with regard to China's digital market and is a strong manager, overseeing our company's operation while leading our future product development assets. TJ is on the call to share some insights about how we run our business and what's in store as we look at 2020. TJ, please go ahead.

Thank you, Sammy, for having me on the call today. Wearing 2 hats at our organization affords me the opportunity to be strategic and focus on operational details as a COO while crafting and owning a product vision as CTO.

As Sammy talked about earlier, we are very optimistic that future growth is imminent, and my role is to help the company deal with the current macroeconomic environment by controlling OpEx, keeping our businesses running efficiently and maintaining our performance at a high level while also preparing the company for future success.

Our strategy is to migrate to enterprise and marketing cloud platform. Ultimately, the success of a cloud migration isn't in the technical functionality. Rather, it's how the client organization is able to realize the vast benefits it provides. We mainly talk about the digital transformation of various enterprises, especially as part of the smart retail strategies.

The ultimate here is for us to provide our branded clients and partners the tools to reach and engage with the customers in a low-cost, highly efficient and a personalized manner, helping them realize higher sales and profit growth.

Furthermore, this transformation will help our bottom line as the higher-margin Enterprise Solutions unit grows rapidly into a higher percentage of our overall revenue, while we continue to see organic growth from Marketing Solutions.

Turning now to our operational execution. For 2020, we are reviewing our business in an effort to create more efficiencies by aiming toward higher margins with the goal of attaining better profitability. To accomplish this, we are focusing on streamlining and exercising very stringent OpEx control. Also, we want to explore better ways to manage our cash flow.

For example, we are continually working with our suppliers to obtain better credit terms as our spending increases. On our accounts receivable side, we are shortening up our days outstanding and being more selective choosing clients with solid credit histories, just to name a few.

Finally, I would like to announce that in the second half of 2019, we have established a product and innovation center to ensure our continued technology advancements and competitiveness in the long term.

Coupled with our constant goal to reach a high-level operational execution, we feel these initiatives will give us competitive advantages moving forward. And I believe that 2020 will be our fruitful year. I'm thankful for the opportunity to talk with you and share some of my thoughts here, and I look forward to communicating further with the investment community in the future.

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

Thank you, TJ. Despite a challenging macro environment, for the third quarter, we increased revenues year-over-year to another record, while we secured financing from an investor that shares our long-term vision for success. The convertible note funding will serve to support our business and our new initiatives, and we are also excited about possible synergies we can realize beyond it.

We are still extremely diligent in controlling costs and achieving the best possible operating efficiencies, and are always examining ways to better manage our cash flow, make our process better and focus on higher-margin business, products and clients. Also, we are wholly committed and continue to execute our Enterprise Solutions businesses.

The revenue from our Enterprise Solutions in the third quarter was relatively stable sequentially due to certain delay in the revenue recognition, but we expect a solid increase for the rest of the year. Therefore, we are confident in our ability to meet our 2019 revenue target in this area. I want to note that, as evidenced by the overall results we achieved this quarter, we have substantial tailwinds driving our business and expect a strong fourth quarter.

Now I will provide the key financial highlights for the third quarter. Please note that all figures given are in U.S. dollars unless otherwise noted.

Our total revenue for the third quarter of 2019 grew 27% to $54.2 million from $42.6 million for the same period last year. The increase was partially offset by negative foreign exchange impact as the renminbi depreciated 4% against the U.S. dollar compared to the third quarter of 2018. On a currency-neutral basis, the revenue would have increased 32% to $56.4 million for the third quarter of 2019 compared with the same period last year.

Our revenue from the Marketing Solutions business also grew to $51.6 million for the third quarter of 2019 versus $42.6 million, a 21% increase from the same quarter in 2018. On a currency-neutral basis, the revenues would have increased 26% to $53.7 million. This growth was driven by the increase in demand we are seeing from marketers. The long-term market dynamics in this area are very robust.

As we mentioned previously, we started to report the revenues from our Enterprise Solutions business separately in order to track the progress of this division. We reported revenue of $2.6 million. Since this is a new business, there's no year-over-year comparisons. Year to third quarter, we have booked $6.8 million for this unit.

We report that our gross profit has continued to grow. We achieved an increase of 45% in gross profit to $13.6 million for the second quarter of 2019 compared to $9.3 million in the same period in 2018. I'm also delighted to say, on a currency-neutral basis, our gross profit would have grown to $14 million in the third quarter, reaching another record high. The increase came as a result of margin stabilization from the company's Marketing Solutions and contribution from the higher-margin Enterprise Solutions business.

Our total operating expenses were $15.8 million for the third quarter of 2019 compared with $23.4 million for the third quarter of 2018, primarily attributable to the reduction of share-based compensation of $11.1 million, which was partially offset by expenses incurred for new business development and resulted in an increase in staff costs, sales incentives and marketing activities. The investment is necessary in order to maintain and grow this business.

And lastly, as of September 30, 2019, the company had cash and cash equivalents of $21.1 million compared with $39.8 million as of December 31, 2018. Our restricted cash and time deposits amount to $24.2 million and $1.8 million compared with nil at December 31, 2018.

For the rest of my discussion, I will focus on our non-GAAP measures. 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.

Our adjusted EBITDA for the third quarter of 2019 was stable at $1 million compared with $1.2 million for the third quarter of 2018, resulting from more operating expenses for new business development that was partially offset by the increase in gross profit.

Our adjusted net loss attributable to company's shareholders, which excludes, among others, share-based compensation expenses, fair value gains and losses on convertible notes, and other gains and losses for the 2019 third quarter, was $1 million compared with $0.8 million in the third quarter of last year. Please find additional financial results in the press release we issued earlier today.

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

For the fourth quarter of 2019, we estimate revenues to be in the range of $54 million to $60 million, which should translate into a range of 37% to 52% year-over-year growth. On a currency-neutral basis, this would translate to an estimated growth rate between 42% and 57% based on the latest available U.S. dollar versus renminbi exchange rate. We estimate our gross profit margin to be between 26% and 28%.

Under the current growth and operational control, we estimate a higher number of adjusted EBITDA and a closer-to-positive number of adjusted net loss in the fourth quarter of 2019. Based on current market conditions and foreign exchange, we are confident to reiterate our full year guidance of our sales to range from $190 million to $210 million and gross profit margin between 26% and 28%.

I would like to take this opportunity to give everyone a brief update on the share repurchase program that we announced last November. Our Board of Directors authorized us to purchase up to $10 million of our own ADS in a 12-month period. As of September 30, 2019, we purchased an aggregate value of approximately $2.6 million. We will continue to purchase opportunistically as we think the share represent an excellent value. Through this entire report, we express confidence in iClick's growth prospects and believe a share repurchase program provides an excellent opportunity to invest in the company's future.

In closing, we are a strong, dynamic company that is performing despite the challenges in the macro environment. We have performed well so far this year by executing for our clients and plan to continue these efforts, while operating prudently and thoughtfully when it comes to our organizational functions. As both Sammy and TJ alluded to earlier, we are also looking at various new business initiatives and very happy that our efforts are apparent in the numbers as we stay the course and start to focus towards 2020.

With that, I will now turn the call back to Sammy for closing remarks.

Thank you, Terence. The long-term strength of our business is compelling, and the market dynamics are exciting. Despite a current challenging macro environment, there is still significant value to be unlocked and much more potential growth.

China is digital-first, mobile and e-commerce-first market. Much of the population has never had a landline, the Internet is their gateway to the wider world for content, collaboration, entertainment and commerce. As such, we continue to execute on our business model and are developing more ways to help our clients. We are also exploring other revenue opportunities through burgeoning technology and through the development of new business partnership, and we'll keep you appraised as they progress.

Our business has sound financial metrics and a stable business model that will continue to provide steady and consistent top line growth while we continue to build out our Enterprise Solutions business. In the fourth quarter, we anticipate seeing a pickup in this unit as we close more business in our pipeline.

Looking into next year, we project that we may be able to double our current client base given the strength here, while we project a possible doubling of our existing revenues in this area. We look forward to 2020 as it will be a critical year as our company transition into a platform with 2 unique growth business model, and our core focus will be on profitability improvement.

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.

(Operator Instructions) Your first question comes from the line of Long Lin of The Benchmark.

This is Long on behalf of Fawne Jiang. So congratulations on the solid results. My first question is on the Marketing Solutions. So the growth of Marketing Solutions reaccelerated this quarter. Can management share some color on the drivers behind it? Also, if management can talk about the macro impact on advertising environment in general and on iClick in specific going forward. And also, what does the management think about the advertising outlook in 2020? That's my first question.

Long, this is Sammy. Thanks for the question. So let me address you on the second part, on the question on the macro environment first. And then my team will address you on the Enterprise Solution, what of the key drivers of the solution, okay?

So for the macro environment, we have seen an improvement in spending sentiment from our marketing solution clients, which was reflected on the acceleration on the year-on-year growth rate of our gross billing and revenues in the third quarter. Our gross billing has grown over 70% during the quarter, and we also expect the growth will continue in the fourth quarter.

Looking into the fourth quarter, we project the revenue to hit $54 million to $60 million, representing 40% to 50% year-on-year growth, respectively, and we believe that's also driven in part by the improved unit sentiment. In addition, we also started to see pricing stabilization, and we believe that bodes well for the ad industry and, of course, our Marketing Solution business.

I would like to reiterate the healthy growth of our Marketing Solution remain intact as we see several factors continue to drive, including the sheer size of the advertising market in China, the shift from the traditional marketing to digital advertising and the ever-increased penetration rate of marketing automation. We believe there will be a large runway for us to grow given our leading position in market and our demonstrated data and technology capabilities. We remain very optimistic about our full year 2020.

Thank you, Sammy. This is Terence. I think Long's second question is just asking about our driver on our growth in the Marketing Solutions.

So I think as Sammy already addressed, we see that the advertising spending and the sentiment are improving in the third quarter, which is really the reason why we see the year-over-year growth accelerate in both the gross billing and revenue. And some of our biggest clients are actually choosing partners with stronger financial profiles, given the macro headwinds. We believe as a U.S.-listed company and one of the largest advertising spenders in the region, and also on the Tencent platform as well as others, we are receiving a lot of recognitions in the industry.

So taking advantage of current situation and we capture more clients, especially in some of the e-commerce sector in this quarter. So that's why it drives our Marketing Solutions' billing and also the revenues growing a lot. For the Enterprise Solutions, if you look at, basically, we're still keeping -- maintaining our $2.6 million revenue in the quarter. There are some spillover to the next quarters due to the revenue recognition, but the pipeline overall is still very strong.

Okay. So just a follow-up for the -- basically, for the -- you said advertising spending is improving, the sentiment is recovering. So just wondering if you see this trend to maintain -- to continue in the next year.

So I would say that because on our revenue mix, over 90% of our business are already coming from mobile advertising. And also, when our customers, they're using our advertising platform, they are -- the performance solution, which means that in every dollar unit they spend on advertising, we can help them to measure and provide them with the optimization, like, technology. When we look at this space, the mobile advertising and the performance advertising, we see that -- we don't have -- we are kind of resilient to the current economy situation. So we think that this growth will continue in 2020.

Okay. So also on the -- just to -- just another follow-up on the advertising outlook. So on the demand side -- you said on the supply side the pricing is stabilizing. Just on the demand side, just wondering, does management expect any changing dynamics in terms of like budget allocation going forward. So I guess, in the past, our clients' budget were mainly allocated to Tencent, Baidu. Just wondering if management expects more budget to be shifted to other channels, such as Toutiao, Douyin or short video kind of type ones. How would that impact iClick?

Okay. So in terms of the sectors, I have already mentioned that we have seen that in some of the sectors, has started to pick up. For example, the gaming sectors and also the e-commerce sectors. And also in terms of the budget allocation. So we see that iClick is platform agnostic. So as long as we can find some advertising spaces that can deliver the KPI, the ROI to our client, we could allocate the budget to any of the publishers, the partners connecting to our system. So there's always a mission for our platform to locate those inventory, efficient -- that can deliver efficient and also results to our advertisers.

Okay. My second question is still on the Enterprise Solutions. I think you said you have -- the company is having very strong pipeline for -- going forward and expect the revenue to pick up. So just wondering if you can give more details regarding some of the progress of the current projects as well as for the upcoming pipeline. Can you share some -- like basically, what are the -- how many number of projects in the pipeline right now?

Long, this is Terence. I think in terms of number of clients, I think we are still very confident to reach our target of 50 by the end of this year. As for the industry focus, we are still very focused across the general retail, food and beverage and skin and beauty industry, which already accumulate up to like 40x for us during -- up to the third quarters right now. So we believe that this business would be scaling up further when we go into the 2020.

Okay. Do you have any outlook for the 2020 for the Enterprise Solution?

As Sammy already mentioned, we are targeting a doubling of our 2019 numbers into the 2020 on this particular Enterprise Solutions business.

Okay. My last question is on the international expansion. Just wondering what's the progress in general and also the progress with VGI. And also, if the company can share the revenue contribution from international expansion as well as some outlook for 2020.

We have continued to move forward with the expansion of our international footprint as it almost the end of the year. So let me do a recap on the progress of our international business.

First, we announced the setup of a joint venture, V-Click, with the leading online to offline solution provider in Thailand and Southeast Asia, VGI, to leverage the respective strengths of VGI's local networking strengths and iClick's in-depth understanding of the Chinese outbound travelers. It was up and running in the third quarter, and we expect some revenue contribution starting with the fourth quarter of 2019.

Secondly, we also formed a strategic partnership with Vector Group, the leading PR firm in Japan. This is our partnership with both our Enterprise Solutions and Marketing Solutions. Once again, this partnership is focused on the significant number of Chinese outbound travelers to Japan. The business consists of providing the local Japanese brand with an integrated enterprise and marketing solution. As this partnership initiated in the second half of this year, we are still working to complete the process and estimate revenue contribution to begin in 2020.

I would like to point out that both the JV and partnerships remain in the infancy stage, but we believe that regional diversification is the right strategic move that will significantly drive iClick's performances over the long term.

In terms of the overall international numbers, so international revenue accounts for around 30% of our overall revenue mix.

Your next question comes from the line of Darren Aftahi of Roth Capital Partners.

So a few, if I may. Terence, back to your comments about revenue recognition on Enterprise Solutions. Can you just maybe clarify 2 things. I think I heard you on the prior call -- prior participant's answer, you said that you ended the third quarter with 40 Enterprise Solution clients. One, is that correct? And then two, on the Enterprise Solutions kind of delay with revenue recognition, could you just talk through that and then maybe quantify what that impact was? And kind of what gives you confidence you're still on track to kind of hit that $10 million number for 2019?

Darren, I think, yes, you heard it correct. We are approaching the 40 in the [first three] (corrected by the company after the call) quarters. So we are relatively confident to achieve the 50 by the end of the year. And the revenue recognition, basically, we would recognize the revenue when we could complete the project with our clients. So when some of the clients are delaying some of the recognitions, then we have to follow their recognition as well. So that's why we have some spillover to the fourth quarter.

And in terms of the numbers, probably there's around $1 million to $2 million revenue that would basically be recognized in the next quarter according to the project completion status. So that's why, right now, we have $6.8 million for the third -- for the first 3 quarters. So we are relatively confident to get into the $10 million by the end of the year.

That's helpful. Maybe if I could just kind of follow up on that, maybe for Sammy. On Enterprise Solutions and maybe for TJ as well. So when you think about 2 things. It's early on, you're sort of 9 months in. Can you talk about customer retention or churn? And then as you think about -- I think you had said doubling clients and, potentially, revenue in 2020. How do we think about the Enterprise Solutions business as a platform with potential new modules that you may add? And anything that you've kind of -- or either maybe developing or you're getting inbound requests from existing clients or potential clients that you could add that could be ARPU accretive going forward?

On the further questions. So to answer your question, so I think so far, this is our first year of our launching the Enterprise Solution. Our primary focus in terms of our strategy is customer acquisition. So currently, we have, like, 40 to 50 clients in our pipeline. So we think that, so far, our retention rate is over 100%. So we see that -- like in this year, so we have to have our clients to set-up the platform. So in the next year, we will go into the maintenance stage. So ongoing, we are going to add more modules. For example, the CRM modules, their loyalty program modules; and also some of the HR modules, which will be in synchronization with the sales and marketing modules we are helping clients develop so far.

That's great. And then maybe one more. On your Marketing Solutions, so you said growth is accelerating. When I look at the kind of year-over-year conversion of bookings to revenue, it seems like that number is declining. Could you just kind of comment on -- and I think the math is sort of 41% in the third quarter down to maybe 29%, 30% in Q3 '19. And I'm just kind of curious what's driving that and where you see that kind of stabilizing long term.

Sorry, this is Terence. Darren, can you repeat your second part of the question?

Yes. So when you look at sort of the bookings conversion to revenue, it looks like that percentage is declining year-over-year on Marketing Solutions. I'm just kind of curious what's driving that. Are you guys giving bigger discounts to your customers? And then maybe, where does that stabilize longer term?

Okay. Okay. I guess you're talking about gross billing and towards the revenue ratio are basically dropping. Particularly in this quarter, you probably looked at, it has some drops. I think, first of all, given the macro headwinds, we are trying to capture some of the bigger clients. And these clients are usually picking stronger partners like us. But at the same time, some of these clients, we could only recognize the revenue on a net basis, and they provide certainly lower margins to us.

But from our perspective, we still want to capture these clients. First, we want to capture the market share. Second, when we have the biggest billing and also more bargaining power in a sense that we will be able to discuss with our suppliers, how to make sure it will benefit the companies, that we'll be able to achieve better credit terms and also be able to develop some other solutions with these clients. So it's more in a sense that in this headwind, we're trying to capture more clients.

At the same time, we're trying to capture a bigger market share at this moment. So that's why you noticed that there will be some drop as time goes. When we're capturing more gross billing, basically, this may be happening. But if you look at our overall gross profit, actually, at the end of the day, we only focus on the absolute gross profit number. So we will hit a historical high on the gross profit, total absolute number. So that's more important for our operational standpoint.

Great. That's helpful. And if I could just squeeze one more in. I think, Sammy, you'd said you guys -- or maybe TJ it was, that you'd launched an innovation center in the second half of '19. And I know you had mentioned blockchain and AI as opportunities. I just guess, when you look at the company and the resources, you obviously have your core Marketing Solutions, you're stabilizing -- or you're ramping up your Enterprise Solutions business. Do you have the bandwidth to add new products and businesses? Or is this something that's more of a longer-term objective that may not be impactful near term?

I think that now our iClick lab, the research and development center, we have pretty good resources there. So we started to develop the new enterprise solution platform. We are trying to modualize some of our product. For example, as I said, the sales and marketing, the HR and loyalty systems. So we are in the beginning of exploring and adopting the blockchain technology into some of the marketing automation, like our platform.

So we think that this blockchain technology can help to improve our platform transparencies and also the data security. So we think that our current R&D resources will be good enough for us to explore further -- next station of the product development.

Also -- this is Terence. Also to add a bit on Sammy's remarks. Basically, the new innovation center from TJ's standpoint right now is more first on organization structure changes that we're trying to consolidate more of our tech team and also resources into a single interface, and at the same time to do more R&D in different new products and new solutions.

At the same time, we're also sourcing and trying to find some good partners. For example, in the blockchain and some technology sector, we're trying to partner with some of these innovative companies, and then to launch certain solution that would fit to our client base. So that's more the objective and the organization structure right now. So it's not like that we are building a whole brand-new R&D center. So I think it probably may address some of the issues in terms of resources questions.

Your next question comes from the line of Bo Pei of Oppenheimer.

So for the Marketing Solution part, we mentioned changing environment, and then we also mentioned we saw strength in the games and e-commerce verticals. So other than games and e-commerce, do we see strength in other verticals? And is there any other verticals that's still kind of lagging behind? And that's my first question.

And then the second question is about our Enterprise Solution. So for the Enterprise Solution, can you just comment on the competitive landscape on the business? So when our sales go out and try to get business, what are the big competitors out there? And then what is our strength there? And then my third question is we mentioned something around the initiative around blockchain. Can we also comment on the opportunity we see there?

Hi Bo Pei, this is Terence. And on your first questions, just judging from some of the numbers that I have on the vertical, basically, overall in this quarter, most of our verticals are growing, because you look at our gross billing number and the growth in terms of revenue.

But in terms of some of the sectors that are a little bit lagging behind, like auto and petroleum, a little bit lagging behind; and some of the logistic companies used to work with us, also a bit lagging behind. So for other sectors like the e-commerce, food and beverage, because are highly related to the smart retail, and basically, they're growing quite well; and also the gaming entertainment, as Sammy also addressed in his remarks, that basically are recovering quite substantially in this quarter.

So then I will pass the questions to Sammy for question 2 and 3.

So in terms of the competitive landscape, so what we are working on with our clients will be coming from 2 parts. One will be some of those multinational clients. So for those multinational clients, we are just building the layers on top of the existing Enterprise Solution so that they can bill the stores from the mini programs and also the communication connection with vCheck. So -- and also, we provide like a data and also analytics layer so that those customers can access some of the market sales and marketing data through our system.

And then the second part of our customers are those startup and also new type companies. For this type of customers, it will be much more easier because those customers, they don't have the legacy systems, so which means that we are building everything from scratch, to build up the mobile commerce platform for them.

So -- and also on your third question on the blockchain technology. So I think right now, we are still in a very early stage on exploring the adoption of the blockchain technology in the advertising and marketing automation. So we see that the blockchain technology can help us in many fronts. For example, they can help us to improve our data transparency in our platform. And also, they can help create confidence to our customers that the data will be more secure transferring to our platform.

Your next question comes from Nelson Cheung of Citi.

Congratulations on the solid quarter. I have a question regarding your investment strategy going into 2020. Given there are a number of initiatives, including internationalization, innovation technology and growing customer base, can management share your thoughts on how would you rank or prioritize your investment priority of these initiatives going into 2020?

And I have a follow-up question regarding your resource allocation. So how would your investment affect your resource allocation that is going to be translated in OpEx, such as R&D and S&M that would impact your margin trend going into next year?

Nelson, this is Terence. So in terms of the investment strategy and resources allocations, I think, first and foremost, actually, the international expansions would be somewhat the low-hanging fruits for us because we already established some of the really good partners and also established some of the really good allocations in Southeast Asia. So we believe that all these investments would be able to turn into certain revenue and also contribution to the business quite imminent -- immediately.

And in terms of the innovation center, as I also addressed to Darren, basically, right now, it's more on the organizational structure changes and that we're trying to consolidate more resources into the R&D with the team together. So it's not like that we are taking a lot of extra resources to build a new R&D center. So in terms of the overall investment strategy, I think we always look into some innovative and new products that would be fitting our customers' need in terms of both the Marketing and the Enterprise Solutions. So we will also be looking from time to time the right targets that will be able to help us to reinforce the new Enterprise and also Marketing Solutions business.

As there are no further questions, I'd like to turn the call over to Lisa for closing remarks.

Thank you once again for joining us 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 again.

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