Q4 2024 Yalla Group Ltd Earnings Call
Operator: Good morning and good evening, ladies and gentlemen.
Good morning, and good evening, ladies and gentlemen.
Operator: Thank you for standing by for Yalla Group Limited's fourth quarter and full year 2024 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.
Thank you for standing by for you all.
Our group Limited's fourth quarter and full year 2024 earnings conference call.
At this time, all participants are in listen only mode.
After managements prepared remarks, there will be a question and answer session.
Today's conference call is being recorded.
Kerry Gao: Now I will turn the call over to your speaker host today, Ms. Kerry Gao, our director of the company. Please go ahead.
Speaker Change: Now I will turn the call over to your speaker host today. This is Carrie go IR director of the company. Please go ahead.
Yeah.
Kerry Gao: Hello everyone and welcome to Yalla's 4th Quarter and 4-Year 2024 Earnings Conference. We issued our earnings release earlier today and it is now available on our IR website as well as all newswire outlets. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor Provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. 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 S&P.
Speaker Change: Hello, everyone and they'll come to you on our fourth quarter and full year 2024 earnings conference.
Speaker Change: We issued our earnings release earlier today and it is now available on our IR website as well as long as all outlets.
Speaker Change: We continue please note that the discussion today will contain forward looking statements made under the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties as such our future results may be materially different from the views expressed today.
Speaker Change: Further information regarding these and other risks and uncertainties is included in our earnings release and our annual report filed with the SEC.
Kerry Gao: Yalla does not assume any obligation to update any forward-looking statements except as specified by law.
Speaker Change: So it all does not assume any obligation to update any forward looking statements, except as required by law.
Kerry Gao: Please also note that Yalla's earnings press release and this conference call include a discussion of unaudited gap financial information as well as unaudited non-gap financial measures. Yalla's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.
Speaker Change: Even though that you announced earnings press release and this Congress call include a discussion of unaudited GAAP financial information, that's about as unaudited non-GAAP financial measures.
Speaker Change: Yeah last press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures today, you'll hear from Mr. Tao Yang our Chief Executive Officer, who will provide an overview of our latest achievements and growth strategies.
Tao Yang: Today, you will hear from Mr. Tao Yang, our Chairman and Executive Officer, who will provide an overview of our latest achievements and growth strategies.
Saifi Ismail: He will be followed by Mr. Saifi Ismail, the company's President, who will briefly review our recent business developments.
Mr. Sop: Followed by Mr. Sop, if my you the company's President who will briefly review our recent business developments.
Karen Hu: 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: As Kevin Hu, our Chief Financial Officer, Who'll 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. Mr. Jeff Shea, our Chief operating officer will join the Q&A session.
Jeff Xu: Mr. Jeff Xu, our Chief Operating Officer, will join the Q&A session.
Tao Yang: With that said, I would now like to turn the call over to our Chairman and Executive Officer, Mr. Tao Yang. Please go ahead, sir.
Speaker Change: and 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 and the full year 2024 conference call. We concluded 2024 with robust fourth quarter results. Our revenue rose to USD 91 million, reaching a new record high for the second consecutive...
Tao Yang: culture and once again beating the upper end of our guidance. We are bringing our annual revenue to USD 340 million. This exceptional performance is a testament to our deep commitment to enhancing user experiences and boosting user engagement across our ecosystem with content tailored to the local culture. Additionally, we have made significant strides in improving our operational efficiency by enhancing management practices. with our service providers, optimizing user acquisition strategies, and refining our internal processes, which led to 26...
Speaker Change: In improving cover operational efficiency by housing management practices with our service providers optimizing user acquisition strategies and refining our internal processes, which led to a 26.
Tao Yang: in China.
Speaker Change: Cause that year over year increase in operating profitability for full year 'twenty 'twenty four.
Speaker Change: This impressive results further demonstrate our ability to drive high quality growth and fulfill our users' evolving our lives social networking and gaming these.
Tao Yang: Looking back at 2024, the thriving digital economy in the MENA region continued to attract attention globally. An increasing number of global leading internet companies are investing more resources and talent into the media market. driving evolving demand trends among local users. This vibrant landscape underscores MENA's potential as one of the fastest-growing mobile Internet markets. On a related note, according to industry research, The digital transformation market in MENA was valued at $USD55 billion in 2024, and it is expected to grow at a compound annual growth rate. of 22.5 percent, reaching USD 418.5. 54 billion by 2034. This dynamic expansion creates tremendous profit and growth opportunities for business.
Speaker Change: Looking back that's 'twenty to 'twenty four.
Speaker Change: The thriving digital economy, and the Mena region continues to attract attention globally.
Speaker Change: By increasing number of global leading internet companies are investing more resources and talent into them either market.
Speaker Change: Driving evolving demand chess among local users.
Speaker Change: This labour into landscapes and their schools minez potential as one of the fastest growing mobile internet markets.
Speaker Change: On a related note according to industry to search.
Speaker Change: Digital transformation market in Mena was valued at USD 55 billion in 2024, and it is expected to grow at a compound annual growth rate.
Speaker Change: Of 22.5%, reaching USD 418 point.
Speaker Change: 54 billing by 2034.
Speaker Change: This dynamic expansion creates tremendous profit and growth opportunities for businesses.
Tao Yang: Leveraging nearly a decade of experience in miniaturizing a well-established product portfolio and flourishing online social and gaming community. Yalla is well positioned for continued market leadership in the MENA region. We remain dedicated to serving local users' evolving needs for social interaction and entertainment. And we'll stay closely attuned to local trends as we create and launch new products. tailored to MENA users' preferences.
Speaker Change: Leveraging nearly a decade of experience.
Speaker Change: Sharon in a minute our aging a well established product portfolio and a flourishing our lives so showing a gaming community.
Speaker Change: <unk> is well positioned for continued market leadership in the Mena region.
Speaker Change: We remain dedicated to serving local users evolving needs for social interaction and entertainment how do we stay closely attuned to local chance as we create and launch new products.
Speaker Change: Tailored to meet our users' preference.
Tao Yang: The MENA region has also experienced significant advancements. in Artificial Intelligence. with countries such as Saudi Arabia and the UAE at the forefront of AI infrastructure investment. In the first half of 2024, Abu Dhabi's AI sector grew by 41.3%, bringing the total number of AI companies to 400,000. Drawing upon Yalla's decade of expertise in MENA's internet industry and our deep understanding of local culture and user behaviors, we continued to strengthen our capabilities in developing AI algorithm models that are tailored to local culture and user preferences. Our dedicated AI team is rapidly integrating AI-driven... automation and data analytics into our products and operations to optimize R&D efficiency and improve the user experience across our product offerings.
The Mena region has also experienced significant.
Speaker Change: At a walkman in artificial intelligence with countries, such as Saudi Arabia, and the UAE.
Speaker Change: We'll file until they are infrastructure investments in the first half of 'twenty 'twenty four but that is a sector grew by 41.3%, bringing the total number of AI companies two of 400.
Speaker Change: Enjoying a PA Yale has decades of expertise jimenez internet industry, and our deep understanding of local culture and user behaviors. We continued to strengthen our capabilities in developing AI algorithm models that are tailored to local culture and user preference.
Speaker Change: Our dedicated team is rapidly integrating AI driven.
Speaker Change: Automation and that Uh huh.
Speaker Change: A lot of things into the products.
Speaker Change: And the operations to optimize R&D efficiency and improve the user experience across our product offering.
Tao Yang: For example, we have increased the role of our self-developed AI art platform in virtual product design, training it to better align with MENA users. aesthetic preference. This has significantly enhanced design efficiency and accuracy.
Speaker Change: For example, we have increased the DAU of our self developed AI odd platform you know what your product does I training it is to better align with our Mena users.
Speaker Change: Static preference.
Speaker Change: This has significantly helped design efficiency and accuracy.
Tao Yang: Additionally, we neutralize... AI algorithm to comprehensively analyze users' characteristics and employ personalized recommendations to improve user interaction and re-engage domain users. This enhanced features not only boost user engagement, but also drive profitability. Going forward, we will continue to drive innovation in AI applications to provide local users more efficient and engaging services.
Additionally, we utilized.
Speaker Change: AI algorithm to comprehensively and allows users to calculate the mistakes and they enjoy personalized recommendations to improve the user interaction and re engage donut users.
Speaker Change: This in house features not only boost user engagement, but also drive profitability going forward. We will continue to drive innovation AI applications to provide local users more efficient and engaging.
Speaker Change: Mrs.
Tao Yang: At the same time, MENA's gaming industry continues to maintain a strong growth trend. As one of the fastest-growing regions in terms of global gaming industry revenue, the MENA market shows a high willingness to download and pay for various types of games. As always, we remain committed to enriching our gaming product portfolio with a continuous focus on R&D for Yalla Games. As we have shared previously, Yalla Games' product line is vibrant with several self-developed medical games in the pipeline. Two of these games have completed development and are in the testing phase. We are also consistently discussing collaboration opportunities.
Speaker Change: At the same time, I mean as gaming industry continues to maintain a strong girl strength as one of the fastest growing regions in terms of global gaming industry revenue.
Speaker Change: For me the market shows a high.
Speaker Change: Readiness to download hidden pay for various types of games.
Speaker Change: As always we remain committed to enriching our gaming product portfolio with a continuous smokers. So R&D for yellow game as we've shared previously yellow games product line is vibrant with several self developed.
Speaker Change: The old games in the pipeline two of these games have completed development and all in the.
Speaker Change: Testing phase we are also consistently discussing collaboration opportunities.
Tao Yang: who proactively work with potential partners from gaming studios around the world. We look forward to seeing these new products capture their corresponding user base and drive revenue growth in the coming years.
Speaker Change: Proactively Baruch with potential partners from gaming studios around the World, We look forward to seeing.
Speaker Change: This new products capture there.
Speaker Change: Responding user base and drive revenue growth in the coming year.
Tao Yang: 2025 marks the 10th anniversary of Yalla Group. We are excited to see our new products and the diverse efforts we've made recently come to fruition this milestone year. The MENA market is experiencing an incredible opportunity for growth, with local governments support for digital development laying a solid foundation for future expansion. As MENA's largest online social networking and gaming company, we remain confident in our ability to navigate the ever-evolving digital landscape and deliver value to all of our stakeholders.
Speaker Change: 20 to 25 marks the 10th anniversary of you Gotta go up.
Speaker Change: We were excited to see our new products and the diverse efforts. We've made recently come to fruition. This milestone here.
Speaker Change: The middle market is experiencing a incredible opportunity for growth with local government support for these store development laying a solid foundation for future expansion.
Speaker Change: That's not just gone live social networking and gaming company, we remain confident in our ability to navigate the ever evolving digital landscape and deliver value to one of ours.
Speaker Change: Stakeholders.
Saifi Ismail: Now I will turn this call over to our president, Mr. Saifi Ismail. for a closer look at our recent developments.
Speaker Change: Now I would turn this call over to our President Mr. Safi is about you for a closer look at our recent developments.
Speaker Change: Yeah.
Saifi Ismail: Hello, everyone. Thanks for joining us today. Let's take a closer look at our fourth quarter operations and our product's performance. As of December 31st, 2024, our MAU increased by 14.4% year-over-year to 41.4 million, paying users increased by 3.2% year-over-year to 12.3 million, with ARBO reaching 7.24, an increase of 10.2% year-over-year. During the quarter, we continued to launch innovative features and engaging operational events for our flagship products, strengthening users' engagements and maintaining these products' profitability. For our regional products, we continued to unleash their immense potential with iterations and upgrades. Revenue from 101OK Yalla reached a new record high, contributing to our overall growth.
Speaker Change: Hello, everyone. Thanks for joining us today.
Speaker Change: Take a closer look at our fourth quarter operations and our product spend for months.
Speaker Change: As of December 31st 2024 hour increased by 14 boycott.
Speaker Change: Year over year.
Speaker Change: 241, born 4 million paying users increased by three 2% year over year to 12 3 million with oddball, reaching <unk> 24, an increase of 10 Boeing two bets in theater already during the quarter. We continue with the launch of innovative features and engaging corporation.
Speaker Change: It had been for our flagship products.
Speaker Change: Lengthening user engagements and maintaining these products broker disability.
Speaker Change: Our regional products, we continue to unleash their immense potential with <unk> and upgrades revenue for a 101, Okay. I love reached a new record high contributing to our overall growth.
Saifi Ismail: We are delighted to see our legacy products exhibit during popularity and generate strong results as we continue to invest in new opportunities to drive future growth. We continue to strengthen Yalla Ludo's momentum with a series of outstanding offline events this year. In December 2024, we held our Yalla Ludo Champion Tournament in Riyadh in Saudi Arabia, featuring a host of customized experiences inspired by local culture traditions to suit local gamers' tastes. We also provided VR gaming experiences and other immersive activities to strengthen users' engagement. With these influential events, we create unique opportunities for talented gamers and game enthusiasts to connect while cementing our bond with users and extending our reach to the broader gaming community.
Speaker Change: Delighted to see our legacy products exhibit Europe brokerage identity and generate strong results as we continue to invest in new opportunities to drive future growth.
Speaker Change: We continue with the strength and momentum.
Speaker Change: Momentum with a series of outstanding offline events. They see it in December 'twenty 'twenty four we held our young Rudow champion tournament in Riyadh, Saudi Arabia, featuring a host of customized experiences inspired by local culture tradition to suit local game on stage.
Speaker Change: We also provided we are gaming experiences and other immersive activities.
Speaker Change: Anything user engagement with these influential events, we create unique opportunities for talented gamers and game in few states to connect one cementing our bond with users and extending our reach to the board that the gaming community.
Saifi Ismail: In terms of regional products, we announced in the third quarter of 2024 that 101OK Yalla had set a new quarterly revenue record, a milestone. It swiftly surpassed this quarter. Meanwhile, the product achieved a significant year-over-year increase in monthly average MAU during quarter four. These remarkable results have inspired us to remain laser-focused on crafting high-quality regional products and challenge ourselves to seize every opportunity for success in their respective markets. Our dedication to enhancing MENA's digital lifestyles continues to win social recognition.
Speaker Change: In terms of regional products, we announced in the third quarter of 2020 for that 101, Okay. Your law has set a new quarterly revenue record.
Speaker Change: Milestone it swiftly, but about this water. Meanwhile, the product achieved a significant year over year increase in monthly average.
Speaker Change: In quarter four this remarkable result.
Speaker Change: Do remain laser focused on drafting high quality original products and challenged ourselves to seize every opportunity for success in their respective markets. Our dedication to enhancing mean as digital lifestyle continue with two n's social recognition on the group level.
Saifi Ismail: On the group level, we are proud to announce that Yalla Group was awarded the Powerhouse Partnership Award at the App Gallery Developer Conference 2024 in Abu Dhabi in November 2024. The award was presented by the co-chairman of the UAE Esports Federation in recognition of Yalla Group's achievements. pivotal contributions to the AppGallery ecosystem, including an array of innovative digital experiences tailored to MENA users' unique needs.
Speaker Change: We are proud to announce that younger group was awarded the Bolthouse Partnership Award the App Gallery debate about comfort on 'twenty 'twenty before in Abu Dhabi in November 22 months before the award was presented by the co chairman of the U a E sports with duration and recognitions of yellow.
Speaker Change: We would tell contribution to the App gallery ecosystem, including an array of innovative digital experiences tailored to me now use our unique needs. Additionally, young Malouda won a gold Stevie Award for innovation and entertainment applications at the sixth annual Middle East.
Saifi Ismail: Additionally, Yalla Ludo won a Gold Stevie Award for Innovation in Entertainment Applications at the 6th Annual Middle East and North Africa Steve Awards in 2025. The Stevie Awards are widely considered to be the world's premier business awards and are the only business awards to recognize innovation in the workplace in 18 nations in MENA. This marks the third consecutive win for Yalla's industry-leading social apps, underscoring our unwavering commitment to the pursuit of innovation, excellence, and the ultimate in-user experience. In short, as the largest MENA-based online social networking and gaming company, Yalla stands at the forefront of MENA's digital transformation.
Speaker Change: Africa, Steve Awards in 2025.
Speaker Change: D V awards are widely considered to be the world's Premier business Awards and are the only business awards to recognize the innovation in the workplace and 18 nations in Mena.
Speaker Change: Mark did good.
Speaker Change: Forget the blend for the automotive industry, leading leading social apps underscoring our unwavering commitment to food innovation excellence and the ultimate end user experience and short as the largest meeting a bit online social networking and gaming company you look down at the floor.
Speaker Change: I mean as digital transformation looking ahead, we will remain dedicated to pushing the boundaries of innovation delivering a better experience to meet our users' evolving need and desire as being as digital eco economy continuous.
Saifi Ismail: Looking ahead, we will remain dedicated to pushing the boundaries of innovation, delivering unparalleled experiences to meet our users' evolving needs and desires. As MENA's digital economy continues to grow, To grow and thrive, we will leverage our core strengths and strategic partnership to explore new opportunities and shape the future of social networking and online entertainment.
Speaker Change: To grow and thrive, we will leverage our core strengths and strategic partnership to explore new opportunities and shape, the future of social networking and <unk>.
Speaker Change: Online entertainment.
Karen Hu: With that, I will now turn the call over to our CFO, Karim, who will discuss our key financial and operational risks. Thank you Saifi and hello everyone. Thank you for joining us today. We delivered robust 2024 results reflecting our unwavering commitment to driving high quality growth in a dynamic and rapidly evolving market. For full year 2024, our revenues reached US$339.7 million. In the fourth quarter alone, our revenues increased by 12.2% year-over-year to US$90.8 million. setting the up end of our guidance and underscoring the ongoing success of our use acquisition and monetization strategies. Moreover, we remained focused on enhancing our operational efficiency and optimizing cost which has significantly contributed to our operating profitability.
Kevin Hu: With that I will now turn the call over to our CFO Kevin.
Kevin Hu: We'll discuss our key financial and operational results.
Speaker Change: Thank you Sanjay and Hello, everyone and thank you for joining us today.
Kevin Hu: It delivers a robust 2024 result.
Speaker Change: <unk>.
Speaker Change: <unk> commitment to driving high quality growth in a dynamic and rapidly evolving market.
Speaker Change: Full year 2024 hour revenues three three.
Speaker Change: <unk> hundred $39 7 million U S dollars.
Speaker Change: In the fourth quarter alone our revenues increased by <unk>, 2% year over year to $19 8 million U S dollars exceeding the upper end.
Speaker Change: And underscoring the ongoing success of our user acquisition and monetization strategies.
Speaker Change: Older. We remained focused on enhancing our operational efficiency and optimizing cost which has significantly contributed to our operating profitability.
Karen Hu: Our operating income increased by 29.4% year-over-year to $30.1 million in the fourth quarter, and by 26% year-over-year to $121.4 million. This meaningfully boosted our overall profitability, with net income increasing by 18.7% to $134.2 million for the full year 2024.
Speaker Change: Our operating income increased by 29, 4% year on year to <unk> point.
Speaker Change: Point 1 million U S dollars in the fourth quarter and by 26% year over year to 121 for U S. Dollar.
Speaker Change: For the full year this medium for April speed, our overall profitability with net income increasing by 18, 7% to $134 2 million U S dollars for the full year 2024.
Karen Hu: As we move into 2025, we will continue to prioritize quality development, focusing on both product innovation and the refined operational processes. We will also deepen our commitment to enriching the user experience and expanding our services to cater to the regions involving... With our deep local insights and strong financial fundamentals, we are well-positioned to navigate the market dynamics and seize future growth opportunities.
Speaker Change: As we move into 2025, we will continue to prioritize quality development.
Speaker Change: Oh boy.
Speaker Change: Product innovation and the refined operational processes.
Speaker Change: We are also deepening our commitment to any region that user experience and expanding our services to cater to the regions evolving needs.
Speaker Change: Our deep local insights and strong financial fundamentals.
Speaker Change: We are well positioned to navigate the market dynamics and the state's future growth opportunities.
Speaker Change: Yes.
Karen Hu: Let's move on to our detailed financials for the fourth quarter of 2024. Our revenues were 90.8 million U.S. dollars in the fourth quarter of 2024, a 12.2% increase from 80.9 million U.S. dollars in the same period last year. The increase was primarily driven by our burning user base and enhanced monetization capability. Our solid revenue growth was also partially attributable to the substantial increase in the number of pain... which grew to 12.3 million. in the fourth quarter of 2024 from 11.9 million in the same period last year. Turning to our costs and expenses, our total costs and expenses were 6.7 million U.S.
Speaker Change: Move onto our detailed financials for the fourth quarter of 2024.
Speaker Change: Our revenues.
Speaker Change: 80 889.
Speaker Change: $98 million in the fourth quarter of 2024% to 12.2% increased from $89 million in the same period last year.
Speaker Change: The increase was primarily driven by our user base and monetization capability.
Speaker Change: Solid revenue growth was also partially attributable to the substantial increase in the number of paying users.
Speaker Change: Which grew to 12.3 meeting.
Speaker Change: In the fourth quarter of 2024 from 11 9 million in the same period last year.
Speaker Change: Turning to our cost and expenses, our total costs and expenses.
Speaker Change: 6.7 million U S dollars.
Karen Hu: dollars. In the fourth quarter of 2024, a 5.3% increase from 57.6 million U.S. dollars in the same period last year. The cost of revenues was 31 million US dollars in the fourth quarter of 2024, a 1.5% increase from 30.7%. meeting U.S. dollars in the same period last year. primarily due to higher commission fees paid to third-party payment platforms as a result of increasing revenues generated. cost of revenues and percentage of total revenues decreased from 34.2% in the fourth quarter of 2024, from 37.8% in the same period last year. Our selling and marketing expenses were $7.4 million in the fourth quarter of 2024, a 28.5% decrease from $10.4 million.
Speaker Change: In the fourth quarter of 2024, or five 3% increase from $57 6 million U S dollars in the same period last year.
Speaker Change: Cost of revenues was 31 million U S dollars in the fall.
Speaker Change: First quarter of 2024.
Speaker Change: 1.5% increase from 13 point.
Speaker Change: Meaning you asked already thank you read last year.
Speaker Change: Primarily due to higher commission fees paid to third party payment platforms as a result of increasing revenues generate Keith.
Speaker Change: Cost of revenues as a percentage of total revenues decreased from 34, 2% in the fourth quarter of 2024 from 37, 8%.
Speaker Change: In the same period last year.
Speaker Change: Our selling and marketing expenses.
Speaker Change: And then for many U S dollars in the fourth quarter of 2024.
Speaker Change: 28, 5% decrease from $10 4 million U S dollars in the same period last year, primarily driven by our more disciplined advertising and promotion approach.
Karen Hu: Thank you. primarily driven by our more disciplined advertising and promotion approach. selling and marketing expenses as percentage of total rent. 8.2% in the fourth quarter of 2024, from 12.8% in the same period last year. Our general and administrative expenses were 13.1 million U.S. dollars in the fourth quarter of 2024. a 15.6% increase from 11.3 million U.S. dollars in the same period last year. primarily due to an increase in incentive compensation. General and administrative expenses and percentage of total revenues increased to 14.4% in the fourth quarter of 2024 from 14% in the same period last year.
Speaker Change: Selling and marketing expenses as a percentage of total revenues decreased two eight point to set in.
Speaker Change: In the fourth quarter of 'twenty 'twenty four from <unk>, 8% in the same period last year.
Speaker Change: Our general and administrative expenses were $13 1 million U S dollars in the fourth quarter of 2024.
Speaker Change: Of 15, 6% increase from $11 3 million U S dollars in the same period last year, primarily due to an increase in incentive compensation.
Speaker Change: General and administrative expenses as a percentage of total revenues increased to 14, 4% in the fourth quarter of 2024 from 14% in the same period last year.
Karen Hu: Our technology and product development expenses were 9.2 million U.S. dollars in the fourth quarter of 2024. that represent increase from 5.4 million US dollars in the same period last year. primarily due to an increase in salaries and benefits for our technology and product development staff, driven by an increase in the headcounts of these staff to support the development of new businesses and expansion of our product portfolio. Technology and Product Development Expenses as Percentage of Total Revenue In the first quarter of 2024, from 6.7% in the same period last year, As such, our operating income was 30.1 million U.S.
Speaker Change: Our technology and product development expenses.
Speaker Change: $9 2 million U S dollars in the fourth quarter of 2024.
Speaker Change: <unk> 9.6.
<unk> increased from five point all means U S dollars in the same period last year.
Speaker Change: Primarily due to an increase in salaries and benefits for our technology and product development staff driven by an increase in the head of class B stock to support the development of new businesses and expansion of our product portfolio.
Speaker Change: Technology and product development expenses as a percentage of total revenues increased 10.21% in the fourth quarter of 'twenty 'twenty four from six point to 7% in the same period last year.
Speaker Change: As such our operating income was $30 1 million U S dollars in the fourth quarter of 2024.
Karen Hu: dollars in the fourth quarter of 2024, a 29.4% increase from 23.3 million U.S. dollars in the same period last year. interest income was $7.1 million in the fourth quarter of 2024 compared with $5.5 million in the fourth quarter of 2020. Income tax expense was 3.35 million US dollars in the fourth quarter of 2024, compared with 0.54 million US dollars in the fourth quarter of 2020. The increase was primarily due to an increase in income tax expenses recognized for recognition of deferred tax liabilities for the undistributed return earnings on consolidated subsidiaries. As a result of our foregoing, our net income was 32.5 million U.S.
Speaker Change: A 29, 4% increased from 23.3, meaning U S dollars in the same period last year.
Speaker Change: Interest income was seven 1 million U S dollars in the fourth quarter of 2024, compared with 6.5, meaning U S dollars in the first quarter of 2023.
Speaker Change: Income tax expense was three point 35 million U S dollars in the fourth quarter of 2024, compared with point $54 million in the fourth quarter of 2023. The increase was primary due to an increase in income tax expenses.
Speaker Change: Is the full recognition of deferred tax liabilities for the undistributed retained earnings unconsolidated subsidiaries as.
Speaker Change: As a result of our foregoing our net income was 32 5 million U S dollars in the fourth quarter of 2024.
Karen Hu: dollars in the fourth quarter of 2024, a 9.7% increase from 29.7 million U.S. dollars in the fourth quarter of 2020. And our non-GAAP net income in the first quarter of 2024 was $35.7 million, a 6.8% increase from $33.4 million in the same period last year.
9.7% increased from $29 7 million in U S dollars in the fourth quarter of 2023.
And our non-GAAP.
Speaker Change: Net income in the fourth quarter of 2024 was $35 7 million U S dollars.
Speaker Change: 6.8% increased from 33.4, meaning U S dollars in the same period last year.
Karen Hu: Moving on to our liquidity and capital resources, our cash position remains solid and healthy. As of December 31, 2024, we had cash and cash equivalents, restricted cash, term deposits and short-term investment of US$656.3 million compared with US$535.7 million as of December 31, 2024. We continued to return value through our share repurchase program. Our Board of Directors has approved an extension of the expiration date of the share repurchase program to May 21, 2021. for the company's share repurchase program beginning on May 21, 2021. During the fourth quarter, we repurchased 1,595,879 ADFs, or Class A Ordinary Shirts, from the open market.
Speaker Change: Moving on to our liquidity and have you rethought at.
Speaker Change: Our cash position remains solid and healthy.
Speaker Change: As of December 31, 2024, we had cash and cash equivalents restricted cash and term deposits and short term investments.
Speaker Change: 600, and the $56 3 million U S dollar compared with by the handler and the 35.7 meeting dress dollars as of December 31 2023.
Speaker Change: We continued to return value through our share repurchase program.
Speaker Change: Lot of directors has approved an extension of the expiration date of the share repurchase program to May 21, 2026 for the company's share repurchase program beginning on May 'twenty, one 2021.
Speaker Change: During the fourth quarter, we repurchased one meaning 595817 nine E. D. S. All class a ordinary shares from the open market totaling approximately 6.9 million U S dollars.
Karen Hu: totaling approximately US$6.9 million. Cumulatively, as of December 31, 2024, we had completed cash repurchases in the open market of 7,305,138 ADFs, or Class A ordinary shares, totaling approximately 49.4 million U.S. dollars.
Speaker Change: Similarly T P. As of December 31, 2021 'twenty 'twenty four we had company cheap cash repurchases in the open market of seven meeting 305.
Speaker Change: 138, or 80 S. All class a ordinary shares totaling approximately 49.4 million U S dollars.
Karen Hu: Moving to our outlook. For the first quarter of 2025, we expect our revenues 75 million U.S. dollars and 82 million U.S. dollars.
Speaker Change: Moving to our outlook for the first quarter of 2025, we expect our revenues to be between 75 million U S dollars and 82 million U S dollars.
Karen Hu: The above outlook is based on the current market conditions and reflects the company's management's current and preliminary estimates of the economy. and operating conditions and customer demand, which are all subject to change.
Speaker Change: The outlook is based on the current market conditions and reflects the company's management's current and preliminary estimates of the market and operational foundation and customer demand, which are all subject to change in the interest of time. Please refer to our earnings press release for further details.
Karen Hu: In the interest of time, please refer to our earnings press release for further details on our first quarter and full year 2024 financial results. This concludes our prepared remarks for today.
Speaker Change: Our first quarter and full year 2020 full financial results.
This concludes our prepared remarks for today.
Operator: Operator, we are now ready to take questions. Thank you.
Speaker Change: We are now ready to take questions.
Speaker Change: Thank you you ask a question please for stores and one on your telephone keypad.
Operator: To ask a question, please press star then 1 on your telephone keypad.
Operator: To remove yourself from queue, please press star then 2.
Speaker Change: As you saw from Hugh Please press Star then two.
Xueqing Zhang: Our first question today comes from Xueqing Zhang with CICC. Please go ahead. Good morning, management. Thanks for taking my question, my question about your game business. Could management share the latest progress of new game products and what's your insights into commercialization expectations? Thank you. Thanks Xueqing for your question.
Speaker Change: First question today comes from <unk>, Zhang with <unk>. Please go ahead.
Speaker Change: Okay.
Speaker Change: Hi, Good morning management. Thanks for taking my question My question Bath Yakin business.
Speaker Change: Can management share the latest progress afternoon, <unk> and what's her insights into commercialization.
Speaker Change: Ah patients. Thank you.
Jeff: Thanks, Tim for your question. This is Jeff I'll take your question throughout 2024, we focus on advancing the research and development.
Jeff Xu: This is Jeff. I will take your question. Throughout 2024, we focused on advancing the research and development of our new gaming products, consistently exploring new avenues to expand our product portfolio. We have completed the version 1.0 development of two mid-core games and are now in the process of fine-tuning them. Meanwhile, we have been proactively pursuing external collaborations that complement our business, leveraging Yalla's extensive experience in the Middle East. We are working with more potential partners to unlock the local market opportunities and establish a deeper foothold in the Middle East. As the largest MENA-based online social networking and entertainment platform, we aim to curate top-tier games and offer game players a rich entertainment experience.
Speaker Change: Our new gaming product.
Speaker Change: Consistently exploring new avenues to extend our product portfolio.
Speaker Change: We have completed the Brazil 1.0 department of <unk> games and are now in the process of fine tuning them.
Speaker Change: Meanwhile, we have been proactively pursuing external collaborations their completion.
Speaker Change: Our business leveraging <unk> extensive experience in the middle East.
Speaker Change: We are working with more potential partners to unlock the local market opportunities and establish a deeper footholds in the middle East.
Speaker Change: As the largest Mena based online social networking and entertainment platform, we aim to curate top tier games and encore game players the retreat and statement experience. We hope your other games recent achievements, we've contribute new revenue streams to the group this year.
Xiaoyue Hu: We hope Yalla Games' recent achievements will contribute new revenue streams to the group this year. The specific financial guidance will be disclosed in due course. Thank you very much about your question. Thank you.
Speaker Change: Specific financial guidance will be disclosed in due course, thank you very much.
Speaker Change: Two questions.
Speaker Change: Yeah.
Speaker Change: Thank you.
Xiaoyue Hu: And our next question comes from Xiaoyue Hu with Haitong International. Please go ahead. Hello, management. Thank you for taking my question.
Speaker Change: Next question comes from Sean <unk> with.
Speaker Change: As long as international Please go ahead.
Speaker Change: Oh Hello management. Thank you for taking my question. So can management elaborate comprehensive stretched your priorities on the Pms you, perhaps call Tonight on the call.
Yang Hu: So can management elaborate on the company's strategy priorities and the key initiatives for 2025? Thank you. Thank you, Xiaoyue. This is Yang. I will answer this question.
Speaker Change: Thank you.
Speaker Change: If this is your one of your I'm serious question.
Yang Hu: I think 2025 marks the 10th anniversary of our company's founding. Our two flagship products continue to thrive. And we are immensely grateful for our media-based users' unwavering support and enthusiasm over the years. We will continue to iterate these flagship apps by enhancing gamification and rolling out innovative new contents, while leveraging advanced technology to offer diverse and engaging experiences. for our users. Additionally, as we mentioned earlier, we have a number of new apps. in our pipeline that have potential to contribute to the company's revenue growth in the second half of this year.
Speaker Change: I think 2025 marks the 10th anniversary of our company's founding.
Speaker Change: Our two flagship products continue to thrive and we are immensely grateful flower.
Speaker Change: Basically users unwavering support and in associate them over the years, we will continue to iterate, there's flagship apps by housing gamification and rolling out innovative new content, well leveraging the <unk> technology to offer diverse and engaging experience.
Speaker Change: For our users.
Speaker Change: Recently.
Speaker Change: As we mentioned earlier, we have a number of new apps.
Speaker Change: In our pipeline that have potential to contribute to the company its revenue growth in the second half of this year and.
Yang Hu: And going forward, we plan to further expand our local team in the Middle East to enhance our local presence and align with the region's sweeping digital transformation trend. We will keep a sharp eye on MENA's evolving user needs and stay open to the new market opportunities while consistently delighting local users with products that appeal to their culture, values, and tastes. Thank you.
Speaker Change: Going forward, we plan to further expand our local team in the middle East Treehouse, our local presence and to align with the regions stripping digital transformation, Chad we will keep a sharp eye on you know its evolving user needs and to stay open to the new market opportunities well cause instantly.
Delighting local users with our products that appeal to their culture of adding a scent taste. Thank you Sylvia.
Speaker Change: Yeah.
Speaker Change: Mm Hmm okay.
Speaker Change: Thank you and our next question comes from Carpeting, Joe We see I see I see please go ahead.
Kaifeng Jia: And our next question comes from Kaifeng Jia with CITIC. Please go ahead. Hi, management. Thanks for taking my question.
Speaker Change: Hi management. Thanks for taking the question I have a question about how should we think about the revenue and margin trades in 2025.
Karen Hu: I have a question about how should we think about the revenue and margin trades in 2025. Thank you. Hello, Kaifeng. Glad to see you here. This is Karen. For 2025, even without factoring in potential revenue from new products, we anticipate at least maintaining our current revenue size. We also think that maintaining a net profit margin of around 40% is reasonable. Of course, our upcoming products are likely to generate new revenue streams. But we will wait until these products are launched to provide revenue guidance. Given the necessary self-marketing investments for these new products, we expect a margin of around 35%.
Karen: Hello, Kevin glad to see you here this is Karen.
Speaker Change: Oh 2025.
Speaker Change: Factoring in potential revenue from new products, we anticipate at least maintaining our current revenue size.
Speaker Change: I also think that maintaining our net profit margin of around 40% is a reasonable of cross our upcoming products are likely to generate a new revenue streams. This year, but we will and Hugh.
Speaker Change: Wait and see what these products are launched to provide revenue guidance given the necessary marketing investments for these new products, we expect our margin of around 35%, but we will adjust our investment pace, depending on the specifics of these new product launches.
Karen Hu: But we will adjust our investment budget depending on the specifics of these new product launches. Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you and our next question comes from Richard <unk> with Nomura. Please go ahead.
Rachel Guo: And our next question comes from Rachel Guo with Nomura. Please go ahead. Hi, good morning management. Thanks for taking my question. My question is about your shareholder returns.
Speaker Change: Hi, Good morning management.
Speaker Change: My question. My question is about their shareholder return and I just want to probe was that I think all your share repurchase plan.
Yang Hu: Can management provide an update on your share reproduce plan? Thank you Rachel. This is Yang. I think we are committed to delivering value to our shareholders through our share repurchase program. In 2024, we repurchased around 3 million ADS, amounting to approximately USD 14 million. Moving into this year, we will accelerate shareholders' returns. through our share repurchase program. We are fully committed to achieving our target of at least doubling our buyback activity to USD. 28 million. We may. escalate this amount later this year and will provide quarterly updates on the plan's progress. We host strong confidence in Yalla's long-term potential and are dedicated to generate...
Speaker Change: Thank you Richard.
Speaker Change: As you all.
Speaker Change: I think we are committed to delivering value to our shareholders through our share repurchase program in 'twenty 'twenty four we repurchased around 3 million a D S amounting to approximately USD 14 million.
Speaker Change: Moving into this year, we will accelerate shareholders returns.
Speaker Change: Through our share repurchase program, we are fully committed to achieving our targets.
Speaker Change: At least doubling our buyback activities to USD.
Speaker Change: $28 million this year.
Speaker Change: We may.
Speaker Change: Escalate, there's a month later this year and we'll provide quarterly updates on the pads progress.
Speaker Change: We host strong confidence and yellow its long term potential and are dedicated to generating.
Yang Hu: tenable long-term value for all stakeholders. I hope that helps. Thank you.
Speaker Change: As tebo long term value for all stakeholders I.
Speaker Change: I hope that helps.
Speaker Change: Yes.
Speaker Change: Thank you and our next question comes from Wisdom, Hong Goldman Sachs. Please go ahead.
Lincoln Kong: And our next question comes from Lincoln Kong at Goldman Sachs. Please go ahead. Thank you, Manjuan, for taking my question.
wisdom: Thank you management for taking my question so.
Yang Hu: So can Manjuan elaborate about our strategic vision for leveraging AI to drive growth and innovation here?
Speaker Change: Can management elaborate sir.
Speaker Change: Our strategic vision for leveraging AI to drive our growth and innovation here okay.
Yang Hu: Hi Lincoln, this is Yang. Thank you for raising this. As we noted earlier, we have a dedicated algorithm team and proprietary AI task platform, and we are already capitalizing on AI to empower our products, boosting efficiency and elevating user experience. Meanwhile, we see tremendous upside potential in further integrating AI into our ecosystem. We are actively evaluating various user cases across our products. exploring how to synergize our internal teams with external AI resources to deepen user engagement. and expand our market reach. We aim to harness AI not only as a tool for enhancing efficiency, but also as a catalyst for innovation, ensuring that our products remain at the forefront of China's digital entertainment market.
Speaker Change: Hi, This is Joe Thank you for raising this as we noted earlier, we have a dedicated algorithm team.
Speaker Change: Uh huh.
Proprietary AI tusker platform and we are already capitalizing all AI to empower all of our products and boosting efficiency and elevating user experience. Meanwhile, we see tremendous upside and potential further integrating AI into our ecosystem we are.
Speaker Change: Actively evaluating whereas user cases across our products.
Speaker Change: Exploring how to synergize, our internal teams with external resources to deepen user engagement.
Speaker Change: And expand our market reach.
Speaker Change: Aim to harness AI not only added two four enhancing efficiency, but also the catalyst for.
Innovation, ensuring that our products remain at the forefront of Neenah is digital entertainment market I.
Yang Hu: I hope this offers a clear picture. Thank you, Lincoln. Thank you.
Speaker Change: I hope this oversaw a clearer picture thank everybody again.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thank you and our next question comes from Jemmy Huang with UBS. Please go ahead.
Jenny Yuan: And our next question comes from Jenny Yuan with UBS. Please go ahead. Thanks management for taking my question.
Speaker Change: Yeah.
Jemmy Huang: Thanks management for taking my question. My question is regarding our original strategy. So could you. Please provide an update on our company's future development, we will still be me not brokered or if we have any plans to expand our push is to other regions. Thank you.
Saifi Ismail: My question is regarding our original strategy. So could you please provide any update on whether our company's future development will still be media-focused or if we have any plans to expand operations to other regions? Thank you. Thanks, Jenny.
Speaker Change: Thanks, Jamie This is safety and I'll take this question we have always viewed me now as our core market and strategic home base.
Saifi Ismail: This is Saifi and I'll take this question. We have always viewed MENA as our core market and strategic home base, making it the solid foundation supporting our business growth. At the same time, as our products portfolio expands, we may reach users elsewhere, diversifying our user base. Some of our new products may also have the potential for distribution in other regions. We will also carefully evaluate such situations based on the market data and market good decisions that maximize our potential and enhance our ROI. Wherever else we may go, the MENA region will always remain at the heart of our business, and we will continue to deepen our presence in this region to strengthen our market leadership.
Speaker Change: King did the solid foundation supporting our business growth.
Speaker Change: At the same time as our product portfolio expands we made each user and sweat.
Speaker Change: But if you're buying our user base some of our new products May also have the potential for distribution in other regions. We will also carefully by the way, it's such situations based on the market data.
Speaker Change: Market grew the decisions that maximize our potential and enhance our ROI. However.
Whereabout, it's we May go.
Speaker Change: What are you doing with odd would remain at the heart of our business and we will continue to deepen our presence in this region.
Speaker Change: Strengthening our market leadership.
Saifi Ismail: Thank you.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you Allison.
Operator: And this concludes our question and answer session.
Speaker Change: And the answer session I'd like to turn the conference back over to the company for closing remarks.
Operator: I'd like to turn the conference back over to the company for closing remarks. Thank you once again for joining us today. We look forward to speaking with you in the next quarter. If you have further questions, please feel free to contact 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. Thank you.
Speaker Change: Thank you once again for joining US today, we look forward to speaking with you in the next quarter.
Speaker Change: Have further questions. Please feel free to contact Investor relations or P. S. N <unk> financial communications, both parties contact information is available in today's press release as well as all of our company website. Thank you.
Speaker Change: Thank you. This concludes today's conference call you May now disconnect your lines and have a wonderful day.
Operator: This concludes today's conference call. You may now disconnect your lines and have a wonderful day.
Speaker Change: [music].