Ladies and gentlemen, thank you for standing by. And welcome to the Weibo reports third quarter 2016 financial results. At this time, all participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session [Operator Instructions]. I would now like to hand the conference over to your first speaker today, Ms. Lydia Yu. Thank you. Please go ahead.

Thank you, operator. Welcome to Weibo’s third quarter earnings conference call. Joining me today are Chairman of the Board, Charles Chao; our Chief Executive Officer, Gaofei Wang; and our Chief Financial Officer, Herman Yu. The conference call is also being broadcast on the Internet and is available through Weibo’s IR website. Before the management’s presentation, I would like to read you the Safe Harbor statement in connection with today’s conference call. During the course of this conference call, we may make forward-looking statements, statements that are not historical facts, including statements about our beliefs and expectations. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Weibo assumes no obligation to update the forward-looking statements in this conference call and elsewhere. Further information regarding these and other risks is included in Weibo’s annual report on Form 20-F for the fiscal year ended December 31, 2015 filed with the SEC on April 28, 2016 and other filings with the SEC. Additionally, I would like to remind you that our discussion today includes certain non-GAAP measures, which excludes stock-based compensation and certain other expenses. We use non-GAAP financial measures to gain a better understanding of Weibo’s comparative operating performance and future prospects. Our non-GAAP financial exclude certain expenses, gains or losses, and other items that are not expected to result in future cash payments or that are non-recurring in nature or will not be indicative of our core operating results and outlook. Please refer to our press release for more information about our non-GAAP measures. Following management’s prepared remarks, we will open the lines for a brief Q&A session. With this, I would like to turn the call over to our Chief Executive Officer, Gaofei Wang.

[Interpreted]Thank you. Hello, everyone. Welcome to Weibo’s earnings call. On today’s call, I would share with you our key developments in products, user, and monetization, as well as the progress that we have made on our key initiatives this year. Let me first discuss third quarter financial results. We continued to see strong user – strong revenue and user growth. Our total revenue in the third quarter reached $176.9 million, up 42% year-over-year. Advertising and marketing revenue reached $156.7 million, up 48% year-over-year with key accounts and SME ad revenue growing 101% year-over-year. 66% of our ad revenue was from mobile. Non-GAAP net income in the third quarter was $54.6 million, up 147% year-over-year. On the user front, Weibo’s monthly active users reached 297 million in September, up 34% year-over-year. Daily active users reached 132 million, up 32% year-over-year. In September, 89% of Weibo’s MAUs were mobile. This quarter, with the occurrence of the Summer Olympics and other events, we saw strong user growth and user engagement. The Olympics brought together over 52 million users on Weibo, generating close to 579 million topic-related interactions. At the same time, as a result of improvements to Weibo’s ad effectiveness and our strong sales force, we noted a meaningful increase in the number of advertisers as well as average revenue per advertiser, aka ARPA. This includes our key account advertisers, which grew 46% year-over-year. KA revenue grew 119% year-over-year this quarter, which is higher than SME’s growth rate. With Weibo’s monetization model taking shape, with a reinforcing cycle of user growth, user engagement, and monetization, this will help us secure an enviable leading position in the mobile Internet world. In discussing our operational update for our third quarter, I will cover Weibo’s progress in the area of user, content, and customer. First, on…

Thank you, Gaofei. Good morning, everyone, and good evening to those of you in the West. Welcome to Weibo’s third quarter 2016 earnings call. Let me go through our top-level numbers. For the third quarter, Weibo’s total revenue reached $176.9 million, up 42% year-over-year or 49% on a constant currency basis, exceeding the company's guidance between $168 million and $173 million. Non-GAAP net income attributable to Weibo reached $54.6 million, up 147% year-over-year. Non-GAAP diluted EPS was $0.24 compared to $0.10 a year ago. Adjusted EBITDA reached $57.7 million, up 117% year-over-year. Our adjusted EBITDA margin reached 33% this quarter compared to 21% last year. Let me give you more color on our revenues. Advertising and marketing revenue for the third quarter reached $156.7 million, up 48% year-over-year or 56% on a constant currency basis. Total advertisers reached 753,000, up 52% year-over-year. We’re pleased to see that more and more advertisers from self-service to SMEs channels to the channels to key accounts continue to adopt Weibo’s social marketing. ARPA or average revenue per advertiser for SME and KA customers have also healthy trends. Mobile ad revenue made up 66% of total ad revenue and was up 53% or 60% on a constant currency basis. Turning to SMEs and KAs. Revenue from SMEs and key accounts together was $147.4 million, up 101% or 112% on a constant currency basis. With ad budgets shifting to mobile, social and video, we’re seeing our SME and KA revenue benefitting from this secular trend, from 50% year-over-year in the first half of last year to 82% in the second half to over 100% in each of the last three quarters on a constant currency basis. The strength of Weibo’s advertising was led by our SME business, which grew 90% year-over-year or 100% on a constant…

[Operator Instructions] The first question comes from the line of Alicia Yap from Citigroup. Please go ahead.

Hi. Good morning, Gaofei and Herman. Thanks for taking my questions. And congrats on another strong set of results. Couple of quick questions. Number one is regarding your recent decision to eliminate the 140 characters limit on the user post and expand it to the 2000 characters, how is the user reactions and feedback so far? And have you seen more posting and more free engagement from user after the change? And then second is also related to your recent new monetization initiative announced at the V-Influence Summit last month. Specifically, wanted to understand the number of payment initiatives that you plan to launch, such as charging fee for viewers to view the broadcast and all that. When will these new initiative features to be fully released to user? And then, when that is released, what is your expectation for the rem? And do you worry about user offended by that? Thank you.

[Interpreted] So, good morning, Alicia. Let me translate what Gaofei just said. So, at the beginning of the year, we opened up the Weibo to allow our people who have a Weibo membership to send more than 140 characters. And these people are those that actually have – have been verified with their ID. And so, when you look at these people who have membership, which is a small group of the total population who actually send Weibo, we see them sending over 250 words – or 250 characters, these subset of people, we see them significantly increase the amount of Weibo that they send that’s over 250 words. However, when you look at the total amount of Weibo being created, this is a small subset of the total.

Okay. For item number two, when you talk about new monetization, yeah, we started a subscription model for some of our content. But as a total whole revenue, it’s going to be an immaterial number.

Okay. All right, thank you.

The next question comes from the line of Claire Cao from Morgan Stanley. Please go ahead.

Hi, management. Thanks for taking my question. I have three questions. So, the first one is related to the progress of monetization plan on our live broadcasting business. When do we plan to start – take a cut for the gross billing of live broadcasting platforms that is getting traffic from us. And the second question is that, we noticed that the gross margin continued to see a substantial improvement sequentially in this quarter. So, I’m wondering, what’s the key driver behind that? And also, if we compare to the global leaders of social platforms, our current level of margin profile is already quite similar to that of Facebook when it was at a similar revenue scale. So, I’m thinking, what’s driving the strong margin improvement and how should we think about further room for margin expansion in the future? And my third question is a housekeeping one. So, can management help us to break down the ad revenue by different ad formats? And also, for our promoted feed ads, what’s the CPM and ad load in the quarter? Thanks.

Okay. Good morning, Claire. Let me try to cover your questions. If I missed something, maybe you can resubmit. The first question is on live broadcasting. So, I think I will answer this in two ways. Number one is, we currently do live broadcasting, the majority of it through a company that we invested, which is Yixia, Yi technology. And the Yi app actually does most of the broadcasting from influencers and we allow all the broadcasters on Yi to also share to Weibo. So, most of the GMV that’s created, it’s created by Yixia. And as a platform that helps them grow with traffic, support, and so forth, we are looking to do a cut into this business sometime soon in the near future. But as a whole, strategy for live broadcasting is much more than just allowing influencers to have the kind of show style type of models that you see in other live broadcasting or live streaming apps. We’re much more than just 2C. We’re also focusing on 2B that Gaofei mentioned, such as working with media companies to have the live broadcast you see from the Olympics, from the presidential debates and so forth. We’re focusing on, for example, working with KOLs, such as celebrities to also do live streaming. And we’re seeing a lot of this beyond just kind of the 2B model. For example, a lot of the KOLs are getting sponsorships, the kind of model that you actually see in the US with, for example, YouTube. So, as a platform, I think looking at just kind of a show model as a subset of our total live broadcasting, I think the opportunity there is much bigger than just – it’s going to probably be getting closer and closer to what we’re seeing in…

Thanks. That’s very helpful.

Next.

The next question comes from the line of Evan Zhou from Credit Suisse. Please go ahead.

Hi. Good morning, Gaofei and Herman. Thanks for taking my questions. Two questions. First one is regarding the product feature that you just mentioned, that roll out. I think specific to – Gaofei just mentioned that – specifically to video and live streaming, you mentioned that you plan to try to enhance [indiscernible] within the Weibo app that users don’t have to just use the third-party apps to produce short video and live streaming. Just want to confirm, does that mean that users don’t have to like rely on the features of MiaoPai and Yi Zhibo to do these? Like, let’s say, like, Weibo will be having our own in-house features for user-produced short video and live streaming or are we still kind of referring to the feature of third-party MiaoPai? And also, kind of any thoughts regarding the future plans for bringing out more third-party providers in short video and especially to live streaming as well? That’s my first question. Second question is actually regarding short video. I think you’ve spoken about it for the past two, three quarters. And I was wondering, like, towards the year-end, if you look at kind of the budget allocation, what kind of outlook [indiscernible] about how short video can play into both the user time spent increase and also on the revenue contribution with effective CPM in terms of the overall revenue picture? That will be helpful if you can do some more color on that. Thank you.

[Interpreted] So, over the last half a year, we can see that the consumption of short videos and live streaming have been growing very, very fast and we’ve been focusing on how do we improve the consumption experience. So, right now, when users want to share short videos and also live stream, you will have to go to a MiaoPai site and this is – we wanted to simplify this process and improve the user sharing experience. So, we’re working with MiaoPai to move some of the key features in MiaoPai app on Weibo, so that users can directly share from Weibo and, at the same time, be able to do features for editing. So, when we look at our key opinion leaders, when you look at when they do a live streaming and also when they share short videos, the amount of content – the frequency that they share is relatively low. We think there is a real opportunity to increase this. So, by increasing the ease of sharing this on Weibo, we think that we can increase the amount of content that they share. So, with this model, we will still continue our strategic cooperation with MiaoPai. The idea is that when we make the sharing from Weibo much easier, the content that’s being shared from Weibo will also go to MiaoPai and vice versa, so that we hope, as an overall, that both content that both of us create will increase and be shared.

With regards to the question on time spent on video and eCPM revenue, I think with regards to time spent, we’re seeing Weibo’s time spent being increased by video consumption. I think this is a big factor. I think this is an overall trend when you look at China’s Internet space. We are seeing that people consuming videos, especially on mobile more and more, and I think that we are getting a good part of that trend. With regards to eCPM, as we mentioned last quarter, we launched video ads in the second quarter. Our strategy this year is more to get the market to experience video ads, especially social ads, especially presenting video ads on mobile. So, our strategy is to go out and give a deep discount, so that more and more people can try, and we will also limit the kind of quantity that people can purchase. The whole idea is to get the market to adapt to some of this social video advertising. In the next year, when we have a new budget, at that point, we hope to further increase the overall spending. So, the net effect is our prices for video ads are much higher, but given the steep discounts that we have that even today is not that much different than the other products.

Okay. Got it. Thank you, Gaofei and Herman.

[Operator Instructions]. The next question comes from the line of Alex Yao from JP Morgan. Please go ahead.

Hi. Good morning, everyone. Thank you for taking my question. Two quick ones. One is to follow up with Evan’s questions on video. So, you guys mentioned that video ads represented roughly 10% of the total ads revenue in this quarter. Just wondering, is this 10% relatively under-monetized or over-monetized in relation to the time spent, those short video form created? And then, given the trend, ads budget is shifting towards video, how do you guys think about longer-term revenue mix between video and other formats? And secondly, regarding your investment in Yixia Technology, does it mean you guys effectively outsource the product and the features development to Yixia Technology in the areas, including live broadcasting, short video creation, and broadcasting stuff or does it mean you guys are effectively outsourcing the content sourcing generation operation, et cetera, to Yixia Technology? And if there’s a future monetization on those, the content created, on both platforms, how should we think about the revenue share between you guys and Yixia Technology? Thank you.

Hi, Alex. So, I’ll answer the first two. With regards to video monetization, as I mentioned earlier, [indiscernible] push in the second quarter. And in the third quarter, we are seeing more and more customer adopt it, but I think this is just very early stage for China to accept social video advertising. And I think that when you look out into next year and you look out further, I think that video is going to be a bigger – a much bigger part of our total advertising dollars. I think there is great potential just from the initial feedback of our customer set, whether it’s the key accounts or the SMEs. With regards to our relationship with Yixia, I’ll let Gaofei answer that.

[Interpreted] So, with regards to short video and live streaming, we think that this is good – a very, very big market opportunity. This is – we are seeing, for example, content creation moving towards that direction. In order to seize that opportunity, we think that it’s much faster when we’re working with someone who specializes the operation and getting the good content of – for short video and streaming versus Weibo trying to do it all alone. With regards to the revenue – with regards to the short videos on Weibo, all the revenue related to short videos, we’re getting 100%. And with regards to streaming right now, basically, all the live streaming, Yixia is getting the GMV. We are looking to get a cut into that revenue stream in the near future.

Thank you. I’ll now hand the call back to Ms. Lydia Yu for closing remarks.

Hi. This concludes the call for today. Thanks, everyone, for joining.