Good day and thank you for standing by. Welcome to Weibo's First Quarter 2021 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 Ms. Sandra Zhang with Weibo's IR. Thank you. Please go ahead, ma'am.

Thank you, operator. Welcome to Weibo's first quarter 2021 earnings conference call. During today, our Chief Executive Officer, Gaofei Wang and our Chief Financial Officer, Fei Cao. The conference call is also being broadcasted on the Internet and is available through Weibo's IR website. Before the management remarks, I would like to read you the Safe Harbor statement in connection with today's conference call. During today's conference call, we will 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 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 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 first quarter 2021 earnings conference call. [Foreign Language] On today's call, I'll share with you highlighting Weibo's useful product and monetization in the first quarter of 2021. [Foreign Language] On the user front, Weibo's MAU reached 530 million and average DAU reached 230 million in March 2021 and 94% of Weibo's MAU came from mobile. [Foreign Language] On the monetization front, in the first quarter of 2021, our revenue increase of 43% year-over-year to 458.9 million, nearly set to the further recovery of market demand and the optimization of our competitive strategy for key industries. Our advertising and marketing revenue increased 42% year-over-year to 390 million with 92% of our ad revenue coming from mobile. Our non-GAAP operating income in the first quarter reached 137.5 million. [Foreign Language] Next, let me elaborate on the progress we made in the area of product and monetization in the first quarter. [Foreign Language] On the product front, since the start of 2021, we further enhanced Weibo's differentiated competitiveness in key features such as cultural and social functions coupled with effective channel strategies. We have further improved our user engagement concurrently to beef up our investment in video products to strengthen users mindset of using Weibo for video consumption, so as to enhance our product competitiveness. [Foreign Language] On the channel front, we set up our channel investment with a focus on improving user engagement allowing to Weibo's competitive advantage in user acquisition costs, while strengthening the synergy between channel investment and subsequent content consumption and thereby improving user engagement and retention. In the first quarter, we extended the channels and improved the content recommendation efficiency and the consumption experience of acquired users by focusing on algorithm optimization. Moving further, we will continue to…

Thank you, Gaofei and hello, everyone. Welcome to Weibo's first quarter 2021 earnings conference call. Let's start with user metrics. In March 2021, Weibo's MAUs reached 530 million, a decrease of 5% year-over-year primarily to a tough camp last year with our user traffic reaching peak level during the pandemic period. On a sequential basis, our MAUs represented a net addition of 9 million users, mobile MAUs represented approximately 94% of total MAUs. Weibo's average DAUs reached 230 million, a decrease of 10% year-over-year, due to the same reason for MAU. Our sequential basis, our average DAUs represented a net addition of 5 million users. Turning 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 first quarter of 2021. Weibo's first quarter 2021 net revenues was 458.9 million, an increase of 42%, exceeding the high end of our guidance. Operating income was 137.5 million, an increase of 85%, representing an operating margin of 30%. Net income attributable to Weibo reached 113.7 million, an increase of 94%, representing a net margin of 28%. Diluted EPS was 0.57 cents compared to 0.30 cents in first quarter 2020. Now let me give you some color on revenues. Weibo's advertising and marketing revenues for the first quarter of 2021 reached 390 million, an increase of 42%. Mobile ad revenues were 361.8 million, contributing approximately 93% of total ad revenue, up from 89% last year. As Gaofei indicated in his prepared remarks, consistent with market trends and the internal management, Weibo no longer provide a segment disclosure of ad business by KA versus SME starting from this quarter. Let me share some corner on our growth from an industry…

[Operator Instructions] Your first question comes from the line of Alicia Yap from Citigroup. Please ask your question.

Hi. Thank you. [Foreign Language] Congratulations on the very strong results. So, wanted to follow up a little bit on these strong outperformance in the first quarter. Was that may be driven by the secular ad recovery, especially with a low base or are we actually seeing we are gaining market share in terms of the ad budget allocation from the advertiser? Any color that management could provide in terms of the trend going into the second quarter, for example, like April or the first week of May, some of these strong vertical that you'll see in first quarter, are we also seeing the trends continue into April and May. Thank you.

[Foreign Language] Okay, so first of all, thank you very much for the question. Let's just be very brief. So first of all, we have been seeing that in Q1 we had a big growth and part of the reason was due to the kind of year-over-year base, like low base number of the last quarter on Q1 of last year, but that was only partially the reason. However, we can see that before talking about the growth rate of the q2, this is still as robust as the Q1, so only partially reason. And also let me talk about the external and also internal reasons of having that high growth of the Q1 performance of the advertisement. So, first of all externally, we are seeing that the recovery of many verticals are very robust, for example, the consumer-related industries like the ecommerce and also FMCG and automobile and luxury as well. And also some of the other very competitive markets, for example, the gaming and also the education industry, which was somehow impacted by certain policies but still, we have strived to realize our target set in the beginning of the year, if we're talking about the year-on-year growth. So this is something about a very good vertical performance. And also, internally, we're talking about the reasons. For example, last year, we have been doing some kind of restructuring of our sales system. So in the past, for example, we had a branding team and sales team that was very much focused on strong at doing service and providing service to those KA customers. However, they are relatively now weaker in providing services to SMEs, and also on the country, those SME sales teams were very much dedicated in providing services, and also get pledges from the gaming and…

Okay, thank you so much.

Thank you. Our next question comes from Alex Xie from Credit Suisse. Please ask your question.

Thank you, manager for taking my questions, and congratulations on very strong results. So I'd like ask about your strategic progress in the use of products. So what will be your key initiatives to increase the user engagement in terms of your product design and operations? And would you like to share any specific targets for some of them? Thank you.

[Foreign Language] Okay. So thank you for this question. First of all, since Q4 of last year, and also in Q1, this quarterly report, we have already been mentioning some of the work and efforts is focusing on the user engagement enhancements. And also for example, the first is that we are trying to get access to those low frequency users, and especially improving the frequency from the external sources and also second from the internal sources. We are talking about, for example, after Q1, we focus more on those kind of activity and also more engagement on the core scenarios and especially, for example, those interest driven or interest-based scenarios like the super topic. And also, we are going to increase the frequency of the content consumption from the KOLs and also the gamers, as well as the campus, etc., products and also like the super topic. And that is the exact reason why we had over 40% of the growth on the super topic. And also talking about the monetization, we are going to actually start doing the monetization since Q2 of this year. And also third point is, we are emphasizing a lot on the growth of the video accounts. And also you can see that not only this can help us to develop the DAU and MAU in terms of user size but also more importantly that we can enhance the consumption of content and also consumption scale of the videos. So that is exactly a focus on the enlargement of the time spanned on the videos within the system. So that is to say that we have been gaining a lot in terms of the traffic inventory in this area. And that is specifically important for us to drive the SME ads industry and also products. And also talking about Q3 and Q2, I don't think that there is any big change. So in a word, we're just going to focus on three areas. The first is that, more channel access to increase the frequency to be more specific and second, is that focusing more on the social content products, and also third, video products.

Okay.

Thank you. Our next question comes from Thomas Chong from Jefferies. Please go ahead.

[Foreign Language] Thanks, management for taking my questions. I just have a question relating to the cost side. Given that we are going to invest more in content to drive user growth and engagement, can you share about our spending budget for this year, together with the trends in R&D and sales and marketing? Thank you.

[Foreign Language] Alright, first of all, let's give you the answer in relation to the content part. So you know since this year, we are talking about a kind of competitive landscape here and also, we are going to focus more on the investment to the content. But of course, that this particular fashion of doing the investment is quite much different from the investment to the content or to the video, sorry. So that is to say like, we're talking about the collaborations with the NBA last year and also CBA, and also China Super League Football League of this year, quite similar. So that is to say that we are going to focus more on those kind of a social accounts like in Weibo, and also to do some kind of monetization or socialization work but we're not going to act like a video actor, which is to say that we are not going to buy a lot of content in that sense. [Foreign Language] So that second of all, let's talk to you about the monetization or the business side or commercial side. So that is to say that, first of all, we are trying to provide to our customers the kind of commercial solution that is pretty much focused on the content marketing. So that is to say that altogether, the regular kind of solutions that we are providing to our customers, we're also going to put and include inside package, the kind of a content created by the KOLs and also those top notch KOLs. So that will generate certain costs in this particular area. However, if you are talking about the kind of sales gross margin of this particular area, we are not seeing any deduction on the gross margins here. So that is…

Great, thank you. Our next question comes from Alex Ko from Morgan Stanley. Please ask your question.

[Foreign Language] Thank you management for taking my question. So, would like to get a sense of like, the recent fan economy, like the regulatory headwind or like the crackdown, would that have like any impact on like any operational or financial impact on our business fundamental? Thank you.

[Foreign Language] And also, you know, talking about this question. First of all, I have to say that this is not a very good question for Weibo to comment, but rather Baidu IT should come on this, but however, let me just share you some of my opinions. So I think that we're talking about the two levels of regulation. The first one is that, first of all, we're not talking about this particular fan economy. But I think that this is more like a kind of illegal funding or crowd-sourcing, and also to help those fans to hit the ranking. But the thing is that, all those kind of motion or misleading kind of a platform or the funding platform or the promotional platforms, they are not Weibo. But actually people are discussing, however, all those topics on Weibo. So we are keeping a very close eye on this topic, and also a very close relationship and also communication with the government. And also second of all, talking about the fan economy, I think that this is pretty common here in China, also in the other part of the world. And also, I think that, in Weibo, we're trying to divert this particular to a very good direction and positive direction. So that is to say that this topic has been talked and discussed for months and also for the past half a year. And also, for example, talking about the KOLs servicing Weibo, I think that their fan economy is more like engaging their fans to really do some promotional activities or charity activities or some called some of the positive energy-oriented activities. For example, that one of the indicators that we care and concern about is the charity value that created by their KOL together with their…

Thank you. Right, thank you. So we have reached the end of the question-and-answer session. With that, we conclude our conference for today. Thank you for participating. You may all disconnect.