Good day and thank you for standing by. Welcome to Weibo First Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. And now, I'd like to turn the call over to Ms. Sandra Zhang from Weibo IR team. Thank you. Please go ahead.

Thank you, operator. Welcome to Weibo's fourth quarter 2022 earnings conference call. Joining me today are Chief Executive Officer, Gaofei Wang, and our Chief Financial Officer, Fei Cao. The conference call is also being broadcasted on the Internet and is also available through Weibo's IR website. Before the management remarks, I would like to review 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 Weibo's annual report on Form 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 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 financials exclude certain expenses, gains and losses, and other items that are not expected to result in future cash payments or are non-recurring in nature or not 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 up 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 2022 earnings conference call. [Foreign Language] On today's call, I'll share with your highlights in Weibo’s users, product and monetization in the first quarter of 2022. [Foreign Language] On the user front, Weibo’s MAUs reached 582 million and average DAUs reached 252 million in March 2022, adding approximately $51 million and $22 million a year respectively. In March, 95% of Weibo’s MAUs use came from mobile. [Foreign Language] On monetization, the macro environment, industry policy and recent domestic COVID-19 resurgence had posed short and medium term impact on the production and operation of many companies to different degrees, causing most advertisers to defer or reduce their marketing budget since March. Nevertheless, thanks to the solid growth of our user scale and traffic, as well as our efforts in key industries, such as gaming and apparel. We have further gained recognition among advertisers for our differentiated market solution that integrates well with our user product and content operation. In the first quarter, our total revenue reached $484.6 million, up 6% year-over-year, and our ad revenues reached $427.1 million, up 10% year-over-year and 94% of our ad revenue came from mobile. This quarter, our non-GAAP operating income reached $141.7 million. [Foreign Language] Next, let me share with you our progress made in product monetization in the first quarter. [Foreign Language] On product font, we continue to focus on operating efficiency, driving steady user base extension and engagement improvement, so as to update our monetization efficiency. On channel front, considering our user scale and the competitive landscape, we will emphasize on balancing user acquisition cost and monetization and improve ROI for user acquisition. On competition, we will continue to step up investment in operations of hot trends and social content, deepen…

Thank you, Gaofei. And hello, everyone. Welcome to Weibo’s first quarter 2022 earnings conference call. Let's start with user metrics. In March 2022, Weibo’s MAUs and average DAUs reached 582 million and 252 million respectively, representing a net addition of 51 million and 22 million users, respectively on a year-over-year. We are delighted to achieve solid user growth momentum [indiscernible] marketing spend. Turning to financials. As a reminder, my prepared remarks would focus on non-GAAP results, while monetary amounts are in US dollar term 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 first quarter of 2022. Weibo’s first quarter 2022 net revenues were $484.6 million, an increase of 6%. Operating income was $141.7 million, representing operating margin of 29%. Net income attributable to Weibo reached $132.9 million, representing a net margin of 27%. Diluted EPS was $0.56 compared to $0.57 last year. Now, let me give you more color on revenues. Weibo’s advertising and marketing revenues for the first quarter of 2022 reached $427.1 million, an increase of 10%. Mobile ad revenues were $401.9 million, contributing approximately 94% of total ad revenue. We had a solid start in 2022. Weibo delivered a relatively resilient ad growth in the first quarter, even though the overall advertising market was capping off amid macro uncertainties, resurgence of COVID-19 and lockdown disruptions. For first quarter 2022, our leading verticals in terms of ad revenue contributions were FMCG, 3C products and gaming. In terms of growth, the fastest growing verticals were gaming and luxury, among major ones. Despite regulatory and macro challenges weighing on demand set, the relatively resilient performance of FMCG and 3C product sectors demonstrated that Weibo’s brand cross performance ad offerings resonated greatly with customers in these…

[Operator Instructions]. Your first question comes from the line of Alicia Yap from Citi.

[Foreign Language] My questions is related to the COVID impact in the second quarter. So if management can give a little bit more detail or the color in terms of the direction that we see in April and May, what kind of the magnitude of the decline that we are seeing for the online ad budget and what is our expectation for June and also into the second half of this year? Which industry vertical actually seeing biggest fill back in terms of their spending the past few months and then which industries vertical that you think will actually see a bigger rebound once this reopening is actually happening?

[Foreign Language] First of all, I would like to talk to you about the situation since Q2 because of COVID. So you can see that if we're talking about the mid-March as well as the Q2, in China, due to the COVID, we have been seeing the escalation of the control policies due to COVID here in China, and this is impacting a lot of marketing campaigns offline of our customers as well as those ads budget as well. [Foreign Language] And also talking about the different ad, for example, the performance ad, we can see that especially the information flow ad, this kept quite stable in terms of the volume. However, the pricing wise, this has been a little bit reduced. And second of all, talking about those brand advertisement, so you can see that because majority of the agents are located in East China, so I think that in terms of the budget, this has been impacted due to the COVID. [Foreign Language] And also, talking about the situation here since the late March, we have been seen a driving down trend in terms of the booking. And also, talking about the April, because of the impact to the logistics as well as the execution of a lot of the projects in East China, we have been seeing a driven down trend of the brand advertisement. And also, talking about May, we used to believe that we'll recover very soon. And actually, it was recovered very well to the level of the March. However, still, also in – after June, originally, we saw that it will be fully recovered. However, because of another COVID broke out in Beijing area, we've been seeing some kind of fluctuation of our performance there. And also, because Shanghai just resumed work and…

Our next question comes from Thomas Chong from Jefferies.

[Foreign Language] I have a question regarding our cost control and the trend in operating expenses [indiscernible] our margin outlook in the remainder of the year?

[Foreign Language] First of all, talking about the cost control. So, first of all, we are having a stricter control and also a stricter policy in terms of the ROI and also keeping it quite preservative in terms of the placement among different channels and also the purchasing of the feeds, for example. And also, talking about Q1, however, still we had stricter rules on the appraisal ROI and also if the channel, for example, could not provide with us the returns as required within three months or six months, we are going to cancel collaboration with that channel. And also, as a result, we have been seeing quite good performance in terms of margin in Q1. And second of all, especially in Q1, we are talking about the cancellation of already the – or decreasing of the tax related to the [indiscernible] by 1.5%. And also, second point is about the activity-related expenses. And due to COVID, we could not organize a lot of activities as planned. So, this has saved some of the costs relating to the activities and also campaigns. However, those kind of activities are also profit making. So, this did impact our revenue at the same time.

Maybe I can add some color on the margin. So, in terms of margin, as a result of better monetization, larger business scale and higher operating leverage, we achieved a good profit margin in the first quarter of last year. And historically, Weibo always maintained healthy margin level. And heading into the second half of 2022, as Gaofei mentioned earlier, we expect a negative impact on advertising business is material. So, amid the difficult market environment and the combined effect of numbers of other factors such as the expiration of the certain tax in contract business construction fee [indiscernible] and we have true investment in some sports IP such as Beijing Winter Olympics and NBA. So, [indiscernible] in operating margin compared to last year. But the management has reached a consensus that the highest priority list here is to optimize our cost structure with more disciplined channel investment and other spending strategy. As you know, Weibo has always maintained a conservative style. Our goal is improving operating efficiency with stricter ROI assessment to control our overall spending and striving for higher operating leverage to mitigate the margin decline as more as possible, and ultimately keep our healthy financial metric.

Next question comes from Tian Hou from TH Capital.

[Foreign Language] It’s about the user. So what is the eventual goal for the company to accomplish regarding the total number of the MAU/DAUs? And also, what's the company's plan in 2022 to acquire new users in China and also how to use content operation to improve user retentions and user activity level on the platform?

[Foreign Language] I think that this question has been answered previously while we were listing our company and also did the secondary roadshow in Hong Kong last year. So we were saying that if we were not operating any video related content and also strategies and then the social media or the upper limit of social media will be only 60% of that of the social network. That was about 2013. However, the time is different, right? So we are now emphasizing a lot on the differentiation points between Weibo and also Twitter and also the other pure social media. And we have been doing more complicated works and also world works as well in terms of our business operation or business development, especially we're talking about video. So in terms of the video, the impact is actually going to be bigger than the social media and also the business driving forces are going to be more as well than the social media only. So that's why that even if we've had a lot of headwinds, as well as the market competition in the video content area, we're still trying to invest as many as possible. So, we believe that we have a very key positioning and also important positioning in the video area and then we are going to further uplift the upper limit of the number of users and also the others. And now in terms of the total traffic and data, the video parts accounted for about one-third of the total traffic now we have. So this is extremely very important for us to uplift further the upper limit. [Foreign Language] And also, lastly, I would like to say that talking about a business value of a company, this does not only relate it to the DAU…

All right, thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I'll now hand the call back to Ms. Sandra Zhang for closing remarks.

Thanks, operator. And thank you all for joining us. This concludes our conference call. We'll see you next quarter.

Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.