Good day and thank you for standing by. Welcome to the Weibo Reports First Quarter 2023 Financial Results. Please be advised, today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sandra Zhang, Investor Relations. Please go ahead.

Thank you, operator. Welcome to Weibo's first quarter 2023 earnings conference call. Joining me today are 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 our 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 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 forward-looking statements in this conference call and elsewhere. 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 today's period. 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 self-based compensation and certain other expenses. We use non-GAAP financial measures to gain a better understanding of Weibo's comparative operating performance and the future prospects. Our non-GAAP financials exclude certain expenses, gains or losses and other items that are not expected to result in future cash payments, while nonrecurring in nature, were 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'll open the line for a brief Q&A session. With this, I would like to turn the call over to our CEO, Gaofei Wang.

Thank you. Hello, everyone. Welcome to Weibo's first quarter 2023 earnings conference call. Today, I'll share with you highlighting Weibo's user product and monetization in the first quarter of 2023. On the user front, Weibo's MAUs reached 593 million and average DAUs reached 255 million, adding approximately 11 million and 3 million users year-over-year, respectively. In the first quarter, 95% of Weibo's MAUs came from mobile. Our monetization, affected by the over peaked pandemic macro uncertainties and off season during the spring festival, the overall ad demand was still relatively low in the first quarter. Coupled with the high base broad by the 2022 Winter Olympics, our total revenues reached US$413.8 million in the first quarter, a decrease of 15% or 7% year-over-year on a constant currency basis. Our total ad revenues reached US$355.3 million, of which 95% of our ad revenues came from mobile. Our non-ad revenues reached US$58.5 million, an increase of 2% year-over-year or 10% year-over-year on a constant currency basis. This year, we continue to focus on improving operating efficiency. And our non-GAAP operating income reached US$128.6 million, representing a non-GAAP operating margin of 31%. On a constant currency basis, our non-GAAP operating income has nearly returned to the same level versus last year which decreased to 1% year-over-year. In the past 3 years, due to the pandemic, user paid more attention to news-related hot topics which benefit Weibo's user and traffic growth, with reopening, the ones that suppress travel and offline consumption demand has been released altogether and users' consumption demand for content in vertical areas has increased accordingly. Such changes in the market environment and user demand has brought certain challenges to our product operation strategy. In the first quarter, we quickly adapt to changes in user demand while maintaining investment in key content…

Thank you, Gaofei and hello. Welcome to Weibo's first quarter 2023 earnings conference call. Let's start within the metrics. In March 2023, Weibo's MAUs and average daily use reached 193 million and 255 million, respectively, representing a net addition of 11 million users and 30 million user on a year-on-year basis, with ongoing execution of a disciplined China investment strategy. Turning to financials; as the remainder, with focus on non-GAAP results, are in U.S. dollar terms and both comparisons are on a year-over-year basis, unless otherwise noted. Now let me move you through our financial highlights for the first quarter 2023. Weibo's first quarter 2023 net revenue were $413.8 million, a decrease of 15% or 7% on a currency basis. Operating income was $128.6 million, representing an operating margin of 31%. Net income attributable to Weibo reached $511.2 million , representing a net margin of 27%. Diluted EPS was $0.47 compared to $0.56 last year. Let me give you more highlight on the first quarter 2023 revenue performance. Weibo's advertising and marketing revenues for the first quarter 2023 were , a decrease of 17% or 9% on a constant currency basis, reflecting conservative average immediately opening as well as factor compared with first quarter last year with Winter Olympics-related ad revenues. Mobile ad revenues were $336.4 million , contributing approximately 95% of total ad revenues to industry. Our for 3 verticals through FMCG, products and e-commerce in terms of likely to be solid growth in currency and all the mobile sector underpinned by tailwind of an event for product launched as well as strong sales execution in this rental industry. Customers in this sector increased our total spectrum of social as combo to build marketing hack and reap high-value users of strong transaction power, our lines on vertical FMCG continued…

First question is from the line of Miranda Zhuang from Bank of America Securities.

My question is about AITC. Can you elaborate more on your plan for the AITC area? What would be the main applications? And what are your product clients?

Yes, thank you for your question. So first of all, as a social media platform, we are looking at our competitors, especially among our users and also in terms of commercialization, two kind. One is actually a sort of platform like Weixin. And also another one is like those and also has those kind of recommended base in social media platforms. So of course, in Weibo, we confronted actually 2 kinds of a crisis. One is, of course, the content creator of media or by the media. Another one is the media that are having a very strong personality. Got it. So First of all, in terms of application of AIGC, we have 2 areas. And one is that our platform, we have a lot of top-notch with media. And also, we are going to help them to enhance their efficiency of creating more personalized and also individualized content. So by having a fine-tuning our big models, we are able to help them to leverage this capability to enhance the efficiency of the content creation and generation. And also, second of all, it is going to help us to optimize and also help those long-tail accounts to have a better creation of content. So now on our platform and on Weibo, we have actually those top-notch accounts that are having a very strong capability in doing so. But actually, it is relatively weaker for those medium level and also the long-tail accounts. So by applying AIGC very effectively, this is going to be enhanced. So that -- let me talk to you about the application. So nowadays, given the strength of the total AIGC capabilities, it is not easy for us to say that it is going to actually replace the top notch We media. So let me talk to…

I will now take our next question. This is from the line of Alicia Yap from Citigroup.

Management, can you hear me okay?

Yes.

Yes.

Okay. All right. So my question is related to advertising. So can management share reverse the view on the latest advertising market recovery so far, especially in April and May? And then what is your expectation for the ad revenue growth in the second half of this year? And then if you can elaborate the performance by the industry category as well. And then also, as we look forward, what is the company at product and marketing strategy that you can think about to be able to improve the competitiveness in the market.

Thank you for this question. So as we have stated in the script that we have already seen that in Q1, the kind of recovery and also the growth trend of the advertisement industry and our company is actually pretty much weak due to the post COVID and in the release of the restricted policies as well as the weak season or low season in the spring festival season. And also in Q2, as we have already stated, after March, we have been seeing that the growth of the advertisement business has been on the positive track but still the growth rate wise, is still smaller than the same period of our last financial results of the same period. So second of all, in terms of the industrial verticals, now we have seen, for example, 3 Cs and headsets as well as the automotive industries. So after March, it would be seen actually a recovery trend in terms of our investment into the consumption market. So for some of these industries, although we've been seeing some of the decline on their sales -- still there is a trend of the consumption upgrade or the competitive edge or competitive market upgrade as well. So for the industry of handsets and 3C digital products as well as automotive, we've been seeing a double-digit growth in Q1 for this diverse and business. And also after March, we've been seeing that -- especially in March, we've been seeing over 40% of the growth in this area. And also in terms of the handsets, we do see the kind of a lot of product launch and new product launch were happening in Q1. Previously, we already said that it is becoming longer and longer in terms of the mobile phone or smartphone switch cycle. However,…

We'll now take our next question. This is from the line of Thomas Chong from Jefferies.

May I ask about the margin outlook for this year? Any initiative on operating efficiency improvement? Separately, may I also ask about our capital allocation plan and also our post on dividends?

So I will answer the first question and the second question will be addressed by Fei Cao. So, first of all -- and as we have already said in the prepared remarks that in Q1, on the overall cost and expenses, we have been having a reduction of 17%. And also in Q1 of this year, we already said that since Q4 of last year, we've been having the strategies and making the reorganization -- or restructuring of our organization structure. So that all uncertain kind of a business. So in terms of the kind of the impact to the overall margin and also profitability, we are going to see the value by doing that things this year. And also, second is that we have already mentioned that we have a strategy of a general user acquisition focusing on that and also further having the ROI related to channel user acquisition as an appraisal indicator. So of course, in Q1, we'd be experiencing certain tiredness in terms of the smartphone, for instance, the reduction of the sales of the assets. So in terms of the marketing cost, originally, actually, we plan that we might have actually an increase in terms of this particular area. But still, I think that this is due to the decreased sales of the headset. In this marketing-related cost, we're going to keep a flat performance versus last year. And also, overall speaking, in terms of the margin, we expect to have a very stable development and also with a little bit increase in terms of the margin of this year. And also since Q2, because we have now fully reopened market after COVID, so we expect to have more organizations of the offline activities. So, this kind of expenses related to the organization of off-line activities are expected to having a growth. So for the rest of the quarters, we expect to have the increase on the overall profit and margin.

Okay. Thank you for the question. This is Fei. Let me add some color on the margin. So most of our marketing spending, including channel investment ; so it's all flexible. We could always monitor store dynamic adjustments. As Gaofei mentioned, we have successfully implemented a series of cost reduction and efficiency enhancement initiatives last year and resulting in a more focused team and the leaner cost structure. We will continue initiatives this year, we lower our primarily challenged is to retire our topline growth in the second half. Let's assure our focus on margins remain area you can see that our margin has consistently maintained at a higher level within the industry. So, regarding your second question; the type of allocation and the usage of cash. Generally, they follow several basic principles in use of cash. For us, the most important of all is to support the organic growth of our business as well as the new business model, such as our social e-commerce and the new product. The second revenue cash is to invest through M&A within the industry. And third, in addition to investing in our own business divestments and applications, we will consider to return excess cash to shareholders, either by share buyback or cash dividend. Regarding the announced special tax business program, this program demonstrates our commitment to delivering share value and our confidence for long-term development. This commitment is supported by our consistent track record and relatively ability to generate operating cash flow. We would like to share our floor admiration behind with our advertised long-term competitiveness and financial liability, driving to enhance shareholder returns within this framework. As mentioned, we will have achieved a sustainable profitability and possess a robust ability of generating operating tax flows. We ensure that we maintain distribution and continue to generate sufficient free cash flow to support operating of care. Our commitment can help the financial condition enables us to navigate market as service and pursue active opportunities while regarding our shareholder interest. Looking ahead, we will continue to explore various ways to reward our investors, including dividend payout and in stock repurchases; these labor will be carefully considered and land with our progressive and subject to our product call. Lately , we indicated the delivery of general value to our shareholders and maximizing the return. Hope I have answered your questions. Thank you.

Thank you. At this time, I will now hand back to the speakers for any closing remarks.

Thanks, operator and thank you all for joining our conference call. We'll see you next quarter.

Thank you. This does conclude the conference for today. Thank you for participating and you may now disconnect.