Form 6-K
false2022-06-300001737339--12-31For equity securities accounted for under the measurement alternative, when there are observable price changes in orderly transactions for identical or similar investments of the same issuer, the investments are re-measured to fair value. The Company recognized impairment charges of long-term investments during the six months ended June 30, 2022.Starting from January 1, 2021, the Company has fully exited the Targeted Marketing business and this balance represents the receivables the Company acts as agent and collects on behalf of third party advertising companies for targeted marketing related services.For the six months ended June 30, 2021 and 2022, the Company recognized impairment charges on loans granted to equity investees of nil and RMB666 (US$99). The Company evaluates the impairment of the equity investments without readily determinable fair value along with loans the Company granted to those investees.The balance represents the payments to third party advertising companies for targeted marketing related services as the Company acts as agent.The balance represents the remaining unpaid cash consideration of RMB16,788 from the acquisition of SendCloud (see Note 6 for details). 0001737339 2022-01-01 2022-06-30 0001737339 2021-01-01 2021-06-30 0001737339 2022-06-30 0001737339 2021-12-31 0001737339 2021-01-01 2021-12-31 0001737339 2020-12-31 0001737339 2021-06-30 0001737339 us-gaap:RetainedEarningsMember 2022-01-01 2022-06-30 0001737339 us-gaap:FairValueMeasurementsNonrecurringMember 2022-01-01 2022-06-30 0001737339 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-06-30 0001737339 us-gaap:TransferredAtPointInTimeMember 2022-01-01 2022-06-30 0001737339 us-gaap:TransferredOverTimeMember 2022-01-01 2022-06-30 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us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001737339 us-gaap:RetainedEarningsMember 2021-06-30 iso4217:CNY iso4217:USD xbrli:shares utr:Year xbrli:pure utr:Month jg:Supplier iso4217:USD xbrli:shares iso4217:CNY xbrli:shares
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM
6-K
 
 
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE
13a-16
OR
15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of September
2022
Commission File Number:
001-38587
 
 
Aurora Mobile Limited
 
 
14/F, China Certification and Inspection Building
No. 8, Keji South 12th Road, Nanshan District
Shenzhen, Guangdong 518057
People’s Republic of China
(Address of principal executive offices)
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form
20-F
or Form
40-F.
Form
20-F  ☒            Form
40-F  ☐
Indicate by check mark if the registrant is submitting the Form
6-K
in paper as permitted by Regulation
S-T
Rule 101(b)(1):  ☐
Indicate by check mark if the registrant is submitting the Form
6-K
in paper as permitted by Regulation
S-T
Rule 101(b)(7):  ☐
 
 
 

EXHIBIT INDEX
 
Exhibit
No.
  
Description
  99.1
  
Unaudited Consolidated Interim Financial Statements
101.INS
  
Inline XBRL Instance Document — this instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
  
Inline XBRL Taxonomy Extension Scheme Document
101.CAL
  
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
  
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
  
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
  
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
  
Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
AURORA MOBILE LIMITED
   
By:  
 /s/ Shan-Nen Bong
Name:    Shan-Nen Bong
Title:    Chief Financial Officer
Date: Septem
ber 22
, 2022
EX-99.1
P1Y
Exhibit 99.1
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
     Page
(s)
 
     F-2  
     F-6  
     F-8  
     F-10  
     F-13  
 
F-1

AURORA MOBILE LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
            As of  
     Note      December 31,
2021
     June 30, 2022  
            RMB      RMB      US$  
ASSETS
           
Current assets:
           
Cash and cash equivalents
        90,552        91,844        13,712  
Restricted cash
        164,030        137        20  
Derivative assets
        5,989        3        —    
Short-term investments
     15        30,000        20,000        2,986  
Accounts receivable, net of allowances of RMB37,690 and RMB26,590 (US$3,970) as of December 31, 2021 and June 30, 2022, respectively
     3        43,860        35,138        5,246  
Prepayments and other current assets
     4        46,670        34,238        5,112  
Amounts due from related parties
        35        —          —    
     
 
 
    
 
 
    
 
 
 
Total current assets
     
 
381,136
 
  
 
181,360
 
  
 
27,076
 
     
 
 
    
 
 
    
 
 
 
Non-current
assets:
           
Property and equipment, net
        62,179        49,267        7,355  
Intangible assets, net
        5,398        26,809        4,002  
Long-term investments
     5        141,926        140,015        20,904  
Goodwill
     6        —          37,785        5,641  
Other
non-current
assets
        4,898        13,476        2,012  
     
 
 
    
 
 
    
 
 
 
Total
non-current
assets
     
 
214,401
 
  
 
267,352
 
  
 
39,914
 
     
 
 
    
 
 
    
 
 
 
Total assets
     
 
595,537
 
  
 
448,712
 
  
 
66,990
 
     
 
 
    
 
 
    
 
 
 
 
F-2

AURORA MOBILE LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
            As of  
     Note      December 31,
2021
     June 30, 2022  
            RMB      RMB      US$  
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST
S
 AND SHAREHOLDERS’ EQUITY
           
Current liabilities:
           
Short-term loan
        150,000        —          —    
Accounts payable (including accounts payable of the variable interest entity (“VIE”) without recourse to the Company of RMB17,529 and RMB18,214 (US$2,719) as of December 31, 2021 and June 30, 2022, respectively)
        18,292        19,190        2,865  
Deferred revenue and customer deposits (including deferred revenue and customer deposits of the VIE without recourse to the Company of RMB115,900 and RMB124,462 (US$18,582) as of December 31, 2021 and June 30, 2022, respectively)
     7        119,991        129,720        19,367  
Accrued liabilities and other current liabilities (including accrued liabilities and other current liabilities of the VIE without recourse to the Company of RMB64,527 and RMB64,642 (US$9,651) as of December 31, 2021 and June 30, 2022, respectively)
     8        85,305        78,240        11,681  
Amounts due to related parties (including amount due to related parties of the VIE without recourse to the Company of RMB54 and RMB66 (US$10) as of December 31, 2021 and June 30, 2022, respectively)
        54        66        10  
     
 
 
    
 
 
    
 
 
 
Total current liabilities
     
 
373,642
 
  
 
227,216
 
  
 
33,923
 
     
 
 
    
 
 
    
 
 
 
 
F-3

AURORA MOBILE LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
            As of  
     Note      December 31,
2021
     June 30, 2022  
            RMB      RMB      US$  
Non-current
liabilities:
           
Other
non-current
liabilities (including other
non-current
liabilities of the VIE without recourse to the Company of RMB560 and RMB511 (US$75) as of December 31, 2021 and June 30, 2022, respectively)
        2,607        2,734        408  
Deferred revenue (including
non-current
deferred revenue of the VIE without recourse to the Company of RMB569 and RMB5,677 (US$848) as of December 31, 2021 and June 30, 2022, respectively)
     7        3,845        8,027        1,198  
Deferred tax liabilities (including
non-current
deferred tax liabilities of the VIE without recourse to the Company of nil and RMB5,097 (US$761) as of December 31, 2021 and June 30, 2022, respectively)
        —          5,097        761  
     
 
 
    
 
 
    
 
 
 
Total
non-current
liabilities
     
 
6,452
 
  
 
15,858
 
  
 
2,367
 
     
 
 
    
 
 
    
 
 
 
Total liabilities
     
 
380,094
 
  
 
243,074
 
  
 
36,290
 
     
 
 
    
 
 
    
 
 
 
 
F-4

AURORA MOBILE LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 

















            As of  
     Note      December 31,
2021
    June 30, 2022  
            RMB     RMB     US$  
Commitments and contingencies
     11     


 


 


Redeemable noncontrolling interests
     13        —         31,582       4,715  
Shareholders’ equity
  


  


 


 


Class A common shares (par value of US$0.0001 per share as of December 31, 2021 and June 30, 2022; 4,920,000,000 shares authorized as of December 31, 2021 and June 30, 2022; 62,036,273 shares and 62,215,467 shares issued and outstanding as of December 31, 2021 and June 30, 2022, respectively)
  


     38       38       6  
Class B common shares (par value of US$0.0001 per share as of December 31, 2021 and June 30, 2022; 30,000,000 shares authorized as of December 31, 2021 and June 30, 2022; 17,000,189 shares and 17,000,189 shares issued and outstanding as of December 31, 2021 and June 30, 2022, respectively)
  


     11       11       1  
Additional
paid-in
capital
  


     1,021,961       1,029,970       153,770  
Accumulated deficit
  


     (819,018     (872,242     (130,222
Accumulated other comprehensive income
  


     12,451       16,279       2,430  

  


  
 
 
   
 
 
   
 
 
 
Total shareholders’ equity
  


  
 
215,443
 
 
 
174,056
 
 
 
25,985
 

  


  
 
 
   
 
 
   
 
 
 
Total liabilities, redeemable noncontrolling interests and shareholders’ equity
  


  
 
595,537
 
 
 
448,712
 
 
 
66,990
 

  


  
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
F-5

AURORA MOBILE LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 

















            Six months ended June 30,  
     Notes      2021     2022  
            RMB     RMB     US$  
Revenues (
including related party amounts of nil, and RMB50 (US$7) for the six months ended June 30, 2021 and 2022, respectively
)
     14        165,609       161,477       24,108  
Cost of revenues
              (40,088     (49,501     (7,390
             
 
 
   
 
 
   
 
 
 
Gross profit
              125,521       111,976       16,718  
             
 
 
   
 
 
   
 
 
 
Operating expenses
                                 
Research and development
              (106,219     (80,772     (12,059
Sales and marketing
              (53,904     (49,609     (7,406
General and administrative
              (46,692     (51,797     (7,734
             
 
 
   
 
 
   
 
 
 
Total operating expenses
              (206,815     (182,178     (27,199
             
 
 
   
 
 
   
 
 
 
Loss from operations
              (81,294     (70,202     (10,481
             
 
 
   
 
 
   
 
 
 
Foreign exchange loss
              (1,504     (3,264     (488
Interest income
              3,330       1,639       245  
Interest expense
              (4,978     (2,621     (391
Other income, net
              13,098       18,531       2,767  
Change in fair value of structured deposits
     16        20       3       —    
Change in fair value of foreign currency swap contract
              1,905       764       114  
             
 
 
   
 
 
   
 
 
 
Loss before income taxes
              (69,423     (55,150     (8,234
             
 
 
   
 
 
   
 
 
 
Income tax expense
     10        (11     (135     (20
             
 
 
   
 
 
   
 
 
 
Net loss
              (69,434     (55,285     (8,254
             
 
 
   
 
 
   
 
 
 
 
F-6

AURORA MOBILE LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
            Six months ended June 30,  
     Notes      2021     2022  
            RMB     RMB     US$  
Less: net loss attributable to redeemable noncontrolling interests
              —         (2,061     (308
             
 
 
   
 
 
   
 
 
 
Net loss attributable to Aurora Mobile Limited’s shareholders
              (69,434     (53,224     (7,946
             
 
 
   
 
 
   
 
 
 
Net loss attributable to common shareholders
              (69,434     (53,224     (7,946
             
 
 
   
 
 
   
 
 
 
Net loss per share for class A and class B common shares:
     12                           
Class A and B Common Shares — basic and diluted
              (0.88     (0.67     (0.10
Shares used in net loss per share computation:
                                 
Class A common shares — basic and diluted
              61,668,577       62,098,973       62,098,973  
Class B common shares — basic and diluted
              17,000,189       17,000,189       17,000,189  
Other comprehensive income
                                 
Foreign currency translation adjustments
              654       3,828       572  
             
 
 
   
 
 
   
 
 
 
Total other comprehensive income, net of tax
              654       3,828       572  
             
 
 
   
 
 
   
 
 
 
Total comprehensive loss
              (68,780     (51,457     (7,682
             
 
 
   
 
 
   
 
 
 
Less: comprehensive loss attributable to redeemable noncontrolling interests
              —         (2,061     (308
             
 
 
   
 
 
   
 
 
 
Comprehensive loss attributable to Aurora Mobile Limited’s shareholders
              (68,780     (49,396     (7,374
             
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
F-7

AURORA MOBILE LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 

























    
Common shares
    
Additional
paid-in

capital
    
Accumulated
other
comprehensive
income
    
Accumulated
deficit
   
Total
shareholders’
equity
 
    
Number of
shares
    
Amount
 
            RMB      RMB      RMB      RMB     RMB  
Balance as of January 1, 2021
     78,392,359        48        988,812        10,813        (678,434     321,239  
Net loss
     —          —          —          —          (69,434     (69,434
Translation adjustments
     —          —          —          654        —         654  
Exercise and vesting of share-based awards
     490,681        1        2,883        —          —         2,884  
Share-based compensation
     —          —          19,036        —          —         19,036  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Balance as of June 30, 2021
  
 
78,883,040
 
  
 
49
 
  
 
1,010,731
 
  
 
11,467
 
  
 
(747,868
 
 
274,379
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
 
F-8

AURORA MOBILE LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 

























    
Common shares
    
Additional
paid-in

capital
   
Accumulated
other
comprehensive
income
    
Accumulated
deficit
   
Total
shareholders’
equity
 
    
Number of
shares
    
Amount
 
            RMB      RMB     RMB      RMB     RMB  
Balance as of January 1, 2022
     79,036,462        49        1,021,961       12,451        (819,018     215,443  
Net loss
     —          —          —         —          (53,224     (53,224
Translation adjustments
     —          —          —         3,828        —         3,828  
Exercise and vesting of share-based awards
     179,194        —          71       —          —         71  
Share-based compensation
     —          —          10,184       —          —         10,184  
Adjustment of redeemable noncontrolling interests to redemption value
     —          —          (2,246     —          —         (2,246
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
Balance as of June 30, 2022
  
 
79,215,656
 
  
 
49
 
  
 
1,029,970
 
 
 
16,279
 
  
 
(872,242
 
 
174,056
 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
Balance as of June 30, 2022 in US$
           
 
7
 
  
 
153,770
 
 
 
2,430
 
  
 
(130,222
 
 
25,985
 
             
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
F-9

AURORA MOBILE LIMITED    
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”))
 
     Six months ended June 30,  
     2021     2022  
     RMB     RMB     US$  
Cash flows from operating activities:
                        
Net loss
     (69,434     (55,285     (8,254
Adjustments to reconcile net loss to net cash used in operating activities:
                        
Depreciation of property and equipment
     13,406       12,986       1,939  
Amortization of intangible assets
     2,190       2,747       410  
Allowance for doubtful accounts
     221       2,474       369  
Interest expenses, net
     2,706       839       125  
(Gain)/loss on disposal of property and equipment
     (814     1       —    
Deferred tax benefits
     —         (208     (31
Change in fair value of structured deposits
     (20     (3     —    
Change in fair value of foreign currency swap contract
     (1,905     (764     (114
Share-based compensation expenses
     19,036       10,184       1,520  
Impairment of long-term investment
     —         6,350       948  
Impairment of loans granted to other companies
     —         666       99  
    
 
 
   
 
 
   
 
 
 
Changes in operating assets and liabilities:
                        
Accounts receivable
     6,524       7,538       1,125  
Prepayments and other current assets
     4,885       15,725       2,349  
Amounts due from related parties
     —         35       5  
Derivative assets
     —         7,037       1,051  
Other
non-current
assets
     (291     (252     (38
Accounts payable
     (2,934     (42     (6
Deferred revenue and customer deposits
     (3,734     7,382       1,102  
Tax payable
     —         (142     (21
Accrued liabilities and other current liabilities
     (17,840     (27,367     (4,086
Amounts due to related parties
     —         12       2  
Other
non-current
liabilities
     1,138       460       69  
    
 
 
   
 
 
   
 
 
 
Net cash used in operating activities
     (46,866     (9,627     (1,437
    
 
 
   
 
 
   
 
 
 
 
F-10

AURORA MOBILE LIMITED    
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”))
 
     Six months ended June 30,  
     2021     2022  
     RMB     RMB     US$  
Cash flows from investing activities:
                        
Purchase of short-term investments
     —         (21,000     (3,135
Proceeds from maturities of short-term investments
     51,229       31,000       4,628  
Purchase of long-term investments
     —         (2,539     (379
Investment in a convertible loan
     (4,223     —         —    
Proceed from disposal of long-term investments
     —         585       87  
Payment for acquisitions, net of cash acquired
     —         58       9  
Purchase of property and equipment
     (16,212     (392     (59
Proceeds from disposal of property and equipment
     2,599       —         —    
Purchase of intangible assets and land use right
     (1,265     (11,021     (1,645
    
 
 
   
 
 
   
 
 
 
Net cash provided by/(used in) investing activities
     32,128       (3,309     (494
    
 
 
   
 
 
   
 
 
 
Cash flows from financing activities:
                        
Proceeds from issuance of common shares
     1       —         —    
Redemption of convertible notes
     (228,508     —         —    
Proceeds from short-term bank loan
     150,000       38,000       5,673  
Repayment of short-term loans
     —         (188,000     (28,068
Payment for stock issuance cost
     —         (528     (79
Proceeds from exercise of share options
     2,884       71       11  
    
 
 
   
 
 
   
 
 
 
Net cash used in financing activities
     (75,623     (150,457     (22,463
    
 
 
   
 
 
   
 
 
 
Effect of exchange rate on cash and cash equivalents and restricted cash
     1,341       792       118  
    
 
 
   
 
 
   
 
 
 
Net decrease in cash and cash equivalents and restricted cash
     (89,020     (162,601     (24,276
    
 
 
   
 
 
   
 
 
 
 
F-11

AURORA MOBILE LIMITED    
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”))
 
     Six months ended June 30,  
     2021     2022  
     RMB     RMB     US$  
Net decrease in cash and cash equivalents and restricted cash
     (89,020     (162,601     (24,276
    
 
 
   
 
 
   
 
 
 
Cash, cash equivalents and restricted cash at the beginning of the period
     356,230       254,582       38,008  
    
 
 
   
 
 
   
 
 
 
Including:
                        
Cash and cash equivalents at the beginning of the period
     356,115       90,552       13,519  
Restricted cash at the beginning of the period
     115       164,030       24,489  
Cash, cash equivalents and restricted cash at the end of the period
     267,210       91,981       13,732  
    
 
 
   
 
 
   
 
 
 
Including:
                        
Cash and cash equivalents at the end of the period
     102,854       91,844       13,712  
Restricted cash at the end of the period
     164,356       137       20  
Supplemental disclosures of cash flow information:
                        
Interest expense paid
     1,196       2,398       358  
Income tax paid
     34       296       44  
Non-cash
investing and financing activities:
                        
Unpaid cash consideration for business combination
     —         16,788       2,506  
Purchase of property and equipment included in accrued liabilities and other current liabilities
     2,297       —         —    
    
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim consolidated financial statements.
 
F-12

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
1
Organization and principal activities
Aurora Mobile Limited (the “Company” and where appropriate, the term “Company” also refers to its subsidiaries, variable interest entity, and subsidiaries of the variable interest entity) is a limited company incorporated in the Cayman Islands under the laws of the Cayman Islands on April 9, 2014. The Company through its subsidiaries, variable interest entity (“VIE”), and subsidiaries of the VIE are principally engaged in providing
Software-as-a-Service
(“SAAS”) Businesses, which include developer services, financial risk management, market intelligence, and location-based intelligence services, in the People’s Republic of China (the “PRC”).
As PRC laws and regulations prohibit and restrict foreign ownership of internet value-added businesses, the Company operates its business, primarily through the VIE. The Company, through JPush Information Consulting (Shenzhen) Co., Ltd. (“Shenzhen JPush” or “WFOE”) entered into powers of attorney and an exclusive option agreement with the nominee shareholders of the VIE, Shenzhen Hexun Huagu Information Technology Co., Ltd., that gave WFOE the power to direct the activities that most significantly affect the economic performance of the VIE and to acquire the equity interests in the VIE when permitted by the PRC laws, respectively.
In addition, pursuant to the supplementary agreements signed in March 2018, the rights under the aforementioned power of attorney and the exclusive call option agreements were assigned to the board of directors of the Company (the “Board”) or any officer authorized by the Board, which entitled the Company to receive economic benefits from the VIE that potentially could be significant to the VIE.
Despite the lack of technical majority ownership, the Company has effective control of the VIE through a series of VIE agreements and a parent-subsidiary relationship exists between the Company and the VIE. Through the VIE agreements and the supplementary agreements, the shareholders of the VIE effectively assigned all of their voting rights underlying their equity in the VIE to the Company. In addition, through the exclusive business operation agreement, the Company, through its WFOE in the PRC, has the right to receive economic benefits from the VIE that potentially could be significant to the VIE. Lastly, through the financial support agreement and the shareholder voting proxy agreement, the Company has the obligation to absorb losses of the VIE that could potentially be significant to the VIE. Therefore, the Company is considered the primary beneficiary of the VIE and consolidates the VIE as required by SEC Regulation
S-X
Rule
3A-02
and Accounting Standards Codification (“ASC”) 810.
The following is a summary of the VIE agreements:
 
F-13

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
1
Organization and principal activities (continued)
 
Exclusive Option Agreements
Pursuant to the exclusive option agreements entered into between VIE’s nominee shareholders and the WFOE, the nominee shareholders irrevocably granted the WFOE an option to request the nominee shareholders to transfer or sell any part or all of its equity interests in the VIE, or any or all of the assets of the VIE, to the WFOE, or their designees. The purchase price of the equity interests in the VIE is equal to the minimum price required by PRC law. Without the WFOE’s prior written consent, the VIE and its nominee shareholders cannot amend its articles of association, increase or decrease the registered capital, sell or otherwise dispose of its assets or beneficial interest, create or allow any encumbrance on its assets, or other beneficial interests and provide any loans or guarantees. The nominee shareholders cannot request any dividends or other form of assets. If dividends or other form of assets were distributed, the nominee shareholders are required to transfer all received distribution to the WFOE or their designees. These agreements are not terminated until all of the equity interest of the VIE is transferred to the WFOE or the person(s) designated by the WFOE. None of the nominee shareholders have the right to terminate or revoke the agreements under any circumstance unless otherwise regulated by law.
Equity Interest Pledge Agreements
Pursuant to the equity interest pledge agreements, each nominee shareholder of the VIE has pledged all of their respective equity interests in the VIE to WFOE as continuing first priority security interest to guarantee the performance of their and the VIE’s obligations under the powers of attorney agreement, the exclusive option agreement and the exclusive business cooperation agreement. WFOE is entitled to all dividends during the effective period of the share pledge except as it agrees otherwise in writing. If VIE or any of the nominee shareholder breaches its contractual obligations, WFOE will be entitled to certain rights regarding the pledged equity interests, including receiving proceeds from the auction or sale of all or part of the pledged equity interests of VIE in accordance with PRC law. None of the nominee shareholders shall, without the prior written consent of WFOE, assign or transfer to any third party, distribute dividends and create or cause any security interest and any liability in whatsoever form to be created on, all or any part of the equity interests it holds in the VIE. This agreement is not terminated until all of the technical support and consulting and service fees have been fully paid under the exclusive business cooperation agreement and all of VIE’s obligations have been terminated under the other controlling agreements. On December 16, 2014, the Company registered the equity pledge with the relevant office of the administration for industry and commerce in accordance with the PRC Property Rights Law.
Exclusive Business Cooperation Agreement
Pursuant to the exclusive business cooperation agreement entered into by WFOE and VIE, WFOE provides exclusive technical support and consulting services in return for an annual service fee based on a certain percentage of the VIE’s audited total operating income, which is adjustable at the sole discretion of WFOE. Without WFOE’s consent, the VIE cannot procure services from any third party or enter into similar service arrangements with any other third party, except for those from WFOE. In addition, the profitable consolidated VIE has granted WFOE an exclusive right to purchase any or all of the business or assets of each of the profitable consolidated VIE at the lowest price permitted under PRC law. This agreement is irrevocable or can only be unilaterally revoked/amended by WFOE.
 
F-14

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
1
Organization and principal activities (continued)
 
Powers of Attorney
Pursuant to the powers of attorney signed between VIE’s nominee shareholders and WFOE, each nominee shareholder irrevocably appointed WFOE as
its attorney-in-fact to
exercise on each shareholder’s behalf any and all rights that each shareholder has in respect of its equity interest in VIE (including but not limited to executing the exclusive right to purchase agreements, the voting rights and the right to appoint directors and executive officers of VIE). This agreement is effective and irrevocable as long as the nominee shareholder remains a shareholder of VIE.
In March 2018, the following supplementary agreements were entered into:
Financial Support Agreement
Pursuant to the financial support undertaking letter dated March 28, 2018, the Company is obligated to provide unlimited financial support to the VIE, to the extent permissible under the applicable PRC laws and regulations. The Company will not request repayment of the loans or borrowings if the VIE or its shareholders do not have sufficient funds or are unable to repay.
 
F-15

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
1
Organization and principal activities (continued)
 
Shareholder Voting Proxy Agreement
The Nominee Shareholders also
re-signed
the powers of attorney agreement whereby they granted an irrevocable proxy of the voting rights underlying their respective equity interests in VIE from the WFOE to the Company, which includes, but are not limited to, all the shareholders’ rights and voting rights empowered to the Nominee Shareholders by the company law and the Company’s Article of Association.
Accordingly, as a result of the power to direct the activities of the VIE pursuant to the powers of attorney agreement and the obligation to absorb the expected losses of VIE through the unlimited financial support, the Company is the primary beneficiary of the VIE.
On July 26, 2022, the previous nominee shareholders Xiaodao Wang and Jiawen Fang transferred their entire equity interests in the VIE to Guangyan Chen (the “Transfer of Shares”). After the Transfer of Shares, the VIE is held as to 80% by Weidong Luo and 20% by Guangyan Chen. On July 26, 2022, the registration of this transfer with the local branch of the State Administration of Industry and Commerce (the “SAIC”) was completed.
In the opinion of the Company’s legal counsel, (i) the ownership structure of the PRC subsidiary and the VIE are in compliance with the existing PRC laws and regulations; (ii) each of the VIE agreements is valid, binding and enforceable in accordance with its terms and applicable PRC laws or regulations and will not violate applicable PRC laws or regulations in effect; and (iii) are valid in accordance with the articles of association of the Company.
However, uncertainties in the PRC legal system could cause the Company’s current ownership structure to be found in violation of existing and/or future PRC laws or regulations and could limit the Company’s ability to enforce its rights under these contractual arrangements. Furthermore, the nominee shareholders of the VIE may have interests that are different than those of the Company, which could potentially increase the risk that they would seek to act contrary to the terms of the contractual agreements with the VIE.
In addition, if the current structure or any of the contractual arrangements is found to be in violation of any existing or future PRC laws or regulations, the Company could be subject to penalties, which could include, but not be limited to, revocation of business and operating licenses, discontinuing or restricting business operations, restricting the Company’s right to collect revenues, temporary or permanent blocking of the Company’s internet platforms, restructuring of the Company’s operations, imposition of additional conditions or requirements with which the Company may not be able to comply, or other regulatory or enforcement actions against the Company that could be harmful to its business. The imposition of any of these or other penalties could have a material adverse effect on the Company’s ability to conduct its business.
 
F-16

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
1
Organization and principal activities (continued)
 
The following table set forth the assets and liabilities of the VIE and its subsidiaries included in the Company’s consolidated balance sheets:
 













     As of  
     December 31,
2021
     June 30, 2022  
     RMB      RMB      US$  
       
ASSETS:
                          
Current assets:
                          
Cash and cash equivalents
     55,946        49,308        7,361  
Restricted cash
     158,032        137        20  
Derivative assets
     —          3        —    
Short-term investments
     30,000        20,000        2,986  
Accounts receivable, net
     43,415        34,232        5,111  
Prepayments and other current assets
     37,807        27,277        4,073  
Amounts due from the Company and its subsidiaries
     69,405        270,407        40,371  
Amounts due from related parties
     35        —          —    
    
 
 
    
 
 
    
 
 
 
Total current assets
     394,640        401,364        59,922  
    
 
 
    
 
 
    
 
 
 
Non-current
assets:
                          
Property and equipment, net
     45,068        37,371        5,579  
Intangible assets, net
     5,398        26,809        4,002  
Goodwill
     —          37,785        5,641  
Long-term investments
     90,618        90,033        13,442  
Other-non
current assets
     3,298        12,514        1,869  
    
 
 
    
 
 
    
 
 
 
Total
non-current
assets
     144,382        204,512        30,533  
    
 
 
    
 
 
    
 
 
 
Total assets
     539,022        605,876        90,455  
    
 
 
    
 
 
    
 
 
 
LIABILITIES:
                          
Current liabilities:
                          
Accounts payable
     17,529        18,214        2,719  
Deferred revenue and customer deposits
     115,900        124,462        18,582  
Accrued liabilities and other current liabilities
     64,527        64,642        9,651  
Amounts due to the Company and its subsidiaries
     389,063        431,716        64,454  
Amounts due to related parties
     54        66        10  
    
 
 
    
 
 
    
 
 
 
Total current liabilities
     587,073        639,100        95,416  
    
 
 
    
 
 
    
 
 
 
Non-current
liabilities:
                          
Amounts due to the Company and its subsidiaries
     277,000        277,000        41,355  
Deferred revenue
     569        5,677        848  
Deferred tax liabilities
     —          5,097        761  
Other
non-current
liabilities
     560        511        75  
    
 
 
    
 
 
    
 
 
 
Total
non-current
liabilities
     278,129        288,285        43,039  
    
 
 
    
 
 
    
 
 
 
Total liabilities
     865,202        927,385        138,455  
    
 
 
    
 
 
    
 
 
 
 
F-17

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
1
Organization and principal activities (continued)
 
The table sets forth the results of operations and cash flows of the VIE and its subsidiaries included in the Company’s consolidated statements of comprehensive loss and cash flows.
 













     For the six months ended June 30,  
     2021      2022  
     RMB      RMB      US$  
Revenues
     162,605        156,317        23,338  
Cost of revenues
     (34,489      (47,380      (7,074
Net loss
     (41,793      (35,265      (5,265
Net cash provided by/(used in) operating activities
     19,773        (113,930      (17,009
Net cash provided by/(used in) investing activities
     5,768        (603      (90
Net cash provided by/(used in) financing activities
     80,000        (50,000      (7,465
As of December 31, 2021, RMB157,900 of the restricted cash balance represents deposits held as collateral for the Company’s short-term loan with Shanghai Pudong Development Bank. There were no pledges or collateralization of the VIE’s assets as of June 30, 2022.
The amount of net liabilities of the VIE was RMB326,180 and RMB321,509 (US$48,000) as of December 31, 2021 and June 30 2022, respectively. Creditors of the VIE have no recourse to the general credit of the primary beneficiary of the VIE, and such amounts have been parenthetically presented on the face of the consolidated balance sheets. The VIE holds certain assets, including data servers and related equipment for use in their operations. The VIE does not own any facilities except for the rental of certain office premises and data centers from third parties under operating lease arrangements. The VIE also holds certain value-added technology licenses, registered copyrights, trademarks and registered domain names, including the official website, which are also considered as revenue-producing assets. However, none of such assets was recorded on the Company’s consolidated balance sheets as such assets were all internally developed and expensed as incurred as they did not meet the capitalization criteria. The Company has not provided any financial or other support that it was not previously contractually required to provide to the VIE during the periods presented.
 
F-18

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
2
Summary of Significant Accounting Policies
Basis of presentation
The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission regarding financial reporting that are consistent with those used in the preparation of the Company’s audited consolidated financial statements for the year ended December 31, 2020 and 2021. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements.
In the opinion of the Company’s management, the accompanying unaudited interim condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position, operating results and cash flows of the Company for each of the periods presented. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of results to be expected for any other interim period or for the full year of 2022. The consolidated balance sheet as of December 31, 2021 was derived from the audited consolidated financial statements at that date but does not include all of the disclosures required by U.S. GAAP for annual financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2021.
Principles of consolidation
The unaudited interim condensed consolidated financial statements include the accounts of the Company, its subsidiaries, and the VIE. All significant intercompany transactions and balances have been eliminated in consolidation.
 
F-19

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
2
Summary of Significant Accounting Policies (continued)
 
 
Use of estimates
The preparation of the Company’s unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amounts in the unaudited interim condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments that management make about the carrying values of assets and liabilities, which are not readily apparent from other sources. Management base their estimates and judgments on historical information and on various other assumptions that they believe are reasonable under the circumstances. U.S. GAAP requires management to make estimates and judgments in several areas, including, but not limited to, those related to allowance for doubtful accounts, useful lives of property and equipment and intangible assets, the purchase price allocation and fair value of intangible assets, fair value of redeemable noncontrolling interests, impairment of goodwill, impairment of long-lived assets, fair value measurements and impairment of equity investments without readily determinable fair value, impairment of loans receivables, including due from related parties, valuation allowance for deferred tax assets, uncertain tax position, fair value change of derivative assets and share-based compensation. These estimates are based on management’s knowledge about current events and expectations about actions that the Company may undertake in the future. Actual results could differ from those estimates.
Convenience translation
T
ranslations of amounts from RMB into US$ for the convenience of the reader have been calculated at the exchange rate of RMB6.6981 per US$1.00 on June 30, 2022, as published on the website of the United States Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at such rate.
 
F-20

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
2
Summary of Significant Accounting Policies (continued)
 
 
Business Combinations
The Company applies the definition of a business in ASC 805,
Business Combinations
to determine whether it is acquiring a business or a group of assets. Business combinations are accounted for using the acquisition method.
The Company accounts for its business combinations by recognizing in the financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interests in the acquiree at fair value at the acquisition date. The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and redeemable noncontrolling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Company determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. The excess of (i) the total of cost of acquisition, the fair value of the noncontrolling interests and the acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net tangible and intangible assets of the acquiree is recorded as goodwill. In addition, acquisition costs related to business combinations are expensed as incurred.
The Company records acquired intangible assets at fair value on the date of acquisition and amortizes such assets using the straight-line method over the expected useful life of the asset unless another amortization method is deemed to be more appropriate. The Company evaluates the remaining useful life of intangible assets on a periodic basis to determine whether events and circumstances warrant a revision to the remaining useful life. If the estimate of an intangible asset’s remaining useful life is changed, the Company will amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life.
Consolidation of Noncontrolling Interests
A noncontrolling interest is recognized to reflect the portion of a subsidiary’s equity which is not attributable, directly or indirectly, to the Company. Consolidated net loss on the unaudited interim condensed consolidated statements of operations and comprehensive loss includes the net loss attributable to noncontrolling interests when applicable. Cash flows related to transactions with noncontrolling interests are presented under financing activities in the unaudited interim condensed consolidated statements of cash flows when applicable.
 
F-21

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
2
Summary of Significant Accounting Policies (continued)
 
Redeemable Noncontrolling Interests
Noncontrolling interests in subsidiaries that are redeemable by such shareholders upon the occurrence of certain events that are not solely within the control of the Company are classified as redeemable noncontrolling interests, within mezzanine equity in the unaudited interim condensed consolidated balance sheet. Net income or loss of the subsidiary attributable to the redeemable noncontrolling interests was subsequently recorded pursuant to ASC 810, Consolidation. After the attribution, the Company considers the provisions of ASC 480, Distinguish Liabilities from Equity (“ASC 480”) to determine whether any further adjustments are necessary to increase the carrying value of the redeemable noncontrolling interests. Adjustments to the carrying amount of the redeemable noncontrolling interests are recognized as an adjustment to retained earnings, or in the absence of retained earnings, by adjustment to additional
paid-in-capital.
Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for noncontrolling interests over the identifiable assets acquired and liabilities assumed. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Company will perform its annual impairment test of goodwill during the fourth quarter. Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. Goodwill, which is nondeductible for tax purposes, is primarily attributable to the synergies expected to be achieved from the acquisition.
Intangible assets
Intangible assets with finite lives are carried at cost less accumulated amortization. Intangible assets represent computer software, systems and technology, brand and customer relationship acquired in a business combination. The cost of the brand and customer relationship is the fair value at the date of acquisition. All intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives, which are as follows:​​​​​​​
 
        Computer software, systems and technology    15 years
        Brand    10 years
        Customer relationship    5 years
Residual values are considered nil.
 
F-22

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
2
Summary of Significant Accounting Policies (continued)
 
Revenue recognition
Under ASC 606, revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Revenues are presented net of value-added tax collected on behalf of the government.
The Company generates SAAS Businesses revenue primarily from developer services and vertical applications. For developer services, there are three types of contracts, subscription-based contracts, project-based contracts and consumption-based contracts. The Company primarily enters into subscription-based contracts with its customers to provide push notification or instant messaging (collectively “notification services”), which the Company provides its customers with access to its notification services platform. This enables customers to send notifications and messages to users. The Company generally recognizes revenue ratably over time under the subscription-based contracts as stand-ready obligations because the customer simultaneously receives and consumes the benefits as the Company provides subscription services throughout a fixed contract term. The Company uses an output method of progress based on fixed contract term as it best depicts the transfer of control to the customer.
The Company primarily enters into consumption-based contracts with its customers to provide short message services (“SMS”),
one-click
verification services, email services and value-added services. For SMS, the Company enables customers to send short messages to users for developer-user communication and authentication. For
one-click
verification services, the Company enables users to verify the cellphone number of users without verification code after integrating the
one-click
verification SDK. For email services, the Company enables the customers to send emails to user. Customers pay for SMS,
one-click
verification, and email services based on the
pre-agreed
rate per message or email and the number of messages or emails delivered. The Company acts as the principal in the SMS,
one-click
verification, and email services in which the Company has control over the fulfillment of services. The Company recognizes revenue on a gross basis and at the point in time when messages and emails are delivered.
For value-added services, the Company built an application (“APP”) Alliance which connects advertisers and APP developers, who are the suppliers of avenue where the ads will be displayed. The Company enters into contractual arrangements with advertisers that stipulate the types of advertising to be delivered and priced. Advertising customers pay for the value-added service primarily based on
cost-per-action (“CPA”)
basis or
cost-per-click
(“CPC”) basis. All of the contractual arrangements’ duration is less than one year. For certain arrangements, customers are required to pay the Company before the services are delivered. For other arrangements, the Company provides customers with a credit term less than six months. The Company acts as the principal in the value-added services in which the Company has control over the fulfillment of the service and has discretion in establishing price. Accordingly, the Company recognizes revenue on a gross basis and at a point in time once agreed actions are performed.
 
F-23

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
2
Summary of Significant Accounting Policies (continued)
 
The Company primarily enters into project-based contracts with its customers to provide private cloud-based developer services, which are designed to provide customizable services to customers who want a more controlled software environment and more comprehensive technology and customer support. The Company provides its customers one combined performance obligation including customized APP push notification system or instant messaging system and related system training services as both performance obligations are incapable of being distinct because the customer cannot derive economic benefit from the related system training services on its own. Meanwhile, the Company also provides post contract assurance-type maintenance services, which usually have a duration of one year. Under ASC 606, the Company recognize revenue at the point in time when the system is implemented, and the training service is provided, which is represented by the customer acceptance received by the Company. Meanwhile, the estimated cost of assurance-type maintenance services is accrued as “Costs of revenues”, which is not material.
For vertical applications, the Company enters into agreements with its customers to provide data analytic solutions and there are three types of contracts, including subscription-based contracts, project-based contracts and consumption-based contracts. The Company primarily enters into subscription-based contracts with its customers to provide customizable service package for a fixed contract term, which allows the customers to subscribe a fixed number of apps to obtain unlimited volume of queries to the Company’s analytic results. The Company generally recognizes revenue ratably over time under the subscription-based contracts, because the customer simultaneously receives and consumes the benefits as the Company provides subscription services throughout a fixed contract term.
The Company primarily enters into project-based contracts with its customers to provide
in-depth
analytics services and generate customized reports based on the customers’ specific requirements. The Company recognizes revenue at the point in time when the customized reports are provided.
The Company primarily enters into consumption-based contracts with its customers to process the queries or provide features based on the customers’ requirements. When the Company receives a placed order, it recognizes revenue at a point in time when the queries are processed, or the features are utilized by the customers.
For certain arrangements, customers are required to pay the Company before the services are delivered. For other arrangements, the Company provides customers with a credit term under six months.
 
F-24

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
2
Summary of Significant Accounting Policies (continued)
 
Other revenue recognition related policies
Timing of revenue recognition may differ from the timing of invoicing to customers. Some customers are required to pay before the services are delivered to the customer. When either party to a revenue contract has performed, the Company recognizes a contract asset or a contract liability on the unaudited interim condensed consolidated balance sheet, depending on the relationship between the Company’s performance and the customer’s payment.
Contract assets represent amounts related to the Company’s rights to consideration received for private-cloud-based service and are included in “Prepayments and other assets” on the unaudited interim condensed consolidated balance sheets. Amount of contract assets was not material as of December 31, 2021 and June 30, 2022, respectively.
Contract liabilities are mainly related to fees for services to be provided over the service period, which are presented in “Deferred revenue and customer deposits” on the unaudited interim condensed consolidated balance sheets. Revenue recognized for the six months ended June 30, 2022 that was included in contract liabilities as of January 1, 2022 was RMB42,182 (US$6,298). Revenue recognized for the six months ended June 30, 2021 that was included in contract liabilities as of January 1, 2021 was RMB44,405. A summary of contract liabilities is as follows:
 
     As of  
     December 31, 2021      June 30, 2022  
     RMB      RMB      US$  
Contract liabilities
     80,405        85,481        12,762  
Customer deposits relate to customer’s unused balances that are refundable. Once this balance is utilized by the customer, the corresponding amount would be recognized as revenue.
As of June 30, 2022, the Company’s unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was RMB31,562 (US$4,712). The Company expects to recognize the majority of its remaining performance obligations as revenue within the next year.
Costs of revenues
Cost of revenues consists primarily of channel cost associated with JG Alliance, bandwidth cost, staff costs and depreciation of servers used for revenue generating services.
 
F-25

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
2
Summary of Significant Accounting Policies (continued)
 
Fair value measurements
The carrying amounts of financial assets and liabilities, such as cash equivalents, restricted cash, accounts receivable, other receivables within prepayments and other current assets, balances with related parties, accounts payable, and other payables with accrued liabilities and other current liabilities, approximate their fair values because of the short maturity of these instruments.
Concentration of risks
Concentration of credit risk
Financial assets that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, derivative assets, other receivables within prepayments and other current assets, short-term investments and accounts receivable.
The Company places its cash and cash equivalents with reputable financial institutions which have high-credit ratings. As of December 31, 2021 and June 30, 2022, the aggregate amount of cash and cash equivalents, derivative assets, short-term investments and restricted cash of RMB276,644 and RMB102,450 (US$15,295), respectively, were held at major financial institutions located in the PRC, and US$2,186 and US$1,423 (RMB9,534), respectively, were deposited with major financial institutions located outside the PRC. There has been no recent history of default related to these financial institutions. The Company continues to monitor the financial strength of the financial institutions. The Company manages credit risk of accounts receivable through ongoing monitoring of the outstanding balances.
Concentration of suppliers
Approximately 49.2% and 38.2% of advertising costs were paid to three suppliers for the six months ended June 30, 2021 and 2022, respectively.
 
F-26

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
2
Summary of Significant Accounting Policies (continued)
 
Concentration of risks (continued)
Foreign currency exchange rate risk
The functional currency and the reporting currency of the Company are the US$ and the RMB, respectively. On June 19, 2010, the PBOC announced the end of the RMB’s de facto peg to the US$, a policy which was instituted in late 2008 in the face of the global financial crisis, to further reform the RMB exchange rate regime and to enhance the RMB’s exchange rate flexibility. On March 15, 2014, the People’s Bank of China announced the widening of the daily trading band for RMB against US$. The appreciation of the US$ against RMB was approximately 5.11% for the six months ended June 30, 2022. Most of the Company’s revenues and costs are denominated in RMB, while a portion of cash and cash equivalents, derivative assets, accounts receivable, and accounts payable are denominated in US$. Any significant revaluation of RMB may materially and adversely affect the Company’s consolidated revenues, earnings and financial position in US$.
Impact of
COVID-19
During the six months ended June 30, 2022, revenues declined compared to the prior period partly due to weakness in demand as its customers in certain industries were negatively impacted by
COVID-19.
There are still uncertainties of
COVID-19’s
future impact, and the extent of the impact will depend on a number of factors, including the duration and severity of the pandemic; the uneven impact to certain industries; and the macroeconomic impact of government measures to contain the spread of
COVID-19
and related government stimulus measures. As a result, certain of the Company’s estimates and assumptions, including the allowance for accounts
receivable
 
and the valuation of certain equity investments subject to impairment assessments, require significant judgments and carry a higher degree of variabilities and volatilities that could result in material changes to the Company’s current estimates in future periods. The extent of the impact of the
COVID-19
on the Company’s operational and financial performance in the longer term will depend on future developments, including the duration of the outbreak and related travel advisories and restrictions and the impact of the
COVID-19
on overall demand for travel, all of which are highly uncertain and beyond the control of the Company and the impact cannot be reasonably estimated at this time.
 
F-27

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
3
Accounts receivable, net
 
     As of  
     December 31, 2021      June 30, 2022  
     RMB      RMB      US$  
Accounts receivable
     81,550        61,728        9,216  
Less: allowance for doubtful accounts
     (37,690      (26,590      (3,970
    
 
 
    
 
 
    
 
 
 
Total accounts receivable, net
     43,860        35,138        5,246  
    
 
 
    
 
 
    
 
 
 
The following table presents the movement in the allowance for doubtful accounts:
 
     As of  
     December 31, 2021      June 30, 2022  
     RMB      RMB      US$  
Balance at beginning of the period
     43,820        37,690        5,627  
Provisions/(reversals)
     (246      1,669        249  
Write-offs
     (5,884      (12,769      (1,906
    
 
 
    
 
 
    
 
 
 
Balance at end of the period
     37,690        26,590        3,970  
    
 
 
    
 
 
    
 
 
 
 
F-28

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
4
Prepayments and other current assets
Prepayments and other current assets consist of the following:
 
            As of  
            December 31,
2021
     June 30, 2022  
            RMB      RMB      US$  
Receivables on behalf of third party advertising companies
     (i      12,599        4,902        732  
Prepaid service fee
              11,410        9,907        1,479  
VAT and other surcharges
              5,618        3,725        556  
Investment in a convertible loan
              4,221        4,463        666  
Loans granted to equity investees
     (ii      3,000        5,000        746  
Office rental deposit
              919        926        138  
Prepaid media cost
              551        1,635        244  
Receivables from sales of shares on behalf of employees
              180        393        59  
Others
              8,172        3,287        492  
             
 
 
    
 
 
    
 
 
 
Total prepayments and other current assets
              46,670        34,238        5,112  
             
 
 
    
 
 
    
 
 
 
 
(i)
Starting from January 1, 2021, the Company has fully exited the Targeted Marketing business and this balance represents the receivables the Company acts as agent and collects on behalf of third party advertising companies for targeted marketing related services.
 
(ii)
For the six months ended June 30, 2021 and 2022, the Company recognized impairment charges on loans granted to equity investees of nil and RMB666 (US$99). The Company evaluates the impairment of the equity investments without readily determinable fair value along with loans the Company granted to those investees.
 
F-29

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
5
Long-term investments
Equity investments without readily determinable fair value
As of December 31, 2021, the carrying amount of the Company’s equity investments was RMB141,926, net of RMB63,902 in accumulated impairment.
As of June 30, 2022, the carrying amount of the Company’s equity investments was RMB140,015 (US$20,904), net of RMB71,146 (US$10,622) in accumulated impairment.
Impairment charges recognized on equity investments without readily determinable fair value was nil and RMB6,350 (US$948) for the six months ended June 30, 2021 and 2022.
 
6
Business combination
On March 8, 2022, the Company completed the acquisition of 52.37% of the equity interests in Wuhan SendCloud Technology Co., Ltd., (“SendCloud”), China’s leading Email API platform for consumer marketing and user-centric transactional email services, for total cash consideration of RMB34,473. At the same time, the Company issued 1,366,128 restricted shares to certain management member of SendCloud with a service vesting period of nine months.
The acquisition supports the Company’s strategy of providing a more reliable and effective customer engagement platform for different industry vertical. Both SendCloud and the Company provide developer-centric services and are highly complementary in products and customer base. Leveraging SendCloud’s reliable high-performance system and database services along with real-time email protocols analysis, together the Company and SendCloud will provide customers with industry-leading technology to simplify their omni-channel communications, through an integrated central platform, which will further reduce customers’ management costs, simplify the complexity for customers to integrate different services and maximize user value.
Goodwill is calculated as the excess of the aggregate of the consideration transferred and the amount recognized for noncontrolling interests over the fair value of net assets, including intangible assets, and is primarily related to expected synergies from the transactions. Goodwill associated with these acquisitions are not tax deductible. The results of the acquisition have been included in the unaudited interim condensed consolidated financial statements from the date of purchase and are not material for the six months ended June 30, 2022.
 
F-30

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
6
Business combination (continued)
With the assistance of third party valuation specialist firm, the Company used the income approach to value the acquired brand and customer relationships. The income approach calculates fair value by discounting the forecasted
after-tax
cash flows back to a present value using an appropriate discount rate. The significant assumptions used in the determination of the fair value of acquired brand and customer relationships include revenue growth rates, discount rates, terminal growth rates and economic useful life. The Company amortizes the acquired intangible assets over a straight-line basis over the periods benefited.
The Company accounted for the acquisition of SendCloud as business combination. The acquisition date fair value of assets, liabilities, goodwill and redeemable noncontrolling interests pertaining to this business combination, were as follow:
 
     RMB      US$  
Purchase consideration
     34,473        5,147  
    
 
 
    
 
 
 
Fair value of redeemable noncontrolling interests
     31,397        4,687  
Less:
                 
Cash and cash equivalents
     17,744        2,649  
Customer relationships
     13,800        2,060  
Brand
     10,300        1,538  
Other current and noncurrent assets
     1,025        154  
Deferred revenue
     (6,529      (975
Deferred tax liabilities
     (5,330      (796
Other current liabilities
     (2,925      (437
    
 
 
    
 
 
 
Goodwill
     37,785        5,641  
    
 
 
    
 
 
 
Supplemental unaudited pro forma information for the acquisition has been excluded as they are not material to the unaudited interim condensed consolidated financial statements of the Company.
 
F-31

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
7
Deferred revenue and customer deposits
Deferred revenue and customer deposits consist of the following:
 
     As of  
     December 31, 2021      June 30, 2022  
     RMB      RMB      US$  
Deferred revenue
     80,405        85,481        12,762  
Customer deposits
     39,586        44,239        6,605  
    
 
 
    
 
 
    
 
 
 
Total deferred revenue and customer deposits — current
     119,991        129,720        19,367  
    
 
 
    
 
 
    
 
 
 
Deferred revenue —
non-current
     3,845        8,027        1,198  
    
 
 
    
 
 
    
 
 
 
 
8
Accrued liabilities and other current liabilities
Accrued liabilities and other current liabilities consist of the following:
 
            As of  
            December 31, 2021      June 30, 2022  
            RMB      RMB      US$  
Accrued payroll and welfare payables
              52,947        35,357        5,279  
Income taxes payable
                        230        34  
Other taxes and surcharge
              9,932        7,294        1,089  
Service fees
              5,233        9,228        1,378  
Acquisition of intangible assets, property and equipment
              840        840        125  
Government grants
              4,500        1,000        149  
Rental and property management fee
              3,418        3,410        509  
Payables for sales of employees’ shares
              180        393        59  
Payables to third party advertising companies
     (i      4,066        787        117  
Payable for business acquisition
     (ii                16,788        2,506  
Others
              4,189        2,913        436  
             
 
 
    
 
 
    
 
 
 
Total accrued liabilities and other current liabilities
              85,305        78,240        11,681  
             
 
 
    
 
 
    
 
 
 
 
(i)
The balance represents the payments to third party advertising companies for targeted marketing related services as the Company acts as agent.
(ii)
The balance represents the remaining unpaid cash consideration of RMB16,788 from the acquisition of SendCloud (see Note 6 for details).
 
F-32

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
9
Share-based compensation
Share option plans
2014 Incentive Plan
On July 23 2014, the Company’s board of directors and shareholders approved the 2014 Incentive Plan (the “2014 Plan”). Awards under the 2014 Plan vest
up
to 4 years from the date of grant and expire no more than 10 years after the grant date. The Company reserved a total of 5,500,000 common shares for issuance under the 2014 Plan. As of June 30, 2022, 37,911 shares remain available for grant under the 2014 Plan.
2017 Incentive Plan
On March 1, 2017, the Company’s board of directors and shareholders approved the 2017 Incentive Plan (the “2017 Plan”). Awards under the 2017 Plan vest
up
to 4 years from the date of grant and expire no more than 10 years after the grant date. The Company reserved a total of 6,015,137 common shares for issuance under the 2017 Plan. As of June 30, 2022, 86,632 shares remain available of grant under the 2017 Plan.
2021 Incentive Plan
In December 2021, the Company’s board of directors and shareholders approved the 2021 Incentive Plan (the “2021 Plan”). Awards under the 2021 Plan vest
up
to 4 years from the date of grant and expire no more than 10 years after the grant date. The Company reserved a total of 4,000,000 common shares for issuance under the 2021 Plan. As of June 30, 2022, 2,333,872 shares remain available of grant under the 2021 Plan.
The exercise price, vesting and other conditions of individual awards are determined by the board of directors or any of the committees appointed by the board of directors to administer the 2014, 2017 and 2021 Plans. The awards are subject to multiple service vesting periods
up
to 4 years, and will expire 10 years after the date of award. Upon the termination of the grantee’s continuous service, the Company has the right to repurchase the vested award or shares obtained.
Total compensation costs recognized for the six months ended June 30, 2021 and 2022 were as follows:
 
     For the six months ended June 30,  
     2021      2022  
     RMB      RMB      US$  
Cost of revenues
     20        (6      (1
Research and development
     6,464        (1,599      (239
Sales and marketing
     1,733        520        78  
General and administrative
     10,819        11,269        1,682  
    
 
 
    
 
 
    
 
 
 
Total
     19,036        10,184        1,520  
    
 
 
    
 
 
    
 
 
 
 
F-33

AURORA MOBILE LIMITED
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
10
Income taxes
The Company has holding companies in Cayman Island, British Virgin Islands, Hong Kong and its main operations is in the PRC. The Company’s entities are subject to local statutory income tax rate in these jurisdictions. Specifically, the Company’s PRC entities are subject to a statutory income tax rate of 25% and a qualified “High and New Technology Enterprise” (“HNTE”) is eligible for a preferential tax rate of 15%, in accordance with the Enterprise Income Tax Law (the “EIT Law”). The Company’s Hong Kong entity is subject to a statutory income tax rate of 16.5%, in accordance with the Hong Kong tax laws.
The Company recorded an income tax expense of RMB11 and RMB135 (US$20), representing an effective tax rate of (0.03%) and (0.24%) respectively for the six months ended June 30, 2021 and 2022.
The Company recorded uncertain income tax liabilities of RMB117 (US$17)
upon
acquisition of SendCloud. The Company does not have any uncertain tax positions nor has it recognized any interest or penalties for the six months ended June 30, 2021 and 2022.
 
11
Commitments and contingencies
Operating lease commitments
The Company leases office premises in the PRC under
non-cancellable
operating leases ranging from one to five years. Payments under operating leases are expensed on a straight-line basis over the periods of the respective leases.
Total operating lease expenses were RMB6,509 and RMB6,350 (US$948) for the six months ended June 30, 2021 and 2022, respectively.
As of June 30, 2022, future minimum payments under
non-cancellable
operating leases were as follows:
 
<
     RMB      US$  
For the six months ended December 31, 2022
     3,586        535  
For the years ended December 31, 2023