Amber International Holding Ltd (AMBR) 2020 Q2 法說會逐字稿

Hello, ladies and gentlemen. Thank you for standing by for iClick Interactive Asia Group Limited's Second Quarter 2020 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 Second 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. Jian Tang, TJ, Chief Executive Officer and Co-Founder of iClick, will begin the call and provide a high-level review of the second quarter results and share insights on our execution strategy; followed by our Chief Financial Officer, Terence Li, who will give us more highlights on the financial results and guidance for the rest of 2020. Then we will turn the call back over to TJ for closing remarks and 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 also note that iClick's earnings press release and this conference call includes 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, Jian Tang. TJ, please go ahead.

Thank you, Lisa, and welcome to the call, everyone. Even in the uncertain environment, I'm delighted to share with you that iClick reported another record quarter of financial results, demonstrating the important role how data analytic services play in quickly understanding the rapidly changing online consumer behavior here in China.

We reported total revenue of $58 million in the second quarter, an increase of 18% from the second quarter of 2019. We are also happy that we reported record high adjusted EBITDA of $5.2 million, an increase of 322% from the second quarter of 2019. Our adjusted net income for the second quarter was $2.5 million versus a loss of $0.7 million in the second quarter of 2019. I want to bring to your attention that this is the third consecutive quarter iClick has reported positive adjusted net income, the historical all-time high adjusted EBITDA and adjusted net income we reported here, a confirmation that we have reached inflection point and are achieving the economies of scale necessary to maintain consistent profitability.

China's economy has started to rebound after a steep slump in the first quarter caused by the coronavirus. Yet, there are challenges that still lie ahead. Domestic demand is beginning to drive China's recovery forward, but external demand could be at risk given the coronavirus effect overseas. So far, our business has proven resilient as brands are looking to China more than ever to make up for business lost in other areas of the globe, still affected by the pandemic.

Many of our brand customers are seizing this as a significant opportunity in the post-pandemic world as China's digitalization is continuing to thrive in the stay-at-home economy. We, along with many of our branded customers, believe the pandemic will change these behaviors permanently, and the information our company provides is an essential part of planning for this new reality.

With this, I would like to share with you an update on the progress of 2 of our most important goals set at the beginning of this year. Our first important goal for 2020 is to improve the profitability of our Marketing Solutions business. As many of you who follow our company know, our Marketing Solutions business is the bread and butter of our success. In this area, we see continued healthy and steady growth as our clients shift their marketing budgets to performance-based solutions, especially now faced with the uncertain environment brought by the pandemic. Since the outbreak has caused such a dramatic change in consumer online buying habits, brands are shifting to advertising spends to increase online penetration, and we are in a perfect position to monitor and track the rapid evolution.

With this dynamic as a backdrop, coupled with our diversified portfolio of over 3,000 customers, we reported revenue of $53 million from Marketing Solutions for the second quarter of 2020, an increase of 14% from $46.6 million for the second quarter of 2019. This business continues to scale and contribute to our profitability, and we remain positive about the demand of our performance-driven Marketing Solutions in the second half of the year.

Our second important goal for 2020 has been to continue to develop our Enterprise Solutions business. This is and will remain our key focus for many years to come. We began this business in 2019, and I'm proud of what we have achieved in the past 18 months. For the calendar year of 2019, we generated more than $10 million in revenue from a starting -- standing stock. For the first half of 2020, revenues have already reached $9.5 million. As a reminder, the gross margin profile for this business is almost 3x of our Marketing Solutions. We are confident that this type of success continues to propel our top line and bottom line results for the foreseeable future.

The demand driver here is that large and sophisticated brands have realized the urgent need to analyze and respond to the swift consumer demand shift to online channels caused by the pandemic. They now require a holistic data and the technology strategy that can integrate online and offline data and include social e-commerce to pinpoint where the demand is coming from and how to capitalize -- how to capitalize or hedge. As this is taking place, Tencent, with whom we partner with regularly, has continued to make efforts in enhancing its WeChat mini-programs ecosystem, which will benefit -- we utilize the mini programs as the interface to help brands engage and interact with end consumers.

Over the long term, we have shown this collaboration enhances customer loyalty and generates more business opportunities. Our Enterprise Solutions have helped our brand clients to achieve 3 core objectives: managing the customer engagement process, targeting and personalization, and the overall management of customer data.

As an example of how well we have done with our integrated enterprise and marketing solutions, I want to share a case study of our client, QiaQia Food. For those of you who are not familiar with the company, QiaQia is the largest producer of roasted seed and nuts in China. We launched a major initiative for them in April of 2019. As a result, the cumulative GMV was more than RMB 64 million for the 12-month period ending in May of 2020. Also, the number of mini-program visitors totaled over 12 million for the same period, while the number of monthly paying users rose by an average of 30% per month. I'm truly delighted with the results we achieved with QiaQia, and it's just one of the many successful pieces we have developed with our top-tier clients in just our first year of operation in this area.

Overall, I'm extremely confident that we are moving towards becoming one of the leading enterprise and marketing cloud platforms in China, that help brands acquire traffic, maintain consumers and optimize customers' lifetime values. In addition to the robust organic growth, we are also continually exploring various partnerships initiatives, collaborative product offerings and MA opportunities to enhance our long-term growth. Currently, we are looking for targets that will complement our SaaS product offerings, all with the data and technology that can further enhance algorithm to drive the rapid development of our enterprise and marketing cloud platform.

As part of our efforts to continually improve our proprietary market intelligence platform, in July, we announced the release of iAudience 2.5 with 3 key enhancements, including broadened data sources, newly developed predefined marketing modules and a recognized brand audience profile display that provides even deeper insights into a brand's positioning and the competitive landscape. We expect these upgrades to help drive future demand for our Marketing Solutions.

I want to take this opportunity to briefly update everyone on some of the industry awards and accolades we recently received this quarter. Winner of the Big Data award in the advertising category at Singapore Business Review; top 10 digital marketing solution providers in APAC 2020 by CIO Advisor APAC; Asia Pacific's leader in Smart Marketing Solutions by Media Zoom Group; 3 accolades in The 8th TopDigital China 2020 awards competition.

It's always very gratifying to be recognized as an industry leader. These awards complement our client execution and are attribute to the hard work and the perseverance of our entire organization, even in these challenging times.

This concludes my opening remarks.

With that, I would now like to turn the call over to our CFO, Terence Li, to discuss the second quarter 2020 financials. Terence?

Thank you, TJ, and welcome, everyone. I'm happy to report that our business model continues to be resilient since being impacted by the pandemic. We continue to experience growth in demand for our Marketing and Enterprise Solutions categories. To reiterate what TJ said earlier, our data analytics services play a critical role in quickly understanding the rapidly changing online consumer behavior here in China, caused by the pandemic. In this quarter, we continued to report record financial results, including total revenues, adjusted EBITDA and adjusted net income. I'm excited to share a few key highlights from the second quarter of 2020.

Our revenue for the second quarter of 2020 grew to $58.1 million, an increase of 18% from $49.3 million for the same period of the prior year. These results are attributable to the increased contributions from existing Marketing Solutions and Enterprise Solutions and were partially offset by a 4% decrease in the FX exchange rate of renminbi to the U.S. dollar for the second quarter of 2020 compared to the same period in 2019.

The revenue from Marketing Solutions grew to $53 million for the second quarter of 2020, an increase of 14% from $46.6 million for the second quarter of 2019, primarily as the result of growing market demand from marketers. The revenue of our core business has steadily increased over time and have given us the ability to improve our platform and branch out into other opportunities.

The revenue from Enterprise Solutions were $5.1 million for the second quarter of 2020, an increase of 87% from $2.8 million we reported for the second quarter of 2019. The robust growth was driven primarily by the increasing and immediate need for online and offline consumers' behavior data integration. iClick continues to build on its success as revenue in this area continue to increase.

The gross profit for the second quarter of 2020 was $16.6 million, representing a 22% increase compared with $13.6 million for the second quarter of 2019, mainly due to continued expansions of the company's Marketing Solutions and contribution from higher-margin Enterprise Solutions.

As of June 30, 2020, the company had cash and cash equivalents, fixed deposit and restricted cash of $64.2 million compared with $61.1 million as of December 31, 2019.

For the rest of my discussion, I 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.

The adjusted EBITDA for the second quarter of 2020 was an income of $5.2 million, an increase of 322% year-on-year. The results were primarily due to the increase in gross profit. The adjusted net income for the second quarter of 2020 was $2.5 million compared with an adjusted net loss of $0.7 million in the second quarter of 2019. This is our first consecutive quarter of positive adjusted net income.

We reported gross billing of $132.8 million for the second quarter of 2020, which represent a 6% decrease compared with $140.9 million in the second quarter of 2019. Please note that the renminbi depreciated against the U.S. dollar by 4% compared with the same period of the prior year. On a currency-neutral basis, the gross billing would have been $140.3 million for the same quarter of 2020, relatively unchanged compared with 1 year ago.

The stable performance reflects our strategic focus in risk management and snatching good-quality clients amid economic uncertainties. For further information, please see the detailed recap of other financial metrics in the press release we issued today.

On January 15, 2020, we announced a share purchase -- repurchase program, in which we may purchase our own ADS with an aggregate value of up to $10 million over the 12-month period ending on December 29, 2020. As of June 30, 2020, we purchased an aggregate value of approximately USD 0.7 million.

Before I issue our guidance, I would like to take this opportunity to elaborate on iClick's current strategic focus from my perspective. In the first half of 2020, we continued to report record high profitability, including adjusted EBITDA and adjusted net income. I attribute this outstanding financial performance to our relentless cost control efforts through better operating efficiencies after an extensive review of our business we compete in 2019.

Currently, we focus on clients' credit quality in an effort to safeguard ourselves from the lingering global economic uncertainty. With these safeguards in place, we feel we are in a solid position to drive profitability, keying in on the high-margin business while managing a cash flow more efficiently than ever before in our history.

In past earnings calls, we talk about our increasing economies of scale and how we would eventually hit an inflection point in our Marketing Solutions business, achieving profitability. We have reached these levels. And looking ahead, we are confident in our ability to maintain healthy and stable growth rate from the Marketing Solutions area, especially now as we see the continuation of advertising budgets shifting to online and creating an even greater need for performance-based solutions as a macro trend in the industry.

Finally, we want to make sure we have enough capital to fund our various strategic initiatives. So to that end, we recently completed a USD 22 million private placement. This process will be used for working capital to ensure our continued growth as well as comfortably funding our Enterprise Solutions business, which will be our main focus for many years to come. We are gratified to see the organic growth from Enterprise Solutions increasing as it is already contributing 9% of total revenues in the first half of the year compared with 5% of the same period last year.

Now I would like to conclude my remarks with our outlook for the balance of 2020. Please note that our outlook for revenue is based on current market conditions and reflects our preliminary estimates of market and operating conditions, taking into account the coronavirus pandemic. These are subject to change.

Third quarter 2020. Revenue is estimated to be between $66 million and $70 million. Revenue from Enterprise Solution is estimated to be between $7.5 million and $9.5 million. Please note that this is the first time we provided quarterly guidance on revenues from Enterprise Solutions. Gross profit is estimated to be between $18 million and $22 million. For full year 2020, revenue is estimated to be between $240 million and $260 million. Gross profit is estimated to be between $70 million and $75 million. Adjusted EBITDA is estimated to be between $9 million and $12 million. Looked at this is an upward revision from our prior guidance of $7 million to $10 million released in the first quarter earnings release.

Our outlook remains cautiously optimistic with full year guidance remaining unchanged. We have increased our adjusted EBITDA guidance as we continue to see the effect on the economy of scale for the Marketing Solutions business. Please note that there remains the possibility of resurgence in local COVID-19 cases, along with the impact of global economic uncertainty that may influence our financial performances.

Before I turn the call back over to TJ, I want to congratulate our entire company for executing and delivering these operational and financial results so far this year. I truly appreciate the efforts, and we're excited to move forward and create more values for our shareholders in the future.

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

Thank you, Terence. Since the beginning of this year, the coronavirus pandemic has swept the world, disrupting our daily work and the life routines. The outbreak has driven many commercial and social activities online. And for many, the Internet has become a very crucial link to the things they need and want. This all began as a necessity for many, but now consumers enjoy the convenience and the personalization, the online buying experience efforts and online reliance is becoming the new norm. Many of our several brand clients view this trend in line with the Chinese idea that every crisis presents an opportunity.

Given these macro trends, we remain positive about the momentum in both our business segments going forward. While we expect to see continued stable growth in our Marketing Solutions segment, we are experiencing strong demand for Enterprise Solutions as brands seek to understand the end consumers through a full consumer life cycle as we provide a comprehensive solution to better understand online, offline consumer headwinds.

We believe our enterprise and marketing cloud platform is proven to fit all these needs in this area, and we are in a solid position to continue to grow in this environment.

In closing, we are confident in our full year guidance. As always, we remain committed to long-term value creation for our shareholders and all stakeholders and protecting the health of our workforce as we see the recovery in China unfold.

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) Today's first question comes from Thomas Chong with Jefferies.

Congratulations on a solid set of results. My question is about our Enterprise Solutions business. Can you comment about the number of customers that we target by the end of this year as well as the customer mix by industry? And on the other hand, can we also talk about our key differentiation of our solutions versus our peers as well as our force penetrating to meet the customers together with the new business model on take rate over GMV?

Thank you, Thomas. This is Terence. So let me first answer the first part about the client numbers and the pipeline first. And in the first half of the year, last year, you recall that we basically have completed our target to have 50 key accounts. So going into 2020, in the first half, we did also completed around 50 key accounts. So we see a pretty strong pipeline right now. And going into the third quarter, we probably would add another 30 to 40 key accounts. So I think that's right now our expectations. And I think I would turn to TJ to answer the rest about -- more on the questions that you have.

(foreign language)

[Interpreted] So this is TJ. So just like what our CFO said, in 2019, we have already accumulated 50 key accounts. And in the first half of 2020, for the SaaS clients, we have newly -- we have 50 newly added clients.

(foreign language)

[Interpreted] So for the second half of this year, we expect that we are going to add another maybe a few dozen new clients. And for the SaaS Enterprise Solutions, this year, we are going to focus on the sectors related to consumption and industries include like luxury goods, cosmetics, food and beverage and also FMCG.

(foreign language)

[Interpreted] So we think that SaaS market in China is still at the infancy stage, especially in terms of the marketing and the selling area. So we're seeing this market as the blue sea market, and we are seeing a lot of different opportunities, especially in terms of the trials of the business models.

(foreign language)

[Interpreted] So it's (inaudible) manage the full cycle of the consumers, including managing the traffic of the consumers to converting this customers into our real consumers to buy our goods, to managing the relationships with these consumers and also to improving their loyalty and also to leading them to repurchase the goods. So all of these are included in our services. So we can see that the market that we are trying to serve is quite there.

(foreign language)

[Interpreted] So right now our market is -- so the market we are trying to serve is very filled as I said just now. And a lot of the clients that we are serving is the mid-tier enterprises and also the large-tier enterprises. And for the SaaS enterprises that we are serving, which are the 100 enterprises, a lot of these big clients are quite fill in the market. So right now we mainly focus on updating our system and also we are trying to expand the market. At the same time, we are trying different new business models. And we just try to satisfy different needs of different customers, like some of our clients need the data analysis, so we would try to serve them in terms of this. And other clients might need the service of mini-program management and also other clients might need advice in terms of the operation. So we try to provide different services to different clients. But overall, we're seeing the data is still being quite wear and fill in the market, and that is the area we are trying to improve.

(foreign language)

[Interpreted] So what we are trying to do right now is that we are trying to provide different business models to different clients. And after we get enough data, we will try to look at what business models work, and we will try to expand those business models to the market.

Our next question today comes from Fawne Jiang with Benchmark.

Wanted to follow up on your Enterprise Solutions part. I think as TJ mentioned, the addressable part of market is -- seems to be substantial. Just wonder, are we -- what's the potential customer base in terms of customer -- number of customers you're seeing as the underlying market. Are we looking for more addition of the customers or more ARPU growth going forward?

And also trying to get a bit more understanding of your -- the economics, particularly for the customers you -- we could -- last year, are we seeing a healthy level of renewal and potential expansion of their ARPU this year? And lastly, want to get understanding of the margin profile for the Enterprise Solutions right now. What's the gross margin level you see?

Fawne, this is Terence. So let me first address some of the numbers, and then TJ can also add on some other comments. As you mentioned, I think, right now, we are still focusing on growing the client numbers more than the ARPU at this moment. And the renewal percentage because it's just the first year after the deal, right now is pretty high, more than 90% plus, our clients still come with us. And going into the second half, as I said -- in the first half, we basically completed the 50 key accounts already. So we are looking forward for another 50 actually in the third quarter. So that's why we also raised our guidance a bit. And that's the current situation.

Margin profile wise, it still stood at pretty high, around 60% for this particular segment. Basically, as we mentioned in our remarks, it was like 3x -- almost like 3x higher than our Marketing Solutions gross profit margin. So I would stop here and see if TJ has anything to add on.

(foreign language)

[Interpreted] To answer your question, I don't have any further opinions on that question. I think I have offered a lot of details about -- in terms of that just now.

Our next question today comes from Darren Aftahi with ROTH Capital.

Nice quarter. Could you talk about, just following up on the last question, the revenue base for your Enterprise Solutions? What is the growth in existing customers versus growth from new customers? And then second question, maybe for Terence. So you guided on your EBITDA now $9 million to $12 million for the year. You've already done $7.5 million. So this sort of implies $1.5 million to $4.5 million in the back half of the year. I'm just curious if there's any incremental investments that your operating costs came down year-over-year, maybe that was anomalistic because of COVID. But I'm just kind of curious if there's any large investments in the second half of the year that maybe we're not thinking about.

Thank you, Darren. Let me answer the second part first. And as you're aware, actually, we raised the guidance of the adjusted EBITDA number. And we already completed $7.5 million. So it actually imply that going into the second half, first, we are pretty confident in our bottom line; second is that we're still controlling very well our operating expenses. The first is that, as you mentioned, we're actually a little bit prudent in terms of the expensing because of the new business that we are developing on the enterprise side. So we probably will spend in further expenses to grow this business segment further. That may actually erode some of the bottom line numbers. But we are still pretty confident because the Marketing Solutions will be able to support that growth and with some self-generated cash to help us to build this business further. And that's on your second part.

On the first part, I think we basically mentioned some of the growth and some of the numbers. And right now, the growth is mainly coming from new clients and new number of clients adding to our pipe rather than some existing clients. Of course, they're renewing the numbers, but that contribution relatively is still like 10%, 15% only and with our whole pipe coming from new accounts mostly. When we add on new clients, then we basically have more revenue coming from the Enterprise Solutions.

And our next question today comes from Brian Kinstlinger with Alliance Global Partners.

Great to see the strengthening profitability. First, what percentage of your enterprise revenue comes from U.S. brands or companies? And should President Trump's executive order remain in place regarding Tencent, do you see that impacting demand for your Enterprise Solutions in any way?

Brian, this is Terence. I do think that, that would have less impact on our Enterprise Solutions because right now, our Enterprise Solutions is still pretty much only working within China or in the Chinese territory. So I think the President Trump's order -- there's some clarification in this 1 or 2 days, and maybe it may not extend to that extreme. And it may be stopping some of the business in WeChat and TikTok, which are basically the overseas versions of WeiXin and Douyin. And we don't have much business actually on the overseas versions. Only 1% to 2% of our business are on that WeChat and TikTok platform. So no matter Marketing or Enterprise Solutions, basically, the impact would be minimal. But to be honest, I think we are not in the best position right now to comment until we have further clarifications of what that executive order really mean for the business -- for Chinese company or for multinational corporations. So I guess impact would be minimal at this moment as we are -- basically based on the information available.

Our next question today comes from Colin Liu with China Renaissance.

I think this one is mainly regard to your Enterprise Solutions. Since the start of the global pandemic, we've been hearing global SaaS companies talking about structural changes of their clients. Customers or enterprises are accelerating to migrate to cloud-based services. I just want to ask if you have seen any such trends, any sort of structural changes of your customer behavior among your enterprise installed base. If there are any services or products that used to be undervalued by your customers but now being highly appreciated, could you just share some examples and colors on this? That will be very helpful.

(foreign language)

[Interpreted] So this is TJ. As for my understanding, I think your question is to -- is that you want to know about the impact of the pandemic to the need of our clients, right?

(foreign language) So I just want to ask in our total different operating environments, what are the changes to customers' behaviors that are key asks for your products? And what sort of product features they really value right now?

(foreign language)

[Interpreted] Okay. So thanks for your question and let me just answer your question real quick. So before the pandemic, we have already seen a huge demand from our clients in terms of the data analysis and also how to use the off-line data to serve the online activities. So after the pandemic, we have seen this demand is getting larger. And for our clients, actually, more clients has the need to switch their off-line -- service off-line activities to online activities. At the same time, they don't want to wait the off-line data. They want to use more off-line data that they have accumulated in the past to serve their online activities and because a lot of our brands used to have a lot of off-line data before. So for our Enterprise Solutions clients, we can just help them to better make the combination of the online data and the off-line data, especially switch the off-line date to serve the online services.

And for some of our clients, they are especially interested in the services provided by the mini-program stores and also other mini-program services. That's also something we can help them. So we have helped our clients create a better purchasing environment for their consumers. And -- so this is one thing. And another thing, we have also helped them -- we have also provided better best stage services to them to satisfy their needs. So not only did we satisfy their needs in terms of the data, we are also very mature in operating in this area. So -- yes, so we can help them expand their market and better deploy their proposals and plans.

Our next question today comes from Nelson Cheung with Citi.

Congratulations on your solid results. I have a question on your margin. Can management explain more on the drivers behind your saving in operating expenses? Was it driven by the operating efficiency of the company? Or is it driven by the synergies between the 2 businesses? For the Enterprise Solutions, what would be the biggest cost component of the business? And what will be the trend going forward into the second half of the year?

Nelson, this is Terence. Thank you for your questions. In terms of the margin profile, I think our Marketing Solutions margin profile is always at around 23%, 24% as we already present to the market. And for the Enterprise SaaS solution, it's relatively high-margin business, but it's not yet really stabilizing, but at around the 60% margin profile is pretty much attainable right now.

And you asked about operating expenses. Our base of the operating expenses, if you look at our recent quarters, even back to 2019, we are sitting at relatively stable operating expenses per quarter, around probably $50 million, $60 million kind of numbers. And that's like our base case right now. And to grow our business further, I think that would be quite stable numbers.

In terms of the SaaS part of -- or the Enterprise Solutions part, the major cost element is still basically human resources, basically the headcounts and the overheads. And we don't need to pay the media expenses as like the media or the Marketing Solutions. And I think that's the biggest cost component of Enterprise Solutions. And I hope this answer your questions.

And our next question today comes from Bo Pang with Oppenheimer.

Congrats on the solid results. So my first question is about Marketing Solutions. I noticed, even though our gross billing was flattish on RMB basis, our revenue actually increased pretty good. So I think that was due to our increased take rate in that area. So I would like to know where this trend going forward. I noticed we mentioned we focus on the high-quality customers. When do you think we can start growing the gross billing?

And then my second question is about Enterprise Solutions side. I think I heard we are trying to invest more into this business and then maybe do some merger and acquisitions in this area. So just wondering what kind of investments or the acquisition target that we are considering? Can you give more color around that?

Bo, this is Terence. I'll first answer part one, and then I will let TJ to address your part 2. And first of all, our gross billing is still growing. If you look at our first quarter total number, it's still only 20% plus year-on-year growth for the first half. So the gross billing is still growing, but on the second quarter, and we focus more on the credit. And right now, we do have the scale for us to have the capability to basically screen for the best quality clients, particularly under this uncertainty environment. I think that's pretty important for the company to ensure the margin profile and some high-quality clients. So that's why our take rate is higher because that we pick the best clients and that with high margin and also because they are more preferring the performance-driven solutions right now under the COVID. And during all these so-called specific actions models or the CPA or CPC models, basically, we will be able to recognize more in terms of the revenue on a gross basis. And that's why you see a slight increase in the take rate, probably around 5% to 10% increase comparing to the same first half of last year. So that's like the current situation.

And going to second half, we believe when the market is more normalizing and that some of the branding customer also coming back, we probably would see the gross billing and the growth coming back again, in particular, with our strong and strength on -- in terms of the performance solutions. So I think I would now pass to TJ to answer your questions on some of the M&A initiatives.

(foreign language)

[Interpreted] This is TJ. Thanks for your question. So as I mentioned earlier, our focus of serving the enterprise -- the enterprises -- our clients of Enterprise Solutions right now is to a help them manage -- better manage their full cycle management of their consumers. So to help them acquire the consumers and also confer them and also lead them to -- guide them to purchase and improve their loyalty and also retain them and also increase their repurchasing rate. So based on that, for our strategy of M&A, we mainly focus on these 4 areas. The first, we'll focus on the AI for consumer analysis, which centered around the -- which centers around the consumers. We will put a lot of focus on this.

And also for the second area is the creator and KOL platform end-to-end solution because that's we all know the KOL or live streaming has been getting more and more popularity globally. And we all now acknowledge that this is a huge business opportunity ahead. So we believe that being equipped with this technology to empower the creators and KOLs will help bring more traffic more efficiently and create more business opportunities for our customers. And the third area is the customer experience management, which is also for CEM. So in China, our customers and clients actually have higher demands and requirements to state. So not only the CRM is very important, CEM is also very important. That's why we will try to focus on this area too. And the last area is the customer -- the last area is the market products and services based on WeChat. All right.

And our final question today comes from [Kevin Lee] with Bank of America Merrill Lynch.

It's extremely clear. And also congratulations on the fantastic results. I was wondering -- first of all, it's very good to know that you've broken out the SaaS revenue guidance for third quarter. $7.5 million to $9.5 million for third quarter is very strong. On a quarter-on-quarter basis, it's up 50% to 90% quarter-on-quarter.

And you also, Terence, I think you mentioned earlier that you're looking for strategic growth opportunities. I was wondering, just mathematically, are those opportunities already included in that guidance? And second of all, in conjunction with that, iClick is trading on, in my opinion, very cheap multiples, still on 2.8x -- 2.8x EV to revenue. So in looking for these opportunities, how value-conscious are you? That's the first part.

The second part is, with the share repurchase program, last year, you purchased USD 4.4 million of stock. This year, you've purchased, I think, $0.7 million. Is that going to be more second half heavy this year? Congratulations again.

Thank you, [Kevin]. And first of all, in your first question, to be honest, we haven't yet budgeted some of the merger and acquisitions potential. And mostly, right now, the guidance is based on our organic or some small investments and in terms of the business.

And your second question is about our repurchase program. And in the first half, we did over USD 7 million share purchase. So we are more bullish going into the second half. We still believe that, that we are undervalued, and we probably would trigger, but we will leave the Board to discuss further. But right now, I think, to be honest, I think we do see in our operations, our efforts are being recognized more by the market. And hopefully, going into the second half of the year, these efforts will be recognized further by the market.

And thank you, ladies and gentlemen. This concludes our question-and-answer session. I'd like to turn the conference back over to Lisa Li for any 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.

And thank you, ma'am. This concludes today's conference call. You may now disconnect your lines, and have a wonderful day.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]