Q1 2024 Yalla Group Ltd Earnings Call
Operator: Good morning and good evening, ladies and gentlemen. Thank you for standing by for Yalla Group Limited's first quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. After management's 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 host today, Ms. Kerry Gao, IR Director of the company. Please go ahead, ma'am.
Good morning, and good evening, ladies and gentlemen, thank.
Speaker Change: Thank you for standing by for you All My Group Limited first quarter 2024 earnings Conference call.
Speaker Change: At this time, all participants are in listen only mode.
Speaker Change: After managements prepared remarks, there will be a question and answer session.
Speaker Change: Today's conference call is being recorded.
Speaker Change: Now I would like to turn the call over to your Speaker Hutch today Miscarry Zhao IR director of the company.
Neil: Please go ahead Neil.
Kerry Gao: Hello everyone and welcome to Yalla's 1st Quarter 2024 Earnings Conference Call. We released our Earnings Press release earlier today, and the release is now available on our IR website as well as on Newsworld Outlet. 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 Security Solicitation Reform Act of 1995.
Neil: Hello, everyone and they'll come to your last first quarter. Tom do you put before earnings Conference call. We released our earnings press release yesterday and the video is now available on our IR website as well as on your small outlets before we continue. Please note that the discussion today will contain forward looking statements made under the safe.
Kerry Gao: Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in our earnings release and our annual report filed with the FDA. Yalla does not assume any obligation to update any forward-looking statements, except as required by law. Please also note that Yalla's earnings press release and this conference call include a discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Yalla's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.
Neil: Hopper provision of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties.
Neil: Such our future results may be materially different from the views expressed today further information regarding these and other risks and uncertainties is included in our earnings release at our annual report filed with the SEC yellow does not assume any obligation to update any forward looking statements, except as required by law.
Neil: Please also note that you lost earnings press release, and this conference call include a discussion of unaudited GAAP financial information as well as unaudited non-GAAP financial measures <unk> press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.
Kerry Gao: Today, you will hear from Mr. Tao Yang, our Chairman and Chief Executive Officer, who will provide an overview of our latest achievements and growth strategies. He will be followed by Mr. Saifi Ismail, the company's President, who will briefly review our recent business developments. Mrs. Karen Hu, our Chief Financial Officer, will then provide additional details on the company's financial results and discuss our financial outlook. Following management's prepared remarks, we will open the call to questions.
Speaker Change: Today, you will hear from Mr. Todd Young our chairman and Chief Executive Officer will then provide an overview of our latest achievements and growth strategies. He will be followed by Mr. Five if my view of the company's President who will briefly review our recent business developments, Mr. Kevin who our Chief Financial Officer, then provide additional detail.
Speaker Change: Based on the company's financial results and discuss our financial outlook. Following management's prepared remarks, we will open the call to questions. Mr. Jeff Shaw, our chief operating officer of the draw of the Q&A session with that said I'd now like to turn the call over to our chairman and Chief Executive Officer and Mr. Tao Yang. Please go ahead Sir.
Kerry Gao: Mr. Jeff Xu, our Chief Operating Officer, will join the Q&A session. With that said, I would now like to turn the call over to our Chairman and Chief Executive Officer, Mr. Tao Yang. Please go ahead, sir.
Tao Yang: Thank you, everyone, for joining our fourth quarter 2024 Learning Accomplishments Call. We kicked off... 2024 with solid first quarter results. Even with the impact of Lam Dan, which started on March 11th this year, Q1 revenue still reached 78.7 million US dollars, putting it into the upper end of our guidance and once again demonstrating the remarkable strength of our flagship applications, Yalla and Yalla Lidl. Our persistent efforts to deliver quality growth and enhance our operating efficiency are also aiding.
Tao Yang: Thank you everyone for joining our fourth quarter 2024.
Speaker Change: The conference call.
Tao Yang: We kicked off.
Speaker Change: Thank you you can call it saw this quarter results.
Even with the impact.
Speaker Change: Which started on March 11.
Speaker Change: Q1 revenues.
Speaker Change: 78 7 million.
Speaker Change: Moving into the upper end of guidance and once again demonstrating the.
Speaker Change: <unk> our flagship applications.
Speaker Change: And again a leader.
Speaker Change: Well were predicted efforts to deliver quality growth.
Speaker Change: Our operating efficiency.
Speaker Change: Also yielding.
Speaker Change: Positive results.
Tao Yang: [inaudible] In Q1, our net margin reached 39.5%. Our sold-out quarterly performance showcases our dedication to refining our operations and our ability to enhance our flagship applications' gamification as well as optimize our user acquisition strategy. Thanks for the success.
Speaker Change: In Q1.
Speaker Change: Net margin reached 39, 5%.
Speaker Change: Our solid quarterly performance, so cases, our dedication to refining our accretion and although the ability to enhance our flagship applications.
Speaker Change: <unk> as well as optimize our user acquisition strategy.
Speaker Change: Thanks to this success.
Tao Yang: We ultimately delivered a better experience for our users, further boosting Yalla's and Yalla Lido's users' willingness to stay and pay. In 2034, we anticipated continued advancement in the acceleration of digital transformation across the MENA region. As the largest media-based online social networking and gaming company, Yalla will continue to enrich our services and expand the boundaries of our business, launching innovative products to fulfill MENA users' evolving needs. Turning to Yalla Games development and further discussion, as we continue to explore and interact in-game, our growing expertise and capability have strengthened our determination to expand our footprint in mid-core and high-core games. Looking ahead, we will continue to prepare our team and grow our game pipeline.
Speaker Change: We ultimately delivered.
Speaker Change: Deliver a better experience for our users.
Speaker Change: Boosting.
Speaker Change: And again, I'll allude to users' willingness to pay and pay.
Speaker Change: In 2024.
Speaker Change: We anticipated continued advancement.
Speaker Change: An acceleration of digital transformation.
Speaker Change: EMEA region.
Speaker Change: The largest mena based online social networking gaming company.
Speaker Change: We will continue to enrich our services and expand the boundaries of our business.
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Speaker Change: Two 2 million users evolving.
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Speaker Change: And the capabilities.
Speaker Change: We have strengthened.
Speaker Change: Termination.
And while the footprint in minutes Midcourt hard core game.
Speaker Change: Looking ahead, we will continue to prepare our team and grow our pipeline.
Tao Yang: As we mentioned on our last call, mid-poll game, which we can leverage our... Extensive expertise, talented workforce, and abundant resources in China's casual gaming sector will be one major focus for the team this year. We look forward to better utilizing our advantages and delivering our exceptional gaming experiences to our users. The middle is the gaming industry, it can't be gaming, with one of the world's fastest-growing...
Speaker Change: As we mentioned on our last call mid core game.
Speaker Change: Rich.
Speaker Change: We can leverage our.
Speaker Change: Extensive exercise talented workforce and abundant resources in.
Speaker Change: Gaming sector will be one major focus for the team this year.
Speaker Change: Look forward to better utilize an hour.
Speaker Change: Voltages.
Speaker Change: Delivering.
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Speaker Change: Two other uses.
Speaker Change: The.
Speaker Change: Gaming industry is booming.
Speaker Change: Boom with one of the world.
Speaker Change: Yes.
Tao Yang: Global top-tier game developers are increasingly recognizing the Near Eastern gaming market's immense potential, and the region has emerged as a retail growth market for good companies from around the world. As the largest unit-based online social networking and gaming company, Yalla is actively engaged in discussions. We now come into it on a global scale, exploring potential collaborations in the region. I want to highlight that Yalla recently joined the UK Interactive Entertainment Association, the old days.
Speaker Change: Global top tier game developers.
Speaker Change: Can you imagine.
Speaker Change: And then it's been gaming market potential.
Speaker Change: Potential and in the region.
Speaker Change: Adding detail.
Speaker Change: Okay.
Speaker Change: The companys former around the world.
Speaker Change: At the latest Nielsen data lines between networking and gaming.
Speaker Change: <unk> is actively engaged in discussions.
Speaker Change: We now.
Speaker Change: Gaming duty.
Speaker Change: On a global scale.
Speaker Change: Exploring potential collaborations in the region.
Speaker Change: I want to highlight that.
I recently joined the UK Interactive Entertainment Association.
Speaker Change: Pete.
Speaker Change: The old age.
Tao Yang: Video Game and Interactive Entertainment trade body in the world, via invitation from Yuki's CEO and Vice-Chairman. Yuki represents nearly 650 businesses across the UK, including major video game platforms, local and international publishers, independent developers, and a vast area of service providers.
Speaker Change: Video game and interactive entertainment trade body in the world.
Speaker Change: We're a mutation <unk> CEO and chairman.
Speaker Change: He represents nearly 650.
Speaker Change: Okay, including major video game platform local and international partnerships independent developers.
Speaker Change: What areas.
Speaker Change: With providers.
Tao Yang: Our goal is to align ourselves with game developers worldwide and foster greater connectivity within the industry. We aspire to contribute to the Near Eastern gaming community by delivering a wide range of high-quality game content to players in the region. That enhances the gaming experience and builds... future gaming options for our users.
Speaker Change: Our goal is to align ourselves with the game developers worldwide.
Speaker Change: Great.
Speaker Change: Activity within the industry.
Speaker Change: Third to contribute to the media and gaming community.
Speaker Change: Delivering a wide range of high quality game content to players in the region.
Speaker Change: Enhancing.
Speaker Change: The gaming experience and building.
Speaker Change: Future gaming options for our users.
Tao Yang: Next, I'd like to elaborate on AI, which has great significance for our business. We have consistently kept pace with the evolving trend and currently have our dedicated AI team focused on researching algorithms, especially tailored to Arab culture and user habits. We're already reaping the rewards of their work, which is helping us enhance the company's management and efficiency in areas such as content recommendation, content moderation, and customer service. For example, the accuracy rate of our self-developed image-review system is already leading in the region, outperforming a number of similar tools developed by major service providers. We have also accumulated considerable experience in image modeling.
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Speaker Change: Great significance for our business.
Speaker Change: We have consistently.
Speaker Change: Consistently kept pace with the evolving 10, and typically have our dedicated AIP focus, though is searching algorithm notice, especially tailored to the Arab culture and user habits.
Speaker Change: We're already reaping the rewards of their.
Work, which is helping us and how the company's management and efficiency in areas such as content recommendation.
Speaker Change: And the motivation.
Customer services.
Speaker Change: For example, the accuracy rate of our self developed major review system.
Speaker Change: He is already leading in the region.
Speaker Change: Forming a number similar to develop.
Speaker Change: Major service providers.
Speaker Change: We have also accumulated considerable exercise image motives.
Tao Yang: AI now plays a crucial role in tasks such as image recognition and Basic Artistic Creation, Enhancing Our Team's Productivity and Efficiency. By harnessing the power of AI, we aim to optimize team resources, save time and money, and ultimately improve our overall operational efficiency. Our commitment to leveraging AI also ensures that we can better understand and cater to the needs of, and the preferences of our users and provide our users with improved services as well as personalized experiences. Before I conclude, I'd like to briefly ask you a question.
Speaker Change: Hey, I know plays a crucial role in pet such as image recognition.
Got it.
Speaker Change: And basic.
Speaker Change: <unk> creation.
Speaker Change: Our team productivity.
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Speaker Change: Hum.
Speaker Change: Are you seeing the color beyond we aim to optimize human resources.
Speaker Change: Time, and money and ultimately improve our overall operational.
Speaker Change: Operational efficiency.
Speaker Change: Our commitment to leveraging AI also ensures that we can better understand and tethered to the new leader.
Speaker Change: The.
Speaker Change: Preferences of users and.
Speaker Change: And provide a renewed cases.
Speaker Change: Group services.
Speaker Change: Personalized.
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Speaker Change: Before I conclude.
Speaker Change: She update you gotta be published its 2023 ESG report detailing the company's performance and future goes across five major areas.
Tao Yang: Yalla recently published its 2023 ESG report detailing the company's performance and future goals across five major areas, including responsible governors, the environment, church, and people in the community. ESG has been an essential component of our long-term business vision and core values. Thanks for your time.
Speaker Change: Leading with Buffalo government.
Chuck: And Chuck.
Speaker Change: People in the community.
Speaker Change: Yes, he has been a central component of our long term business decision and pull that is.
Speaker Change: Stay warm.
Tao Yang: We were pleased to share our ongoing progress in terms of sustainability and social responsibility, and we look forward to reaching new heights in ESG's enrollment and sustainably enriching local digital lives. In sum, we remain confident in the growth opportunities presented by MENA's increasingly pivotal role on the global stage and the region's rapid digital transformation, and the number one minibus online system networking and gaming company. We are dedicated to building relationships locally and globally to broaden our business horizons and contribute to the United States.
Speaker Change: We were pleased to share our ongoing progress in terms of.
And ability and social responsibility.
Speaker Change: We look forward to reaching new heights, and yet achieved.
Speaker Change: And.
Speaker Change: Anybody in reaching local digital lives.
Speaker Change: And so we remain confident in the opportunities presented by Mena is increasingly pivotal role on the global stage.
Speaker Change: And it is aging method is to exploration.
Speaker Change: And then number one minute based on launching some networking and a gaming company, we are dedicated to building relationships.
Speaker Change: And globally.
Speaker Change: Built into our business, providing and contribute two minutes.
Tao Yang: Thank you all, goodbye. With our strong business fundamentals and outstanding product portfolio, we believe we are well-positioned to capitalize on potential growth opportunities. Now I would like to turn this call over to our proud... Mr. Saifi Ismail, for a closer look at our recent developments.
Speaker Change: Economic development.
Speaker Change: With our strong business fundamentals.
Speaker Change: Pending product portfolio.
Speaker Change: We believe we are well positioned to capitalize on.
Speaker Change: Potential growth opportunities.
President: Now I will turn the call over to our president.
Speaker Change: Mr Psyche, if my yield.
Mr Psyche: For a closer look at our recent investments.
Saifi Ismail: Hello, everyone. Thanks for joining us today. I would like to start with a closer look at our operations and our products' performances for quarter one. Our average monthly active users increased by 14.6% year-over-year to 37.8 million. Our average revenue per paying user also increased to 6.03 U.S. dollars in the first quarter from 5.39 U.S. dollars in the same period last year. Furthermore, our ongoing adjustments to our game mechanism aimed at improving user engagement and experience have proven effective. Bank users increased by 7.3% quarter over quarter, demonstrating users' growing willingness to pay on our platform.
Speaker Change: Hello, everyone. Thanks for joining us today.
Mr Psyche: I would like to start with a closer look at our operations and our product performance for quarter one.
Mr. Psyche: Our average monthly active users increased by 14, 6% year over year to 57 8 million.
Mr. Psyche: What I'd, rather do you have any real bad bank users also increased to six point all three U S dollars in the first quarter.
Mr. Psyche: $539 in the same period last year.
Our ongoing adjustments to our game mechanic them aimed at improving user engagement and experience our proven effective.
Speaker Change: Dang users increased by seven 3% quarter over quarter, demonstrating good nodes growing willingness to pay on our platform.
Saifi Ismail: Following our successful offline Yalla Ludo tournament in Riyadh in Q4 last year, we hosted a second offline tournament in Baghdad in Q1. Over 10,000 players registered an impressive response, and 128 outstanding finalists competed in the live final round.
Speaker Change: Following our successful offline.
Speaker Change: Tournament in Riyadh in quarter four of last year.
A second offline arguments and buying that in quarter one.
Speaker Change: 10000 players.
Speaker Change: And embraced addressable mm 128 outstanding finalists competed in the lifeline.
Saifi Ismail: The success and popularity of these events reflect Yalla Ludo's growing influence and appeal in the mobile gaming world. Conducting offline tournaments and other regional events also strengthens our partnerships with local channels, deepens our product penetration among local gamer communities, and enhances our brand awareness. We are excited to bring more thrilling experiences to our users, continually pushing the boundaries of mobile gaming, and ensuring that Yalla Ludo remains an industry leader. Now for a few highlights from our industry activities this quarter.
Speaker Change: Thanks, Vince and popularity of these events reflects the undiluted growing influence and appeal in the mobile gaming ward conducting offline Gordon events and other regional events also strengthened our partnership with local China.
Speaker Change: EBIT, our product penetration among local gamer community.
Speaker Change: Enhances our brand awareness.
Speaker Change: Excited to bring more forgiving experiences to our users continually pushing the boundaries of mobile gaming and ensuring that you ludo remains an industry leader.
Speaker Change: Now for a few highlights from our industrial activities. This quarter, we are very proud to announce that for the fourth consecutive year yellow group was recognized by data.
Saifi Ismail: We are very proud to announce that for the fourth consecutive year, Yalla Group was recognized by Data.ai's Annual Top Publisher Award as one of the top 30 publishers' hit quarters in the Europe, the Middle East, and Africa regions. Data.ai is the premier global platform offering unified data analytics for the mobile app market.
Speaker Change: Annual top publisher award.
Speaker Change: One of the top 50 publisher headquartered in Europe, the Middle East and Africa region.
Speaker Change: AI is a premier global Blackhawk offering unified data analytics for the mobile App market since 2012, the top publisher Award.
Saifi Ismail: Since 2012, the Top Publisher Award has acknowledged outstanding mobile publishers worldwide. We extend our heartfelt gratitude to Data.ai for this distinguished award and remain committed to delivering high-quality, tailored digital products that cater to the evolving needs of MENA users in the online, social networking, and gaming sectors. Next, Yalla hosted a Suhoor gathering in Dubai during the holy month of Ramadan, bringing together more than 100 governmental officials, business partners, industry experts, and local media leaders to discuss the latest technology industry trends. The festivities also allowed us to thank and celebrate our partners who have always trusted and supported Yalla Group.
Speaker Change: Molly outstanding mobile publishers worldwide.
Speaker Change: Our heartfelt gratitude to data AI for English award and remain committed to delivering high quality tailored digital product that got us to the evolving.
Evolving needs.
Speaker Change: And the online social networking and gaming sector.
Speaker Change: Next gala hosted a sold whether in Dubai during the holiday months from.
Speaker Change: Bringing together more than 100 governmental offices business partners industry experts and local media leaders to discuss the latest technology and industry trends.
Speaker Change: Activity also allows us to thank and celebrate our partners who have always trusted AD supported the allegro.
Saifi Ismail: As the largest local online social networking and gaming company in the MENA region, we strongly believe that good friendship and extensive cooperation among our stakeholders can accelerate our company's and the industry's development, bring better experiences to users, and in this great regional economic development, we will maintain our strong relationships with local governments, business partners, and media to jointly promote the development of the digital economy in the MENA region and promote and preserve our unique local cultural traditions. Finally, Yalla was invited to share its success story at the WN Conference 2024 in Abu Dhabi, a hallmark of the global gaming industry since 2012. The WN Conference spans nearly 10 cities worldwide. This year's event in Abu Dhabi drew over 800 attendees, primarily from the GCC video game market, and featured leading international players.
Speaker Change: As the largest local online social networking and gaming company in the Mena region, we strongly believe that good friendship friendship and extensive cooperation among our stakeholders.
Speaker Change: Our company and industry developments.
Speaker Change: Better experiences to users.
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Speaker Change: I'll make a development, we will maintain our strong relationships with local governments business partners and media to jointly promote but if we're looking at.
Speaker Change: Over the digital economy in Dominion that Aegean and promote them, but he says our unique local culture tradition. Finally yellow was invited to share our story at the W. And conference 2024 in Abu Dhabi, a hallmark of the global gaming industry since 2000.
Speaker Change: Well the W and comfort on spans nearly 10 cities worldwide. This year's event in Abu Dhabi drew over 800 attendees, primarily from the GCC video game market and.
Saifi Ismail: It was a phenomenal platform for discovering new partners and exploring diverse topics within the gaming sphere, from game analytics to AI integration. As a pioneering local internet company in MENA, events like this provide us with vast opportunities to contribute to the region's digital transformation goals. We remain committed to enhancing our socioeconomic value by improving digital access and advancing the digital lifestyle throughout MENA. In conclusion, we are poised to drive progress in MENA's digital transformation as the region's leader in online social networking and gaming.
Speaker Change: Featured leading international players.
Speaker Change: I put them on our platform for discovering a new partner and exploring diverse topics within the gaming forget.
Speaker Change: But on game analytics to AI integration.
Speaker Change: But you're nearing local Internet company EMEA event like this provide us with vast opportunities to contribute to their digital transformation goals remain committed to enhancing our social economic value by improving digital access and advancing the digital lifestyles throw out to me.
Speaker Change: In conclusion, we are poised to drive progress immune as digital transformation as that Aegean bleeder, an online social networking and gaming we will continue to deepen our partnership locally and globally to broaden our business horizon and embrace the opportunities brought by that transformation.
Saifi Ismail: We will continue to deepen our partnership locally and globally to broaden our business horizon and embrace the opportunities brought by the transformation. As always, our vision is to become the number one online social networking and entertainment platform in the MENA region. With that, I will now turn the call over to our CFO, Karen, who will discuss our key financial and operational...
Speaker Change: As always our vision is to become number one online social networking and entertainment platform and Dominion that income with that I will now turn the call over to our CFO, Kevin who will discuss our key financial and operational results.
Yang Hu: Thank you, Saifi. Hello, everyone.
Kevin: Thank you Safi Hello, everyone. Thank you for joining us today.
Yang Hu: Thank you for joining us today. Our financial performance remained robust throughout the first quarter of 2024. Our ongoing efforts to deliver high-quality growth and enhance our operating efficiency resulted in meaningful profitability improvements, with net income increasing 56.2% year-over-year to US$31.1 million, and the net margin expanding from 27.1% to 39.5%. Looking ahead, we are confident that our strong cash position and excellent execution will empower us to capitalize on future opportunities, driving sustainable growth and creating value for all our stakeholders.
Kevin: Our financial performance remained robust throughout the first quarter of 2024.
Kevin: Our ongoing efforts to deliver high quality growth and enhance our operating efficiency, resulting in meaningful profitability improvement with net income increasing 56, 2% year over year to 31 point to one meet meaning U S dollars and margin expanding from 2007.
Kevin: 1% to 39, 5%.
Kevin: We are confident that our strong cash position and excellent execution will empower us to capitalize on future opportunities driving sustainable growth and creating value for all our stakeholders.
Yang Hu: Let's move on to our detailed financials for the first quarter of 2024. Our revenues were $78.7 million in the first quarter of 2024, a 7.1% increase from $73.5 million in the first quarter of last year. The increase was primarily driven by our broadening user base and enhanced monetization capability.
Kevin: Let's move onto our detailed financials for the first quarter of 2024 hour revenues was 78 8.7 million U S dollars in this first quarter of 2024.
Kevin: Seven 1% increase from $73 5 million in U S dollars in the fourth quarter of last year.
Kevin: The increase was primarily driven by our broadening user base and the in house the monetization capability. Our solid revenue growth was also partially attributable to the significant increase in absolute <unk>.
Yang Hu: Our solid revenue growth was also partially attributable to a significant increase in APU, which grew from 5.39 U.S. dollars in the first quarter of 2023 to 6.03 U.S. dollars in the first quarter of 2024. Now, let's take a look at our costs and expenses. Our total costs and expenses were $49.6 million in the first quarter of 2024, a 12.7% decrease from $56.8 million in the same period of last year. Our cost of revenues increased by 2.6% to 28.6 million U.S. dollars in the first quarter of 2024 from 27.9 million U.S. dollars in the same period of last year.
Kevin: Each grew from 539 U S dollars in the first quarter of 2020 326 points there was three <unk>.
Kevin: In the first quarter of 2024.
Yang Hu: Primarily due to higher commission fees paid to third-party payment platforms as a result of increasing revenue generated, the cost of revenues as a percentage of total revenues decreased to 36.3% in the first quarter of 2024 compared with 37.9% in the same period of last year. Our selling and marketing expenses were $8.1 million in the first quarter of 2024, a 28.7% decrease from $11.4 million in the same period of last year, primarily driven by our more disciplined advertising and promotion approach and lower share-based compensation expenses recognized in the first quarter of 2024.
Kevin: Now, let's take a look at our cost and expenses, our total costs and expenses were $49 6 million in U S dollars in the first quarter of 2024 or 12, 7% decrease from $56 $8 million in the same period of last year.
Yang Hu: Selling and marketing expenses as a percentage of total revenues decreased from 15.4% in the first quarter of 2023 to 10.3% in the first quarter of 2024. Our general and administrative expenses were 6.6 million U.S. dollars in the first quarter of 2024, a 34.6% decrease from 10.2 million U.S. dollars in the same period of last year, primarily driven by lower share-based compensation expenses recognized in the first quarter of 2024 and a decrease in professional service fees.
Yang Hu: General and administrative expenses as a percentage of total revenues decreased from 13.8% in the first quarter of 2023 to 8.4% in the first quarter of 2024. Our technology and product development expenses were 6.3 million U.S. dollars in the first quarter of 2024, a 15.5% decrease from 7.4 million U.S. dollars in the same period of last year. Primarily due to a lower amount of performance-based bonuses recognized during this quarter, technology and product development expenses as a percentage of total revenue decreased from 10.1% in the first quarter of 2023 to 8% in the first quarter of 2024.
Kevin: Our cost of revenues increased by 2.6% to $28 6 million U S dollars in the fourth quarter of 2024.
Kevin: $27 9 million U S dollars in the same period of last year.
Kevin: Primarily due to higher commission fees paid to third party payment platforms.
Kevin: As a result of increasing revenue generated.
Cost of revenues as a percentage of total revenues decreased to 36.3.
3% in the fourth quarter of 2024, compared with 37, 9% in the same period of last year.
Kevin: Our selling and marketing expenses were 8.1 meeting U S dollars in the fourth quarter of 2024 or 28, 7% decrease from 11 4 million U S dollars.
Kevin: Same period of last year.
Speaker Change: Primarily driven by our more disciplined advertising and promotion approach and a lower share based compensation expenses recognized in the first quarter of 2024.
Speaker Change: Selling and marketing expenses as a percentage of total revenues decreased from 15, 4% in the fourth quarter of 2023 to 10, 3% in the first quarter of 2024.
Speaker Change: Our general and administrative expenses were 6.6 meeting U S dollars in the fourth quarter of 2024.
Speaker Change: 13, four 6% decrease from 10.2, meaning U S dollars in the same period of last year.
Speaker Change: Similarly, driven by lower share based compensation expenses recognized in the first quarter of 2024.
Speaker Change: And a decrease in professional service fees.
General and administrative expenses as percentage of our total revenues decreased from.
13 eight.
Speaker Change: 8% in the first quarter of 2020, 328.4% in the fourth quarter of 2024.
Speaker Change: Our technology and product development expenses was $6 3 million U S dollars in the first quarter of 2024.
15, 5% decreased from seven 4 million U S dollars in the same period of last year.
Primarily due to a lower amount in performance based bonuses recognized during this quarter.
Speaker Change: Technology and product development expenses as percentage of total revenue decreased from 10, 1% in the fourth quarter 2020, 328% in the first quarter of 2024.
Yang Hu: As such, our operating income was 29.1 million U.S. dollars in the first quarter of 2024, a 74.2% increase from 16.7 million U.S. dollars in the same period of last year. Excluding share-based compensation expenses, our non-GAAP operating income in the first quarter of 2024 was $13.3 million, up 49.3% year-over-year. Our interest income was 6.6 million U.S. dollars in the first quarter of 2024, compared with 3.1 million U.S. dollars in the same period of 2023, primarily due to an increase in the interest rates applicable to the company's bank deposits.
Speaker Change: As such our operating income was 29.1, meaning U S dollars in the first quarter of 2024.
Speaker Change: 74, 2% increase from $16 7 million U S dollars in the same period of last year.
Speaker Change: Excluding share based compensation expenses, our non-GAAP operating income in the fourth quarter of 2024 was 13, three threep, meaning U S dollars.
Speaker Change: 49, 3% year over year.
Speaker Change: Our interest income was $6 6 million U S dollars in the fourth quarter of 2024, compared with 3.1, meaning U S dollars in the same period of 2023, primarily due to an increase in the interest rate applicable to the company's bank deposits.
Yang Hu: Our income tax expense was 3.5 million U.S. dollars in the first quarter of 2024, compared with 0.6 million U.S. dollars in the same period of last year. The increase was primarily due to the introduction and implementation of the UAE corporate tax law, which is effective for financial years starting on or after June 1, 2023.
Our income tax expense was $3 5 million U S dollars in the first quarter of 2024, compared with <unk> 6 million in U S dollars in the same period of last year.
Speaker Change: The increase was primarily due to the introduction and the implementation of the UAE cooperative tax law, which is effective for the financial years, starting on or after June one 2023.
Yang Hu: Moving to our bottom line, our net income increased by 56.2% to $31.1 million in the first quarter of 2024, compared with $19.9 million in the same period of last year. Next, I would like to briefly review our liquidity and capital resources. Our cash position remained solid. As of March 31, 2024, we had cash and cash equivalents, restricted cash, term deposits, and short-term investments of $482.7 million, compared with $535.7 million as of December 31, 2023.
Speaker Change: Moving to our bottom line, our net income increased by 56, 2% to 31.1 million U S dollars in the first quarter of 2024.
Speaker Change: Paired with $19 9 million U S dollars in the same period of last year.
Speaker Change: Next I would like to briefly review, our liquidity and capital resources.
Speaker Change: Our cash position remained solid as of March 31, 2024, we had cash and cash equivalents restrict.
Speaker Change: Restricted cash term deposit and short term investments of $482 7 million in U S dollars compared with $535 7 million U S dollars as of December 31, 2023.
Yang Hu: The decrease was primarily due to the reallocation of some of the company's cash reserves to long-term investments in the first quarter of 2024. Under our 150 million U.S. dollars share repurchase program that began on May 21, 2021 and has since been extended by our board through May 21, 2024, we have accumulated repurchased 3,972,876 ADS, all class A ordinary shares, in open market cash repurchases, totaling approximately 35.5 million U.S. dollars as of March 31, 2024.
Speaker Change: The decrease was primarily due to the reallocation of some of the company's cash reserves for long term investments in the first quarter of 2024.
Speaker Change: Under our $150 million share repurchase program that began on May 21, 2021 and has since been extended by our board through May 21, 2024, we have accumulatively really repurchased $3 million 972008.
Speaker Change: <unk> hundred 76, Ags all class a ordinary shares.
Speaker Change: Open market cash repurchases totaling approximately 35 5 million U S dollars as of March 31, 2024.
Yang Hu: On May 16, 2024, our Board of Directors approved an extension of the expiration date of the Share Repurchase Program to May 21, 2025. Moving to our outlook, for the second quarter of 2024, we expect our revenues to be between $72 million and $79 million. The above outlook is based on the current market conditions and reflects the company's management's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change. This concludes our prepared remarks for today. Operator, we are now ready to take questions.
Speaker Change: Ill may 16th 2024, our board of directors approved an extension of expiration date of the share repurchase program to May 21 2025.
Speaker Change: Moving to our outlook for the second quarter of 2024, we expect our revenues to be between 72 million U S dollars and $79 million.
The above outlook is based on the current market conditions and reflects the company's management's current and preliminary estimates of the market and operating conditions and customer demand, which are all subject to change.
Speaker Change: This concludes our prepared remarks for today operator, we are now ready to take questions.
Speaker Change: Thank you.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been answered and you would like to withdraw your question, please press star and 2. At this time, we will pause for a moment to assemble our roster. Our first question today will come from Xueqing Zhang of CICC. Please go ahead.
Speaker Change: We will now begin the question and answer session.
Speaker Change: Good question you May Press Star then one on your touch 10 10.
Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please.
Speaker Change: Please press Star then two.
Tim.
Speaker Change: At this time, we will pause for a moment, where some of our roster.
Our first question today will come from Chi Tsang.
Speaker Change: Please go ahead.
Saifi Ismail: Thank you management for taking my question and congratulations on the strong result. I have two questions. The first one is about flagship products. Can management share some color on the recent progress of the two flagship products, Yalla and Yalla Little, and the main strategy this year? And the second one is about financial outlook. Can management update on revenue growth and the net profit margin change this year? Thank you.
Chi Tsang: Hey, Thanks management for taking my question and congratulations on the job I have two questions.
Speaker Change: First one is about flagship product and can management share some color on our recent progress off of the two fresher product yellow in the litho and does that mean strategy this year.
Speaker Change: The second one is about financial outlook.
Margaret: Management update on our revenue growth and the net profit Margaret yes. Thank you.
Saifi Ismail: Hi Xueqing, this is Saifi, and I will answer your first question. Yalla's and Yalla Ludo performances are currently remaining stable. Over the years, we have gradually cultivated a loyal user community that loves the Majlis culture and is highly vibrant and engaged on the platform. Of course, this year, we will continue working on upgrades and rolling out more fresh features and functions for our users to enjoy. Additionally, as I just mentioned, for Yalla Ludo, the team is actively organizing more offline tournaments to strengthen our brand's local impact and to better penetrate the market through offline channels. We will also continue to look for growth opportunities for both legacy products.
Tracy: Hi, <unk>. This is Tracy and I will answer your first question.
Speaker Change: Yes, and yes.
Speaker Change: <unk> performance is currently remaining staggered.
Speaker Change: Over the years, we have gradually cultivated a loyal user community that loves the message. The message. This culture and is highly vibrant and engaged on the platform of course did see it and we will continue working on upgrades and more rich features and functions for our users to enjoy.
Speaker Change: Yeah.
Speaker Change: Additionally, as I just mentioned for the other la <unk>. The team is actively organizing more offline, Doug Liman will strengthen our brand broker and back and to.
Speaker Change: To better penetrate the market.
Speaker Change: Our incentives.
Speaker Change: We'll also continue to look for growth opportunities.
We get to broader.
Yang Hu: Hi Xueqing, this is Karen. And I will ask you the second question.
Speaker Change: Hi, Ashish this is Karen and I will take you the second question.
Speaker Change: For 'twenty to 'twenty four we are very confident of maintaining our current stable top line performance for our existing product portfolio.
Yang Hu: For 2024, we are very confident of maintaining our current stable top line performance for our existing product portfolio. Our new products may also contribute to revenue growth later this year. We will update the market on our progress when we have a clear picture after our product launches. Regarding the net margin, we think it's fair to expect around 40%, excluding any potential investments in new products. However, if we take into account the new product's potential impact, our margin may end up in the 35% range.
New products also contributed to revenue growth later this year.
Speaker Change: <unk> the market on our progress when we have a clear picture of our product launches regarding that that margin. We think is fair to expect around 40%.
Speaker Change: Excluding any potential investments in new products. However, if we take into account all the new products the potential impact our margin may end up in the 35% range. Thank you. Thank you a question.
Operator: Thank you. Thank you for your question. Our next question today will come from Chenghao Li of CICC. Please go ahead.
Speaker Change: Our next question today will come from Sam policy of CIBC. Please go ahead.
Hi management and thanks for taking my question and congratulations on a solid quarter. My question is related to our external cooperation can we expect more external cooperation to settle this year and could management share more color about the strategy of future cooperation direction. Thank you.
Tao Yang: Hi Chenghao, this is Tao Yang. Thank you very much for your question. As MENA's digital transformation continues to advance rapidly, we are being approached by many companies from... New York, the United States, and China to discuss potential opportunities in the region, mostly in gaming and social networking. We're open to this discussion, and our strategic team is consistently exploring this opportunity. In terms of strategy, we consider synergies with our current businesses, the team's expertise, or the fundamental quality of the assets, and not the ROI, of course.
Speaker Change: Alright.
Speaker Change: Thank you very much for your question.
Speaker Change: With these two transformation continuous tier demands that.
Speaker Change: We are being approved.
Speaker Change: By many companies.
Speaker Change: <unk>.
Speaker Change: Europe.
Speaker Change: The state and <unk>.
Speaker Change: China too.
Speaker Change: Because the potential opportunities in the region.
Speaker Change: Mostly in the gaming and social networking sector.
Speaker Change: We are open to discussion.
Speaker Change: T J P is consistently.
Speaker Change: There's opportunities.
Speaker Change: In terms of strategy, we consider the synergies with our current businesses the teams.
Speaker Change: For the fundamental quality of the assay.
Speaker Change: And lastly.
Speaker Change: Okay.
Tao Yang: In terms of the timeline, we will keep you updated once there is anything we can share with the public. Thank you, Chenghao. Thank you for watching.
Speaker Change: In terms of the timeline, we will keep you updated once there is anything we can share.
Speaker Change: Thank you you too.
Speaker Change: [noise] our next question.
Operator: Our next question will come from Tao Yang Xu of Haipang. Please go ahead.
Speaker Change: <unk> pipeline. Please go ahead.
Speaker Change: Hello management.
Speaker Change: Thank you my question can I. Please ask what's management think about.
Speaker Change: The pet coke by the U S what would be the impact on that.
Tao Yang: Hi Sir, thank you for your question. TikTok entered the MENA market in around 2021 and 2022. It's a very strong player that had a big impact on the live streaming landscape in MENA upon entry. Now that TikTok has been in the Middle East market for a while, we believe the competitive landscape has re-stabilized. I would also like to remind you that we don't compete with TikTok directly since we are not a live streaming platform; we meet a different set of needs for our users.
Speaker Change: Hi, Sarah Thank you for your question.
Speaker Change: Okay.
Speaker Change: Market around 2021 'twenty two it's a very strong player that had a big impact on the life streaming landscape and Nina upon entry.
Speaker Change: Now that it has been in the middle East market worldwide.
Speaker Change: Believe the competitive landscape has really stabilized.
Speaker Change: I'd like also.
Speaker Change: To remind you that we don't compete with directly.
Speaker Change: We are not like streaming platform, we need a different set of needs.
Speaker Change: Our users.
Well good luck. Thank you.
Tao Yang: Unlock TikTok's global strategy. Yalla is rooted deeply in the MENA tradition and serves a group of loyal MENA users who love the Majlis culture, love voice chatting, and love the pure and equal social networking atmosphere our platform offers.
Speaker Change: You need to deeply in the tradition and says.
Speaker Change: Laurie I mean are you good.
Speaker Change: Good luck with Dynegy the sculpture loved voice chatting I Love, we debuted and equal social networking atmosphere our platform often.
Operator: Our team has been monitoring the situation closely, but nothing significant has happened recently, so we will share new observations, if any, on future calls. Thank you. Our next question will come from Kaifang.
Speaker Change: Our team has been monitoring the situation closely but nothing significant has happened recently, so we would share your observation.
In future calls.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Yes.
Operator: Our next question will come from Kaifang Jia of Citi. Please go ahead. Transcribed by https://otter.ai
Speaker Change: Our next question will come from Python Chia.
Speaker Change: Please go ahead.
Speaker Change: Yeah.
Chenghao Li: Hi management. Thanks for taking my question kind of I have cats in a box in our regional strategy.
Speaker Change #101: As a company have any plan to expand into other regions offset midnight.
Tao Yang: Hi, Kaifeng. Good morning. This is Tao Yang, and I will answer your questions.
Hi, Paul good.
Speaker Change #102: Good morning Tanya.
Speaker Change #103: And the other.
Paul: To answer your question.
Tao Yang: And, as we always emphasize, our... primary focus will continue to be the Middle East. Of course, at the same time, we will remain alert and open to opportunities in the overseas market. With our current products, we have already gained access to certain user groups in overseas markets, including South America and Southeast Asia. For certain new products in our platform, we may conduct global promotional activities to realize greater potential and enhance our identified solid opportunities for distribution beyond the UN. However, our primary interest... Unquestionably lies in the minute when we possess distinct advantages and can best utilize our core capabilities to drive growth. Thank you, Kaifeng.
Paul: As we always emphasize our.
Paul: Primary focus we will continue to be the meter is okay. At the same time, we remain alert and open to opportunities in overseas markets.
Paul: Our current products, we have already gained access to certain user groups.
Paul: Markets, including South America.
Paul: In southeast Asia for certain new products in our pipeline.
Paul: They come back.
Paul: Promotional activity to realize greater potential.
Speaker Change #105: All right.
Speaker Change #105: 75 opportunities.
Speaker Change #105: Distribution.
Speaker Change #105: And the NIM.
Speaker Change #105: However.
Speaker Change #105: Primarily.
Speaker Change #105: Yes.
Speaker Change #105: Chris We do believe the minutes.
Speaker Change #105: Minutes, where we presented.
Speaker Change #105: One is.
Speaker Change #106: That utilize our core capabilities to join us.
Paul: Thank you Paul.
Yeah.
Operator: Our next question will come from Lincoln Kong of Goldman Sachs. Please go ahead.
Speaker Change #107: Our next question will come from linking Com of Goldman Sachs. Please go ahead.
Speaker Change #107: Okay.
Operator: Thank you, management, for taking my question. My question is, one is, can I just share some color on Yalla Games' outlook and publishing strategy? And what about the strategy to expand in the gaming business? And my follow-up question is, you know, are there any updates in terms of the return? Can the management share?
Speaker Change #108: Thank you management for taking my question.
Speaker Change #109: My question. This one is can I just share some color on it.
Speaker Change #110: Guidance outlook in publishing strategy.
Speaker Change #111: And what about the strategy to expand in.
Speaker Change #111: Scandinavia.
Speaker Change #112: And then my follow up Tom.
Speaker Change #113: Any updates in terms of <unk>.
Speaker Change #114: Kevin mentioned I'm sure alright, thank you.
Speaker Change #113: Okay.
Operator: Thank you.
Jeff Shaw: Alright, Thank you and thank you for the question. This is Jeff I will take your first two questions and if the last one to Karen.
Speaker Change #116: So we are working on the beta version of one of our new products and optimizing its designed before the official launch for the other new products in our portfolio. We will keep you posted on that progress.
Speaker Change #117: Our game strategy first going forward, we will look to collaborate with more mature gaming studios, while those with successful track records in gaming publishing.
Speaker Change #118: We will also carefully select game content that is suitable for the Mena markets leveraging our localized expertise.
Speaker Change #119: We plan to explore collaborations with global players.
Speaker Change #119: Who are interested in the Mena markets utilizing our expertise in community engagement and a deep local know how to drive outcomes. Finally, we are committed to grow our.
Speaker Change #119: Growing our in house development team and we expect to introduce a series of new self developed games. This year. Thank you.
Jianfeng Xu: We will also carefully select game content that is suitable for the MENA market, leveraging our localized expertise. Second, we plan to explore collaborations with global players who are interested in the MENA market, utilizing our expertise in community engagement and our deep local know-how to drive win-win outcomes. Finally, we are committed to growing our in-house development team and expect to introduce a series of new self-development core games this year. Thank you. Hi Lincoln, glad to see you.
Jianfeng Xu: Hi Lincoln, thank you for your question. This is Jeff.
Speaker Change #120: Hi, Lincoln glad to hear here, yeah, La is dedicated to return value to shareholders through our share repurchase program.
Jianfeng Xu: I will take your first two questions and leave the last one to Karen. So we are working on a better version of one of our new products and optimizing its design before its official launch. For the other new products in our pipeline, we will keep you posted on their progress. Regarding our game strategy, first, going forward, we will look to collaborate with more mature gaming studios or those with successful track records in gaming publishing.
Yang Hu: Hi Lincoln, glad you are here. Yalla is dedicated to returning value to shareholders throughout our share repurchase program. As of March 31, 2024, we have deployed a total of $35.5 million for share repurchases. Also, as we mentioned in our prepared remarks, we have extended our share repurchase program for another year to ensure that the company can repurchase shares from the market at any time during the next 12 months. Given our solid fundamentals, we will continue to conduct our share repurchase program while considering cash dividend payments in due course.
Lincoln: As of March 31, 2024, we have deployed a total of $35 5 million in U S dollars for share repurchases.
Speaker Change #122: Also as we mentioned in our prepared remarks, we have extended our share repurchase program for another year to ensure that the company can repurchase just from market at anytime during the next 12 years amongst given our solid fundamentals. We we all continue to contract our share repurchase program.
Speaker Change #122: <unk> costs catering cash dividend payments in due course, we will keep you posted if we have any more updates in short we believe strongly in <unk> long term potential and are dedicated to generating value for all parties involved.
Yang Hu: We will keep you posted if we have any more updates. In short, we believe strongly in Yalla's long-term potential and are dedicated to generating value for all parties involved. I hope this answer will... make you feel satisfied. Thank you.
Speaker Change #122: This as well.
Speaker Change #123: Making you feel that's fine thank you.
Speaker Change #124: Thank you.
Operator: As there are no further questions now, I'd like to turn the call back over to management for closing remarks. Thank you all for joining us today.
Speaker Change #125: As there are no further questions now I'd like to turn the call back over to management for closing remarks.
Tao Yang: Thank you once again for joining us today. We look forward to speaking with you in the next quarter. If you have any further questions, please feel free to contact Yalla's investor relations or Piacente Financial Communications. Both parties' contact information is available in today's press release as well as on our company website.
Speaker Change #126: Thank you once again for joining US today, we look forward to speaking with you in the next quarter. If you have any further questions. Please feel free to contact <unk> Investor Relations <unk> financial Communications, both parties content information is available in today's press release as well as on our company website. Thank you.
Operator: This concludes the conference call. You may now disconnect your line.
Speaker Change #127: This concludes the conference call.
Speaker Change #128: You may now disconnect your lines. Thank you.
Speaker Change #128: [music].