Q1 2025 Yalla Group Ltd Earnings Call
Operator: Good morning and good evening, ladies and gentlemen. Thank you for standing by for Yalla Group's limited first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode.
Good morning, and good evening, ladies and gentlemen, thank you for standing by for Yellow Group's Ltd. First quarter 2025 earnings conference call. At this time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session.
Operator: After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded.
Today's conference call is being recorded.
Kerry Gao: Now I would like to turn the call over to your speaker host today, Ms. Kerry Gao, Investor Relations Director of the company. Please go ahead, ma'am.
Speaker Change: Now I would like to turn the call over to your speaker host today, Ms. Carrie Gal Investor Relations director of the company. Please go ahead ma'am.
Kerry Gao: Hello everyone, and welcome to Yalla's first quarter 2025 earnings conference call. We issued our earnings press release earlier today, and it is now available on our IR website as well as on Newsrout 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. forward-looking statements involving inherent risks and uncertainties. As such, our future results may be materially different from the views expressed. Further information regarding these and other risks and uncertainties is included in our earnings release and our annual report filed with the FCC.
Speaker Change: Hello, everyone and welcome to <unk> first quarter 225 earnings conference call.
Speaker Change: Our earnings press release earlier today and it is now available on our IR website, a thought on yourself on that.
Speaker Change: 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 up 1995.
Speaker Change: Forward looking statements involving human risks and uncertainties as such our future results may be materially different from the views expressed today.
Speaker Change: Formation 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 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 metrics. Yalla's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.
Speaker Change: Yeah that does not assume any obligation to update any forward looking statements, except as required by law.
Speaker Change: Please also note that earnings press release, and this conference call include discussion of unaudited GAAP financial information as well as audited non-GAAP financial measures.
Speaker Change: The press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.
Tao Yang: 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.
Speaker Change: Today, you will hear from Mr. Tao Yang our chairman and Chief Executive Officer will then provide an overview of our latest achievements and growth strategies it'll be followed by Mr. <unk> is my view of the company's profit that will.
Saifi Ismail: He will be followed by Mr. Saifi Ismail, the Communist President, who will briefly review our recent business development.
Kevin Hu: I will briefly review our recent development this is Kevin Hu our.
Karen Hu: This is Karen Hu, our Chief Financial Officer. We'll 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: Our Chief Financial Officer will then provide additional details on the company's financial results and discuss our financial outlook.
Speaker Change: In management's prepared remarks, we will open the call to questions Mr. Jeff <unk>, our chief operating officer, John acute infection.
Jeff Xu: Mr. Jeff Xu, our Chief Operating Officer, will join the Q&A section.
Tao Yang: With that said, I'd now like to turn the call over to our Chairman and Chief Executive Officer, Mr. Tao Yang. Please go ahead, sir. Thank you. Thank you everyone for joining our first quarter 2025 earnings conference call. We kick off 2025 with a strong first quarter. even with the impact of Lam Tan. which fell entirely within the first quarter of this year. Our Q1 revenue still reached $84 million USD, up 6.5% year-over-year and beating the upward end of guidance. our persistent efforts to deliver quality growth. and enhance our overall efficiency are also yielding. In Q1, our net margin improved Substantially, year-over-year from 39.5 to 43.4%.
Speaker Change: I'd now like to turn the call over to our Chairman and Chief Executive Officer, Mr. Tom Yeah. Please go ahead Sir.
Speaker Change: Thank you take care of it.
Speaker Change: It was for joining our first quarter 'twenty five earnings conference call.
Speaker Change: We kicked off 2025 with a strong first quarter.
Speaker Change: Even with the impact of them done which fell entirely within the first quarter of this year.
Speaker Change: Q1 revenue still reached 84 million USD up six 5% year over year and beating the upper end of our guidance.
Speaker Change: Our persistent efforts to deliver quality growth.
Speaker Change: Anyhow, so overall efficiency also yielding.
Speaker Change: Positive results.
Speaker Change: In Q1.
Speaker Change: Net margin improved.
Speaker Change: Substantially year over year from 30 952.
Speaker Change: 43, 4%.
Tao Yang: Our robots' quarterly performance benefited from our effective growth strategy and efforts to enhance our flagship application's schematization and optimize user acquisition. And these initiatives ultimately delivered a better experience for our users, boosting Yalla's and YallaLudo's users' willingness to pay and stay. In recent months, shifting international economic policies have sharply impacted the global macroeconomic situation. economy against this fast-evolving backdrop. The MENA region, Yalla's core strategic market, has maintained remarkable stability and immense potential upside. Historically, the Middle East served as a vital crossroads for cultural exchange and trade between East and West. today. It is a thriving hub for digital services.
Our robust quarterly performance benefited from our effective growth strategies and efforts to yeah, that's our flagship applications communication and optimize user acquisition.
Speaker Change: This initiative has delivered a better experience for our users listening yellows and yet a liter of users' willingness to pay let's say.
Speaker Change: In recent months shifting international.
Speaker Change: Policies have sharply impacted the global Michael Kors.
Speaker Change: Economy.
Speaker Change: Again, because it's fast evolving backdrop.
Speaker Change: The Mena region, Yeah, that's core strategic market.
Speaker Change: <unk> maintained remarkable stability and he loves potential upside.
Speaker Change: Historically.
Speaker Change: The Middle East served as a veto crossroads full culture exchange and trade became east to west.
Speaker Change: Today, It is a thriving hub for digital services.
Tao Yang: thanks to its reverent, young demographics and high Internet penetration. technology is actively embraced across the region, making MENA a prime incubator. Thank you for your involvement in tech development and AI innovation. to capitalize on this opportunity. Yalla is the largest destination for online social networking and entertainment activities. remains deeply committed to R&D and AI deployment. During the first quarter, we leveraged extensive localized materials from our products. in the Middle East. We train our self-developed AI content moderation model to support recognition of both images and text. in Arabic, as well as several Minas regional dialects. We are especially proud that our proprietary platform's recognition speed and accuracy now lead the minority.
Speaker Change: Step two is we werent young demographics and high Internet penetration.
Speaker Change: Technology.
Is it active.
Speaker Change: Actively embraced across the region, making <unk> a problem.
Speaker Change: You bet.
Speaker Change: For the walls.
Speaker Change: Tiger two element and AI innovation.
Speaker Change: To capitalize on this opportunity yellow.
Speaker Change: Yes.
That's not just a destination for life, social networking and entertainment activities.
Speaker Change: We remain deeply committed to R&D and AI deployment, they're already in the first quarter, we leverage extensive localized materials from our products.
Speaker Change: And the middle East to change our.
Speaker Change: <unk> developed a I call it in moderation model to support reclamation.
Speaker Change: False image is fantastic.
Speaker Change: As well as several for me as though they're less well.
Speaker Change: We are especially proud that our proprietary platforms reclamation speed and accuracy now leave because the Mena region.
Tao Yang: We also integrated our moderation platform into our flagship products during the quarter. A win-win in terms of technological advancement and cost efficiency. Beyond moderation, we extended AI applications to user profile management. our data integration and systematic management. to bring deeper insights into user activity. Spanning Patterns, and other behaviors, whether optimizing our customer acquisition is.
Speaker Change: We also integrated our moderation platform into our flagship products you already have a culture of wing wing in terms of tech knowledge grow at Walnut and cost efficiency.
Speaker Change: Beyond moderation, we extended AI applications to user profile management.
Speaker Change: Our integration and the system that magic talent management to spring.
Speaker Change: Or any insights into user activity.
Speaker Change: Spending patterns and other behaviors, what are optimizing our customer acquisition efficiency.
Tao Yang: Moving to our gaming business. Minas' young population, enhanced digital infrastructure, and visionary government support for the culture and entertainment industry. are generating unique growth momentum for the gaming sector. With a robust product pipeline spanning casual and medical games, we have matched the three titles slated for official release in Q3. We just completed one round of product testing, and the team is working to further improve various details. for this title song. We may test in the water, seeing a few additional...
Speaker Change: Moving to our gaming business.
Speaker Change: Global economic.
Speaker Change: Well what's.
<unk> will.
Speaker Change: Well activity.
Speaker Change: Neil Young population.
Speaker Change: How's the digital infrastructure, and a visionary and government support.
Speaker Change: For the culture and entertainment industries.
Speaker Change: All are generating unique girls momentum for the gaming sector.
Speaker Change: With a robust product pipeline setting casual and mid core games, we have a much the three titles slated for our official release in Q3.
We just completed one.
Speaker Change: Out of product testing and the team is working to further improve well as it is.
Speaker Change: Before this title's lunch.
Speaker Change: We may test the waters, saying a few additional.
Speaker Change: The regions.
Tao Yang: I'll start the meeting. with this game. Moving forward, we will continue to build our product metrics with a steady, displaying approach and collaborate with industry partners to foster the growth and prosperity of MENA's gaming ecosystem.
Speaker Change: I'll start and Mena.
Speaker Change: With this game.
Speaker Change: Going forward, we will continue to build our product classics with a steady displaying the approach and collaborate with industry partners to bolster the girls and a trustee.
Speaker Change: Prosperity of Minas gaming ecosystem.
Tao Yang: Before I turn the call over to Saifi, an update on our shareholder return program. We mentioned last quarter that we would accelerate our share repurchase. As of May 16, 2025, Yalla had repurchased over 4.2 million ADS, or Class A ordinary shares, in 2025. 27.4 minutes. bringing us close to fulfilling our commitment made this month. In line with our commitment to sustained shareholder returns, we have decided to raise this year's buyback target by an additional $22 million USD, on top of the previously outlined $28 bringing our total plant share repurchases to US$50 million for 2025. We will provide another progress update next quarter and discuss whether to increase the buyback scale even further.
Speaker Change: Before I turn the call over to society.
On our shareholder return program.
Speaker Change: We mentioned last quarter that we would accelerate our share repurchases. This year targeting at least double the amount of last year's buy back a minimum of a USD 28 million.
Speaker Change: As of May 16th 2075 yellow.
Speaker Change: How do we purchased over four 4.2 million ADR, So class a ordinary shares in trying to identify.
Speaker Change: Totally.
Speaker Change: 27.4 million, bringing.
Speaker Change: Bringing us close to fulfilling our commitments made this much.
Speaker Change: In line with our commitment to.
Speaker Change: So staying to shareholder return, we have decided to raise this year's buybacks permit by additional attention 2 million USD.
Speaker Change: On top of our previously outlined 28 million.
Speaker Change: Bringing our total planned share repurchases too.
Speaker Change: <unk> meeting USD 4025, we will provide another progress updates next quarter and discuss whether to increase the buyback scale even further.
Tao Yang: Moreover, the company has decided to cancel all shares repurchased. as part of our commitment to generating sustained benefits for our shareholders.
Speaker Change: All over the company.
Speaker Change: Has decided to cancel all shares repurchased this year.
Speaker Change: As part of our commitment to generating sustained benefits for our shareholders.
Tao Yang: In summary, Yalla Group deftly capitalized on diverse opportunities during the fourth quarter amid a complex global landscape, achieving breakthroughs in both R&D and product offerings. Harnessing MENA's vast potential and tech-forward assets, we continue to deepen our technological capabilities using AI innovation to drive efficiency improvements and optimize user experience while further strengthening our localized advantage. We remain committed to amplifying Yalla Group's role in the Middle East digital transformation. creating value for all of our stakeholders.
Speaker Change: In summary.
Speaker Change: Yeah.
Speaker Change: Definitely kept a lifestyle diverse opportunities during the quarter amid a complex global landscape, achieving breakthroughs in both R&D and product offering.
Speaker Change: How do you think minez lost potential and path forward. He says we continued to deepen our technological capabilities using AI innovation to drive efficiency improvement and optimized user experience well further strengthening our localized.
Speaker Change: The Baltic.
Speaker Change: We remain committed to amplifying yellow group's ROE in the middle you used to do so transformation.
Speaker Change: Creating value for all of our stakeholders.
Saifi Ismail: Now I will turn this call over to our President. and Mr. Saifi Ismail for a closer look at our recent developments.
Speaker Change: No I will turn the call over to our president Mr. Southeast by you.
Speaker Change: For a closer look at our recent developments.
Speaker Change: Okay.
Saifi Ismail: Hello, everyone. Thanks for joining us today. Let's take a closer look at our first quarter operations and our product's performance. First, let me walk you through our operational and product performance in the first quarter. It is important to note that Ramadan in 2025 started earlier than usual, with the entire month falling within the first quarter. Even so, our products delivered impressive results. Notably, while our flagship application Yarlaludo's user base continued to grow, our WeMuslim organically gained broader popularity during Ramadan. Without raising our selling and marketing expenses, we increased our group's average monthly active user by 17.9% year-over-year to 44.6 million, achieving an accelerating growth rate substantially higher than that of previous quarters.
Speaker Change: Hello, everyone.
Speaker Change: Thanks for joining us today, let's take a closer look at our first quarter operations and our product performance.
Speaker Change: Let me walk you through our operation in Florida.
Speaker Change: Florida months into first quarter. It is important to note that Ramadan and 2025 Stockton area other than usual.
Speaker Change: They are the months falling within the first quarter, even so our brothers.
Speaker Change: Notably, while our flagship application you Ludo user base continue with good go Oh, well, you're Muslim organically gain broad popularity of you didn't get them all done.
Speaker Change: Without raising our selling and marketing expenses, we increased our average monthly active user base have been deemed boys, 9% year over year to 44 6 million, achieving an accelerating growth rate substantially higher to Beth.
Speaker Change: That those previous squad steps, we continue to build out.
Saifi Ismail: We continued to roll out online and offline initiatives crafted to enhance user experience and boost engagement, and we are thrilled to see them drive meaningful results within Yalla's vibrant community. Yalla Ludo's 6th Anniversary campaign was a resounding success, attracting around 3 million participants, including a remarkable share of devoted users who have been with Ludo since its launch. For Ramadan, we introduced a spectacular array of month-long celebratory events online across our mobile apps, drawing users closer to our products. and each other. Participating in our activities and exploring Yalla's apps became a new part of our users' daily lives during Ramadan.
Speaker Change: Computing online and offline initiatives drafted to enhance user experience and boost engagement and we absolutely see them drive meaningful results within young loves vibrant community.
Speaker Change: Yeah. The sixth anniversary campaign was a resounding success, attracting around 3 million participants, including a remarkable chaired or duplicate users who have been with ludo since its launch both of them alone we introduced a spectacular rate.
Speaker Change: Off month longer celebratory events online.
Speaker Change: Our mobile apps, drawing users close up the old products.
Speaker Change: And each other buckets, you're facing in our activities and exploring the unloved became a new part of our users' daily lives you didn't get them about it.
Saifi Ismail: To celebrate the close of Ramadan, we also hosted an Iftar gathering in Dubai, showcasing the crucial role our offline activities play in driving industry progress. This event brought together over 100 government officials, business partners, tech industry leaders, and regional media executives to engage in thought, provoking discussions on the latest trends and innovation opportunities in technology, while sparking insightful exchanges of ideas. This gathering also expanded the region's cross-segment partnership networks industry-wide, laying a solid foundation for future synergetic growth. We were honored to host these distinguished guests and to extend our heartfelt gratitude to our partners for their continued trust and support.
Speaker Change: Celebrates the closer from a bum. We also hosted on it started gathering in Dubai showcasing the provincial road, our offline activities play in driving industrial Brokenness. This event brought together over 100 governmental officials business boss knows it.
Speaker Change: Industry leaders and regional media executives do engage in thought.
Speaker Change: Provoking discussions on the latest trend and innovation opportunities in technology, while sparking insightful exchanges of ideas. This is good and also expanded the region's growth segment, but not shipped networks industrywide laying a solid foundation for our future, saying how did you think draws.
Speaker Change: Oh not to host these distinguished guests and to extend our heartfelt gratitude to our Boston office.
Speaker Change: Continuing with trust and support.
Saifi Ismail: At the end of March, we hosted an additional offline event to amplify our regional presence and strengthen our brand impact. Returning to Iraq with the Yalla Ludo Friendship Tournament, tens of thousands of users registered for the online qualifying rounds to compete for a coveted spot in the offline event. These events gave us invaluable insight into the passion of this region's players and their high regard for the Yalla Ludo brand. Looking back at the first quarter of 2025, we see our success reflected in growth metrics as well as deepening user trust and market recognition. Looking ahead, we remain committed to harnessing technological innovation as our engine and user needs as our compass driving synergy between our social and gaming businesses while expanding the boundaries of MENA's digital ecosystem.
Speaker Change: At the end of March we hosted an additional offline events to amplify our original defense and strengthened our brand impact.
Speaker Change: Turning to Iraq.
Speaker Change: The friendship Goldman.
Speaker Change: As of thousands of users that are just up for the online qualifying at all to compete for a good but they're supposed in the offline event. These events gave us invaluable insight into their passion over the regions, but that is and then how you to GOG well they'll lose O'brien.
Speaker Change: Looking back at the first quarter of 2025, we see our success that afflicted and growth metrics.
Speaker Change: Do you think views of thrust on market driven mission looking ahead, we remain committed to harden with things technologically innovation engine.
Engine and user needs as our compass driving synergy between our social and gaming businesses, while expanding the boundaries of the digital ecosystem.
Saifi Ismail: As always, our vision is to build the largest destination for online social networking and entertainment activities in MENA, and we will never lose sight of that goal.
Speaker Change: As always our vision is to build the largest destination for online social networking and entertainment activities in Mena and we will never lose sight of that goal with that I will now turn the call over to our CFO Karen.
Karen Hu: With that, I will now turn the call over to our CFO, Karen, who will discuss our key financial and operational results. Thank you, Saifi, and hello, everyone. Thank you for joining us today. I'm pleased to report that we delivered a robust first quarter as we continue to execute our high-quality growth strategy and enhance overall efficiency. Our revenues increased by 6.5% year-over-year to US$83.9 million despite the impact of Ramadan. Thanks to our disciplined cost control and stronger operating leverage across the business, we further enhanced our profitability with net income increasing by 17% year-over-year to US$36.4 million.
Karen: We'll discuss our financial and operational results.
Karen: Thank you Safi and Hello, everyone and thank you for joining us today.
Karen: Pes Tuesday, we called that we delivered a robust first quarter as we continue to eat that keep our high quality growth strategy and our in house overall inflation.
Karen: Our revenues increased by six 5% year over year to $83 9 million U S dollars, despite the impact of Ramadan.
Karen: As to our disciplined cost control and stronger operating leverage across the business. We further in house, our profitability with net income increasing by 17% year over year to 36 point for many U S dollars.
Karen Hu: Our net margin also rose substantially to 43.4% from 39.5% in the same period last year. and excluding share-based competition, non-GAAP net margin increased to 46.6%. Supported by our solid fundamentals and a clear strategy roadmap, we remain confident in our ability to seize new opportunities across the MENA region and beyond and deliver enduring value to our stakeholders.
Karen: Our net margin also rose substantially to 43.4% from 39, 5% in the same period last year.
Karen: And excluding share based compensation non-GAAP net margin increased to 46.6%.
Karen: Supported by our solid fundamentals and a clear strategy map, we remain confident in our ability to seize new opportunities across the Mena region and beyond and deliver enduring value to our stakeholders.
Karen Hu: Let's move on to our detailed financials for the first quarter of 2025. Our revenues were $83.9 million in the first quarter of 2025, a 6.5% increase from $78.7 million in the same period last year. The increase was primarily driven by our broadening user base and the enhanced monetization capability. Turning to our costs and expenses, our total costs and expenses were $52.7 million in the first quarter of 2025, a 6.2% increase from $49.6 million in the same period last year. Cost of revenues was $29.2 million in the first quarter of 2025, a 2.2% increase from $28.6 million 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.
Karen: Let's move onto our detailed financials for the first quarter of 295.
Our revenues were $83 9 million U S dollars in the first quarter of 'twenty 'twenty five.
Karen: 6.5% increase from seven to 8.7 million U S dollars in the same period last year.
Karen: The increase was primarily driven by our broadening user base and in house to monetization capability.
Karen: Turning to our cost and expenses, our total cost and expenses for $52 7 million at your stores in the fourth quarter October 25.
Karen: 6.2% increased from 14 $9 $6 million in the same period last year.
Karen: Cost of revenues was 29.2, meaning less dollars in the first quarter up 20 to 25 or 2.2% increased from 28.6 million U S dollars in the same period last year.
Karen: Primarily due to higher commission fees paid to third party payments platforms as a result of increasing revenues generates heat.
Karen Hu: Cost of revenues as percentage of total revenues decreased to 34.8% in the first quarter of 2025 from 36.3% in the same period last year. Our selling and marketing expenses were US$6.9 million in the first quarter of 2025, a 14.3% decrease from US$8.1 million in the same period last year. primarily driven by a decrease in incentive compensation. Selling and marketing expenses as percentage of total revenues decreased to 8.3% in the first quarter of 2025 from 10.3% in the same period last year. Our general and administrative expenses were 8.7 million U.S. dollars in the first quarter of 2025, a 30.8 percent increase from 6.6 million U.S.
Cost of revenues as a percentage of total revenues decreased to 34.8% in the fourth quarter of tension five from 36.3% in the same period last year.
Karen: Oh, sorry on the marketing expenses for $6 $9 million in the first quarter of 'twenty to 'twenty, 5% to 14.3% decreased from eight point to one meaning U S dollars in the same period last year.
Karen: Primarily driven by a decrease in incentive compensation.
Karen: Selling and marketing expenses as a percentage of total revenues decreased two 8.3% in the fourth quarter of 20 to 25 from 10.3% in the same period last year.
Karen: Our general and administrative expenses were $8 7 million in U S dollars in the first corporate off 2025.
Karen: 38% increase from 6.6, meaning U S dollars in the same period last year.
Karen Hu: dollars in the same period last year. primarily due to an increase in incentive compensation and higher professional services fees. General and administrative expenses as percentage of total revenues increased to 10.4% in the first quarter of 2025 from 8.4% in the same period last year. Our technology and product development expenses were $7.8 million in the first quarter of 2025, a 25% increase from $6.3 million in 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 the staff to support the development of new businesses and expansion of our product portfolio.
Karen: Primarily due to an increase in incentive compensation and higher professional services fees.
Karen: And Amit <unk> expenses as a percentage of total revenues increased to 10.4% in the first quarter of 2025 from 8.4% in the same period last year.
Karen: Our technology and product development expenses were 7.8, meaning U S dollars and are forced to culture, all Tony touched five.
Karen: 25% increase from 6.3, many U S dollars in same period last year.
Karen: Primarily due to an increase in salaries and benefits for our technology and product development staff driven by an increase in the head of calls all the stops to support the development of new businesses and expansion of our product portfolio.
Karen Hu: Technology and product development expenses as percentage of total revenues increased to 9.3% in the first quarter of 2025 from 8% in the same period last year. As such, our operating income was $31.2 million in the first quarter of 2025, a 7.1% increase from $29.1 million in the same period last year. Interest income was flat at US$6.6 million in the first quarter of 2025, compared with the same period last year. Income tax expense was $1.4 million in the first quarter of 2025 compared with $3.5 million in the first quarter of 2024, primarily due to a decrease in UAE corporate tax.
Karen: Technology and product development expenses as percentage of total revenues increased nine 3% in the first quarter of 2025 from 8% in the same periods last year.
Karen: As such our operating income was 31 point too many of those dollars in the first quarter of 'twenty 'twenty five.
Karen: Seven point to 1% increase from 29 point to $1 million in the same period last year.
Karen: Interest income was flat at 6.6 million U S dollars in the first quarter of 2025 compared with the same period last year.
Karen: Income tax expense was one point for them in U S dollars in the first quarter off 2025, compared with 3.5 bidding U S dollars in the fourth quarter, often 24, primarily due to a decrease in UAE corporate tax.
Karen Hu: As a result of foregoing, our net income was 36.4 million U.S. dollars in the first quarter of 2025, a 17% increase from 31.1 million U.S. dollars in the first quarter of 2024. And our non-GAAP net income in the first quarter of 2025 was $39.1 million, a 10.9% increase from $35.3 million in the same period last year.
Karen: As a result are also growing our net income was 36 point for me to U S dollars in the first quarter of 2025.
Karen: 17% increase from 31 point to $1 million in the first quarter of 'twenty 'twenty four.
And our non-GAAP net income in the first quarter of 2025 was 39 point to $1 million or 10, 9% increase from $35.3 million 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 March 31, 2025, we had cash and cash equivalents, restricted cash, term deposits, and short-term investments of U.S. 690.9 million U.S. dollars compared with 656.3 million U.S. dollars as of December 31, 2024.
Moving on to our liquidity and capital resources.
Karen: Our cash position remains solid and healthy as of March 31, 2025, we had cash and cash equivalents restricted cash and term deposits and short term investments of U.
Hmm.
Karen: 619.9 million U S dollars compared with 656.3 million U S dollars as of December 31, 20th century foods.
Karen Hu: We continue to return value through our share repurchase program. Pursuant to the company's current share repurchase program, from January 1 through May 16, 2025, the company repurchased 4,275,812 ADS, or Class A ordinary shares, totaling approximately $27.4 million. including 5.4 million U.S. dollars in the first quarter of 2025. As of May 16, 2025, the company has cumulatively completed cash repurchases in the open market of 11,580,950 ADS, or Class A ordinary shares, totaling approximately $76.9 million since the inception of the current share repurchase program. The aggregated value of ADS, or Class A ordinary shares that remain available under the current share repurchase program was $73.1 million as of May 16, 2025.
Karen: We continued to return value through our share repurchase program pursuant to the company's current share repurchase program from January one through May 16.
Karen: 2025, the company repurchased four meaning 275880 S. All class a ordinary shares totally a person literally 27 point for many great stories.
Karen: Including five point for many U S dollars in the first quarter of 2025.
Karen: As of May 16th 1995, the company has accumulated the computed cash repurchases in the open market of 11, meaning 500, a T cell then my hand on that 15, a D. S. All class a ordinary shares.
Karen: Totally a person lately.
Karen: $76 9 million U S dollars since the inception of our current share repurchase program.
Karen: The aggregate to value our a D. S. All class a ordinary shares that remain available for protection under our current share repurchase program was 73.21 meeting U S dollars as of May 16, 2025.
Karen Hu: Furthermore, as our CEO just mentioned, we have raised our 2025 share buyback target to US$15 million, strengthening our commitment to share our success with shareholders. We believe our solid fundamentals and ample liquidity will support us in retaining value to shareholders while maintaining daily operations and investing in future groups.
Speaker Change: Furthermore, our as our CEO just mentioned, we had raised our attention five sure put buyback talking to $15 million.
Speaker Change: Strengthening our commitment to share our success with shareholders.
Speaker Change: We believe our solid fundamentals and liquidity will support us in returning value to shareholders, while maintaining daily operations and investing in future growth.
Karen Hu: Moving to our outlook, for the second quarter of 2025, we expect our revenues to be between $76 million and $83 million. The bulk 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.
Moving to our outlook for the second quarter of 10 10, five we expect our revenues to be between 76, meaning U S dollars and $83 million.
Speaker Change: The outlook is based on the current market conditions and reflects the company management's current and preliminary estimates of market and operating foundation and customer demand, which are all subject to change in the interest of time. Please refer to our earnings press release for further detail.
Karen Hu: In the interest of time, please refer to our earnings press release for further details on our first quarter 2025 financial results.
Speaker Change: On our first quarter touching five financial results.
Operator: This concludes our prepared remarks for today. Operator, we are now ready to take questions. Thank you.
This concludes our prepared remarks for today I'll creature, we're now ready to take questions.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: To ask a question you May press Star, then one or you touched home phone.
Speaker Change: Using a speakerphone please pick up your handset before pressing the keys.
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Xueqing Zhang: And our first question will come from Xueqing Zhang with CICC. Please go ahead. Hi, good morning management. Thanks for taking my question and congratulations on another third quarter. My question is about your financials.
Singh: And our first question will come from <unk> Singh with C. ICC. Please go ahead.
Singh: Hi, Good morning management, Thanks for taking my question and congratulations on another solid quarter.
Speaker Change: Now culture I'll tee off on that shows a what's the main driver offering a significant year over year increase E and then margin and any guidance for next quarter and this year. Thank you.
Tao Yang: What's the main driver of the significant year over year increase in margin and guidance for next quarter and this year? Thank you.
Tao Yang: Thank you Xueqing, I will take your questions. On the revenue side, revenues from game services are the main gross driver. Our flagship product, like Yalla Ludo, continues to progress smoothly. And the OneOneOK Yalla has achieved record high revenues for three consecutive quarters.
Speaker Change: Thank you switching I'll I'll take your question.
On the revenue side revenues from games services on the main growth driver our flagship product like yellow Ludo continues to progress smoothly and the one well okay. Yellow has achieved record high revenues for three consecutive quarters.
Tao Yang: On the expense side, we've significantly decreased our selling and marketing expenses, mainly thanks to enhanced user acquisition efficiency, driven by our innovative AI predictive model for analyzing users' lifetime value. Together, these factors support our robust net margin performance. Regarding next quarter's guidance, I would say it's fair to expect our net margin to remain at around 40%. It is a relatively sustainable level given our current business.
Speaker Change: On the expense side, we have significantly decreased our selling and marketing expenses, mainly SaaS to enhance the user acquisition efficiency driven by our innovative AI predictive model for analyzing users' lifetime value.
Speaker Change: Together these factors support our robust and that margin performance regarding next quarters guidance I would say, it's fair to expect I would not met net margin to remain at around 40%.
Speaker Change: It's a relatively sustainable level given our current business. Thank you.
Tao Yang: Thank you.
Speaker Change: Yes.
Xuxiao: The next question will come from... Xuxiao with Haitong International. Please go ahead. Hello, management. Thank you for taking my question and congrats on a strong first quarter. So, management, please share the recent developments of our two flagship products, so Yalla and Yalla Ludo.
The next question will come from.
Yao: That's you Yao with high Tong International. Please go ahead.
Yao: Hello, and thank you for taking my question and congrats on a conference call here. So can management share. The reason for that was myself, our two flagship products. So yeah yeah.
Saifi Ismail: Thank you. Hi, I'll take this question. Thanks.
Yao: <unk>.
Yao: I'll take this question on thanks.
Saifi Ismail: So Yalla is celebrating its 9th anniversary today, coincidentally on the same day as our earning release. So we have kicked off a major in-app celebration to mark this special occasion. We also have some iteration lined up for Yalla's operation and design this year to enrich users' chatting experience, making it more fun. The goal is to keep things fresh and engaging of our users and draw in a wider audience. For Yalla Ludo, we continue to boost user engagement in our online community through high-quality operational activities. We also continue to host highly-praised tournaments across MENA countries, effectively expanding Yallaludo's brand influence from online to offline.
Yao: Yeah like celebrating its <unk> anniversary today Coincidently on the same day as our earnings release.
Yao: So we have kicked off a major acceleration Dumont. This special occasion, we also have some <unk>.
Gration lined up 40, yellows operation and designed to see you doing let's use of chatting experience, making it more fun.
Yao: The goal is to keep things fresh and engaging with all of the users and throw in a wider audience.
Yao: What do you Ludo, we've continued to boost user engagement in our online community through high quality operational activities.
Yao: We also continue with the host highly praised Doorwoman sector median of countries.
Yao: Effectively expanding you lose those brand influence.
Yao: Online to offline.
Saifi Ismail: So overall, we see both products performing sweetly, generating steady and consistent cash flow for the company.
Yao: So overall, we see both products, they're forming so Italy.
Speaker Change: Steady and consistent cash flow for the company. Thank you.
Saifi Ismail: Thank you.
Lincoln Kong: The next question will come from Lincoln Kong with Goldman Sachs. Please go ahead. Thank you for taking my question. So my question is about the shareholder return. So we have seen actually the share price rally quite nicely in the past two months. So at this moment, could you share the latest, sort of, the mindset behind the shareholder return plan going forward? How should we think about the consistency of our buyback program? Thank you.
Speaker Change: The next question will come from Lincoln Kong with Goldman Sachs. Please go ahead.
Speaker Change: Yeah.
Lincoln Kong: Thank you for taking my question. So my question is about the shareholder return. So we havent seen actually the surprise a rally quite nicely in the past two months.
Speaker Change: So at this moment could you share the latest subscribed by my.
Lincoln Kong: I'm always that'd be that'd be hard too that goes.
Holder return going forward.
Lincoln Kong: How should we think about the consistency.
Lincoln Kong: Bye Bye program. Thank you.
Lincoln Kong: Yeah.
Tao Yang: Hi Lincoln, this is Tao. I will take this question. We are glad to see a market correction in the company's valuation. Our buyback program is definitely picking up speed. Two months ago, we committed to at least doubling last year's buyback amount for 2025. And we are close to achieving this goal. As we just mentioned, to further strengthen our efforts to return value to shareholders We have raised this year's buyback target by an additional $22 million USD, bringing our total planned share repurchase to $50 million USD.
Hi, Linda.
Lincoln Kong: Uh Huh I would take this question.
Lincoln Kong: We are glad to see a market correction and the company's valuation.
Lincoln Kong: Our buyback program is the definitely picking up speed two months ago, we committed to at least a doubling last year's buyback a mouthful Tony is on the path and we are close to achieving this goal.
Lincoln Kong: As we just mentioned to further strengthen our efforts to return value to shareholders.
Lincoln Kong: We have raised this year's buyback target by additional 10 2 million USD.
Lincoln Kong: Our total planned share repurchase to USD 50 million.
Tao Yang: I also want to highlight that the company has decided to cancel all shares repurchased this year. That's part of our commitment to delivering.
Lincoln Kong: I also want to highlight that the company has decided to cancel oh shares repurchased this year.
Lincoln Kong: As part of our commitment to delivering.
Lincoln Kong: Since then benefits to our shareholders, we will provide another update Mexico here and discuss whether to further ramp up the buyback I hope that helps thank you. Thank you.
Tao Yang: We will provide another update next quarter and discuss whether to further ramp up the buyback. I hope that helps. Thank you.
Lincoln Kong: Thanks next question.
Kaifang Jia: Next question. The next question will come from Kaifang Jia with CITIC, please go ahead. Hi, management. Thanks for taking my question. Could management brief us on the advancements in musical and hardcore games? Thank you.
Speaker Change: The next question will come from K firing Jai with Citic. Please go ahead.
Speaker Change: Hi management, Thanks for taking my question quite imagine men's apparel.
Speaker Change: First off all of the other last months missed call on hardcore games. Thank you.
Tao Yang: Hi, Kaifeng, thanks for raising this. Our CEO just mentioned a Match 3 title set to be released in Q3, and we have several additional mid-core games in the pipeline, with potential launches as early as Q3. For these games, we are not only focusing on the Middle East, but also exploring several other overseas markets to expand our user base.
Speaker Change: Hi, guys. Thanks for raising this our C. O just mentioned to match three titles to be released in Q3, and then we have several additional mid core games in the pipeline with potential launches as early as Q3. So these games, we are not only focusing on the middle east, but also exploring several although oversea market.
Speaker Change: To expand our user base, we provide more details after the official rollout. Thank you.
Tao Yang: We provide more details after the official rollout. Thank you.
Ginny Yuan: The next question will come from Ginny Yuan with UBS. Please go ahead. Hello, thanks Amanda for taking my question. So we see y'all have a very strong growth momentum this year with multiple new products. So looking ahead, where we see a more ambitious user acquisition plan in the future. Thank you.
Ginny: The next question will come from Ginny you earn with UBS. Please go ahead.
Ginny: Hello, Thanks management for taking my question. So, let's see I'll AR has achieved their strong growth momentum with you with smartphone you put up.
Ginny: So looking ahead, our where we see them more machines do the acquisitions that are in future. Thank you.
Ginny: Yeah.
Saifi Ismail: Thank you, Jenny, for your question. I'll be taking this question. So MAU growth in Q1 indeed came in well above our expectations. Historically, our quarterly MAU growth has ranged from 2 to 3 percent, but in Q1 exceeded 7 percent. This was largely driven by our refined user acquisition strategy tailored for Ramadan, as well as our UI-driven, AI-driven traffic acquisition optimizations. Overall, this year's MAU growth may not follow the smooth trajectory we saw in the past three years. We will adjust and plan dynamically based on the needs of our products and communities. We are keeping a close eye on the ROI of our marketing initiatives.
Ginny: Thank you Daniele for your question I'll be taking these questions. So mou growth in Q1, indeed came in well above our expectations historically, our quarterly Mou growth has ranged from 2% to 3% in Q1 exceeded 7%. This was largely driven by our refined user acquisition strategy tailored for Ramadan.
Ginny: Our U I, driven AI driven traffic acquisition optimizations overall this year's Mou growth may not follow the smooth trajectory. We saw in the past three years, we will adjust in the plan dynamically based on the lease of our products on communities, we're keeping a close eye on the al why of our marketing initiatives currently with.
Saifi Ismail: Currently, we still expect full-year MAU growth to be around 10 percent year-over-year. We will revisit this and keep you posted if anything new comes up.
Ginny: Do you expect for your Mou growth to be around 10% year over year, we will revisit this and keep you posted if anything new comes up thank you.
Operator: Thank you.
Ginny: Yes.
Tao Yang: As there are no further questions now, I would like to turn the call back over to management for any closing remarks. Please go ahead. 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 Pearson Financial Communications. Both parties' contact information is available in today's press release as well as on our company website.
Speaker Change: As there are no further questions now I would like to turn the call back over to management for any closing remarks. Please go ahead.
Speaker Change: Thank you all once again for joining US today, we look forward to speaking with you in the last quarter. If you have further questions. Please feel free to contact Investor Relations Rps any financial communications. Both parties contact information is available in today's press release as far as our company web site.
Operator: This concludes this conference call. You may now disconnect your lines, and thank you.
Speaker Change: This concludes this conference call you may now disconnect your lines and thank you.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: [music].