Ladies and gentlemen, thank you for standing by and welcome to the Weibo Reports Third Quarter 2020 Financial Results Conference Call. At this time, all participants are in listen-only mode. After speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your first speaker for today, Ms. Sandra Zhang. Thank you. Please go ahead, ma'am.

Thank you, operator. Welcome to Weibo's third quarter 2020 earnings conference call. Joining me today are our Chief Executive Officer, Gaofei Wang; and our VP, Finance and Interim CFO, Fei Cao. The conference call is also being broadcasted on Internet and is available through Weibo's IR website. Before the management remarks, I would like to read the Safe Harbor statement in connection with today's conference call. During today's conference call, we may make forward-looking statements, statements that are not historical facts, including statements of 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 this and other risks is included in the Weibo's Annual Report on 20-F and other filings with the SEC. All the information provided in this press release is occurring as of the date hereof. 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 financials excludes certain expenses, gains or losses, and other items that are not expected to result in future cash payments or are non-recurring in nature or are not indicative of our core operating results and our outlook. Please refer to our press release for more information about our non-GAAP measures. Following management's prepared remarks, we'll open the lines for a brief Q&A session. With this, I would like to turn the call over to our CEO, Gaofei Wang.

[Foreign Language] Thank you. Hello, everyone, and welcome to Weibo's third quarter 2020 earnings conference call. [Foreign Language] On today’s call, I will share with you highlights on Weibo's user, product, and monetization, as well as progress we made on our key initiatives in 2020. [Foreign Language] Let me start with our third quarter financial results. In the third quarter, our total revenue reached $465.7 million, flattish year-over-year. Advertising and marketing revenues reached $416.7 million, an increase of 1% year-over-year. 90% of our add revenues came from mobile. [Foreign Language] On the user front, Weibo's MAUs grew 3% year-over-year to 511 million in September 2020 and average DAUs grew 4% year-over-year to 224 million in September 2020, both representing a decrease of 2% quarter-over-over. 94% of Weibo's MAU came from mobile. [Foreign Language] This quarter with grown user base as steady pace and enhanced user engagement and retention as our key strategies for use of product operation, we put more emphasis on increasing consumption efficiency of fees and enhanced user’s social interaction. [Foreign Language] That said, on the user scale front post the summer break in August, Weibo’s user number decreased in September compared with June. We have faced incremental headwinds in terms of user growth for the second-half of year, mainly due to negative impact from cutback in investments for variety shows and entertainment industries, as well as back-to-school seasonality. In addition, on the engagement front, our user engagement and time spend were also negatively impacted – influenced by the intense competition in the user market, as short video companies are still aggressively investing in the user acquisition. As such, for one thing, we have beefed up our investment in social attributes and video areas from both product and operation perspective to solidify our market competitiveness and user growth,…

Thank you, Gaofei. And hello, everyone. Welcome to Weibo’s third quarter 2020 earnings conference call. Let's start with user metrics. In September 2020, Weibo’s MAU reached 511 million, representing a net addition of approximately 14 million users on a year-over-year basis. Weibo’s average DAUs reached 224 million, representing a net addition of approximately 8 million users on a year-over-year basis. Let's turn to financials. As a reminder, my prepared remarks would focus on non-GAAP results and all the comparisons are on a year-over-year basis unless otherwise noted. Now, let me walk you through our financial highlights for the third quarter of 2020. Weibo’s third quarter 2020 net revenues were $465.7 million, flat or a decrease of 4% on a constant currency basis. Exceeding the high-end of our guidance, operating income were $179.4 million, representing an operating margin of 39%. Net income attributable to Weibo was $152.9 million and the diluted EPS was $0.56. Now, let me give you more color on revenues. Weibo’s advertising and marketing revenues for the third quarter 2020 increased 1% to $416.7. Mobile ad revenues were $376.1 million, contributing approximately 90% of total ad revenue up from 87% last year. Moving on to KA. In the third quarter, Weibo’s KA revenue reached $221.2 million, an increase of 12% year-over-year and 33% quarter-over-quarter. Leveraging a nice rebound in domestic consumption and ongoing digital transformation, our KA business demonstrated great recovery momentum with the number of brand advertisers branding with us this quarter hitting record high. We’re delighted to see a growing number of brands recognizing Weibo’s unique value proposition in connecting to younger generation, KOLs influence, as well as delivering on brand plus performance goals. This quarter, on top of traditional branding budget, KA customers notably allocated higher budget to performance driven products such as feed and…

Certainly. Ladies and gentlemen, we will now begin the question-and-answer session.[Operator Instructions] We have the first question from the line of Alicia Yap from Citigroup. Please go ahead.

Thank you. [Foreign Language] Good evening, management, and thanks for taking my questions. I have two questions related to advertising. Number one is related to the overall act of budget sentiments and recovery trend in China. It seems, China is on track for a decent recovery, but given the seriousness of the pandemic outbreak in other countries, do you – have you seen or do you think it will affect the ad budget onto the worries of the outbreak in other countries in terms of ad sentiments? And then second is related to the competition. It seems that management continue to mention the intensified competition from the short video companies in terms of the ad budget allocation. So not too sure will this intense competition continue into next year? Or do you think given Weibo’s product is recovering, I mean is improving, should we see the competitive landscape be actually moderate and improving over time? Thank you.

Okay. [Foreign Language] So, let me give you the answer for the very first question. So let's talk about the data of Q3. Let’s divide it into the brand and also SME. First of all, talking about brand ads, you can see that because Weibo is a very large company, so I don't think that pandemic is impacting the ad revenue or budget of the brand so far. But talking about the SME, I think that in the first-half of 2020, we really had a big impact, because previously our SME budget previously focused on offline, primarily speaking, and especially those kind of industries like O2O and also finance. So, I think that we made some changes on the SME side. So this year, we moved further to the online business and especially the online education, e-commerce and gaming, et cetera. [Foreign Language] So, second of all, I would like to say that in terms of our strategy focusing on the brand customers, currently speaking, our brand revenue or our ad revenue from the brand customers is relatively small compared with the other big companies, so – because previously and also, as of now, we pretty much focus on the top companies and also top brands. So you can see that, of course, we have a very steady growth of our number of customers, especially the brand customers. And also in 2021, we have some kind of changes and also adjustments over our strategy. For example, now, we are going to enlarge and expand the name list of those brand customers, especially focusing on the inclusion of regional brand and also those national fashionable brand as well. So you can see that in the next one, two years, we are going to see that more revenues or we're going to…

Thank you.

Thank you. Next question comes from the line of Tian Hou from TH Capital. Please ask your question.

[Foreign Language] So the question is continued on the short video, the company has made great progress on the short video. But last quarter, we mentioned the company has about a half million offers already opened their short video accounts. So, I wonder how many of them opened accounts by the end of the Q3. And in 2021, what is the company's goal in terms of how many accounts do we plan, you know – or work on to open? And for the advertising revenues generated by short video, what's the percentage of total does the company expects that to be? That's my question, thank you.

[Foreign Language] So first of all, in our previous presentation, I mentioned a little bit about it. So let's just recap from it. So first of all, overall speaking, we have over 700,000 accounts already opened on the video accounts and also talking about those accounts having over 1 million followers, we have 13,000 of them already. So the growth rate is very good and glad. So of course, that – and having said that, that is still relatively way smaller comparing with the number of [We Media] that we have or self-media that we have on Weibo. [Foreign Language] So, given the fact that creating the content of video is way more difficult than that of creating a text or image like we traditionally did in Weibo, so in the future I think the number of video accounts will be still remained relatively small against the total number of accounts that we have. [Foreign Language] And second of all, let's talk about our strategy, which is very clear already in our group. So, first of all, in terms of production, first, of course, we are going to emphasize more on encouraging those capable authors to create more high quality videos on our side. So, by those capable authors, I mean the media or KOLs or those food or delicious food accounts, and also those fashionable brands or fashionable accounts or those cosmetic KOLs as well. So, not only they can get the traffic from the video itself, but also they can gain an extensive traffic or feed from the Weibo itself from those text and image users. And second of all, the strategy is that we are going to attract more external accounts or external creators to join Weibo to publish their short videos at the same time. For…

Thank you. Thank you. Okay.

Thank you. Your last question comes from the line of Miranda Hui from Bank of America. Please ask your question.

Thank you, operator, and good evening, management. Thanks for taking my questions. Can you please share with us your preliminary outlook for the advertising business next year in particular the ad spend settlement of your advertisers in various industries? Thank you. [Foreign Language]

[Foreign Language] So, overall speaking, talking about the industry outlook, so continuously, we're not going to only focus on KA but also SME at the same time. And also, we are now trying to focus more on each different verticals. And also second, combine the brand together with effectiveness and conversion of that particular ad, so this is a very comprehensive and holistic strategy for this business. [Foreign Language] So, you can see that in the future, we can see that by doing that, we are going to increase the branding and also increase the SME side as well or effectiveness as well. So you can see that we are going to focus more on the verticals like automotives, gaming, and also FMCG as well. So, for example, gaming this year, we pretty much focus on those new games published this year and also they can – they have a huge demand of getting a very good effectiveness of more gamers and also high-quality content of games as well. [Foreign Language] Also let's talk about the industry of gaming for example, so because that now, we are trying to focus on the quality or the quality-oriented customers, so that is to say on the gaming side, now you can see that we are primarily very much – very well collaborated with Ali Game, Tencent or [indiscernible] for example, and they are making high-quality games at the same time, so they're pretty much gaining more traffic from Weibo. But if you're continuously making some of the games like the webpage game et cetera, which does not necessarily need to build up the brand, but only focusing on the factors in this kind of advertisement, I don't think that they are going to get a further traffic from Weibo. So that is to say that we are going to see a very good growth on those concentrated verticals, especially those top brands concentrated areas, but not that distributed or like scattered area. [Foreign Language] So overall speaking, while we finished our monetization strategy implementation, we're going to see that in the future, we are going to continuously focusing on those customers that are investing more into the – their high-quality area. So, especially in the future, if the brand – not only the brand customers, but also SME, if they have more budgets focusing on the online advertisement, we are going to, you know, collaborate and also track those ads. [Foreign Language] Okay.

Thank you, Gaofei.

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.