Good day, and thank you for standing by. Welcome to the Weibo Reports Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Sandra Zhang. Please go ahead.

Thank you, operator. Welcome to Weibo’s Third Quarter 2023 Earnings Conference Call. Joining us 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 Weibo’s IR website. Before the management remarks, I would like to read you the safe harbor statements 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 laws. Additionally, I would like to remind you that our discussion today includes certain non-GAAP measures, which exclude 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 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 or non-recurring in nature or not indicators 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 that, let me turn over the call to our CEO, Gaofei Wang.

Thank you. Hello, everyone. Welcome to Weibo’s third quarter 2023 earnings conference call. Today I will share with you highlights on Weibo’s product, operation and monetization in the third quarter of 2023. On the user front, Weibo’s monthly active users reached 605 million and average daily active users reached 260 million in third quarter, adding approximately 21 million and 8 million users year-over-year, respectively. Our monetization from the supply side in third quarter, benefiting from the promotions of popular TV series and movies during the summer vacation. Our user engagement continues to improve and the overall traffic on Weibo reached peak levels this year in July and August, providing sufficient ad inventories on the platform. From the demand side, a few factors negatively impacted on ad revenues growth. First, the macro economy and consumption fell short of expectations. Secondly, a few unexpected adverse factors in late August negatively impacted on some clients’ budgets. Thirdly, in Q3 last year after the pandemic lockdown, advertisers have been intensively launching new products and increased ad placements. Due to these factors, our ad revenues in Q3 picked up modestly year-over-year, with ad performance of July declined and the performance of August and September recovering month-over-month. In Q3, our total revenues reached USD 442.2 million, a decrease of 3% year-over-year and flat quarter-over-quarter. On a constant currency basis, our total revenues would have increased 2% year-over-year and 3% quarter-over-quarter. Our total ad revenues reached USD 389.3 million, a decrease of 1%, or an increase of 3% on a constant currency basis. 95% of our ad revenues came from mobile. This year, we’ll continue to focus on improving operating efficiency. And our non-GAAP operating income reached USD 163.9 million, representing a non-GAAP operating margin of 37%. Next, let me share with you our progress in product…

Thank you, Gaofei, and hello, everyone. Welcome to Weibo’s third quarter 2023 earnings conference call. Let’s start with user metrics. In September 2023, Weibo’s MAU crossed the 600 million milestone, reaching 605 million, and average DAU reached 260 million, representing a net addition of 21 million and 8 million users on a year-on-year basis, respectively. Turning to financials. As a reminder, my prepared remarks would focus on non-GAAP results. All monetary amounts are in US dollar terms, and all comparisons are on a year-over-year basis, unless otherwise noted. We continued to experience headwinds to our financials due to the volatility of foreign exchange rates this quarter since our business primarily operates in China. While we report our financials in US dollars, our financial performance was affected by adverse currency movements. Now, let me walk you through our financial highlight for the third quarter 2023. Weibo’s third quarter 2023 net revenue were $442.2 million, a decrease of 3%, or an increase of 2% on a constant currency basis. Operating income was $163.9 million, representing an operating margin of 37%. Net income attributable to Weibo reached $136.6 million, up 15%, or 17% on a constant currency basis, representing a net margin of 31%. Diluted EPS was $0.57 compared to $0.50 last year. Let me give you more color on the third quarter 2023 revenue performance. Weibo’s advertising and marketing revenues for the third quarter 2023 were $389.3 million, a decrease of 1%, or an increase of 3% on a constant currency basis, with a relatively soft July while accelerated growth in August and September. Mobile ad revenues were [$368.9] million, contributing approximately 95% of total ad revenues. In terms of growth, we are encouraged to see strong momentum of handset, entertainment and online services sectors as the largest contributors to top line…

[Operator Instructions] Your first question comes from the line of Miranda Zhuang from Bank of America.

So, can management provide more details on the recent ad business recovery in the fourth quarter, especially given we have the Double 11 e-commerce promotions? And then how will the company increase the competitiveness of the ad business?

All right. Thanks for the question. So, first of all, as we have already stated, in terms of the Q3 performance of the advertising performance. So in the third quarter, advertising revenue increased on the basis of the renminbi by 3% year-on-year and also quarter-on-quarter, which is actually basically in line with our expectations. And also, this was primarily due to the concentrated release of the consumer demand and advertising placement requirements during the e-commerce event on 618. And also after that, we’ve been seeing a quite weak performance during the July and also August, and also a much better performance in August and also September. And also let me share some of the colors on the Q4 expectations. So actually, for the Double 11 shopping festival and also the e-commerce events, we’ve been seeing a very good trend. For instance, we expect to have -- also in Q3, we’ve got over 50% of the growth because of Asian Games by Alibaba. And also in Q4, we’ve been seeing also activation of the ad placements by all kinds of different e-commerce platforms like the Double 11 and also Double 12 shopping festivals. So that we are expecting a year-on-year growth for the Double 11 and also Double 12 e-commerce events, especially for the e-commerce, including all kinds of different brands and also platforms. Okay. And also let me talk to you about some of the verticals. So first of all, in the second half of this year, we had a very good momentum of the growth for the verticals like the automotive and also digital products, food and beverages, as well as the health care as we have already stated. So you can see that because of a very good recovery of the traffic for those verticals and very good…

Your next question comes from the line of Daisy Chen from Haitong International.

I’ll translate myself. My question is about the real name display rule. We have noticed that many social media platforms in China, including Weibo, have recently announced that they will display the real names of the online influencers on their front account pages. So about this, I would like to ask the management what is the progress of Weibo’s real name display work of those display? And how we should evaluate the impact of real name rules on Weibo’s content ecosystem and the user activity?

So for this question, first of all, since the birth of Weibo, we’ve been always emphasizing on the real name registration mechanism. So, I don’t believe that this is actually kind of a new rule or new regulation for Weibo. And also, for instance, if you want to be identified as a We account, normally you have to provide the real name and also the other relevant information to facilitate this accreditation process. So, Weibo actually did that when we were appearing in this market to solve the issue of the trust. However, in the future, after that, we did see the emergence of many different social platforms and also because of the requirement of the personal and privacy information protection, this is becoming less stringent as we required before. But still, we still are performing the regulation of the front-end real name registration. For instance, if you still apply for the certification of your account, you need to provide the name or the position and also your company’s name. So, this is kind of a real name registration process. And also for this time, for the real name registration process of this time, actually, the major purpose is actually to emphasize on the authoritativeness and also the responsibilities and also the obligations that should be shouldered by those top notch We-media accounts and specifics, so that we are able to facilitate and also lead the process of creating a more harmonious environment of the Internet. So of course, at this particular round of the real name registration process, especially those kind of channels of news and military and also the legal and the council-related accounts are in the forefront of this round of the real name registration rule. But of course, this is not going to impact the accounts…

Your next question comes from the line of Timothy Zhao from Goldman Sachs.

I have 2 questions. First is regarding the progress in building the vertical ecosystem. Could management elaborate more on what is the Weibo progress so far and how does that affect your monetization capabilities? And secondly, it’s regarding AIGC applications. I think we discussed last time, but I was just wondering if there’s any updates, especially regarding content generation and also the efficiency improvement in your monetization capabilities.

All right. So for this particular question, we were always trying to emphasize on the Weibo’s strategy for the past several earnings report sessions and also especially touching upon the concept of the building of vertical ecosystem. So, for instance, after COVID, we had several strategies of focus. The first one is that focusing on establishment of the IP ecosystem, the definition of which is actually for those areas that could attract a lot of eyeballs and also intentions from the society. For instance, the hot topics and also the entertainment and culture, and also sports as well as the gaming industry as well. So, you can see that these different verticals were regarded as the IP ecosystem. And also, these IP ecosystems were growing still even during the COVID period for the past 3 years. So, you can see that both in terms of the revenue and also the influential power. We’ve been seeing a very good growth and a very good momentum. Got it. And also by Q3, we’ve been seeing the statistics of showing that we had over 70% of the growth in terms of the traffic for this particular, what we call the IP ecosystem and also for the past several years during the COVID. So originally, the traffic from the IP ecosystems actually was accounting for about 40% to 60% of the total traffic of Weibo. And also during the COVID period, still we had a much better growth from the IP ecosystems than the verticals of automotives and digital or cosmetics and beauty and also the other, like electronics area. So, this particular growth was pretty much stable in the past. However, this year we would like to shift our attention of our strategy. So after the COVID, we would like to change the…

Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.