Ladies and gentlemen, thank you for standing by. And welcome to the Weibo Reports Fourth Quarter and Fiscal Year 2017 Financial Results Conference Call. 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. Vanessa Chen. Over to you ma'am.

Thank you, Operator. Welcome to Weibo's 2017 fourth Quarter Earnings Conference Call. Joining me today are our Chairman of the Board, Charles Chao; our Chief Executive Officer, Gaofei Wang; and our VP, Finance, Fei Cao. The conference call is also being broadcasted on the Internet and is also available through Weibo's IR website. Before the management presentation, I'd 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 statement. Weibo assumes no obligation to update the forward-looking statements in this conference call and elsewhere. Further information regarding this and other risks is included in Weibo's annual report on Form 20-F and other filings with SEC, all information provided in this press release is occurring as of the for the date and Weibo assumes no obligation to update such information except as required under applicable law. Additionally, I'd 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 excludes 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 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.

[Foreign Language] Thank you. Hello, everyone, and welcome to Weibo's fourth quarter and full year 2017 earnings call. [Foreign Language] On today's call, I will share a few key assays in Weibo's user growth, product development and monetization, review the progress that we made in 2017 and share with you our strategic plan for 2018. [Foreign Language] Let me first discuss fourth quarter financial results. We continue to see strong revenue in the user growth in the fourth quarter of 2017. Our total revenue reached 377.4 million, up 77% year-over-year. Advertising and marketing reached 332.3 million, up 77% year-over-year versus 79% of net revenue coming from mobile. Non-GAAP net income was 146 million, up 90% year-over-year. [Foreign Language] Weibo's total revenue for fiscal year 2017 was 1.15 billion, up 75.5 year-over-year, which is our fastest 2016 IPO. Advertising and marketing revenue reached 996.7 million, up 75% year-over-year. Non-GAAP net income reached 405.7 million, up 121% year-over-year. [Foreign Language] Weibo's robust revenue growth and operating efficiency in 2017 are in following three areas. First, continues user growth and diversifying social product features have made Weibo the primary channel for advertisers to execute our social marketing campaign. Second, as a result of efforts to further improve user engagements, in our content distribution system, we offer a full factor of advertising and marketing product and solution to our different customer segments from individuals to SMEs to key accounts. This increase is customer's recognition towards Weibo's social marketing ability and overall value proposition. Lastly, Weibo's social network efforts have been further optimized in 2017, effectively enhancing our operational efficiency and monetization. [Foreign Language] On the user front, Weibo's smartly active users reached 392 million in December, up 25% year-over-year. Average daily active users in December reached to 172 million, up 24% year-over-year. In December,…

With that, let me turn the call over to Cao Fei for a financial update.

Thank you, Gaofei. Let me go through our financial highlights. For fourth quarter of 2107, Weibo's total revenue reached $377.4 million, up 77% year-over-year, exceeding the previous guidance. Non-GAAP net income attributable to Weibo was $146 million, up 90% year-over-year. Non-GAAP diluted EPS was $0.64 compared to $0.34 a year ago. With revenue peaking in our high season in Q4, we delivered adjusted EBITDA of $161.9 million, up 107% year-over-year, and adjusted EBITDA margin was 43% compared to 37% last year. We're also pleased to announce that we have achieved an important milestone as our total revenue for full year 2017 surpassed the $1 billion to $1.15 billion, up 75% compared to 2016. Our pay and SME businesses, which together represented 92% of Weibo's advertising revenue, each grew robustly in 2017 at 85% and 73% year-over-year respectively. Non-GAAP net income attributable to Weibo was $405.7 million for 2017, up 121% compared to 2016. Non-GAAP diluted EPS was $1.80 compared to $0.82 in 2016. Adjusted EBITDA was $471.3 million, up 143% year-over-year, and adjusted EBITDA margin was 41% compared to 30% in 2016. As a result of our continued efforts to address revenue growth and operating efficiency, we continued to expand our margins throughout 2017. We delivered a non-GAAP net margin of 35% for the year compared to 28% in 2016. Factoring a high income tax rate we had to bear in 2017, the 7 percentage point increase in net margin once again demonstrates the strong operating leverage of Weibo as a unique and a substantial social media platform. In 2018, we will continue to drive operational and financial improvements across our business and we are confident that we are positioned for long-term growth as our users, content creators and customers continue to scale up. Now, let me give you more…

[Operator Instructions]. The first question comes from the line of Juan Lin from 86Research.

I have two questions. The first one is on our user matrixes. I noticed that in 2017 we added 33 million DAU and 75 million MAU. I am wondering if - whether the net growth of user number in 2018 and going forward will be stabilizing at the current level. This is the first question. And the second question is on our user feed monetization. Now, that [indiscernible] has already been available for both pay and SME advertisers, I am wondering what is the current ECPM of new feed versus last quarter and the Q4 2016 and what is the outlook for ECPM for 2018.

I think, as everybody knows, the competitive landscape in China mobile, Internet industry has significantly changed in the last year and the rising cost for user acquisitions through the handset manufacturers has been well noticed in the marketplace. However, because Weibo had a long-term relationship with the handset manufacturers, top APPs and the TV station and the other long form video companies, we have a very unique position in the marketplace to negotiate right cost to work with - in the user acquisition front.

You look at the base number of our users - we understand it's getting harder from a percentage point of view to grow the new users, and this is also thus reflected on both the fresh new users and the recall new users. However, our monetization capability has been rising in the last couple of years as well, so we are confident that the monetization we can get from each user can well cover the costs we incurred in the new user acquisitions.

As I indicated in my prepared remarks, we already made a really good progress in the recalled customer in 2017. So heading into 2018, this is one of the area we will continue to focus our efforts. I think on one side because we are a social media platform, we are served by a natural advantage in terms of connecting and recalling customer back, and on the other side, our capability in machine learning enhancement as well as our expansion in the video experience also helps us to attract our user back to our platform. Yes, I think there is two sets of ECPM worth noting. One is related to those we call a pure media property, for example, the launch page ECPM. The other sets are the news feed, the feed ECPM. You look at the pure media ECPM, compared to other competitors in the marketplace, we still have - we have certain price advantage over that. With the growing base of our users, we intend to increase our ECPM on that front in 2018. On the feed ECPM, as we introduced the Super Fans Top in the marketplace in late third quarter last year, we have better a matching with our inventory and our customer demand. And we anticipate the ECPM for the feed in 2018 will continue to rise in the foreseeable future.

The next question comes from the line of Alicia Yap.

I have a question related to the 1Q guidance. So can you explain a little bit more about the new accounting standard. Your 1Q guidance actually implies currently about 68% to 73% year-over-year growth. What would be the like-to-like growth rate if we were using the previous comps, like the standard? And then related to the 1Q, can you also give us some colors of the ultimate growth drivers? Will that mainly driven by the increased ad budget from the existing customer or you actually expect growing more SME customer base or is it more driven by technology improvement that allow the customer to actually be a bit more efficiently and also - leading to the higher ECPM? And then any benefit you expect to get from the Chinese New Year gala, the Winter Olympics?

This is Vani. On your first question, I think in Gaofei's prepared remarks we made it very clear that the aggregated impact from the accounting changes on revenue line is not material taking the financial statement as a whole. If I want to expand this a little bit, there's two parts of the new accounting standard that will have impact on Weibo moving into 2018. One is the value-added tax. Historically, we are recording - we are using growth method, recording where - whereby our revenue included the value-added tax. With the new accounting standard, now we are required to report revenue only through a net form. That means that part of the value-added tax will be taken directly out of the revenue. So that's the one-fold. The second part is the accounting for the advertising barter transactions. Prior accounting required no - barter transactions can be recognized if a fair value cannot be determined in the marketplace. However, the latest new accounting standard has updated that with a transaction sort of a model, where a company is required to recognize a barter transaction based on transaction sort of arrangements. With that, we anticipate that we have to report that barter in 2018. But the net-net of these two components, they are offsetting each other, because one is to reduce your revenue, the other is increasing your revenue. That's why we said that the aggregated impact from such changes will not be material. So if you're using the old method and the new method, you are coming to a very similar result for two sets of accounting standards. Hopefully, that answers your first question. The second is on the driver part. I think the - you already mentioned a number of those drivers as you asked the question. I don't think one that a single set of driver will be predominant compared to the others. So it's a mix issue. On the key account side, we're probably talking more on the budget shifting, while on the SME customer side, we're talking about more customer - a larger customer base. We're talking about higher bidding activities on the platform. So that we're anticipating the rising of the ECPM as more bidding available to us. So I don't think we're singling out a particular component that would be the only set to drive the revenue growth. We're talking about multiple elements. Your third question is on the Chinese New Year Gala and the Winter Olympic. You want to go ahead?

If you look back at the past three years our Q1 performance, you might be noticing that Q1 is representing a very important quarter for us to acquire new users. This is a quarter we generally work with CCTV-1 for the Chinese New Year Gala, and through the red envelope and the participation in the Chinese New Year Gala, we expect to attract a significant portion of our new user during the year. As you may know, Weibo was the only social media partner to the CCTV-1 for the last couple of years. And even the Gala - the Gala is going to happen in three days. Even prior to the - there's a lot of pre-event that's going on right now and we already see pretty good pick-up in the new users. We are hoping this year it's another - will be another good quarter for us to attract and to retain our users, and the Chinese New Year Gala, the collaboration between Weibo and CCTV hopefully will become another successful event for both parties.

Now, I would like to hand the conference back to the speakers. Please go ahead, ma'am.

That concludes today's conference call. Thank you for joining us, everyone. Thank you.