Q1 2021 Yalla Group Ltd Earnings Call
Okay.
Good morning, and good evening, ladies and gentlemen, thank you for attending standing by for a Gala Group Limited first quarter 2021 earnings conference call.
At this time all participants are in a listen only mode.
After managements prepared remarks, there will be a question and answer session.
Today's conference call is being recorded now I would like to turn the call over to your speaker has today and there's Carryout IR director of the company. Please go ahead ma'am.
Hello, everyone and welcome to you our third quarter 2021 earnings conference call for me.
All earnings earlier today and the release is now available on our IR website, and it's not on mute.
Cloud services.
Before we continue please note that the discussion today will contain forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties ethanol. Our future result may be materially different from the field for us today.
Information regarding these and other risks and uncertainties is included in our earnings release, and our registration statement filed with the SEC, Yeah that does not assume any obligation to update any forward looking statements, except as required by law.
And also know that yellow earnings press release, and this conference call include discussion of commodity GAAP financial information about the audited non-GAAP financial measures <unk> press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.
And then you'll go here from Mr. Paul Young our chairman and Chief Executive Officer will then provide an overview on our recent achievements and growth strategies can be followed by Mr side of it my view on the company's credit does well.
With a brief review of our recent developments.
And this is Kevin who our Chief financial Officer and provides additional details on the company's financial results and discuss our financial outlook for.
Management's prepared remarks, we will open up the cost for two question, our Chief operating officer, Mr. Jeff and they're trying to call for our Q&A session and I'd now like to turn the call over to our chairman and Chief Executive Officer, and he says how yeah. Please go ahead Sir.
Thank you Gary and Frank.
And one for joining or turning on who our first quarter earnings Conference call. Tom do you want and then it's off to a remarkable start.
Yeah like groups total revenue increased almost by 40% Q on Q and.
Uhm.
67, 6 million USD exceeding the upper end of our guidance by seven 4%.
This better.
Performance was driven by our continued effort to grow our user community.
The effective conversion from active users into paying users.
And the further and work much of our monetization capabilities and initiatives.
And the fourth quarter can you talk to us.
We also maintained rulebook perfectibility as demonstrated by our non-GAAP net margin was 49, 7%.
With the strong execution of our effort to raise brand awareness across the middle East and North Africa.
Jay.
And our effective marketing campaigns tailored to the local culture monthly active users for our group increased by 14, 6% Q on Q and <unk>.
18 8 million.
In addition.
Increasing user engagement on our platform drove yellow group paying users up by 11.
What percentage quarter over quarter at two five points.
Leading to outstanding paying ratio 31%.
Our ability to monetize.
And also continues to improve.
And our groups revenue Oh group Op, who grew rapidly by Todd you thoughts on cross cultural.
Total about culture and rich.
11 on steak doner and kilowatts.
During previous earnings calls.
And now for new programs and novel.
Your line.
Three of them are casual game platform.
Including balloon.
We used <unk> and Gulf countries.
And I know one okay for Turkish user and yellow pages.
For South America.
That's unfortunate.
Oh, the three cardio being put on helping made available online and we have also made great progress and we.
Sliding and the technology and user interface.
This new product over the past.
Our Crescent Society.
Share more.
And his partner.
Our folks new per.
Yellow Chad.
This method for.
And product designed specifically for <unk>.
Okay.
We are pleased to share that we lost with the decoration of yellow choppy much Linda debt tissue for rainy.
And really kind of put that.
Yeah on a group.
And to be entered and Justin and connections among our and Davita app.
And create integrate all day.
Synergistic ecosystem.
To list.
We have adopted measures to chat.
Chat for the right talent to join our R&D on product.
The spend on Washington.
Automation and instant messaging functions such as messaging.
I was chatting and greater China.
Since its launch and our domestic brands team has.
Continue to refine and enhance the product based on user feedback and we will gradually roll out new design features and functions on top.
And based on the local user feedback and get better.
The improvement and.
Iteration notebook and for that it's all day.
Ongoing.
And then in.
And you show better stage.
Take more than several months.
Debt to corporate paying their detailed or a couple of Kodak.
For the team decided to officially launch and the product and dark pool promotion.
As I mentioned and our last earnings call.
I like to talk on <unk>.
And it's to expand on where you are today.
With new product lineup for official launch we plan to increase our sales and marketing activity to be at initial yields for bank for this program.
For our existing two product yellow and yellow.
We will maintain our strategy with data and user growth and don't expect to see must change and.
And exactly related to that too.
Furthermore.
We continue to see a range our portfolio, we aimed to amplify standard.
Larry.
I congratulate you and Nevada.
Yellow ecosystem.
Oh and Si E.
And we'll elaborate more on <unk>.
Ideas on this.
Dear.
And in a few minutes.
We had an outstanding first quarter marked by strong girls across our primary operational and financial metrics.
And just a few day.
Your line is going to happen.
And our estimate five years ago.
And we identified what Jeff to be uniquely suitable for online social networking and entertainment and.
And <unk>.
And the development.
And the first one.
<unk> mobile and social networking and entertainment platform in the region.
Over the past five years, our leadership in this field.
Debt to debt.
And we gradually in rate and income.
The productivity Oprah to better serve local users, we're affirming our mission to build.
The most popular destination for online social networking and.
Okay.
Looking ahead, we continue to.
To closely watch test and neither local culture.
And our Stradley community.
And beauty, yes ecosystem with various products and services tailored to local users need.
Now I would share that go over to our president Mr. <unk> for <unk>.
Closer look like over weighted development.
Thanks.
Hello, everyone.
Thanks for joining us today.
And we continue to enrich our product portfolio.
Clothing yellow zone.
And for new products and our pipeline, we are looking to boost Sydney outages among individuals.
Develop a more integrated ecosystem, which will help us improve efficiency and acquiring and yours.
Moving forward well.
This move we would expect to see and increase and the flow of users from application to application.
Michelle you between the chat rooms available on each of our products.
We also anticipate seeing an increase and user awareness of the multiple product and services provided by a day.
Which will as the whole lead to a larger user base loan growth time spin and.
Yellow ecosystem and deeper brand loyalty and the loan growth.
We recently adjusted the effectiveness of advertising yellow on your <unk>.
A few region.
And the resulting tropic gained oriola what solid.
While we have observed good potential for cross selling on yellow Ludo before we decide to launch this project officially we plan to run more trial.
Essentially we will test the concept and a few countries.
But aggressively apply it to all other countries that we operate in and.
And Chile replicate the same process to help promote our upcoming your products or even collaborate with other industrial Chuck.
Another exciting updates, we would love to share with you and our investors here is about our new product yellow boxes.
And do you use for technology Unicorn and listed on the NYSE, Besides focusing on serving our Mena users' needs and.
Your line is also exploring overseas opportunities and the South American market, our first product customized for South America boxes and received very good user feedback and its bit that's Ryan and we are very encouraged by its user metrics that we are constantly give value.
We will keep monitoring the strength and we will share more updates for Baxter's development with you next time.
Yellow and continue to leverage the team's deep local insights to provide me and our local users with various products.
And it needs and preferences.
It remains dedicated to building and developing the ecosystem.
Our mission is to become the number one provider for online social and Nick walking on the entertainment and dining out easily and.
And we are well on our way to achieve it with that I will now turn the call all booked all of T F or cut and.
Who will discuss our key financial and operational results.
Thank you Sammy Hello, everyone. Thank you for joining on.
Our strong performance.
Good day first quarter as weak debt postulate excuse me our strategy, that's not always easy to use easy and convenient he bachman.
Our first quarter revenues grew by two.
Two.
And for Entertainment one.
Year over year too.
57 point, meaning U S dollar Wow, our non-GAAP net income reached $33.
U S mi and to reach out.
263, 7%, Yeah, Oh, yeah.
Our non-GAAP net margin remained low.
He at $49, seven Mcclatchy, and our unique monetization strategy and marketing positioning and strong operational efficiency.
Now I'd like to walk through our financial issue for the first quarter of 2021.
All right well 67.
Meeting USD debt.
And quarter I'll keep on May 21.
221 increased from 21 1 million and U S dollars in the same period last year.
The increase was primarily driven by the widening of flow.
And the yellow ludo debate on.
And Hoffman.
Good morning, and accretion couple for me.
On average and E. Each week 500 feet.
<unk>.
From day, one meeting in the fourth quarter of 2022, eight percentage points eight meeting in the fourth quarter of 2021.
Yes, and <unk> increased by 81.
And then two seven points, meaning in the fourth quarter of two five and thank you one from.
For meaning in the same period of last year.
And the <unk> and <unk> increased by $445 for.
To 11.5 meeting in the fourth quarter outflows on the 'twenty one for.
Two one meaning in the skin care line.
In addition, and not.
Finally contributed to average Saudi Aramco group was.
Good day.
And to me in the numbers.
Hey, Nathan.
Which grew from one point and seek meaning in the fourth quarter of 2020 258, meaning in the fourth quarter of two from the 21.
Now, let's look at our costs and expenses.
Our cost of revenue was.
'twenty for meeting USC in the first quarter of 'twenty one.
Excluding share based compensation expenses cost of revenue in the fourth quarter of attempting pension one for 'twenty.
22.3, and U S dollar.
227.
On increased from $8 8 million USD for the same quarter last year.
The increase was primarily due to interest and commission fees for the payments platform, resulting from our expanding scale.
Each of these share based compensation and Synthes other components on cost of revenues as a percentage.
Our total revenue remained relatively stable and Sydney suite.
In the fourth quarter on 'twenty, 'twenty, one compared with 32.
Make sense.
Thank you Andrea and thank you. Thank you.
Our selling and marketing Synthes eight points for me and in U S story, and the first quarter of 2021.
<unk> consultation synthes other components.
And the marketing expenses for the fourth quarter on 2021 five.
And five points, one meeting USD and.
And 81, 7% increase from $2 8 million USD for on the same quarter last year.
The increase was primarily due to higher advertising and marketing promotional incentives as a result of our continued user acquisition efforts.
Excluding share based compensation expenses other component of selling and marketing Synthes and <unk>. Our total revenue decreased from 13 points for <unk>.
The fourth quarter of 2022 seven.
And the Thanksgiving in 2000, and thank you Wang.
Primarily due to strong growth organically the acquisition to one more before arrest and Brent index and the income my taking my question.
Our general and administrative expenses were 11.
Seven meeting USD, and therefore support shop 2021.
Excluding share based compensation from any other.
And the components of general and at a net <unk> expenses for the first quarter of 2021.
And we meaning U S T. A lesson from the 24, 4% increase from one 3 million USD for the same quarter last year.
Which was primarily due to an increase in salaries and benefits for our general and administrative staff.
Which was intensely and by an expansion on our general and administrative staff.
Excluding share based compensation expenses other components on general and administrative expenses and 10 page our total revenue growth from this point for <unk> in.
In the first quarter on 2020.
Two for folks in.
In the fourth quarter on 2021 huge and economies of scale.
Our technology and product development expenses were 3.3, meaning you're asking from the fourth quarter on 'twenty one.
Excluding share based compensation expenses other components, our technology and product development expenses for the fourth quarter of 'twenty, 'twenty, one and walk suite to meet and USD.
277% increase from <unk> 9 million USD for the same quarter last year.
The increase was primarily due to and Hoffman and salaries and benefits for our technology and products to keep volume and stuff.
Which was incomplete and fine and expansion on our technology and products and vitamins.
And it's widely from higher investments and new products and services.
As a result, obviously, we get other components on the technology and the product development and Synthes and engage our total revenue.
And from 4% to.
Two for 7% year over year.
And our operating income for 'twenty two 'twenty.
Turning to guidance.
In the first quarter on 2021.
<unk> operating income was $9 2 million and USB and nothing PMA Lafayette.
Excluding share based compensation non-GAAP operating income for the fourth quarter on 2021.
And for medium and U S.
257, 8% improvement from the same quarter last year.
Our income tax expense was <unk> 40.
And 43 million USD and the Zip.
And <unk>.
Last quarter on <unk> in comparison to points 19, meaning USD and of course, the courtyard 2021.
Moving to the bottom line, our net income was $19 8 million USD and therefore supports our 2021.
100, and and the 14% increase from.
From nine to meeting with Sars and the same period last year.
Excluding share based compensation expenses non-GAAP net income for the fourth quarter of 2021.
33 million USD.
Two handled and and 63, 7% improvement year over year.
Next I would like to briefly go through our liquidity and the casually bogey.
As of March 31, 'twenty country, one we had cash and cash equivalents.
And two Hanford and $61 7 million USD.
And compared to cash and cash equivalents.
For <unk> and 39.
Nice meeting you asking as of December 31, 2020.
This improvement demonstrates our resolve and the capability to improve yeah group operation on that.
Consistent basis.
As we enter the second quarter, we said Ramadan and classing Humana chicken pizza coffee and up between.
13th April through May.
And 2021.
We expect to have on a relatively moderate revenue growth due to potentially reduced social and entertainment and <unk>.
Which is in and the seasonal impact.
We expect our revenue to be between 65 million USD and 71 million USD and the second quarter on 'twenty, one taking the speed and now seem to come from the region.
Looking ahead, we already elaborate our teams deep local and continue to do that day.
Yeah.
C zone and enhance our brand building too for the pace the runway for long term growth.
As we are committed to delivering per year.
For our users and meaningful returns for shareholders.
So Bob I'll loop and based on the current market conditions and reflects the company and management's current and preliminary estimates on marketing and operation Foundation and customer demand.
And are all subject to change.
This concludes our prepared remarks for today operator, we are now ready to take questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
And you're seeing a speaker phone please pick up your handset before pressing the keys.
To withdraw from a question for you. Please press Star then two.
For the benefit of all participants on today's call. If you wish to ask your question and net to management and Chinese places and immediately repeat your question in English.
The first question today comes from fire and how with Haitong International. Please go ahead.
Yeah.
And gladly turn and Shannon Hawkins from additional ex U S now and what do we all share and Sean and he goes just yet on what she does that for them yet Apache for dice LNG and you May go ahead, and Saturday actually I, just have a patch and shouldn't that you always have to go just due to the holiday shift that debt measured on.
Doug I, just you Patrick merchandize, Godfrey and Doug Australia on the Alicia Yoga run and that's what you pay for Jack.
Oh sure Yeah, why shouldnt learn a whole downhill UCI just for.
And what day shelf ourself and alcohol, Joseph who go out kind of judiciary and thought that that might be treated with fragile cartridges and make a teacher and back on saying that you're going to know what would be the outdoor Yahoo, diminish and Michelle Jones, She said she <unk> assumptions.
I will translate for myself and I. Thank you management for taking my questions and congrats on a strong quarter.
And my question is mainly related to the on approaches and could.
Could you. Please provide some color to the current stage up yet to Patrick's day, such as M and you'll revenue it was up.
Profile and spend and use their paying behavior and what is the most active country for yellow purchase now and when are you going to officially launch the product.
Oh, Hi for Ya.
And other question, but based on the feedback we received which are clearly showed love group.
Padgett from users and South American Margaret.
Believe patriot has the potential to become a powder product.
Product and this region, we have already started and the promotions be on a patchy and Q1.
And according to the App and et cetera and people there.
Eddie I'm always hopeful and six countries and are the book and category and Joy and.
We will continue to monitor the engagement churn and look forward to sharing more backend debt on our review next quarter, but then we are starting to strengthen our campaigns and in Q2.
And the members like beauty and they use the other real question Danielle we will provide.
And we prefer to provide and deal.
Nathan.
And next morning call.
Yeah.
Alright, Thank you Ms. Dan Thank you for Cam.
And then.
The next question comes from Bob <unk> with Oppenheimer. Please go ahead.
Hi management, Thanks for taking my question.
So I have two quick questions here. So first is I guess.
Our non-GAAP margin actually improved sequentially in <unk> I guess, that's because we haven't started spending on sales and marketing yeah. So my question is when do we plan to spend more on and sell some rock and paying for especially for our new products right and then.
When we do that.
And what what's going to be the impact on.
Our net income margin and then the second question is about our Mou growth outlook. So last time, we talked about 10% to 15% sequential growth for the for each quarter of this year. So can management comment on debt any update on debt and then how should we think about the Mou.
And we look for the new products for example by the end of this year like how.
Well, it's going to be the user size for it.
New products. Thank you.
Okay.
Thank you Bob Thank you for your question on <unk>.
Total Q1 yellow achieved wide net margin again.
And for Q2 is we have go into for promotions on a need for that let me see from inquiry from batches to our margin in terms on how much they are going to spend in plasma and marketing and.
And it really depends on user feedback and marketing dynamic.
We will adjust our promotion strategy accordingly, and.
Time to.
Maximize the efficiency of spending.
For the Yao on Duluth.
Duluth and they use all Luke and.
We mentioned last quarter, we think that in both products and <unk>.
Grew by 10 to expenses.
Tim will take its.
Quarter over quarter, and 21 and on the new products and <unk>.
And we think that and that's been on the user feedback and the for.
Fair question.
Got it thank you.
Okay.
The next question comes from cash hang or see ITI think please go ahead.
Hi management, Thanks for taking my question and congratulations for on culture.
My question on box.
So in terms of the instant message and product.
And youll see the compensation from either for gods like what's that.
And so what are your debt.
Goldstrike age on time that ball I got on attach thank you.
Hi, good morning paper on.
On <unk> question.
On the company with glucose teen space and UAE, we are dedicated to offering and product.
And our pillar two Arabic users less debt.
And using habits and preferences.
Which is the main difference.
Thank you and let Chad and Whatsapp.
And the money localized futures Fisher for wood.
This program and continue to refine and based on local user feedback.
And in terms of user growth strategy. When we think the product is ready we will introduce eurochecks for users and now organic community.
And from Golar and get on Hulu and other programs and.
And encourage them to give you the China and this one really to be able to leverage for the Q minutes community we have built.
And the short euro connections, we have fostered over the past years.
Yeah.
Thank you Gabriel.
Okay. Thank you for clarity.
And two.
The next question comes from Chicken G with CIBC. Please go ahead.
Thanks management for taking my question first I would like to congratulate for another strong quarter.
Have a question regarding your product pipelines are currently both of yellows products our video centric since.
And our voice and check things and video entertainment applications have gained a lot of attention. These days do you have any plans to launch video centric products in the future can you. Please share more color about that thank you.
Thank you for switches.
At this point and we don't have really essentially product line.
And but it doesn't mean that we only focus on growth strategy product, we will kick motoring and being a user's need and champion and social networking on them and payments and.
We will continue to adjust our strategy occurred on.
Thank you.
Yeah.
Thank you.
Okay.
The next question comes from Fiona fan with Jefferies. Please go ahead.
Hi management, Thanks for taking my question so and.
Congratulations on a great.
Great breakout so I have two questions. So the first question is about and <unk> acquisitions, and so I would like Charles and any differences of user acquisition strategies for a different and Paragon.
And in different regions. So like for example, we launched and you're probably Doug and me.
So what will be the margin strategy here.
And my second question is about mid to long term outlook, so could management share a strong colors and about outlooks for two to three years from now like geographic expansion and business and line extension products offerings.
Yeah.
Thanks for question and this is Jeff I'll be answering the question.
Through royalty and marketing campaigns on your non diluted over the past five years. Our team has gained valuable experiences and gradually built strong capabilities and.
Mark.
Our high user acquisition efficiency can be demonstrated by our excellent expense control and sales and marketing and the consistent and increasing our and the youth.
Besides.
The traditional user acquisition through advertising and media both on.
For yellow and yellow and Blue is also showing strong organic growth and at the same time because of the high quality of the product and localization.
And also being recommended for free by top tech platforms like Apple and Google. This all contributed to our successful use acquisition.
For every new product, we will design and marketing plans based on our understanding of the product special characteristics and there will be always below our own pace and execution and <unk>.
Jeff our strategy according to the feedback and the metrics that we keep module.
It's always it's always a very dynamic process. We also have different plans tailored for different measures to maximize the efficiency of state support for the upcoming promotion and our new product, we're very confident on teams and the ability to achieve strong results. Thank you for your question again.
And I'll be answering the second question for strength.
For the next two and three years.
Certainly be overpaying for Chris.
And we got a purchase match, we will keep our eye all these total mark to market and see.
And if there are.
Any other potential opportunities.
In addition to yellow yellow ludo and for new products, we introduced earlier.
We will continue to monitor and look who users' needs and preferences.
And identify further opportunities to serve.
At the same time as we introduced earlier.
We will gradually start to drive traffic from one product for another.
And with the dedication to build and develop our yellow ecosystem.
Which we will as a whole.
Moving to a more integrated user community longer time span and yellows ecosystem and deeper brand loyalty and the loan.
Thank you Fiona.
Okay.
Okay.
As there are no further questions now I'd like to turn the call back over to management for any closing remarks.
Thank you once again for joining US today, we look forward to speaking with you in the next quarter. If you have further questions. Please feel free to contact <unk> Investor relations through the contact information provided on our last night or the PSM Hay group and documentation.
Yeah.
This.
Concludes the conference call you May now disconnect. Your line. Thank you for attending.
Okay.