Q3 2022 Weibo Corp Earnings Call

Good day, and thank you for standing by and welcome to Wasteful reports third quarter 2022 financial results Conference call.

At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Ask the question during the session you will need to press star one telephone please be advised that today's crisis being recorded I would now like to hand, the comprehends over to the company. Thank you. Please go ahead.

Thank you operator, welcome to Weibo's third quarter 'twenty two earnings conference call joining us today, our Chief Executive Officer, All day long and our Chief Financial Officer, Steve Hoppe. So Congress call is also being broadcasted on the Internet and then available through Weibo's IR website.

Before management remarks, I would like to read you the safe Harbor statement in connection with today's conference call. During today's conference call. We may make forward looking statements statements that are not historical facts, including statements of our beliefs and expectations.

These statements involve inherent risks and uncertainties a number of important factors could cause actual results could differ materially from those contained in any forward looking statements. We assume no obligation to update the forward looking statements in this conference call and elsewhere.

Further information regarding this and other risks is included with the annual report on form 20-F and.

And the other filings with the SEC all the information provided in this press release is occurring as of date hereof, Weibo assumes no obligation to update, especially information except as required.

Additionally, I would like to remind you that our discussion today includes certain non-GAAP measures, which excludes stock based compensation and certain other expenses, we use non-GAAP financial measures to getting a better understanding of Weibo's comparative operating performance and the future prospects our non-GAAP .

Financials excludes certain expenses gains or losses, and other items that are not expected to result in future cash payments and a nonrecurring in nature and not indicators of our core operating results and outlook. Please refer to our press release for more information about our non-GAAP measures.

Following management's prepared remarks, we will open up the lines for a brief Q&A session with this I would like to turn the call over to our CEO golf they want.

Tony already bought.

Thank you Hello, everyone and welcome to Weibo's third quarter 2022 earnings Conference call.

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Today's call I will share with you highlights of Weibo's user product and monetization in the third quarter of 2022.

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On the user front weibo's reached $584 million and average fees reached $253 million in September 2022, adding approximately 11 5 million users year over year, respectively in September 95% of Weibo's.

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Monetization with macro economy and consumption weighing on the overall advertising market.

Clients remain cautious towards their advertising budget spend in the third quarter. Our total revenues reached $453 6 million U S. Dollar a decrease of 25% year over year, and an increase of 1% quarter over quarter, excluding the foreign exchange impact our total revenue.

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Third quarter, our non-GAAP operating income reached $162 1 million U S dollar representing a non-GAAP operating margin of <unk>.

36% up from 32% last quarter.

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Next let me share with you our progress made in product monetization in the third quarter, our targets on product operations still focused on strengthening the platform competitiveness through improving operating efficiency, maintaining large user scale and enhancing user engagement.

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In this quarter with the summer holiday season, and how Trump effect. Our overall traffic reached its peak level in August this year based on our experience the opening of the fall semester in September usually negatively impact our traffic, especially when campus promotion suspended this year due to COVID-19.

The control measures in response on the products and operational fronts. We have stepped up our efforts in the areas of China investment community product optimization, and the cultivation of entertainment and E sports verticals, which resulted in healthy trend of our overall traffic in September and shooed off on that.

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On the channel front, the ROI of our channel investments for the third quarter was further improved we continue to strengthen our cooperation with handset manufacturers in Weibo's, Caltrans and social products, while focusing our investing hard ROI channel. This quarter were achieved full coverage for Weibo's hot trends content.

In our core positions all handset devices domestic leading manufacturers.

Meanwhile, we further upgraded our service domestic smartphone users and enhance their consumptions are improving the quality of crops and content considering the handset attributes in a user's consumption scenarios in September the number of our hot trend of users from domestic handset increased 30.

Percent quarter over quarter next well will continue to deepen our.

Cooperation with handset manufacturers to focus on long term mutual benefits expand cooperation to more of Weibo's core products and content and increased weibo's user scale through handset channel.

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On social attributes this quarter, we continued to enhance social features of our products and increased our scale and engagement of our core users.

Our relationship with beat.

While maintaining user traffic user interaction continued to grow in September representing improved user's thickness in July and August which is the peak season of Capex due to the summer holiday Weibo's content generation largely increase particularly for verticals such as the elaborate east television series.

Variety of shows and games et cetera, we leaned our traffic distribution towards these verticals with strong thickness of young users in the relationship based feed which help enrich the vertical content ecosystem and enhancing user interaction and consumption.

And ship it in.

In the meantime, we will continue to improve the distribution structure of our relationship there.

Further increase the distribution of content generated by Kols and community based content to emphasize the social features of our relationship with.

In particular, we made significant upgrades in algorithm to enhance distribution have communicated content further integrating the community based content and user generated content as a result in the relationship based feed 70% of users, we're able to consume quality community.

Its contents if their interests directly in the feed in September traffic generated from community based content distributed in the relationship with Steve and the number of users who made interactions through community content has increased more than 50% quarter over quarter, which further flexibility.

Data users relationship beauty and the interaction efficiency in our relationship.

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In the third quarter will continue to beef up our investments in community product to strengthen the perception of community products by all users on <unk>.

One hand, with the independent tab of Super topic at the bottom of main page launching ensures we are able to improve new users' willingness to revisit attack through prioritizing traffic distribution of poor quality community content, coupled with our effective user recall strategy in September .

He is a super topic tax increased by more than 50% compared to desktop <unk> half of which were new users spoke communicate product not only has the scale of users growing users' consumption thickness increased significantly with per capita consumption of community related content.

Increased by 40% from June on the other hand, we further enhanced functions and mechanics.

Many key products such as new functions are posting any inaction that launched in the third quarter.

Increased user's thickness in the community significantly at all the production and interaction of quality content in the entertainment and online gaming verticals in September the number of users who posted and ensure access in our community continued to grow double digits compared to June while the <unk>.

Number of posts and Inactions increased twice the increase of the users.

We believe that the cost of building up our community product.

For instance, the social thickness of Weibo users boding, well for the long term healthy devote them to have the platform.

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So the comparison.

In France, our strategy. This year is to focus on developing social accounts and a key vertical to constantly solidify our advantages in key content verticals as well as high quality accounts and thus drive the improvement of operating efficiency in terms of the online gaming vertical.

With further cultivate our ecosystem around esports events and deepened cooperation with Weibo and top Esport club in third quarter. The daily number of posts by esports players has increased by 50% quarter over quarter with both traffic and inactions doubled coupled with.

Tournaments realizes how trends the overall traffic from the esport vertical well over 50% sequentially, but have also attracted a wider group of young users and generated higher user engagement, while helping esport club buildup esports and the market value of our platform.

I suppose the entertainment industry. The summer holiday was the peak seasons for TV series and variety shows we're supposed to have some partnership with video platforms and show producers to improve distribution of hot trends and a user interaction driving the volume of blockbusters to grow across the platform.

And third quarter, the traffic and the interaction of TV and a variety of shows continue to trend up compared to that of the last summer holiday in particular, the traffic for TV shows has reached record high which more than doubled compared to the same period last year with multiple phenomenal projects.

<unk> TV show love like the Galaxy and the love between theory, and that will have generated over or typically public views and 28 million discussion reinforcing weibo's position as a designated platform will show launching and promoting going forward, we will continue to.

We support our partners and drive healthy development of the entertainment.

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Moving on to monetization in the third quarter is our general recovery trend of AD spend on a sequential basis with virus and paces across different industries. For example, in although industry. Thanks to call to support for new energy vehicles industry and enhance market recognition for Weibo's integrated.

New car launching marketing solution automakers over the past two quarters, where it was in that product launch and marketing solutions attracted over 90% of the overall new model launches.

Top of regular brand exposure leveraging the combo of media vertical kols and how trends Weibo has successfully expanded its market share in new car launches leading to sustained double digit year over year growth in AD revenue from auto industry in the third quarter as for the luxury sector.

And revenues also booked significant year over year growth due to the intensive launch of new lines and shows in the third quarter.

In terms of online game industry, our differentiated marketing model that we have established over the past two years has resonated greatly among game developers, even though the new games approval. This year has shrunk we have effectively help this game developers improve user our pool and life.

Cycle, leveraging cooperation around content with our top tier game crime and event based marketing products and services.

As a result, Weibo has gained surgeon at budget and further solidified our market position among advertisers in the online gaming sector. Other industries, such as the <unk> industry continued to be impacted by headwinds of COVID-19 control measures and weak consumption surgery with brands take.

No wait and see attitude in their branding budget allocation.

E Commerce platforms in the three C products also experienced varying degrees of decline in the third quarter due to market conditions and the industry slow season.

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Talking about outlook.

All advertising business for the fourth quarter and the first half of next year. There is still relatively high uncertainty under the market circumstances. However, we are pleased to see positive signals with certain industries. For example, e-commerce platforms and anthem CPG clients have released at budget during the.

Double 11 shopping festival to various degree although the double 11 shopping festival was shorter this year at budget from E. Commerce platforms returned to a growth trajectory compared with the same period last year.

Third quarter with focus on conforming our algorithm to accurately fulfill the marketing needs of e-commerce platforms on the AD product fronts and expect to gradually capture certain advertising budget in the fourth quarter.

Meanwhile, the fourth quarter is also a key seasons for new product launches in the handset sector with all major handset manufacturers launching key models in their pipeline.

As such we are actively working with our clients to develop content marketing plans to further beef up weibo's market share in new phone launch at Moreover, the 2022 World Cup in the fourth quarter will be a key advertising window for many of our clients, especially in the food and beverage sectors.

We are cooperating with clients and discussing their.

Marketing plans and details to tap into World Cup related trends in the whole pumping enhancing AD performance and our wallets.

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Thank you Joshua <unk>.

Now, let me briefly recap on Weibo's progress our initiatives to optimize costs and improve operating efficiency as mentioned in our last earnings call. We have taken a series of effective measures to optimize our cost and expense structure and enhance efficiency.

Year to better control our costs.

These measures continues to bear fruit leveraging our solid execution is.

Third quarter, we delivered a non-GAAP operating margin of 36% up nearly four percentage points versus 32% in the second quarter benefiting from solid execution and disciplined spending strategy to further improve operating efficiency.

This has demonstrated our improvements in operating efficiency, giving us the opportunity to lead our resources towards more potential areas.

<unk> channel investment as an example through strategic channel cooperation we have acquired more high Apple users.

Roy retrieving period of China investors.

Currently the cost retrieving cycles of most of our channel shortened to nearly half of back in the same period last year on the product operation fronts, we're deepening the strategic cooperation with our content partners.

So social products and our strength and our advantages in hot trends in our key verticals such as E Sports and sports will build strategic partnership with video site mainstream media and E sports clubs this year to acquire more content and users.

Despite potential cost incurred in the short run where it will significantly enhance our competitiveness and content operations and improve the operating efficiency of the platforms traffic.

On the AD product front, but one thing we will tap into market trends and beef up our investments in content marketing to strengthen our differentiation or another we're focused on delivering breakthroughs in accurate algorithm adaption to capture E. Commerce AD budget looking into the fourth quarter will continue.

Due to executive against our strategy of reducing costs and improving efficiency was more focused on adjusting our cost structure and optimizing resource allocation to ensure efficient operation of our company remains high uncertain macro environment and solidify our long term competitive.

On this.

Yeah, I know, it's tough into shops and with that let me turn the call over to Beth Howe for financial review.

Thank you Adolfo and Hello, everybody.

Welcome to Weibo's third quarter, two earnings conference call.

Less cash used in magic.

September 2017 to wafer with all of you on average if you use the fast time to an $84 million and 253 million respectively, representing a net addition of 11 million in the first million users respectively on a year over year basis.

We are pleased to see healthy engagement chat and video consumption.

Five the back to school seasonality and ongoing disciplined channel marketing strategy that is changing weibo's car by the publication when you're over there.

Turning to financials.

A reminder, my prepared remarks will focus on non-GAAP results or.

All monetary amounts are U S dollar term and all comparisons are year over year basis, I Love All our wife Mila Hate now let me walk you through our financial highlights for the third quarter of tiny tiny tool.

Weibo's third quarter, two and that revenue was 453 6 million a decrease of 35%.

All told me press that a possible crazy.

Operating income was $112.

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<unk> operating margin of 36% net.

Net income attributable to Weibo reached about a 19 million representing a net margin of 36%.

I hate to the E P S.

Compared to a 97 last year.

Now, let me give you more color on revenue.

Weibo's advertising and marketing revenues for the third quarter 2022 victories I'm, sorry factory, there's actually three part for me Dan.

A decrease of 27% or 21% on constant currency basis.

Reflecting our paid marketing advertising market asked me back pain.

Mobile AD revenue was 372 million talked ability of approximately 95% of total ad revenue.

What's called me, the researchers and the macro habitus, mainly on overall demand.

Our advertising business continued descending trajectory year over year.

Well booking a moderate sequential growth during the quarter.

Our leading verticals in terms of AD revenue contributions in the third quarter for F. N G. So IC products and all of that game.

In terms of quote the luxury and automobile.

Automobile sector utility the salaries in the car right Chad.

Double digits growth.

Both annual and sequential basis.

Fabricating, Bob Hamlin electronic a b or in that shape.

Policy stimulus for the automobile industry and then you've got the whole product work visas for luxury brands.

Beefed up sales are for us to capture higher wallet share and we expect her with our whole spectrum of social AD solutions.

I'll, let him sector also demonstrated.

Okay.

As our brand plus performance at offering.

We maintained the greatly with game developers.

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Discretionary consumption category on the e-commerce sector. They met its lackeys amid a weak assumption sentiment.

Lukewarm sales data and the broad based initiative to optimize cost and expenses among our customers.

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Most of the fees continued to be the largest part followed by social display ads and search and the topic at offering.

In light of industry wide pricing pressure and add execution challenges.

Perhaps to me toward the window to optimize our AD technology and the product.

In the hope of Patriot more pro forma Australia ad budget.

As more defensive in the current market publisher.

Meanwhile, we are steadfastly focused on highlighting our market.

For recreation I felt I boil archiving, each with a video that patient chat off the ad market.

Entering the fourth quarter, we are seeing signs of advertising market bottoming out in a more moderate at a gradual pace that's that.

Larry King upcoming ecommerce festival.

Beefed up our product and our sales execution to capture the potential pent up market opportunities.

Well navigate tools there are many have them in the near term.

We remain confident our last 10 months I think that opportunity.

That's our unique value proposition and a diversified content ecosystem will unlock.

AD revenues from Alibaba for third quarter was 15 million.

Decrease of 28% or 22 of press at a constant currency basis.

In January in line with our overall advertising business performance.

Value added a survey that revenue.

Was $16 1 million in the third quarter.

A decrease of 14% or 8% comp.

<unk> comprehensive basis, a decrease of Bath revenue with many due to lost revenue contribution from membership with everything.

Turning to costs and expenses.

Costs and expenses for third quarter, which will kind of like a one 5 million.

<unk> of 19% as.

As we implemented our efficiency initiatives to stabilize earnings.

The decrease was a call each past unexposed, Idaho successful ongoing and stringent cost plus provider, a very operational fall, especially disciplined channel investments and the reduced offline opportunities.

Operating income in the third quarter with $102 1 million, representing operating margin of 36%.

And toward the farm sector to put that in the second quarter.

Our market performance has exceeded our expectation of our cost optimization initiatives continue to bear fruit.

Despite COVID-19 headwinds in the macro strategies.

Yes.

Turning to income tax under GAAP measure income tax expense for the third quarter was like.

<unk> 8 million compared to $71 4 million last year.

Net income attributable to <unk> in the third quarter with wildfire and 19 million representing a nice margin.

Thanks for that.

Compared to 34% last year.

Okay.

Turning to our balance sheet and cash flow items.

September surface plenty plenty to weibo's cash cash equivalents I'm sure coming investments totaled therapy that comparison of third quarter.

I thought December 2nd fourth plenty plenty what.

In the third quarter of 2017 to cash provided by operating activities was 74 million capital expenditure totaled $4 6 million.

Depreciation and amortization expenses amounted to 13 2 million.

Before turning to the plenary session I would like to provide update our share repurchase program.

I got up to 500 million share repurchase program authorized in March of this year, we have repurchased a total of approximately three 1 million at Adi.

Our total cost.

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15, $7 7 million as of September 32017 tool of Ms to return value to shareholder amid a hormonal market with that let me now turn the call over to the operator for Q&A session. Thank you.

As a reminder, if you'd like to ask questions. At this time, Please press star one one and <unk>.

One moment for the first question.

Okay.

First question comes from the line of Alicia Yap from Citi. Please proceed.

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The final lease up.

So thanks for taking my questions I have a question related to.

The advertising outlook and sentiment in the fourth quarter as well as into 2023.

Given the strict public policy and also the weakness in the macro how should we think about the growth rate.

As comparison to the third quarter in terms of the declining.

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Deeper again to what.

What we saw for the third quarter and then as we go into 2023 can management also Kyle a split in terms of preliminary rebuilt for the first half versus the second half growth.

How should we think about I got the first half should be more conservative and then second how we should see some resumption of the growth. Thank you.

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Alright. Thank you for the question so with regards to the Q4 and also the 2023 performance. So you can see first of all I'd like to talk to you about the structure of our Bozeman so to.

Many industries are actually related to consumption for example, <unk> products as what it is.

E Commerce. So you can see that the recoveries due to its high related to that.

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So next.

I'd like to talk to you about the.

So you can see that we are going to narrow in the kind of trials in Q4, and also going to realize any quarter over quarter improvement.

In the future and also now I'd like to talk to you about these situations. So as you can see that I'm talking about some old offline scenarios msos multi offline activities. So.

TOBA, we had a lot of activities and so organized by international institutions. So that we've got some suspension of the offline activities as part of our customers. So we had a big impact in October .

I see that I'm talking about the e-commerce actually a great improvements because of a couple of other just shopping festival and also the double 12 shopping festival as well, so thats, especially talking about the FMC Gs so they're going to allocate more budget actually in these two events.

And also the overall trend will be upward.

So last year, we had a very special in the category, which is the live stream e-commerce and due to certain reasons they had actually a big decline.

In terms of this.

In particular this year's performance and also to the next one is that talking about the Q4 on the overall basis. The overall category of E. Commerce will be experiencing a very stable trend and also talking about the World Cup you can see that on a budget is allocated with us.

The World Cup.

So that especially FMC Jeep so that is to say that we're going to receive the same budget of the FMC G medications.

<unk> in the World Cup session, which is quite equal to the assertion of the Winter Olympics.

Which one kind of horizontal reach and suites at Ya Qin shoe condo kind of in Asia.

Historically <unk> hopefully here in the years.

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Donlin will be a kind of a tissue concentration on loyalty.

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Would you have that kind of woman Panera, two Fisher from Hydro bridge on that either.

The yard either two ways.

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The easy to adding an army, which you're shipping the offshore tableau each of Asia.

Thank you Marie Kondo organ crew, who the hearings on the to go with that.

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Our coming through on to Johan Asher.

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Actually I'll be equipped for that becoming ship when we're going to be a commercial network with <unk> with some downward pressure.

Got it.

Okay.

Okay.

So now I would like to share with you some of the colors.

For example, if we're talking about the new control Covid control policy, especially the new 20 items that issued by the government and controlling the COVID-19.

And also some of the seamless.

Policies towards the reduced industry, we are able to see a very good recovery of the consumption side, but that is to say that having said that we are still hoping that it will take time to recover and also even if we are having a fully open the market. After the COVID-19 control still it will not generate the rig.

Coverage immediately and I believe that is going to be the case and still it takes time to recover and also next step point.

And also the next point I'd like to talk to you about is.

I'm talking about the first half of next year. So we're going to experience some of the stress in terms of yet, but it's been market.

And also in 2022 in Q1, we did not have any impact actually from the COVID-19.

And also how about the mix you're talking about the marketing activities and also some of the allocation of the budget and in terms of the product promotion. For example, we're going to see a very good situation in the Q2 of 2023 and even in the second half of 2023, so there will be an upward trend.

Okay.

No.

So its home convenient you Cheetah Hanmi formula.

Scribner's with John if I may.

Sure.

That will come in at all.

Sure. Thanks ticket holders here that can you speak to you in January timber to Michelle.

We're kind of in all cohorts.

<unk> says it <unk> been a thought that country right now short opinion alright. Thanks, you Triage, if you will and then pullbacks with that <unk> <unk> could we assume that reach out to you though that function.

The sound I go home that I'd say, yes. Thank you doing Rama Hi, real quick Cindy <unk> had issue with tissue.

The chairman's onshore she is a woman that guarantee.

Yokohama common geographic portion of the agenda.

<unk>.

Tissue.

And also lastly, I would like to say that if you're talking about the next year. So you can see that more people and also more customers are going to keep that budget, especially on the performance based ads.

And also even if we have seen that the slow down of the new product launch, but still we have seen that more customers are actually choosing our platform.

Is there kind of a platform to launch a new product and also the new product launch and a percentage against the rest of the other budget is increasing especially that it's quite obvious in the industry of luxury products and also the automotives as well.

Third point is that in the next several quarters and also in the next year, we're going to still focus on our cost reduction that's what it assumes efficiency improvement. So we're going to have a very federal situation in that thank you.

The question next question comes from the line of Thomas Chong of Jefferies. Please proceed.

Thomas Your line is now open. Please proceed with your question.

Yes.

Okay.

Why was that.

Yes.

Wouldn't you say.

A woman that's happened so.

So far that you've seen both be tightened up.

<unk> often call Jason.

So when you saw a woman.

On the NIM.

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It sounds like double fault that you've got that <unk> got a much riskier BCG to hi, Yao Ming Nan.

Okay.

You got that one.

It sounds like Zain, Saudi said Gucci that John .

Management of my.

My question, Yes.

The cost optimization strategies.

Oh, yes.

The closing quite well in particular, we are seeing that effect in our operating margin EMEA. After some more color about our strategies in kind of trying to create.

Our strategies in.

Cost optimization, and how should we think about Q4 margin trend as well as.

Margin outlook as well.

The matters that we will be undertaken.

Yes. Thank you.

Uh huh.

So we'll go there.

Scrimmage initial rollout are essentially <unk>.

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When you go through and you saw a man tissue attrition.

Hi, Anna Sui can fund me Antonio.

San Diego.

So you may argue that.

Thank you Latoya, and Shanghai, Shanghai Pudong in English.

Okay great.

So you talked about.

No it's helpful.

Thank you.

<unk> heart failure.

Okay.

Thank you to each year, our margin will be argued with you shortly.

Understanding within a corridor greenway.

I mean, what you bought <unk>.

Thank you very much.

Alright. Thanks.

Thanks for the question actually I have been stated quite briefly in the script that is to say that in Q3, we've been keeping optimizing some of the expenses for example, marketing related to R&D and also operation as well we've been had a lot of optimization and also in Q2 and Q3 due to the Covid management and control policy a lot of our offer.

Events actually did not have or did not exactly hold so we are going to move and delay them into Q4 and also the ROI of those offline events will be around one to two also so that is the reason why we are having a slightly higher margin in Q3 than.

Q2.

Okay.

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My brother, who needs to go on from here.

We will continue to be well beyond that would create of course when you're in EMEA.

<unk> on the tumor now incremental Craig.

Greetings from ethane Lucia Tonio.

Ian and Tony.

<unk> your thoughts on that.

So how many in each of our union issues have demonstrated metallic maybe to your TV cable assumption.

C zebra.

Hey, Josh Adobe ADP, English and when they're going to have higher yields will pass with us.

Thanks again.

All of that which will be booking at Cushing.

No she's going to be looking to me if I may share with wuxi immune problem that <unk> shown here.

And secondly, how do you the shipyard.

Good morning.

So also if youre talking about the next year and also Q4 as well. So there are lot of uncertainties in terms of the control policy of Covid as well as economic policies as well, especially in the first half of next year so that of.

Of course, we're going to further reduce the cost and also optimize the cost as well as the improved the operational efficiency and also do a lot of work in terms of the optimization of our cost structure. For example, we're going to further concentrate and also doing more optimization works related to the expenses of marketing and also labor and human resources as well so.

That's how we're going to improve our core competence by doing that and also if you're a <unk>.

Very senior investors and following Weibo for a very long time, we should be noting the story about five years before so from 2017 to 2020, we had about the operational cost which was about 60% against our revenue and also in 2020 because of lots of new operational events and also business.

This particular figure improved to about 65% and also in 2022 first half because of the reduction of the revenues. This particular figure is going up further.

We don't think that this is actually quite in line with the positioning and also the core strength of Weibo as a social media platform. So in the future we're going to really focus on our advantages and also the key characteristics as what I would say no further improve our core competence and then I think a better offset situations by doing a lot of slow further more.

Works on the optimization of our cost and also cost structure, so as to improve our operational efficiency further.

Yes.

So it's always good to see utilization Hong Kong.

Sure.

We will send you went away from the surgical tissue.

One kind of digital audio meaningfully Jonathan Zillow Dot open sensitive Gulf Alright.

Sean Zhang with <unk> capital.

Thanks Michelle.

Michelle.

The irony of ironies that kind of commentary posture equilibrium here in Utah.

Children.

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Without question.

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Akshay <unk> gotcha.

Touch on the meat.

So that's how we're handling our question.

Sure.

Okay.

So lastly, I'd like to say that in Q4 as I have four stages.

Most of the offline events will happen should have been happening in Q2, and Q3 will be moved to Q4, so that terrible, they're not going to see us high operational margin as the previous quarter, but I think that this should be quite similar.

Two Q2.

And also in 2023 of course, we're going to have a very stable plan of quarter growth of our operational margin and also really emphasize more of course on the.

Investments to improve our core competencies as well as launch most of new businesses and also in the long run while the market is the fluctuation and also on surgeon doesn't speaking we have to keep a very good balance in terms of our development and also the investment as well and also generate quite robust cash.

Through all of those means and also having a very good flexibility on our financial performance.

Okay.

Sure.

Thank you for the questions and the interest.

On the last question comes from Timothy <unk> from Goldman Sachs. Please proceed.

Hi, guys good morning.

Joe with Cowen.

What I want you to call UBS, you may be quantify at all with whats homogeneous have an annualized.

So you will probably push out data emulation that going forward now as.

Joey how quaint Hong Kong showroom.

Probably a harder to Vishal Shah.

Our promotional rhubarb Obs Chilean <unk>.

Sandy.

Can management share your thoughts on the strategy to further diversify the revenue stream beyond advertising and what other key initiatives.

Companies investing too and what is the outlook for the Es revenue potential going forward. Thank you.

No.

So finishing up on me.

Yes.

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Oh sure sure women don't shatter pension as shown in the coming future.

Sure.

LIBOR.

Qualcomm com ensured that pushes out the mutation you compensate how she's going to be shipping.

Sure. Thanks will.

Mature can knock on promotion was a question regarding your own conclusions on prudently dominantly around that they don't banking transaction.

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I'm good at the Booth opinion chocolate assured congrats on the quarter.

Yes.

Thank you for the question.

So I have to say that even if you can see that now in the deal but it is a module Kevin white, but we do have that shield.

If you are talking about because the bulk the positioning and also the market influence of Weibo as a big social media platform and also.

Because of the <unk>.

Important and also the product of <unk>.

<unk> installed.

Kind of a necessity or necessary for the customers to actually launched a new product. We can see that the efficiency of the monetization by using the advertisement is actually the highest and also of course that still.

If you are talking about it fluctuated market. So we do see a lot of pressure on the pricing of this particular advertisement and also that is the reason why we have to diversify the monetization methods and <unk>.

Currently speaking we have.

Yes, the accounting for the total revenue, which is about only 13, not very high but actually I think that is significantly important cost to maintain the fundamental line for our monetization itself on especially based on the traffic.

Okay.

Okay.

Yes.

From a kind of one element to our assumptions.

Okay.

Tamara.

The hurdle.

Because you don't have those figures.

Chip.

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Further to that I think with that one.

Halfway tissue Ginger.

Sure.

So second thing in terms of our E Commerce and also the many shop off label. So actually we are having a model of combining the platform with the product and also as you all know that we always keep a very good relationship with J D. And also tower and also the other airlines as well so in terms of this one we are always.

Keeping a very good collaboration with those very good.

E Commerce with a very high <unk> and also this is very efficient of course to generate enough cash flow and especially for those scenarios.

Line, plus offline as well and also we can see that this is especially important for us to leverage the capability and also the advantage of weibo as a platform and especially helping those offline organizations too.

Actually you have a very clear select top tier margins and also helping to improve the quality of the users by guaranteeing a very good module of placing an order within this particular in those stations and also having to guarantee a very good agreement fulfillment and also the performance we've been having a very good growth on this particular segment.

Okay.

Uh huh.

So that for me and I kind of on that.

Quality without tying up with <unk> and canyon of the entrepreneurs with our fantasy <unk>, yet because the Chinese market.

On the <unk>.

And that's in one kind of issue.

You May <unk> you.

Sure sure attributing John tiers.

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The walk from Q4 that we would see humana radically more for sure.

Similarly in the intermodal the reach out we are kind of on a key injuries reported to.

The issue that can congregate alcohol play along.

Trading income in Q should go back to that particular tumor.

And we get that kind of on the woman's <unk> Motors Yahoo.

Okay.

And as usual sequence.

So that's one.

Typically and I got an adequate tissue that's on that whole group here you find manager each acquisition element yes.

While glass back sheet Andrew.

Andrew it's into even stronger the weak under clear typical in Shanghai.

If I'm here youll deal into a single coherent.

Bunzl, Minneapolis, Atlanta seeking attention.

Sure.

And also a third of all talking about the members as you can see that during the past development, we have been actually having a very stable and also mature membership system. So on one hand. This is actually very good to guarantee a benefit that is specifically unique to those loyal.

Members of our Weibo platform and also this is very good for us to actually brain, none of our monetization capabilities and opportunities for those content creators as well. So this is actually even going to further boost activity and also enhance the ability of the monetization and also <unk>.

Previously in the last year, we had a lot of our restrictions from the entertainment industry and also that was a little bit.

It's impactful to our total business, but actually and you can see that while we are upgrading the benefits that we are providing to the users and also the members and specific in Q3, we are seeing that the revenues and also the loyalty of the numbers that should improve in Q3.

Also if you are sharing some of the colors on the <unk> plus.

Membership system. So we are having a kind of a year over year growth on this area and especially in the area of a healthcare Internet and also the other segment, we're keeping a very good growth year over year and also.

It is giving us a more space of course in the future to further enhance this particular segment of the <unk> plus membership system and also membership system is a very important revenue.

Which we regard as a non admitted some revenue to Weibo and this is really significant so in the future we're going to further enhance more functions and also dedicating ourselves into for example, first of all as VIP and also a second is the <unk> plus system, which is targeting aimed specifics those content creators.

This is a very good way for us to really improve the monetization and also the revenue off the content creators and also this is going to be very beneficial to weibo in the long run as well thank.

Thank you.

Okay for the questions without ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.

The conference will begin shortly to raise your hand during Q&A you can dial one one.

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Good day, and thank you for standing by and welcome to wasteful reports third quarter could be 'twenty, two financial results conference call.

At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Ask a question during the session you will need to press star one telephone. Please be advised that today's currency is being recorded I would now like to hand, the conference over to the company. Thank you. Please go ahead.

Thank you operator, welcome to Weibo's third quarter 2022 earnings conference call joining us today, our Chief Executive Officer, <unk>, Wang and our Chief Financial Officer, Paypal. So Congress call is also being broadcasted Amin in that and is available through Weibo's IR website.

Before management remarks, I would like to read you the safe Harbor statement in connection with today's conference call. During today's conference call. We may make forward looking statements statements that are not historical facts, including statements of our beliefs and expectations.

Statements involve inherent risks and uncertainties a number of important factors could cause actual results to differ materially from those contained in any forward looking statements. We will assume no obligation to update any forward looking statements in this conference call and elsewhere.

Further information regarding this and other risks is included in Weibo's annual report on form 20-F, and other filings with the SEC. All the information provided in this press release is occurring as of date hereof Weibo assumes no obligation to update session information, except as required under applicable law.

Additionally, I would like to remind you that our discussion today includes certain non-GAAP measures, which excludes stock based compensation and certain other expenses, we use non-GAAP financial measures to gain a better understanding of Weibo's comparative operating performance and the future prospects, our non-GAAP financials exclude.

Certain expenses gains more losses and other items that are not expected to result in future cash payments and that nonrecurring in nature or not indicators of our core operating results and outlook. Please refer to our press release for more information about our non-GAAP measures.

Following management's prepared remarks, we will open up the lines for a brief Q&A session with this I would like to turn the call over to our CEO <unk> Wang.

Hey.

Tony.

Thank you Hello, everyone and welcome to Weibo's third quarter 2022 earnings conference call business had albeit with Shanghai <unk>, maybe what are you attempting to try and quantify that impact.

Today's call I will share with you highlights of Weibo's user product and monetization in third quarter of 2010 in Q <unk>, 2% anymore.

And lastly, any engine to really change the power.

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On the user front Weibo's SME has reached $584 million and average fees reached $253 million in September 2022, adding approximately 11, <unk> and finally users year over year, respectively. In September 95% of Weibo's <unk> came from <unk>.

Shanghai Santa.

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Coca Cola bottling partners only seasonal pattern.

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Mcdonnell financial planning meeting Rajan, you didn't think beauty <unk> home.

<unk> kidney care, we initially chicken will be chunky.

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Monetization with macro economy and consumption weighing on the overall advertising market our clients remain confident towards their advertising budget spent in the third quarter. Our total revenues reached $453 6 million U S. Dollar a decrease of 25% year over year and an increase of.

1% quarter over quarter, excluding the foreign exchange impact our total revenues decreased 20% year over year and increased 5% quarter over quarter and revenues reached $393 4 million U S. Dollar this quarter and a 95% of our AD.

It came from mobile this year, we have focused on improving our operating efficiency in the third quarter. Our non-GAAP operating income reached $162 1 million U S dollar representing a non-GAAP operating margin of 36% up from 32% last quarter.

Hi, Judy.

We've looked at <unk> Shanghai funding that Sheila Thank you for the time.

You mentioned <unk>.

In total shock when David Greenwood, who in Korea too.

Thank you.

Next let me share with you our progress made in product monetization in the third quarter, our targets on product operations still focused on strengthening the platform competitiveness through improving operating efficiency, maintaining large user scale and enhancing user engagement.

Thank you Alicia.

We can hear you.

<unk> from China.

With you again.

You will achieve your Canadian region.

Thanks, Sean.

Thank you we will continue at a time charter contract.

Thank you with that should also show a few times.

Thanks, Tony and the team with Hulu.

<unk>.

And this.

In this quarter with the summer holiday season, and how trends the effect. Our overall traffic reached its peak level in August this year based on our experience the opening of the fall semester in September usually negatively impacted our traffic, especially with campus promotion suspended this year due to COVID-19.

Related control measures.

Response on the products and operational fronts, we have stepped up our efforts in the areas of China investment community product optimization and cultivation of entertainment and esports verticals, which resulted in healthy trend of our overall traffic in September and shoot off Amit <unk>, our SVP in tissue.

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<unk> used qunar Toyota to keep.

<unk> retention issue, which is coming from Julien.

Sure Jonathan.

Thank you.

100, <unk> accordingly.

<unk> dot transfer okay.

Turner Scotia, commenting.

Hey, Joshua attraction tea leaves us with Amazon with a huge team petition shortly.

Jonathan.

Good morning, and program expansion. Additionally, we.

Only guarantee fishing question would you touch on the hurdle.

Sometimes they will come to conclusion.

Hello from Jim Sidoti. Please proceed.

Donnelley.

On the channel front.

All of our channel investments for the third quarter was further improved we continue to strengthen our cooperation with handset manufacturers in labor cost trends in social products, while focusing on investing hard ROI channel. This quarter were achieved full coverage for waivers how trans contents in our core positions.

I'll have that device business domestic leading manufacturers. Meanwhile, with further upgraded our service domestic smartphone users and enhance their consumption through improving the quality of hot trend, considering the handset attributes and users' consumption scenarios.

September the number of our house Xiaomi users from domestic handset increased 30% quarter over quarter next we will continue to deepen our.

Cooperation with handset manufacturers to focus on long term mutual benefits expand cooperation to more of Weibo's core products and content and increase weibo's user scale through handset channel. Thanks very helpful. Thank you to Orange as you tack on time in Q2.

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To your account.

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You can turn around switching with sequential Glenn Cohen assuring equivalence of attrition.

On social attributes this quarter will continue to enhance social features of our products and increased the scale and engagement of our core users.

Our relationship with.

While maintaining user traffic user interaction continue to grow in September representing an improved user's thickness in July and August which is the peak season of Capex due to the summer holiday Weibo's content generation largely increase particularly for verticals such as elaborate is television series.

Variety shows and games, we leaned our traffic distribution towards these verticals was strong thickness of young users in a relationship its feet, which helped erase the vertical content ecosystem and enhancing user interaction and consumption.

<unk> shipped this week.

In the meantime, we'll continue to improve the distribution structure our relationship is.

Further increase the distribution of content generated by Kols and community based content to emphasize the social features of our relationship based feed.

In particular, we made significant upgrades in algorithm to enhance distribution nap communicate content further integrating the community based content and the user generated content as a result in the relationship based feed 70% of users, we're able to consume quality community base.

The contents of their interests directly in the feed yes September traffic generated from community based content distributed in the relationship with Steve and the number of users who made interactions through community content has increased more than 50% quarter over quarter, which further flexibility.

<unk> users relationship beauty and the interaction efficiency in our relationship.

Meanwhile, <unk> tissue donor tissue issue.

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Sure sure.

Julia.

China, we won't be amortization comes out how about share excuse me Patrick Schuster here pretty.

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As shown in the near term Egypt, the initial readout.

Lee from here and there should be submitted in Q2 corner a teacher you plan to do.

Thank you <unk>.

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That's important.

Thanks Glenn.

So should I attribute or retention.

He was happy with us.

John can you change that accounts you cannot add that in.

In the third quarter will continue to beef up our investments in community product to strengthen the perception of community products by all users on one hand with the independent tab of Super topic at the bottom of main page launching in June we are able to improve new users' willingness to revisit attack.

Through prioritizing traffic distribution for quality community content, coupled with our effective user recall strategy in September . The D is a super topic tax increased by more than 50% compared to desktop <unk> half of which were new users for community product now the only.

As the scale of users growing user's consumption thickness increased significantly with per capita consumption of community related content increased by 40% from June .

On the other hand with further you have functions and Mccann had them.

With many key products, such as new functions, the posting and inaction that launched in the third quarter the increase user stickiness.

<unk> significantly enhance the production and interaction of quality content in entertainment and online gaming verticals in September the number of users who posted in Asia access in our community continued to grow double digits compared to June while the number of codes and Inactions increase.

Twice the increase of the users we believe that the constant building up our community product has strengthened the social stigma of Weibo users boding well for the long term healthy development of the platform.

And the Ocean, <unk>, which you Jonathan a simulation of account opportunity attributing ghansham.

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Consolidated Sundar.

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<unk> employees brilliance on broader immune tolerance for that what would you see that showing up selling.

Thank you for what you do.

Josh Nash, which account for Sundar.

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And we changed our bullish LNG vishal.

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Hello, everybody.

Tony.

That's a function of people I think we took extreme hydropower in the P&L.

Sure.

If we come back to either Julie Hoover Pat <unk>.

So the simple answer.

Also from our strategy. This year is to focus on developing social accounts and key vertical to constantly solidify our advantages in key content verticals as well as high quality as.

Thus drive the improvement of operating efficiency in terms of the online gaming vertical with further cultivate our ecosystem around esports events and deepened cooperation between Weibo and top Esport club in third quarter. The daily number of close by esports players has increased by 50 per.

Quarter over quarter was boosted traffic actually doubled coupled with tournaments reloaded hot trend. The overall traffic from the esport vertical well over 50% sequentially, but have also attracted a wider group of young users and generated higher user engagement.

While helping esport club buildup equal risk and the market value on our platform.

As well as the entertainment industry. The summer holiday was the peak seasons for TV series and variety shows we focus on partnership with video platforms and show producers to improve distribution of hot trends and a user interaction driving the volume as blockbusters to growth across the platform.

In the third quarter, the traffic and the interaction of PV in a variety of shows continue to trend up compared to that of the last summer holiday in particular, the traffic for TV shows has reached record high which more than doubled compared to the same period last year with multiple phenomenon projects emerge.

Television show last night, the Galaxy and the lag between Varian Devil have generated over <unk> and 'twenty eight milling discussion reinforcing weibo's position as the designated platform will show launching and promoting <unk>.

Going forward, we will continue to actively support our partners and drive healthy development of the entertainment ecosystem.

Shanahan with Hangzhou, Shanghai La Quinta.

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Moving on to monetization in the third quarter is our general recovery trend of AD spend on a sequential basis with virus in patients across different industries. For example in auto industry. Thanks to call to support for new energy vehicles industry and enhanced market recognition for.

Weibo's integrated new car launching marketing solution automakers over the past two quarters, where it was in that product launch and marketing solutions attracted over 90% of the overall new model launches on top of regular brand exposure leveraging the combo media vertical.

<unk> and how trends Weibo has successfully expanded its market share in new car launches leading to sustained double digit year over year growth in AD revenue from auto industry in the third quarter as for the luxury sector AD revenues also booked significant year over year growth due to the intensive Mt.

<unk> new lines and shows in the third quarter in terms of online game industry, our differentiated marketing model that we have established over the past two years has resonated greatly among game developers, even though the new games approval. This year has shrunk we have effectively help these days.

Developers improve user our pool and lifecycle leveraging cooperation around conference with our top tier game content and event based marketing products and services.

As a result, Weibo has gained certain AD budget and further solidified our market position among advertisers in the online gaming sector. Other industries, such as the <unk> industry continued to be impacted by headwinds of COVID-19 control measures and weak consumption surgery with brands.

No wait and see attitude in their branding budget allocation.

E Commerce platforms and <unk> products also experienced varying degrees of decline in the third quarter due to market conditions and the industry slow season.

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Talking about outlook.

Our advertising business for the fourth quarter and the first half of next year. There are still relatively high uncertainty under the market circumstances. However, we are pleased to see positive signals with certain industries. For example, e-commerce platforms and anthem CPG clients have released AD budget during the.

Double 11 shopping festival to various degree although the double 11 shopping festival was shorter this year at budget from ecommerce platforms returned to a growth trajectory compared with the same period last year.

Third quarter with focus on conforming our algorithm to accurately for the marketing needs of E. Commerce platforms on the AD product front and expect to gradually capture certain advertising budget in the fourth quarter. Meanwhile, the fourth quarter is also a key seasons for new product launches in the handset.

Sector with all major handset manufacturers launching key models in their pipeline as such we are actively working with our clients to develop content marketing plans to further beef up weibo's market share in new phone launch at Moreover, the 2022 World Cup in the fourth quarter will be a key.

Key advertising window for many of our clients, especially in the food and beverage sectors, we're cooperating with clients and discussing there.

The marketing plans and details to tap into World Cup related hot trends in home cooking enhancing AD performance and our wallets.

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Now, let me briefly recap on Weibo's progress our initiatives to optimize costs and improve operating efficiency as mentioned in our last earnings call. We have taken a serious effective measures to optimize our cost and expense structure and enhance efficiency.

To better control our ROI on our cost in these measures continues to bear fruit leveraging our solid execution is key.

Third quarter, we delivered a non-GAAP operating margin of 36% up nearly four percentage points versus 32% in the second quarter benefiting from solid execution and disciplined spending strategy for further improve operating efficiency.

This has demonstrated our improvements in operating efficiency, giving us the opportunity to lead our resources towards more potential areas.

<unk> channel investment as an example through strategic channel cooperation we have acquired more high Apple users and is thus shorten the ROI retrieving period of China investments currently the cost retrieving cycles of most of our channel shortened to nearly half of back in the same period last year.

On the product operations front, we're deepening the strategic cooperation with our content partners focus on social products and strengthen our advantages in hot trends in our key verticals, such as esports and a sport where.

<unk> strategic partnership with video site mainstream media in the esports crop this year to acquire more content and users.

Despite potential cost incurred in the short run where it will significantly enhance our competitiveness and content operations and improve the operating efficiency of the platforms traffic.

On the AD product front, but one thing we will tap into market trends and beef up our investments in content marketing to strengthen our differentiation.

We're focused on delivering breakthroughs in accurate algorithm adaption to capture E. Commerce AD budget looking into the fourth quarter, we will continue to executive against our strategy of reducing costs and improving efficiency was more focused on adjusting our cost structure and optimizing.

Resource allocation to ensure efficient operation of our company remains high uncertain macro environment and solidify our long term competitiveness.

JJ I know, it's tough to shop and interact.

With that let me turn the call over to Beth Howe for financial review.

Thank you <unk> and Hello, everyone.

Welcome to Weibo's third quarter 2022 earnings conference call.

Less cash plus user magic.

September 2022, wafers, <unk> advocacy EU reached $584 million and $253 million, respectively, representing a net addition of 11 million in the first million users respectively on a year over year basis.

We are pleased to see healthy engagement chat and video consumption.

Five of the back to school seasonality and ongoing disciplined channel marketing strategy, demonstrating weight loss car by the propagation Toyota.

Turning to financial.

A reminder, my prepared remarks would focus on non-GAAP results.

Iterate amongst U S dollar term.

And all comparisons are year over year basis, unless otherwise noted.

Now, let me walk you through our financial highlights for the third quarter of 2022.

Weibo's third quarter 2000, <unk> revenues were 453 6 million a day.

Credits of 35%.

20% constant currency basis.

Operating income was $112 1 million.

<unk> operating margin of 36%.

Net income attributable to Weibo reached over 519 million, representing a net margin of 36%.

Diluted EPS was <unk> 57.

Compared to 97 last year.

Now, let me give you more color on revenue.

Weibo's advertising and marketing revenues for the third quarter 2022.

Sorry, if I answered that before a planned $4 million.

A decrease of 27% or 21% constant currency basis.

Reflecting a tablet packaging advertising market as we expected.

Mobile AD revenue was $372 million contributing approximately 95% of total AD revenue.

With call me, the researchers and the macro headwinds mainly on overall demand that our.

Our advertising business continued descending trajectory year over year.

Booking a moderate sequential growth during the quarter.

Our leading verticals in terms of AD revenue contributions in the third quarter for FMC AG <unk> product.

I'll, let Gaye Inc.

In terms of the luxury and automobile sector exhibited a solid recovery Chad booking double digit growth, both annual and sequential basis.

Sadly painting, Bob tailwind of electronic b or in that shape.

Policy stimulus for the automobile industry, and then <unk> core product last season for luxury brands.

Our sales are for us to capture higher wallet share in this sector with Oracle spectrum of social AD solutions.

The online game sector also demonstrate relative.

As our brand plus performance at offering resonated greatly with game developers.

Obviously that is.

Discretionary consumption category I think e-commerce sector remained flattish amid a weak consumption sentiment lukewarm sales data and the broad based initiative to optimize cost and expenses among our customers.

Okay.

From a product perspective.

For most of the fees continued to be the largest part followed by social display ads and search on the topic of AD offering.

In light of industry wide pricing pressure and add execution challenges.

Proactively towards window to optimize our AD technology and the product in the hope of Patriot more performance Jada AD budget, which is more defensive in the current market position.

Meanwhile, we are steadfastly focused on highlighting our market.

Differentiation as well as foreign archiving into the visualization Chad of the AD market.

Entering the fourth quarter, we are seeing signs of add or heightened market bottoming out in a more moderate at a gradual pace.

Got that.

<unk> upcoming ecommerce festival.

<unk> beefed up our product and our sales execution to capture the potential pent up market opportunity.

Well navigate though there are many have them in the near term.

We remain confident in our last 10 months I think the opportunity.

That our unique value proposition and a diversified content ecosystem will unlock.

AD revenues from Alibaba for third quarter was $15 million.

Decrease of 28% or 22, a press that constant currency basis.

It is generally in line with our overall advertising business performance.

Value added a survey that revenue.

Was $16 1 million in the third quarter.

A decrease of 14% or 8% comp.

On a comparative basis, the decrease of Bath revenue was mainly due to less revenue contribution from membership services.

Turning to costs and expenses.

Cost and expenses for third quarter were $291 million.

<unk> of 19% as.

As we implemented our efficiency initiatives to stabilize earnings.

The decrease was a qual each past unexposed, Idaho successful ongoing stringent power to provider, a very operational far, especially disciplined channel investments and the reduced offline activities.

Okay.

Operating income in the third quarter with $102 1 million, representing operating margin of 36%.

And for the farm sector to put that in the second quarter.

Our margin performance has exceeded our expectation of our cost optimization initiative continue the tobacco.

<unk> coal with hydrogen and the macro strategies.

Turning to income tax under GAAP measure income tax expense for the third quarter was light.

<unk> 8 million compared to $71 4 million last year.

Net income attributable to Weibo in the third quarter with ratify the $19 million, representing a nice margin.

Thanks for that.

Compared to 34% last year.

Turning to our balance sheet and cash flow items.

September 2019 to Weibo's cash cash equivalents I'm sure kind of investment totaled therapy compared.

Compared with $3 1 billion as of December 2nd part, but in 'twenty one.

In the third quarter of 2017 to cash provided by operating activities was 74 million capital expenditure totaled $4 6 million.

Depreciation and amortization expenses amounted to 13 2 million.

Before turning to the plenary session I would like to provide update our share repurchase program.

I got up to $500 million share repurchase program authorized in March of this year, we have repurchased a total of approximately three 1 million Adi for a total cost of.

<unk>.

<unk> $7 7 million as of September <unk> 2017 to ask Mitch to return value to shareholders amid a hormonal market with that let me now turn the call over to the operator for Q&A session. Thank you.

As a reminder, if you'd like to ask questions. At this time. Please press star one one and with brand name to be announced.

One moment for the first question.

Okay.

First question comes from the line of Alicia Yap from Citi. Please proceed.

Hello, Thank you.

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Just real quick a lot in the hall.

I follow the whole show will show, an uncle way Yoko how the co ops quite go to show the trends what do the final lease up.

So thanks for taking my questions I have a question related to.

The advertising outlook and sentiment in the fourth quarter as well as into 2023.

Given the stricter Covid policy and also the weakness in the macro.

How should we think about the growth rate as comparison to the third quarter in terms of the declining Matney Q4, Q year over year decline be steeper.

Steeper again to what.

What we saw for the third quarter and then as we go into 2023 can management also Kyle a split in terms of preliminary rebuild for the first half versus the second half growth.

How should we think about I got the first half should be more conservative and then second how we should see some resumption of the growth. Thank you.

Yes.

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Got it.

Alright. Thank you very <unk> question, so with regards to the Q4 and also the 2023 performance. So you can see first of all I'd like to talk to you about the structure of our Bozeman. So to the industries are actually related to consumption. For example, FMC <unk> products as well as E. Commerce. So you can see that recur.

It is highly related to the macro.

Okay.

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Got it.

So next I'd like to talk to you about the performance. So you can see that we're going to narrow in the kind of trend into Q4, and also going to realize a quarter over quarter improvement.

In the future and also now I'd like to talk to you about these situations. So as you can see that talking about some old offline scenarios msos multi offline activities. So in October we had a lot of activities and so organized by international institutions. So that we've got some suspensions.

Of the offline activities organized by our customers. So we had a big impact in October .

Talking about the e-commerce actually a great improvements because of the double 11 shopping festival.

So the double 12 shopping festival as well, so thats, especially talking about the FMC Gs so they're going to allocate more budget actually in these two events.

Timeframe and also the overall trend will be upward.

Also last year, we had a very special in the category, which is the live stream e-commerce due to certain reasons, they had actually a big decline.

In terms of this.

Particular, this year's performance and also to the next one is that they are talking about the Q4 on the overall basis. The overall category of E. Commerce will be experiencing a very stable trend and also talking about the World Cup you can see that on a budget is going to be allocated with us.

In the World Cup.

So that especially FMC G. So that is to say that we're going to receive the same budget of the FMC G medication all participants in the World Cup session, which is quite equal to the assertion of the Winter Olympics.

We challenge, our Sanya reach and suites at your 10-Q.

The Asia <unk> hopefully here in the year.

2018, the highest season type issues.

We're kind of on three Hudson country annuity China, Russia.

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Yeah.

Yes.

So now I would like to share with you some of the colors like.

Like for example, if we're talking about the new control Covid control policy, especially the new 20 items that issued by the government and controlling the COVID-19.

And also some of the stimulus policies towards the reduced industry. We are able to see a very good recovery of the consumption side, but that is to say that having said that we are still hoping that it will take time to recover and also even if we're having a fully open to market after the COVID-19 control still.

Will not generate the recovery immediately and I believe that is going to be the case and still it takes time to recover and also next point.

And also the next point I'd like to talk to you about is.

I'm talking about the first half of the.

Next year, we're going to experience some of the stress in terms of yet, but it's been market.

And also in 2022 in Q1, we did not have any impact actually from the COVID-19.

It also however, if youre talking about the marketing activities and also some of the allocation of the budget and in terms of the product promotion. For example, we're going to see a very good situation in the Q2 of 2023 and even in the second half of 2023, so there will be an upward trend.

Okay.

No.

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And also lastly, I would like to say that if youre talking about the next year. So you can see that more people and also more customers are going to keep that budget, especially on the performance based ads and also even if we have seen that the slowdown of the new product launch, but still we have seen that more cuts.

<unk> they are actually choosing our platform.

They're kind of buying a platform to launch a new product and also the new product launch and a percentage against the rest of the other budget is increasing especially that is quite obvious in the industry of luxury products and also the automotives as well. So third point is that in the next several quarters and also in the next year, we're going to still folk.

Because on a cost reduction that's what assumes efficiency improvement. So we're going to have a very federal situation in that thank you.

The question next question comes from the line of Thomas Chong of Jefferies. Please proceed.

Okay.

Thomas Your line is now open. Please proceed with your question.

Okay.

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John .

Management thoughts Mike.

My question, Yes.

The cost optimization strategies.

Executing quite well in particular, we are seeing that reflect in our operating margin EMEA I'll give some more color about our strategies in China trying to equity.

Our strategies in.

Cost optimization, and how should we think about Q4 margin trend as well as FX margin outlook as well.

The managers that we will be undertaken.

Yes. Thank you.

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Thank you to each year, our margin could be argued attrition that you go down in Miami standard wholesaler Codelco Accordingly.

Thank you Pat.

Thank you very much.

Alright.

Alright.

Thanks for the question actually I have been stated quite briefly in the script that it to say that in Q3, we've been keeping optimizing some of the expenses for example, marketing them related to R&D and also operation as well we've been had a lot of optimization and also in Q2 and Q3 due to the Covid management and control policy a lot of our <unk>.

Events actually did not have or do not exactly hold so we are going to move and delay them into Q4 and also the ROI of this offline events will be around 1% to two also so that is the reason why we are having a slightly higher margin in Q3 <unk> Q2.

Okay.

Two two in Q2. So this wasn't minion earlier leads that raw material.

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Zebra.

And John actually on the ADP and activation and we're going to get higher yields for both for that.

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Yeah.

So also if youre talking about the next year and also Q4 as well. So there are lot of uncertainties in terms of the control policy of Covid as well as economic policies as well, especially in the first half of next year so that.

Of course, we're going to further reduce the cost and also optimize the cost as well as to improve the operational efficiency and also do a lot of work in terms of the optimization of our cost structure. For example, we're going to further concentrate and also doing more optimization works related to the expenses of marketing and also labor and human resources as well so.

That's how we're going to improve our core competence by doing that and also if you're a <unk>.

Very senior investors and following Weibo for a very long time, we should be knowing the story about five years before so from 2017 to 2020, while we had about the operational cost which was about 60% of our revenue and also in 2020 because of lots of new operational events and also business.

This particular figure improved to about 65% and also in 2022 first half because of the reduction of the revenues. This particular figure is going up further.

We don't think that this is actually quite in line with the positioning and also the core strength of our Weibo as a social media platform. So in the future we're going to really focus on our advantages and also the key characteristics as what I would say no further improve our core competence and then I think I've been at Oxford situations by doing a lot of further more.

Works on the optimization of our cost and also cost structure, so as to improve our operational efficiency further.

Hey.

So it's all good.

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Okay.

Okay.

So lastly, I'd like to say that in Q4 as I have already stated.

Most of the offline events will happen should have been happening in Q2, and Q3 will be moved to Q4, so that <unk> going to see us high operational margin as the previous quarter, but I think that both should be quite similar.

Two Q2.

And also in 2023 of course, we're going to have a very stable plan of quarter growth of our operational margin and also really emphasize more of course on the.

Investments to improve our core competencies as well as I know launched most of our new businesses and also in the long run while the market is a fluctuation and also on surgeon doesn't speaking we have to keep a very good balance in terms of our development and also investment as well and also generate quite robust cash.

Through all of those means and also having a very good flexibility on our financial performance.

Okay.

Sure.

Thank you for the questions and the interest of time. The last question comes from Timothy <unk> from Goldman Sachs. Please proceed.

Hi, guys good morning.

Now what I want you to call UBS, you may be quantify at all with whats homogeneous have been annualized.

Cash on year will probably push out data emulation that doing so will not answered your all your points Hong Kong showroom.

Please play out how to cross sell side, you guys have a ton of off label and offshore Rubalcava Chilean dose already from the others.

Can management share your thoughts on the strategy to further diversify the revenue stream beyond the timing and what other key initiatives.

The company's investing too and what is the outlook for the Es revenue potential going forward. Thank you.

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Got it.

Thank you for the question.

So I have to say that even if you can see that now in the deal, but there's been module carrying weight, but we do have that.

But if you're talking about because the bulk the positioning and also the market influence of Weibo as a big social media platform and also because of the.

Important and also the product of <unk>.

<unk> installed.

Kind of a necessity or necessary for the customers to actually launched a new product. We can see that the efficiency of the monetization by using the advertisement is actually the highest and also of course that still.

If youre talking about it fluctuated market. So we do see a lot of pressure on the pricing of this particular advertisement and also that is the reason why we have to diversify the monetization methods and <unk>.

Currently speaking we have.

Yes, the accounting for the total revenue, which is about only 13, not very high but actually I think that is significantly important cost to maintain the fundamental line for monetization itself on especially based on the traffic.

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Today, we will come into Charlotte, we can call it Alicia Shanghai, Shanghai Kyoto This year sure.

When you tell them, how can anybody looking at newer ship alcohol and tailor made of Wuhan Shanghai Hugo.

Working in concert.

Even with some cost things like that.

And which end acquired greenwald associated with actually a box.

Further to that typical halfway tissue ginger.

Okay.

So second thing in terms of our E Commerce and also diminish up off label. So actually we are having a model of combining the platform with the product and also as you all know that we always keep a very good relationship with J D and also tower and also the other alliances as well so.

In terms of this one we are always keeping a very good collaboration with those very good.

E Commerce with a very high <unk> and also this is very efficient of course to generate enough cash flow and especially for those scenarios.

<unk> plus offline as well and also we can see that.

Is especially important for us to leverage the capability and also the advantage of Weibo as a platform and especially helping those offline organizations to actually have a very eco select top tier margins and also helping to improve the quality of the users by guaranteeing a very good module of placing an order within this particular.

And those stations and also having to guarantee a very good agreement fulfillment and also the performance we've been having a very good growth on those particular segments.

Okay.

So you saw that formula that kind of on that.

Quality without tying up with those wuxi in.

And chairman of the entrepreneurs with Ocwen and.

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Thank you Andrew.

Andrew it's into Union tongue with other week under clear typical Shanghai.

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And also a third of all talking about the members as you can see that during the past development, we have been actually having a very stable and also mature membership system. So all of that.

Hi, This is actually very good to guarantee a benefit that is specifically unique to those loyal members of our Weibo platform and also this is very good for us to actually brain.

Utilization capabilities and opportunities, but also a content creators as well. So this is actually even going to further boost activity and also enhance the ability of the monetization and also previously in the last year, we had a lot of our restrictions from the entertainment industry and also that was a little bit impactful to our total.

But actually you can see that while we are upgrading the benefits that we are providing to the users and also the members and specific in Q3, we are seeing that the revenues and also the loyalty of the numbers that should improve in Q3.

And also if you are sharing some of the colors on the <unk> plus.

Membership system. So we are having a kind of a year over year growth on this area and especially in the area of healthcare Internet and also the other segments, we're keeping a very good growth year over year and also.

This is giving us a more space of course in the future to further enhance this particular segment of the <unk> plus membership system and also in our membership system is a very important revenue.

Which we regard as the non advertising revenue to Weibo and this is really significant so in the future we're going to further enhance more functions and also dedicating ourselves into for example, first of all S. VIP and also a second is the <unk> plus system, which is publishing aim specifics.

Content creators. So this is a very good way for us to really improve.

Monetization and also the revenue of the content creators and also this is going to be very beneficial to weibo in the long run as well.

Thank you.

Thank you for the questions without ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.